Factors that assist co-operative enterprises to be successful in South Africa
Date
2014-10-10
Authors
Mokhele, Mohau Martin
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Abstract
Context
The South African government is looking at co-operatives as one way of addressing
poverty and high unemployment rates in the country. However, their impact on
addressing these challenges is somewhat minimal due to their high rate of failure.
The objective of this study is to research factors that enable these organisations to
be successful as business enterprises.
A brief statement of the problem
The problem is that co-operatives experience a high failure rate in South Africa. It is
currently estimated by the Department of Trade and Industry to be at 88%. These
organisations are important due to their ability to create employment, reduce poverty
and improve the economic participation of the marginalised communities. The study
looked at the factors that contribute to the success of co-operative enterprises in
South Africa.
The method of data collection
The research was done through in-depth interviews with respondents from cooperative
companies and stakeholders in Gauteng and the Free-state. A
questionnaire was prepared to collect specific information about these organisations
through an interview process in order to understand and answer the research
problem. Two different types of questionnaires were prepared for co-operative
organisations and stakeholder organisations. Audio recordings of the interviews
were kept as a reference to the actual discussions and meetings.
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Key findings
The available literature indicate that co-operatives fail due to a number of challenges
in South Africa; which are lack of appropriate skills, resources and understanding of
the co-operative organisations and the availability of markets for their products.
These are the main constraints to their success and sustainability. The research
study found various factors that can improve the performance and success of these
organisations which included; the right kind of support from government and other
stakeholders that is channelled towards training and capacity building within cooperatives.
This training would create an enabling environment for these
organisations to operate in and improve their productivity. The provision of finance to
fund viable start-up ventures and expansion plans would also contribute to making
them successful.
Key message
The importance of co-operatives in South Africa was confirmed due to their ability to
balance economic and social benefits. However, the success and benefits, where
they exist, of these organisations need to be well communicated and documented to
improve their attractiveness and encourage other entrepreneurs to follow the
collective action route in forming businesses. The understanding of co-operatives
and appreciation of the seven principles that characterise them is of utmost
importance to their sustainability and success as they describe the fundamental
principles that these organisations universally operate under and contribute to
society. The stakeholders including; government through the DTI, provincial
department and development finance institutions need to support and continue to
promote these collective organisations to ensure and project their success as drivers
of economic development in communities and rural areas.
Description
Keywords
Cooperative societies , Producer cooperatives , Business enterprises -- South Africa.