Not coming together
When Tsholofelo Kungwane and fellow community members decided to start a recycling service three years ago, they chose to set up their enterprise as a co-operative. They hoped to tap into the millions of rand in grants and loans that government offers such ventures.
Her co-operative, Katlego Movement, was able to get support worth R7m from the departments of environmental affairs and social development in the form of a refurbished building and stipends to cover wages and training for 14 employees.
Though Katlego Movement has barely broken even, Kungwane is hoping that a R150,000 prize it received at the International Co-operatives Day in Nelspruit earlier this month will help finance a new plasticcleaning machine that could boost revenue.
Kungwane is one of more than 600,000 South Africans who belong to co-operatives. But experts say government is setting many up for failure — through promises of grants and contracts — when very few even get out of the starting blocks.
By March 31 a total of 120,251 co-operatives were registered with the Companies & Intellectual Property Commission (CIPC). The number has shot up from 4,652 in March 2005. The CIPC said in its annual report last year that the perceived role of cooperatives in the empowerment of communities likely contributed to the rapid growth in registrations.
But few survive. A 2010 study by the trade & industry department found that of the 22,030 co-operatives registered between 2007 and 2009, a mere 12%, or 2,644, were still operating in 2010.
Johannes Wessels, director of the Enterprise Observatory of SA, blames government for giving the poor false hope by coaxing them into registering co-operatives.
In a 2014 study funded by the International Labour Organisation for the University of the Free State, Wessels found that only 131 of the 1,269 registered co-operatives listed in the CIPC records for the Thabo Mofutsanyana District (Bethlehem-Harrismith area) had working telephone numbers. Of these enterprises, only 48 were still active and just two said their revenue had increased since registering.
Wessels says the huge growth in cooperative registrations has been driven by an “ideological thrust” by the state and public servants chasing performance appraisal targets, rather than by community members responding to the needs of the market.
Wessels cites a recent study showing that the National Community Development Workers Programme and the department of social development’s Community Practitioner Programme set the creation of one cooperative a month as a
‘‘ CO-OPERATIVES ARE FORMED BY PEOPLE THEMSELVES, AND GOVERNMENT’S ROLE IS TO CREATE AN ENABLING ENVIRONMENT LAWRENCE BALE