7. TOWARDS COOPERATIVE INDEPENDENCE

7.1 The Cooperative Setting
7.2 The Process of Disengagement
7.3 Conclusions

7.1 The Cooperative Setting

The cooperative setting, up to the beginning of the process of disengagement from state control during the last few years, can be summarized as follows by means of the main components of the cooperative environment. (Section 2.2)

The cooperative organizations have a membership composed largely of rural smallholder agricultural producers. Given their limited economic means, and the top down nature of the government’s promotion of cooperatives, the mobilization of share capital has been insufficient and as a result the economic basis of the rural cooperatives has remained very weak. The raising of additional share capital was at times further limited by the fact that cooperatives were obligated to service both members and non-members without much discrimination. The widespread illiteracy among members has also contributed to this situation through a relatively low level of awareness about the nature and potential benefits of cooperative action.

The cooperative movement, largely as a result of external intervention, has come to be organized in 4-tiers in most parts of the country, which appears to be too elaborate a structure to be democratically and economically effective. The result has been intra-cooperative friction, an inadequate flow of communication, and an uncoordinated distribution of activities between the different tiers. This situation has contributed to an unsatisfactory performance in the business activities of most cooperatives, and an inability to fully benefit from intra-cooperative collaboration.

A major cause of the above situation of the cooperative movement has been that the cooperative context and the general national environment have not been conducive for the development of independent cooperatives. The cooperative policy was oriented towards making cooperatives subservient to UNIP and the government, under single party rule, and utilize them for the economic mobilization of the population, particularly in rural areas. The overall cooperative policy was made operational by the inclusion of cooperatives in the national development plans, with the government as the main implementor. This made it difficult for the cooperative movement to formulate its development plans, as it could appear to be in disagreement with the national plan.

The enacted cooperative law gave extensive powers to the government to intervene and interference in the operations of the cooperative movement. The Registrar of cooperatives is thus not only responsible for registration but is authorized to intervene in cooperative operations, including the removing of board members and management staff. The cooperative law also tends to emphasize the social aspects of cooperatives at the expense of business operations.

The national agricultural policy identified cooperatives as engines for rural development and subsequently allocated to them the main responsibility in the agricultural marketing system as regards the staple crop of the country. The basic agricultural marketing law was re-formulated to give the cooperative movement the position of a quasi-governmental marketing organization with virtual monopoly in the strictly regulated area of maize marketing. Cooperatives were also assigned a major role in the related activities of distributing fertilizer and grain bags. Given the regulated nature of agricultural marketing and their weak economic base, cooperative became extremely dependent on the government.

The official cooperative support system was operated by the government through a special marketing and cooperative department. In the context of the prevailing policy and legal framework the promotional activities carried through this channel served to achieve government objectives and plans for the cooperative movement. This contributed strongly to the democratic and economic deficiencies of the cooperative movement and increased its dependence on government.

The cooperatives themselves made concerted and durable attempts to foster genuine cooperative development, with an emphasis on the local level, through its own limited resources and with major assistance from cooperatives in the North. Despite the adverse situation for cooperatives this resulted in improved member awareness, staff competence, business and infrastructure development, which provided a basis for the development of genuine cooperatives in the current liberalized environment.

In the area of cooperative education the existence of the state owned Cooperative College has discouraged the emergence of an internal education and training programme within the cooperative movement. The main deficiency of this dependency on government provided cooperative education and training is that it is not sufficiently supportive of the creation of an autonomous and self reliant cooperative movement. Such training also has a tendency of projecting the government view of cooperative education, training and development. The training materials, further, may not be adequately related to the specific needs of cooperative members, leaders, and staff, particularly in a rapidly changing environment.

As regards the international environment, the cooperatives ostensibly received considerable support from donor organizations during the period of one-party-rule. The projects carried out, however, were mostly aimed at achieving general rural development objectives and primarily used cooperatives as suitable instruments for that purpose. This resulted in the undermining of cooperative member participation and self-reliance, particularly as there were widely different approaches regarding the combination of self-help, grants and credit in achieving grassroots development action.

The channelling of this support from donors was mainly through government structures and the technical assistance component was provided largely by rural development experts, often with little understanding of cooperatives. This approach, therefore, also had the effect of further strengthening government control of cooperatives.

