Box 1 The development of the Ugandan co-operative movement

The Ugandan Co-operative Alliance [UCA - the national federation] has developed and implemented an innovative approach to building networks among co-operatives, called Area Co-operative Enterprises (ACEs). ACEs work as smaller co-operative unions, with lean management structures, encompassing fewer primary co-operatives, and being strongly rooted at grassroots level (Kwapong and Korugyendo, 2010). They do their business differently compared to traditional co-operative unions, bulking instead of buying from members, working for commission (which is agreed upon in advance) and not taking ownership of the commodity.

This new network approach has been developed with the purpose of ensuring that co-operative structures are efficient, not debt-ridden, deliver more services and bring maximum benefits to their members while at the same time ensuring that co-operative organisations can earn enough income to sustain their operations. However, this also means that most of the risk is borne by the farmer. That is why UCA encourages ACEs to bulk and market at least three products, which in turn encourages farmers to diversify, reducing risks from crop failure or market price volatility (Kwapong and Koruyendo, 2010; UK Co-operative College, 2011).

Another interesting innovation is about the so-called ‘tripartite system’. As explained by Kwapong and Koruyendo (2010), primary co-operatives, ACEs and SACCOs are interconnected, with the latter providing financial assistance to farmers and to the ACEs. Specifically, as reported by UK Co-operative College (2011), SACCOs provide a loan to the farmer of approximately 50% of the estimated price of the crop bulked in the ACE’s warehouse. Once the crop is sold, the farmer is required to pay off the SACCO first and thus can keep the remainder.

The UCA Report (2012) and Msemakweli (2012a, 2012b) explain that the ‘tripartite system’ is just a part of a broader strategy. Efforts are devoted to find new opportunities in trade liberalisation, particularly about the emerging domestic market for food commodities. Promotion of co-operation among co-operatives is another strategic issue, with co-operatives encouraged to come together, for instance, to share contracts which they would not be able to fulfill as individual co-operatives. UCA also promotes partnerships between co-operatives and other private sector players, creating business and credit opportunities respectively with buyers and banks.

UCA is also promoting a participatory movement, acknowledging the fact that a crucial feature for co-operatives to succeed involves members participating actively, including contributing adequate capital to carry out the business, making good policies, holding the leadership accountable and using the power of the vote to remove them if they do not perform, doing the business through their co-operative and receiving member education.

Through education UCA aims to spread and develop an environment able to bring about leaders with vision, commitment, and a good record in their respective communities and appropriate skills to run successful co-operative businesses. UCA also regards women and youth as key players in the development of the current co-operative movement in the country.

Finally, as part of its work, UCA lobbies the government in order to foster a conducive environment that enables the growth of co-operatives as autonomous, self-financing and self-reliant enterprises. Such efforts are visible in the National Co-operative Policy of 2011, whereby the government provides the policy guidelines for co-operative development in Uganda, aimed at enabling co-operatives to play a leading role in poverty alleviation, employment creation and social-economic transformation of the country. UCA has also made clear to national and international organisations that it is committed to defending co-operatives from any interference, acknowledging that their independence from the state is a major factor for their sustainability.