The power of co-operatives

‘To know and not to act is not to know’. This Chinese proverb relates to the predicament in which Lesotho finds itself presently. Lesotho has failed to learn from its mistakes and experiences.

Despite numerous Ministry of Economic Planning’s Five-Year National Development Plans, Lesotho hovers in the doldrums of poverty. Successful innovation depends on developing and integrating new knowledge in the innovation process.

Pointing fingers does not lead to solutions. Lesotho must focus its energies on developing endeavours that advance the livelihoods of its citizenry. For example, a government adviser suggests that Lesotho must establish a development bank.

The development bank would enable Basotho to participate in driving new investments. But we all know that Lesotho had development banks before, the likes of Lesotho Bank and Agricultural Bank. The government he advises shut down both banks.

Here, I want to pursue an idea that I brought up in the article of 18 – 24 August 2022 titled: ‘Pushing a community-based economy.’ I suggested that communities consider establishing agricultural cooperatives (co-ops) as a way toward economic emancipation.

This article reiterates the same approach. Lesotho must conquer the triple tragedy of hunger, poverty and unemployment by reverting to the basics.

Lesotho’s economic solutions lie with Basotho’s traditional communal farming practices.

So, co-ops are a solution to Lesotho’s food security crisis and can ensure that Basotho Prosper. They will ensure food and employment security for the communities they will serve. I will provide a deeper understanding of how Basotho may benefit from co-ops.

According to a local scholar, Mbata, about 13% of land in Lesotho is arable. However, Mbata asserts that during the 1920s, Lesotho’s food production began declining till 1930 when the country became a net importer of food grains.

Urbanisation and migrant labour came at acost to farming in Lesotho. Today, capable men leave their fields and flock to Maseru urban in search of work. The closure of mines in South Africa worsened the already awkward predicament.

Unemployment grew. In the meantime, people continue to migrate to cities leaving their fields unattended.

I will use the importation of pork to highlight Lesotho’s food shortage plight. Big retail businesses do not buy pork from Basotho piggery farmers because there is no hygienic slaughtering facility.

Moreover, the farmers do not possess the farming management technological know-how. Therefore, these shortcomings compromise the quality of local pork.

Lesotho’s annual pork import was 7 133 tonnes in 2020. According to the United Nations COMTRADE database on international trade, the imports were worth US$3.1 million. There is a need to reform agriculture and food production in Lesotho.

First, I will discuss the principle that grounds cooperatives; namely crowdfunding. Crowdfunding is not a new concept to Basotho.

Basotho, who have one goal come together to form groups like burial societies, stokvels and cooperatives. Organisations such as churches or schools use concerts as functions for raising funds.

In 2006 the Oxford English Dictionary coined this new term, ‘crowdfunding’. ‘Crowdfunding’ is the practice of funding a project or venture by raising money from a large number of people who each contribute a relatively small amount, typically via the internet.

Musicians, filmmakers and artistes successfully raised funds and fostered awareness through this initiative. Crowdfunding established the Lesotho Bank. It enables the masses to raise funds as a collective. As an individual, these people would not raise enough funds. Crowdfunding may work as a revenue stream for the individual.

Two Basotho proverbs echo this phenomenon. One proverb reads, ‘lets’oele le beta poho,’ meaning: working together gives a group power to get the job done quickly. The other reads: ‘ntja-peli ha e hloloe ke sebata’, meaning: two or more people conquer impossible situations.

This article focuses on a certain form of crowdfunding, agricultural cooperatives. Co-ops facilitate business access for ordinary field owners, and small-scale farmers make inputs that could promote their development.

For example, while individual smallholder farmers may not access bank funding, co-ops may enable them to bargain as a collective. In so doing, the farmers access facilities they would otherwise not be able to. Co-ops help reduce dependence on foreign investment.

Sikwela, Fuyane and Mushunje assessed the probability for South African agricultural cooperatives to engage in collective marketing activities over time, given market and institutional characteristics.

They observed that smallholder farmers benefit from market-oriented agriculture when they get support from various institutions and operate in organised groups such as co-ops.

Market access is critical to smallholder farming.

Market access improves productivity of subsistence agriculture.

First, it alleviates food deficiency at the household level of the rural population. Secondly, it improves the incomes of farmers. Co-ops’ collective action reduces transaction costs and boosts the bargaining power of farmers concerning markets.