Such donor support tended to weaken the possibilities of effectively linking the cooperative movement in Zambia to the international cooperative movement. The cooperatives were perceived, and often saw themselves, mainly as local institutions for rural development without much ambition to extend their activities into international trade, other than as donor financed importers of agricultural equipment and chemicals, and occasional exporters of surplus maize.

7.2 The Process of Disengagement

Recent political and economic changes in Zambia in 1991 initiated a period of plural politics and a stronger emphasis on creating a market economy. The cooperative movement has been profoundly and directly affected by this new political and economic environment.

The overall current government policy reflects a positive attitude to member based cooperatives as business enterprises in the private sector of the economy. The implementation of such a policy, however, requires a clear definition of the government’s role in relation to cooperatives. The cooperative movement has therefore been involved in an intensive dialogue with the government about the implementation of the overall government policy.

Progress in achieving the cooperative objective of independence and effective member service is conditioned on adequate negotiating strategy and capacity, and a sufficient degree of member support stemming from member conviction of the benefit of membership. Despite many and serious weaknesses as regards its economic position and degree of internal unity and common vision, the cooperative movement, through its apex organization, ZCF, has pursued a vigorous campaign to achieve a rearrangement of its relations with the state and thereby redefine their respective roles.

Using the COPAC general guidelines (section 2.2) for the promotion of independent cooperatives, the Zambian case can be analyzed as follows:

Stimulate discussion on the present situation and experience regarding cooperatives and their dependence on government.

ZCF has taken a number of initiatives in discussing the situation of the cooperatives. Through the radio and TV programs, newspaper articles and advertisments that it sponsored, influencial sections of the general public have become better informed about the cooperative movement. The cooperative membership has also come to appreciate the changed position of the cooperative movement in the economy, and the implications of a reduced direct government involvement in agricultural marketing. Workshops organized by the ZCF in 1991 and 1992 were particularly crucial in that they providing a forum for the exchange of views between cooperative leaders, government officials, and representatives of donor and other organizations on the changing situation for cooperatives.

The initiatives taken so far have been largely at the level of management staff, however, and not sufficiently involved the grassroots membership. For effective stimulation of a discussion which would result in an enhanced overall member awareness of the current situation a more broadly based activity in the form of a participatory strategic planning process has been initiated.

Convince the political leaders of the need for and potentialities of the growth of a self-reliant and autonomous cooperative movement.

The cooperative movement has, partly through its lobbying efforts, established an effective communication with the top leadership of the country. The movement has taken every opportunity to gain access to and influence the highest government and political leaders, and this has led to a deeper understanding and appreciation of the need for an autonomous and fully member controlled cooperative movement. This change of attitude has also been assisted by the new government’s growing experience with the complexities of agricultural marketing, resulting in an appreciation for the work the cooperatives have carried out in this area under difficult circumstances.

The previous limited understanding of the business nature of the cooperative movement still persists in parts of the leadership, which is inclined to perpetuate the former government’s controlling policies. The possibility that this will again become the dominant view has been reduced, however, as a result of the efforts of ZCF, and higher degree of openess in the country’s political process.

The continued active involvement of the cooperatives in the marketing of the staple food, maize, however still exposes the cooperative movement to the risk of continued government intervention. This is the case despite the likely adoption of a new law on agricultural marketing, which will remove any responsibility for administering government imposed crop regulations from the cooperative movement. The price of maize meal has risen sharply with the lifting of some of the previous government controls in line with the new macro-economic policies pursued under the structural adjustment programme. The leadership is therefore concerned about a possible public outcry against the high consumer prices and its effects on the popularity.

Encourage changes in the cooperative law or the passing of such a law, to facilitate growth of genuine cooperative self-help organizations.

From the beginning of Zambia’s Third Republic in 1991 the cooperative movement started pressing for amendments to the Cooperative Societies Act. The current cooperative law was considered incompatible with the government’s own perception of cooperatives in a liberalized economy within a democratic political system. The political and government leadership has over time generally come to appreciate the need to amend the current law.

The procedure for making the necessary revision of the cooperative law has become contentious, however. In certain government circles an approach is advocated whereby the responsible government department, DMC, should take the lead role in the process and coopt the cooperatives. ZCF has been advocating the need for the cooperatives to freely present their own proposed amendments. The political leadership has on several occasions invited the cooperatives to prepare and present a draft new cooperative law. The result of these differences has been the drafting of two proposals, one from ZCF and one from government officials, and the needed government decision and submission to parliament has been deferred.

