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3.5 Building local development through cooperatives: Working Out of Poverty

Written by: International Labour Organization

Article Overview: The participation of people living in poverty in policies to improve their livelihood and counteract social exclusion and vulnerability is increasingly emphasized in poverty reduction strategies.

3.5 Building local development through cooperatives: Working Out of Poverty

The participation of people living in poverty in policies to improve their
livelihood and counteract social exclusion and vulnerability is increasingly
emphasized in poverty reduction strategies. Village self-help groups, farmer-owned businesses, savings and loan associations and other forms of memberdriven
community organizations are frequently advocated as effective
means of organizing to meet the needs of workers and entrepreneurs in the
rural and urban informal economies. Capacity building, improvements in
literacy and health, opportunities for income generation, access to existing
institutions and public services, policy advocacy – all depend on there being
some kind of cooperative organization of the poor on which to build. Why,
then, are there so few explicit references to cooperatives in the literature on
poverty reduction?

One of the main reasons is that the word “cooperative” has been badly
misused in the recent past. In many countries, state-controlled “cooperatives”
failed to mobilize members, who perceived them as being controlled
by government-appointed managers. The cooperative vision of enlarging the
economic power of individual members through membership-driven entrepreneurship
was devalued and discredited. However, the rich legacy of cooperatives
and its value to community-based models of sustainable
development should not be discarded. Development strategies need to rediscover
cooperation as a model for local development. The 90th Session of the
International Labour Conference adopted the Promotion of Cooperatives
Recommendation, 2002 (No. 193), providing a framework for the renewed
growth of the movement.

Cooperatives are in fact a very significant part of the global economy.
Ranging from small-scale to multi-million dollar businesses across the globe,
they are estimated to employ more than 100 million women and men and
have more than 800 million individual members. Because cooperatives are
owned by those who use their services, their decisions balance the need for
profitability with the wider interests of the community. They also foster
economic fairness by ensuring equal access to markets and services for their
members, with membership being open and voluntary. Cooperatives mainly
operate in agricultural marketing and supply, finance, wholesale and retailing,
health care, housing and insurance. This is a strong base to build on.

The ILO has had a close relationship with the cooperative movement
since its earliest days. Because they are both enterprises and associations,
cooperatives bring together in very practical ways the vision of social organization
to create opportunities for decent work as a key to individual and
community well-being. The work of the ILO is thus focused on providing individuals,
communities and micro-enterprises with the organizational tools
that enable them to help themselves through collective action and mutual assistance.
This approach has proved to be particularly appropriate for indigenous
communities, and the ILO has a special programme (the INDISCO
programme) targeting the needs of this group of the poorest of the poor.

The core tools cooperatives need in order to flourish are advice on
capacity building, entrepreneurship development, leadership training, market
research, accessing loan finance and grant aid, inter-cooperative networking,
and federation building. For such grass-roots support to work
effectively, cooperatives need a secure legal framework governing their status.
Since 1994, the ILO has assisted over 60 member States in reforming cooperative policy and legislation and equipping teams of national experts
to provide practical assistance to new and existing cooperatives.

The ILO programme on organizational and cooperative support to
grass-roots initiatives (ACOPAM) implemented in Burkina Faso, Cape
Verde, Mali, Mauritania, Niger and Senegal exemplifies what cooperatives
can do where they have the support of government policies and a secure
legal environment. Over a period of 20 years, more than 85,000 men and
women in rural areas, in over 2,000 grass-roots organizations, benefited from the programme. The objective was to enable producers to express and defend
their interests by helping them adapt their organization to the changing
needs and different experiences and know-how of the members. In practical
terms, the cooperative structure ensured that local people were in charge
and decided what was to be done and how to use the external experts and
extension workers available to them through the project. The main areas of
intervention were self-managed cotton markets, village cereal banks,
women’s savings and credit schemes, community irrigation and land management
schemes, and mutual health insurance schemes.

Cooperatives empower people by enabling even the poorest segments
of the population to participate in economic progress; they create job opportunities
for those who have skills but little or no capital; and they provide
protection by organizing mutual help in communities. Furthermore, by creating
a platform for local development initiatives they bring together a range
of community institutions to foster opportunities for decent work and social
inclusion. Cooperative members learn from each other, innovate together
and, by increasing control over livelihoods, restore the dignity that the experience
of poverty destroys.

Related Articles
  1.9 Building local development through cooperatives: Working Out of Poverty
  2.9 Conclusions: Working Out of Poverty
  4.0 Sustainable pro-poor growth and the governance of the labour market: Working Out of Poverty
  3.0 Community action for decent work and social inclusion: Working Out of Poverty
  What can business and governments do to promote SMEs?

Article Tags: capacity building, cooperative organization, cooperatives, decis, development strategies, dollar businesses, economic power, explicit references, global economy, health opportunities, income generation, international labour conference, loan associations, local development, policy advocacy, poverty reduction strategies, rich legacy, savings and loan, self help groups, social exclusion



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