Cape Town - Co-operatives are still failing in large numbers, the Deputy Minister of Trade and Industry Elizabeth Thabethe said today, but new institutions would help to vamp up support to the sector.
"We don't have a good, rosy picture overall," admitted Thabethe, who today briefed the National Assembly's portfolio committee on economic development, on the status of support for co-operatives.
A 2008 survey by the department found that just 10% of co-operatives on the register for co-operatives in 2005 had survived.
But the department's chief director of co-operatives Jeffrey Ndumo said he believed that things had improved since then.
He singled out five wine co-operatives which were black-owned and which the department would be taking to China soon.
Thabethe said the 2005 Co-operatives Act was currently being amended to provide for the setting up of a co-operatives academy to offer training, a tribunal to address disputes in co-operatives and a co-operatives agency to provide support.
On a question from ANC member Sue van der Merwe on what kind of co-operatives the department was looking to support - were these businesses or social projects - Thabethe said co-operatives had to be looked at as sustainable business entities that could grow into sustainable enterprises.
Currently, there were 54 461 co-operatives registered with the Companies and Intellectual Property Commission (CIPC) as of January 31 - over double the 22 619 recorded as registered in September 2008.
In all, 90% of co-operatives are black-owned and most are registered in KwaZulu-Natal, followed by Gauteng, the Eastern Cape and Limpopo respectively.
The department, in partnership with provincial governments, supports co-operatives in buying machinery and exhibiting their products in local and international exhibitions, while training and support is offered by provincial agencies and the Small Enterprise Development Agency (Seda).
The Co-operative Incentive Scheme (CIS) had between 2005 and the end of March 2011 assisted 488 co-operatives with grant funding totalling R92.5 million - 47% of these were in the agricultural sector, with 19% in clothing and textiles and 18% in manufacturing.
Most of these were co-operatives in Limpopo (R25 million) and the Eastern Cape (R18.2 million).
In the current financial year, 162 co-operatives accessed the scheme, while in the last financial year, 242 were supported by the scheme, while 236 were assisted in the 2010 financial year.
The department had changed the way it operated the scheme after it found that beneficiaries were not spending the grants on developing their co-operative, said Ndumo.
Beneficiaries are now required to submit three quotes for the services or equipment they sought, before they could access the funding from the department.
Co-operatives could also get funding of up to R10 000 from the SA Microfinance Apex Fund (Samaf), while several provinces, mainly through their respective development agencies, had set aside large amounts of funding to, among other things, assist co-operatives to buy machinery and attend exhibitions.
These include R23.1 million funding of 38 co-operatives between July 2010 to August last year by the Eastern Cape Development Corporation's Imvaba Fund and R3 million advanced to co-operatives by Ithala in the 2010/11 financial year.
Ndumo said the creation of a single co-operatives agency to house funding for co-operatives could help put an end to the practice of double-dipping - where applicants benefit from government funding from different agencies and departments.
The department is also looking at increasing the amount of funding available in the CIS - which currently stands at R50 million - and increasing the R350 000 threshold for grant funding.
Several provinces also offered training to a number of co-operatives in the last financial year - with the Gauteng Enterprise Propeller (GEP) having trained 1 295 co-operatives.
A further 83 primary and six secondary co-operatives were supported with mentoring and training by Seda in the current financial year.
Seda has also identified 18 large-scale co-operatives it wants to support, which have the potential to create more than 50 jobs each
The department has also assisted a number of co-operatives to register, and has rendered assistance to 183 walk-in clients and held 47 co-operatives workshops, seminars and information seminars, which were attended by an average of 100 people, said Ndumo.
The department has also produced a catalogue in which to promote products of co-operatives.
Ndumo said the department was now looking to come up with marketing boards for farmers and to bring more co-operatives into business incubators.
He said co-operatives could also serve as buying groups where businesses could secure better terms when purchasing raw materials.
One challenge his department faced, said Ndumo, was that co-ordination and support for co-operatives programmes at provincial and municipal level remained weak - with in some instances support angled more at small businesses, rather than co-operatives.
In many instances, he said, junior officials in municipalities and provinces, with little power, were tasked with overseeing co-operative support.
The department will launch South Africa's programme for the UN's International Year of Co-operatives on March 12.
A large part of the programme will focus on support for co-operatives in the Northern Cape - the province with lowest number of co-operatives.
South Africa would also be hosting the International Co-operatives Alliance's global board meeting in Cape Town between 20 and 23 June.