Although there is an official overall policy in favor of independent cooperatives this has not been supplemented by either guidelines or a time table for the phasing out of government control. Some influential government officials maintain that there is need for continued involvement of government in cooperative operations. The low level of literacy among most cooperative members, corruption among cooperative directors and employees, and government funding are given as the main justification. The cooperative movement argues, however, that government intervention is a major cause of such problems, rather than the solution. The only lasting remedy to corrupt practices and economic dependence, it is advocated, lies in strengthening the cooperative democratic process, its self-reliance and managerial capacity, and this can only be achieved independently from government involvement.

Educate the membership about what is required if a “new” cooperative is to emerge and the role and influence of the government are to be reduced.

Membership training in appreciating the changing situation has not been as intensive and effective as desirable, and there is thus currently a considerable gap between the perceptions and understanding of the professional cooperative staff and the membership. The cooperative management can therefore not always rely on the required support from the membership for its position in negotiations with the government representatives, even though that position has the approval of the elected cooperative leadership. The risk inherent in this situation is that such differences can be taken advantage of through divisive tactics, which the cooperative movement has frequently experienced.

To address this situation ZCF, after obtaining the agreement of its affiliates, has decided to undertake a series of consultative meetings, from the grassroots to the national level, to map out a strategy for cooperative action in the new environment. It is planned that the strategy will be adopted by the cooperative movement at a national convention in late 1993 or 1994.

The inadequacy of member training in relation to the challenges posed by the situation is underlined by the fact that most cooperative training is carried out by the government controlled Cooperative College and government field training staff. This is one major reason for the transfer of this training institution from the government to the cooperative movement, as advocated by the cooperatives.

Strengthen the cooperative structure through collaboration between cooperatives to form a coherent cooperative movement take on the responsibility of the promotional functions.

The sustainability and viability of the current structure of the cooperative movement in Zambia is far from assured. A fundamental problem of the structure arises from the fact that two of the tiers, the provincial and district cooperative unions, were at least partly formed on the basis of government initiative and pressure. This has contributed to inadequate member support and commitment to the unions in many cases. It has also resulted in a uniform structure in all provinces, which does not reflect the considerable differences in the provincial resource endowment and economic activity.

To redress the situation it has been decided that the structure should be carefully examined with a view to proposing a cooperative structure suited to the new market environment and reflecting the varying levels of rural economic development in the provinces, as well as the differences in cooperative business opportunities. The proposal should also outline and propose on the division of business and other activities between the tiers in the cooperative movement in each province, thus ensuring a subsidiarity that fully utilizes the comparative advantage of the nationwide cooperative structure. This exercise will be participatory and involve all levels of the cooperative movement.

It has also been decided to strengthen the promotional role of the ZCF through the establishment of a professionally staffed autonomous division, ZCF DSD, focused on local cooperative development. This development activity is receiving substantial support from the increasing surpluses generated by ZCF, and from SCC, a collaborating partner of ZCF. The implementation of the examination of the whole cooperative structure is yet at an early stage partly due to insufficient collaboration between the various tiers in the cooperative movement.

Work out a policy for a gradual freeing of the cooperatives from undue tutelage and for limiting the growth of promotional bureaucracy, whether government or non-governmental.

The government bureaucracy for cooperative registration and supervision, organized mainly in the DMC, has a country-wide structure down to the district level. The reduction of its role to primarily the registration of cooperatives and related functions has been proposed by the cooperative movement. To emphasize the private sector business nature of cooperatives it has also been proposed that the registration be coordinated with that of the registration of companies.

Support for these proposals have been expressed by leading government representatives, who state that they are in line with both the overall government policy on cooperatives, and its ambition to reduce the number of civil servants. Such retrenchment would be in conformity with the policy of limiting the role of the state in society pursued by the government, and contribute to the much needed reduction of the government budget deficit. The proposals have however been actively countered and resisted by the DMC and no decision or action has yet been taken.

Over the years the cooperatives have received support from various governmental and non-governmental organizations (NGOs) for the development of primary cooperative societies. In most cases the support at the field level has created dependency rather that independence. The reasons for this are mainly that such support normally has utilized cooperatives as instruments for general rural development, that the approaches used have undermined cooperative self-reliance through an overemphasis on grants, and that the assistance has been channeled through the government rather than the cooperative structure.

