Cooperatives are a vital tool in development, particularly in countries where there is low capital and a mass need for equal development.
It allows those without liquid capital to invest other forms of capital like labour, skills, time, land, and future earnings in exchange for a share of a concern.
Being a mainly agricultural economy, it is agricultural cooperatives that were the first to spring up, but the concept has extended to other trades and sectors. In some cases they are similar to trade unions except that the workers are self-employed.
This mass expansion of Cooperatives has to be more closely regulated, sometimes they are shadowy front organisations that exploit their members.
In the end these conmen are often caught but after wrecking ordinary peoples lives. On the whole, the keen eye of the members keeps the leaders honest and makes sure the books are correct.
Quite often cooperatives have services and functions that span across several departments, from Minagri, Minecofin, Mineloc, Mineduc to name a few. So we need a body that regulates them.
Social cooperatives are very popular, particularly ones based on sectors or geographic locations. These are mostly on the production side, but cooperatives can also be helpful in a consumer context.
For example if users of telephone networks banded together then they can form a consumer cooperative to lobby for better services, or can even buy out the network. So cooperatives have so many uses on both the supply side and demand side.
Housing is an ideal sector for cooperatives as you can collectively buy land cheaper and use economies of scale in supply to reduce the overall cost of building.
The key to the success of these cooperatives is their ability to adapt to the needs of their members. Cooperatives start often as single-issue concerns, but expand into other sectors – for example Kabuga Tomato growers, it can expand into anything provided there is a need.
The most powerful cooperative model is in Britain, where the cooperative movement started. Today The Co-op in UK owns supermarkets, insurances, farms, banks, factories, and is worth in excess of $20 billion. This has come from trying to provide services to their members that they can roll out to the general public.
Another model is owners of companies dividing up a part of the company and sharing it with their employees, this way your employees become partners and have a stake in the success.
John Lewis Group in Britain uses this model, workers are called partners and get both a wage and a share of the profits in the form of a bonus.
There is a certain lack of motivation we see in Rwanda that often stems from workers not having a stake in success and not being rewarded for higher performance.
Cooperatives must also be recognised by the banks as an investment opportunity, cooperatives generate large amounts of capital, have a higher multiplier effect for services and job creation.
Management buyouts should also be encouraged, some firms can go bust but the workers get together to buy the company with the help of the banks. In reality workers and best positioned to run their company, and should get bonuses for improving a company.
The use of cooperatives has not been explored in full, there are so many models that we can adapt to suit our development.