Smallholder farmers are subsistence farmers. Subsistence farming is predominant in Lesotho.

Cooperatives, being a collective group, have the potential to penetrate high-value markets or better-paying markets to improve their living standards. Co-ops are the best way of converting employees and buyers into business owners through shareholding.

The concept of ‘cooperatives’ is not new to Basotho. Records show that co-ops existed in Lesotho by 1931.

However, they experienced avalanches of managerial problems. There was no regulatory framework for their operations.

By 1933, co-ops thrived through promotion and information sharing. In 2019, Lesotho had 99 co-ops with 9 092 members and 320 employees.

But Noko blames the demise of the co-op movement in Lesotho on the lack of supportive legislation and excessive regulation.

First, let us understand the legislative imperatives of co-ops in Lesotho.

Although 1947 saw the enactment of their formal registration, the Cooperative Society Act of 2000 and the Cooperatives Societies (Amendment) Act of 2014 unified the legal regime for different kinds of co-ops.

The Cooperatives Societies Act, 2000 describes Cooperative Societies as private business organisations of exceptional nature. Cooperatives register under this act and operate according to their listed principles and practices (Sic).

Lesotho participates in International Cooperative Alliance (ICA) initiatives. Accordingly, ICA brings together co-op organisations worldwide. It promotes and enhances collaborations in regions.

The Cooperative College actively participated in these initiatives. But its closure is an example of Lesotho scoring its own goals against itself.

ICA defines cooperatives as autonomous associations of persons united voluntarily to meet their common economic, social, and cultural needs and aspirations through a jointly-owned and democratically-controlled model. Gordon-Nembhard explains that members of co-ops meet their needs and earn returns on their investments.

Hence, co-ops fill market failures ignored by private businesses and governments ignore. These gaps include affordable housing, healthy organic food, credit and banking services.

Co-ops are similar to Anderson’s communities in that they are oriented toward solving their problems. Co-ops aggregate communities’ resources and capital into economic units overcoming historical barriers to development.

Co-ops increase economic activities in communities. For instance, they contribute to the national fiscus through taxes and job creation.

Noko analysed Lesotho’s legal framework for co-ops in 2021. According to Noko, co-ops do not feature in Lesotho’s Constitution. Nonetheless, the constitution provides for and protects citizens’ rights to free association.

Noko’s analysis concluded that the cooperative movement experienced setbacks for many years because of unsupportive legislation and excessive regulation. He suggested areas that need urgent attention by legislation if cooperatives are to flourish in Lesotho.

On the other hand, a supportive regulation may allow their development. Here, I can cite two examples. King and Ortmann reported that the South African government committed to providing a supportive legal environment for co-ops.

Again, according to Gordon-Nembhard, the USA’s co-ops enjoy enabling conditions. Federal and state agencies support co-op development.

As a result, co-op start-up costs are low. Non-governmental financial institutions like co-op banks provide low-cost loans to co-ops. These banks function to assist co-op organisations.

Agricultural co-ops are critical to economic empowerment and poverty eradication. Studies in the developing world show that co-op societies play an important role in developing and enhancing the economic conditions for the unemployed educated youth.

Co-ops are critical in developing and improving economic conditions for unemployed educated youth by providing work. So, they help level the playing field for the privileged ‘haves’ and the underprivileged.

They are crucial in promoting economic and social development, creating employment and generating income. In doing so, they will economically empower the marginalised poor and eradicate poverty.

In the article: ‘Pushing a community-based economy’, I interrogated Anderson’s definition of a community. Anderson says a community is the ability to pull resources and power to produce and distribute consumption in a way that creates goods and wealth under its control.

But, Gordon-Nembhard showed that communities’ co-ops combine consumers with owners and sellers in democratic structures. So, co-ops are collective problem solvers. Their purpose is to meet members’ needs and enable them to earn returns on investments. In other words, co-ops will empower communities to develop independent sustainable economies.

Alternatively, co-ops are businesses where some or all the employees are owners.

Members produce and, or sell different goods and services and share profits. Worker members play direct roles in decision-making. For instance, workers participate in setting hours of operation and decide membership eligibility criteria.

The two South African studies on co-ops made profound findings. They found that co-ops supported by Non-Governmental Organisations (NGOs) have a longer life span than government-controlled co-ops. Gordon-Nembhard reported similar results in the US.