The examining of the position of the cooperative movement in the perspective of the new socio-economic policies of the government is continuously being pursued by ZCF. The overall strategy for the development of independent cooperatives has been outlined and is in the process of being further refined. The specific course of action to be taken is determined on an ongoing basis in the shifting and turbulent environment for the cooperative movement.

A closely related strategy has been outlined for relations and collaboration with donor agencies and NGOs, essentially aiming at achieving the incorporation of their activities in the PCS development strategy of INAP pursued by ZCF. Considerable experience has already been gained in securing such collaboration, involving sensitization and requiring flexibility and adjustments by both parties.

7.3 Conclusions

(a) Political and economic environment

The existence of a non-democratic political system is a severe constraint for the development of independent cooperatives. The Zambian experience has shown that an open political system, market oriented economic policies, and a general atmosphere of openness are pre-requisites for the development of independent cooperatives. It is the democratization of the Zambian political system and the liberalization of the economy that has made it possible for the cooperative movement to take decisive steps towards self-reliance and independence.

(b) Public relations

Although cooperative constraints and problems had been brought to the attention of the previous government, the new government seemed to be largely unaware of the cooperative situation. Immediately after the new government took office ZCF launched an extensive information dissemination campaign using the media, including television and radio, to educate both the government and the public at large about the cooperative movement.

This exercise was successful in increasing the awareness of the political leadership about the cooperative situation. The lesson learnt from this is that it is unlikely that the government, the political leadership and the public will understand the nature, the problems and the perceptions of the cooperative movement unless special efforts are made.

(c) Cooperative self-reliance

The progress of the process of cooperative disengagement depends on the extent to which it generated and sustained within the cooperative movement itself. It therefore also requires sufficiently strong unity and cohesion in the cooperative system. Although the process was largely initiated by the management, the cooperative membership through the Board and the AGM of ZCF built the consensus and provided the impetus which has ensured its sustainability.

The Zambian experience is thus neither externally influenced nor based on a preconceived model. It is rather based on the desire by the cooperatives to disengage themselves from the state and establish a genuinely self-controlled cooperative movement.

The process of disengagement still suffers from insufficient participation, particularly at the level of members and local cooperatives. This is however currently being rectified through the initiation of broad based participatory strategic planning exercise. A related issue which has not been adequately addressed is the organizational and economic conflicts of interest which exist within the cooperative movement. Although the process of disengagement has so far not been severely affected by internal frictions, insufficient attention to this matter could create serious and even debilitating divisions. The ZCF Board is currently increasing its efforts in both these areas of concern. Ideally, internal conflicts should be dealt with prior to engaging in the challenging process of disengagement from state control.

(d) Problem analysis and monitoring

The process of disengagement had been strengthened by the carrying out of a number of studies aimed at documenting the constraints and problems in the cooperative sector, and in its external relations. This was of great assistance in identifying and analyzing the economic, political and legal issues which needed to be addressed, especially with regard to relations with the government, and in suggesting possible solutions.

Follow-up studies and analysis have also been undertaken as required. The launching of disengagement action without proper analysis of the constraints and problems faced is much less likely to become convincing and successful, as it can more easily be derailed by the inevitable opposition to change, whether internal or external.

The monitoring of policy statements and pronouncements made by government officials and politicians is an important aspect of the building up of sufficient materials for lobbying and implementing the cooperative disengagement strategy. Also in this respect the cooperative movement, through its apex organization, has been active and able to effectively identify and utilize elements that can strengthen its negotiating position.

(e) Collaboration with other organizations

It has become clear in the disengagement action that close contact and collaboration with other organizations can be an important factor in the process. Such organizations, when properly sensitized, and after areas of mutual interest have been identified, can be instrumental in influencing public opinion and in assisting in applying pressure for the desired change on the government and the political system.

This is an area which the cooperative movement has not yet given sufficient attention. Such organizations, with which preliminary contacts have been taken, include the ZNFU, other farmer organizations, the National Confederation of Chambers of Commerce, the National Federation of Employers, and a number of special interest NGOs.

(f) External support

There can be little doubt that the majority of cooperatives in Africa, including Zambia, will continue to require external support in form of financial and technical assistance, particularly at the level of local cooperatives, in building their economic base in the new era of political and economic liberalization. Such support is particularly important during the current period of economic transition, if the cooperatives are to become a significant factor in the new market place. It is equally important for the achievement of the economic and organizational strength to remain self-reliant and independent in relation to the state.

