The impact of the local government support on the sustainability of co-operatives and its role on poverty alleviation in the eThekwini Municipal region

Abstract

It has been accepted that sustainable co-operatives create job opportunities and have become a source of income for many people worldwide. The concept and philosophy of co-operatives is deeply embedded in the traditional culture of many human societies, especially within African communities. There are many examples where individual members of communities work together in improving their socio-economic welfare and that of their communities. In this context, the KwaZulu-Natal (KZN) Province has committed to promoting cooperatives through the establishment of a division that focuses on the establishment and promotion of co-operatives. The Department of Economic Development Tourism and Environmental Affairs (EDTEA) in KZN has put in place a Co-operative Development Programme which started from February 2005; and since then, the programme has attracted more than sixty thousand individuals, who constitutes approximately six thousand co-operatives. Since 2001 the eThekwini Municipality developed a co-operative programme aimed at eradicating poverty by empowering people who were living below the poverty line to step into the mainstream of the economy. As a result, ninety six co-operatives were formed with an average of twenty members each, resulting in about 720 people being employed, thus enabling them to look after their respective families. However, although the preceding cases have been successful in terms of facilitating the establishment of new co-operatives, there are some challenges that still need to be addressed. Unfortunately, the government investment in co-operatives and the substantial increase in the registration of co-operatives have not been accompanied by a related increase in the contribution of co-operatives to poverty alleviation and growth of the economy. The rationale behind this research is to establish the impact of the local government support on the sustainability of co-operatives and its role in poverty alleviation in the eThekwini Municipality. The research aim is to understand the role of the local government’s support on co-operatives’ sustainability and its impact on poverty alleviation in the eThekwini Municipality. Such an understanding will lead to the development of an inclusive and sustainable approach/model for supporting cooperatives in the eThekwini Municipality that will take local co-operatives into a sustainable growth path to alleviate poverty. In terms of the literature review, a theoretical outlook was formulated around the study with three chapters detailing the perspectives of co-operatives at the international, African, South African and eThekwini Municipality levels were presented. The rationale was tested in the form of questionnaires and interviews with key stakeholders involved in the support of cooperatives from the provincial to the municipal levels. A target sample was selected with co-operatives supported by the local government. The case study approach was utilised with the eThekwini Municipal Region having been selected as the study area, as it is one of the many local municipalities which have programmes aimed at supporting co-operatives in the country. The major findings from the research may be gravitated towards the co-ordination of support, monitoring of the outcome and the overall approach used during the support. Co-operatives in the eThekwini Municipality have been provided with both financial and non-financial support. However, the provision of support to co-operatives has been undertaken without a clearly set up mechanism for a regular assessment and review of their impact. The study also found that the financial support to co-operatives has resulted in increased economic activities in the eThekwini Municipality, such as an increase in business volume (production), employment opportunities, additional gross value added (GVA), and the generation of personal income for co-operative members. However, co-operatives are still facing a number of challenges after being assisted and supported. Therefore, the government and other stakeholders will need to continue with the provision of support services to make them sustainable. This study recommended the reduction of promotional support; the increase of the aftercare support; the improvement of the holistic support through a fifteen-year cooperative support package with an exit strategy; the provision of incubation support for co-operatives; and the establishment of a cooperative sustainable and development model (CSDM).