She also found out that community co-ops stay longer. According to her study, community ownership of co-ops promotes community growth.

Consequently, I propose a co-ops model that brings farmers and business owners together. They will collectively buy goods and services that would otherwise be too costly for an individual business owner to buy alone.

Thus, they will eliminate the middleman. Co-op businesses serve members’ marketing, processing and purchasing needs.

I propose forming a co-op model comprising three subsidiaries. The first arm will be the farmers’ co-op.

The primary purpose of the farmers’ co-op will be food production. To achieve this function, the Farmers Co-op will need to undertake the production, marketing and processing of agricultural products.

The farmers’ co-op will seek to produce crop and meat products. Their goals will include supplying meat produce that meets world standards in terms of slaughtering and quality control.

The long-term goal of the farmers’ co-op will be to cut food imports into Lesotho.

Presently many fields lie fallow, with able people migrating to towns looking for jobs. Farmers’ co-ops must invite the owners of these fields to join. Simultaneously, they must negotiate with the owners to have their fields surveyed to establish their surface areas.

The co-op with the field owners must cultivate all the fields. For the fields whose owners cannot till, the co-op must negotiate contracts for block farming. Farmers’ co-op will arrange favourable prices directly with the food market, cutting the middleman.

With time, the farmers’ co-op will acquire, let, sell or otherwise supply requisites necessary for farming operations.

It will ensure that members of the co-op and communities will benefit from its activities. Members must benefit from all proceeds of the food supply chain.

The second arm will be the food co-op. It will focus on providing local, organic, free-range, natural and healthy foods to all the members and surrounding communities. Subsequently, the food co-op will be the sole supplier of food products produced and processed by our farmer members.

In this way, they will eliminate the middleman in the food supply chain and give members affordable fresh food direct from the farm.

The food co-op will include food processing. For instance, the food co-op will process pork meat into polony, ham, etc. The food co-op must work directly with the farmers for their products.

The third and last arm of the co-op model will focus on capacity building and human development. I call this arm the Academy.

The Academy will provide academic and training services for the co-op. The Academy will offer training and short-courses in collaboration with the Ministry of Agriculture and Food Security and the Ministry of Education and Training.

So I suggest the co-op model run under the stewardship of an elected board. The co-op membership must be open to people over the age of 18-years. People must apply for membership. The 2000 Act mandates that the minimum number of members in a co-op is ten.

Moreover, the co-op must agree on joining and membership fees. Members have the right to do business with or through the co-op.

Each member carries one vote in the co-op. The co-op shares will all be of the same class, ranking and nominal value. Members may apply for additional shares from the co-op.

In summary, this article scans the agricultural demise of Lesotho and suggests an approach to follow. I cite the pork import to concretise Lesotho’s food shortage plight. Lesotho is a net importer of grain crops.

I argue for a community-level approach. The solution to Lesotho’s economic problem lies with Basotho and its communal farming tradition. Accordingly, I propose that communities must establish cooperative enterprises.

Co-ops have existed in Lesotho from the second decade of the 20th century. However, they experienced numerous setbacks. These includes unsupportive legislature and excessive regulation.

Evidence from other countries show that supportive legislation enables greater co-op development.

These studies reveal that community-owned cooperatives are successful. They help ordinary people access banking services. Also, they help communities grow. At the same time, co-op members will participate in the economy and lead quality lives.

Thus, I propose establishing a three-pronged co-op model. The first is the farmers’ co-op.

This co-op’s primary task is fresh food production. They ensure that communities benefit from their activities.

The second arm is the food co-op. The food co-op shall negotiate prices directly with farmers.

So the co-op will generate affordable prices for the communities they serve by eliminating the middleman from the supply chain. Also, they will process the meat into other products.

The third and last arm is the Academy. The Academy will be responsible for human development and cutting-edge information sharing.

They will ensure that the co-op model remains on top of innovations in the food production industry.

In conclusion, our ailing economy adversely impacts economic development aggravating the triple tragedy of hunger, poverty and unemployment.

Thus, many citizens cannot participate in economic activities. Moreover, the low agricultural production and excessive food import exacerbate the awkward predicament. Community-owned cooperatives are an obvious solution. The country’s economic redemption lies firmly with Basotho communities.

Dr Tholang Maqutu