With their invaluable significance towards increasing rural financing and poverty alleviation, cooperatives still face challenges of research, experts have revealed.
Shimelles Tenaw, focal point for the Finnish Committee for the International Year of Cooperatives said that despite tremendous steps African cooperatives have taken to financially include rural people and alleviate poverty, research gaps still exist.
“We always have to make a follow up on cooperatives’ growth by carrying short and long term research studies,” Tenaw, who is also expert in cooperatives told Business Times in an exclusive interview in Kigali. He was confident that through research, it would be possible to change the performance of cooperatives in Africa, as experts will be able to share their experiences and challenges.
“This way, we can show to the world that we are capable of changing the image of cooperatives in Africa, because it is only members of cooperatives in rural areas who can find solutions to these,” he said.
Experts also say that research will help to understand the contribution people at the grassroots can make to ensure that the success of cooperatives trickle down to them.
“In order to get rid of these challenges that we are facing now and in the future, we have to strengthen grassroots cooperatives,” he added.
“What kind of solutions can Africans at grass roots contribute?” he asked.
Tenaw emphasised the need to increase rural financing as a way to help farmers’ cooperatives mainly those in the production sector to access credit.
But Sithembiso Nyoni, Zimbabwe’s Minister for Small and Medium Enterprises and Co-operative Development expressed optimism that creation of cooperative banks for example would address the challenge of lack of access to finance.
“I think finance is a problem to most cooperatives because they always want to grow, but what we need to understand is that having access to money is different from having access to credit,” she pointed out.
She believes that by encouraging the growth of cooperative banks as alternative to commercial banks would boost rural financing as members would become shareholders in the bank giving them a chance in decision making.
Experts stated that the government should also support the cooperative movement by easing regulatory frameworks and empowering cooperatives in legislation that lays blame on illiterate leaders.
“Legislation is very important for the success of cooperatives; what we need to have is to see the bottom up structures in legislation in cooperatives,” Tenaw stressed.
Minister of Trade and Industry, Francois Kanimba, mentioned that the government had moved in to support cooperatives through capacity building.
“It is clear that there is significant progress being carried out, and what we are doing as government is to support these cooperatives to be able to grow more,” he said
Coperatives have certainly been vital in increasing access to finance and alleviating poverty in the country.
This is witnessed in the latest FinScope Rwanda survey on financial inclusion which indicates that lending to rural areas has increased drastically over the last five years with rural borrowing growing to 57.6 per cent among adults compared to 45.6 per cent in Kigali City.