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4. Applying the resilience framework to savings and credit co-operatives
Introduction
In this section, I would like you to undertake the same process of reviewing the case studies using the resilience framework. This should take you about an hour and a half, as previously.
However, in this case, I would like you to reflect on whether there are substantive differences between producer co-operatives and savings and credit co-operatives: do they present different issues for resilience?
The two co-operative unions are: the Malawian Union of Savings and Credit Co-operatives (MUSCCO) and the Community Saving and Investment Promotion (COMSIP) co-operative union.
I will first present my own analysis of their resilience, as previously, and will come back to the question of similarities and differences at the end.
4.1 Two case studies
Activity 6 Understanding resilience in the MUSCCO and COMSIP co-operative union
Please read the MUSCCO case study (Case Study 3) and the COMSIP case study (Case Study 4), which you can locate by clicking on the links.
As you read each case study, using the resilience framwork, make notes on:
- The ways in which each case has demonstrated resilience.
- The challenges that might constrain resilience in each case.
Again, you could use a table such as the one below. When you are considering the concept of innovation, try to identify what type of innovation or upgrading has taken place.
In this instance, reflect and make notes on the following:
- Does the resilience of savings and credit (or investment) co-operatives have different or similar requirements from that of producer co-operatives? Identify common and different issues.
| Co-operative X | Demonstration of resilience | Constraints on resilience |
| Membership | ||
| Collective skills | ||
| Networks | ||
| Innovation | ||
| Role of government |
4.1.1 Resilience and constraints in the case of MUSCCO
This is my table for MUSCCO.
| MUSCCO | Demonstration of resilience | Constraints on resilience |
| Membership | Homogeneous (employees-based) Heterogeneous to some extent (community-based) Strong gender policy, including education and training, and participation in the Union board Committed female membership with, if trained, good repayment rates |
Potential threats if companies or crops fail Problems in members repaying loans, exacerbated by crises such as fall in the tobacco price Members failing to capitalise the co-operatives adequately Intra-household threats to use of women’s loans |
| Collective skills | Education and training on gender issues Wide range of technical assistance to members Leadership training Development of skills within groups, particularly womens groups leading to social learning Also training in technological literacy |
Not enough skilled managers particularly in rural or remote areas – affects performance and governance |
| Networks | Strong links to donors – donor support for capacity building Recognition of need for links between financial and producer co-operatives: now linking to farmers’ union and smallholders’ association |
Problem of donor dependency |
| Innovation | Process innovation: technology change - use of ICTs Computerised SACCOs perform better and are better governed (more transparent) Production innovation: development of insurance products – life savings and loan protection |
Connectivity weak in remote rural areas High costs of maintaining the technology Problems of technological literacy Initial capitalisation of insurance withdrawn – is the current capitalisation secure? |
| Role of government | Passing of Financial Co-operative Law – great improvement in regulatory environment | Need to harmonise with the Co-operative Act that regulates other co-operatives |
My sense of this case is that there is considerable potential and many excellent ideas and innovations taking place. A question at present is how secure the changes are and what actions are needed to make them secure. This question underlines the discussion at the end of Section 3: resilience is a process that is continually ongoing. It requires both constant innovation and a strong and committed membership, underpinned in this case by solid capitalisation.
What other issues did you raise in your notes?
4.1.2 Resilience and constraints in the case of COMSIP
Finally, here is my table for COMSIP. Please compare it with yours or your notes.
| COMSIP | Demonstration of resilience | Constraints on resilience |
| Membership | Strong growth in membership, particularly among women, who also participate in the board and decision-making Includes non-affiliated co-operatives, pre-co-operatives and groups Several important benefits identified by members Members tend to be in homogeneous communities although may engage in different activities (farming, small business) Potential for youth involvement |
Low capitalisation by membership due to lack of understanding of co-operative values and principles Ongoing tendency to want hand-outs Low repayment of loans, especially by farmers (who face several risks) and those expecting hand-outs, although better performance amongst members who have been trained |
| Collective skills | Planning to train a book-keeper in every co-operative Role of loan committees in the primary co-operatives to instil a culture of saving as well as assess projects submitted for loans Belonging to the same community promotes mutual controls for loan repayment Collaborative business ventures Training events that bring in wider community |
Lack of adequate skills among leadership and managers Little systematic book-keeping |
| Networks | External funding from development agencies and ongoing links with donors Aim to build more shared experiences and learning between member co-operatives |
No relations with other co-operative unions Need for coordination with other unions to build up movement |
| Innovation | Product, process and chain innovation: new strategy to include product marketing services in portfolio – will therefore engage in new products, new processes (both investment in value addition) and new value chains | Lack of expertise Limited access to and knowledge of technologies Electricity shortage |
| Role of government | Evolution of government programme so links with several ministries Extension and co-operative education support |
Government involvement in education and extension results in less contact between Union and primary co-operatives (and therefore less opportunity to train in co-operative principles) Aim to make the new book-keepers a key link between co-operatives and Union |
4.2 Comparing producer and savings co-operatives
You have probably seen that there are some very similar characteristics or prerequisites needed by both types of co-operative. In practice they map on to the resilience framework discussed in Section 2. Here are my thoughts.
Commitment and loyalty
A committed, co-operative-aware and loyal membership that understands and is prepared to work with co-operative values and principles. This type of membership can be difficult to achieve if the co-operative or union is not able to provide the services that are part of the co-operative’s brief. It can also be challenged if other actors such as middlemen are able to undermine membership loyalty for very good reasons – such as the cost of transporting products or greater ease of access to markets. In the case of producer co-operatives, members may sell elsewhere. In the case of SACCOs or similar co-operatives, members may not repay loans. In both cases, there may be challenges in terms of the capitalisation of the co-operatives: buying shares. However one aspect that kept coming through in all cases was the role and inclusion of women as an important dimension of membership and of women’s contribution to the resilience of the co-operatives.
Training and awareness
Related to the above points is the need for a trained and aware membership that is able to build and share collective experience within and between co-operatives. This aspect applies in both producer and savings and credit co-operatives. In this instance, it is both important to build the ‘expanded learning space’ (Hartley, 2012), which involves going beyond the boundary of the co-operative to the wider networks that co-operatives are part of, as well as developing or accessing specific skills for leadership, management, book-keeping and so on.
Networks
As implied, building collective skills is partly related to the networks that co-operatives are part of. Networks are an important dimension to belonging to a co-operative in several respects. They provide opportunities for building joint learning, as suggested, however they also provide access to opportunities for training, business development, access to new technologies, access to credit, loans or grants for investment, and, crucially for producer co-operatives, access to markets. In the four case studies you have now read, there were some important differences in this respect. One difference in the case of the producer co-operatives was whether they originated as independent initiatives or as an outcome of aid or government programme. This difference substantially affected their initial access to resources and wider networks. The history of government or donor involvement could also lead to later challenges for independent and sustainable longer-term funding.
Innovation
Which brings me to innovation and the crucial role that innovation plays in cooperative businesses and in creating longer-term futures. You have seen all four types of upgrading in the case studies. Technologies in both producer and savings and credit co-operatives are crucial for enhanced performance. However so is the training to use and maintain the technologies (and the resources to pay for them). You also saw that new products played a role in both types of co-operative, as well as new processes and engagement in new value chains.
Government role
Finally, government plays a crucial role in providing an enabling environment in all four cases. There may be different needs – for example, access to credit in the case of TMCU, or harmonisation of different laws in the case of MUSCCO and COMSIP. However, the role of government in creating appropriate regulatory and financial environments, and enabling co-operatives to act independently and creatively, is an important part of the overall environment.