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A cooperative is a business model where people unite with a common socio economic interest. The business is democratically owned and controlled, and generally each member has an equal proxy. Every member/worker shares the burden of success or failure—therefore the business is generally motivated and driven; hence cooperative businesses have significantly low failure rates of around 10 percent after the first year, whilst traditional businesses have a failure rate of around 60-80 percent after the first year.
Cooperatives are relevant in a South African context due to the lack of economic ownership by the majority of its people in local communities as well as the dire need to stimulate the stagnant economy influenced by various global and local challenges that are generally historical and political.
Cooperatives thus present a unique economic opportunity. Hence, the development and professionalism of co-ops should be an apex priority.
Cooperatives turn unlikely players, or rather individuals who are isolated from participating in the economy, into active participants in the economy.
Cooperatives do not only have a great potential for turning profits but are also notorious for their profound social impact in communities. Localities are stabilized and take responsibility for their own development and ultimately the ownership of their own local economy.
The communities benefit due to the local alternatives created as opposed to importing goods or services that could have been locally produced. This then develops the local economy immensely. One such example of this radical impact is cited in an article in the Yes! Magazine 2013: "For every $1000 spent at a goods co-op, $1606 goes to the local economy and for every $1 million in sales, 9.3 jobs are created."
The cooperative business model greatly challenges conventional business models and brings forth a united and democratic business alternative to confront the market, where human capital is prioritized as the most important investment. Cooperatives in essence are the responsible practice of capitalism.
Cooperatives are a critical weapon in the fight against South Africa's socio economic challenges and a great stimulus of local economic growth and development. This is seen in countries like Uruguay and Cuba respectively where some similar historical challenges are prevalent. Cooperatives have shown that they have all the tools to become global and multinational brands as seen in cooperatives like FC Barcelona, Clover, the Agricole group, Sanlam, and Eureko to name a few but there are many more serious players that trade as cooperatives.
Cooperatives indeed present vast opportunities for South Africans to unite their communities to render services and produce the goods they value, thus creating a unique and organized local economy where the community benefits from the rewards.
Economic gurus generally allude that local and informal businesses should not be professionalized and be left to trade informally, however this inhibits their growth and to congests an emerging role-players potential to be even more competitive in their own localized economies and beyond as growth occurs.
I am personally of the view that indeed local businesses should be encouraged to initially start trading informally, essentially responding to demand. This also acts as a countermeasure to rampant unemployment, through the pursuance of entrepreneurship. However, these local businesses should be aware that running a professional and organized business is essential for growth and competitiveness.
There is a need to instill the notion in the minds of many aspiring successful entrepreneurs that cooperatives are not NPOs and neither NGOs but rather a legitimate and legally recognized entity for commerce and trade with limited liability, designed to pool resources and collective efforts to establish flourishing businesses that are democratic and accountable to its board and members.
There are different levels a cooperative can reach and trade as, namely; primary cooperatives (single entity), secondary cooperatives (two or more entities/group/holdings), and tertiary/apex (two or more secondary cooperatives). Each of these levels come with different directives, responsibilities, and legislative requirements depending on the country you register your cooperative.
The transformation of the South African economy can never be national before it's local.