External organizations have for many years provided finance and technical assistance for the implementation of the previous cooperative policies of government. They have therefore actively participated in causing the fundamental weaknesses and distortions of the cooperatives that resulted, and should now shoulder the responsibility for giving the cooperative movement an opportunity to rectify the situation and adjust to the changing environment.

That can be done by providing continued assistance, channeled through the cooperative movement and using its approach for building local level cooperative self-reliance. With such financial and technical support during a transitional period, the cooperative handicaps can be compensated for and a “leveled playing field” in a new market economy be created.

The Zambian unique “movement to movement” support experience, provided during many years through the SCC has proved to be a very useful approach to promoting cooperative development. The approach has helped promote closer collaboration between the cooperative movements in Sweden and Zambia, and thereby exemplified the functioning of independent cooperatives to the cooperators in Zambia.

In the long term, if the countries in South continue to liberalize their policies and if the countries in the North reduce existing trade barriers, relations among cooperative movements should increasingly take the form of trade and joint ventures. This will be facilitated by a consolidated “movement to movement” partnership between cooperatives in the two areas.

(g) Agricultural marketing

The process of disengagement has considerably improved the image of the cooperative movement and created a more responsive attitude to cooperative proposals in most government circles. One indication of that is the Agricultural Marketing Act, which is about to be changed in line with the proposals made by the cooperative movement.

It has been generally realized that the government will continue to play a role in agricultural marketing particularly with regard to the marketing of the staple crop (maize). This should be only to ensure national food security, however, and without distorting the operations of a free market. In proposing amendments to the Agricultural Marketing Act the cooperative movement advocated the creation of a government statutory board, the Food Security Board, and the retransfer of all food security and related functions to this body. The underlying idea was that such an organization would intervene in the maize market on behalf of government as required, and as a result the cooperative vulnerability to government pressures would be reduced.

Inconsistencies in maize marketing policy implementation by the government, remains as a major threat to the furtherance of the process of cooperative disengagement from the government, however. The experience of the last two years indicate that a complete liberalization in this area of agricultural marketing, despite the national policy to that effect, is unlikely in the foreseeable future. The maintenance of a floor price for maize requires buyers of last resort with extensive outreach capacity. It is also dependent on huge financial resources in order to uphold the price in peripheral areas, and to subsidize the consumer price of maize meal in order to avoid risking urban consumer unrest.

The government does not appear to have access to the necessary financial resources, either to implement the floor price policy or to protect the urban consumer. As a result no private commercial trader in the market will accept to serve as a buyer of last resort agent for the government. The cooperatives, given their maize marketing experience and their extensive rural network and infrastructure, therefore remain vulnerable to government pressures to operate as the main buyers of last resort on a non-commercial basis.

This is what regularly took place in the past as the marketing season approached its annual crisis, with large uncollected quantities of maize, inadequate funding for crop purchase, handling and storage, and the approaching rains. If that were to happen again the economy of the cooperatives would be further undermined and their dependence on the government reinforced. This may well become one of the most difficult challenges to the cooperative movement, and a severe test of their resolution to pursue and implement the policy of independence from the state.

(h) The status of cooperatives in mid-1993

The period between October 1991, when the new government came to power, and the time when this case study was completed, has being characterized by numerous and critical events in the life of cooperative organizations in Zambia.

Through a process of active lobbying and information dissemination the cooperative movement has managed to convey the fact that their widespread image as being associated with inefficiency and mismanagement has been partly incorrect, and largely due to the central planning, restrictive and interventionist policies of the previous government.

The cooperative movement has therefore moved from a point of threatened de-registration to being fully recognized by the national leadership. The government, at the highest level, has come to appreciate the achievements of the cooperatives in undertaking agricultural marketing activities under difficult circumstances. There is currently therefore a genuine interest in creating a conducive environment for cooperatives in the emerging market economic system.

The cooperative movement has itself taken resolute action, and made considerable progress in changing its legal environment and influencing national policy. It has similarly engaged itself in the development of its business competence, in promoting the advancement of primary cooperative societies, and in organizational rationalization.

Not withstanding the remaining obstacles and uncertainties, the cooperative movement in Zambia may therefore already have past well beyond the half way point in completing the process of disengagement from government.

15 July 1993