Columnists

Cooperatives crying out for disruption

coop

Milk processing at a factory. FILE PHOTO | NMG

bitangendemo-ima

Summary

  • The cooperative movement originated in Europe, mainly in Britain and France, in the 19th Century.
  • The agricultural cooperatives quickly became the cornerstones for economic transformation.
  • The introduction of compulsory membership in the 1970s and 1980s and advances in food technology in developed nations led to the decline in agricultural output in Africa.

As a young person growing up in a rural community in Kenya, cooperatives reframed many lives in every household. The movement was a strong, vibrant economic driver. Its decisions impacted profitability and the welfare of the members they served.

At that time, it was an effective way for people to control their economic livelihoods as they had a say in who managed it through an election every year.

The impact of cooperatives in Kenya, especially in the 1980s and 1990s, was seen mainly in housing, agriculture, education and trade.

The cooperative movement originated in Europe, mainly in Britain and France, in the 19th Century. The first industrial revolution's (1IR), characterised by mechanisation, was rapidly transforming communities and the economies of Europe.

The 1IR disruptions at that time were also threatening workers' livelihoods as the owners of capital got richer at the expense of the workers, giving rise to labour and social movements. The inequalities created serious concerns that required solutions, hence the birth of the cooperative movement.

It wasn't until 1908 that the concept of cooperatives started in Africa. Since then, the idea has contributed to the development of Africa in many ways. It was particularly critical to economic and agricultural development in the newly independent African countries.

The agricultural cooperatives quickly became the cornerstones for economic transformation. The movement helped farmers increase their yields and incomes by aggregating resources to support community development.

But the introduction of compulsory membership in the 1970s and 1980s and advances in food technology in developed nations led to the decline in agricultural output in Africa. Trust levels declined, and by the 1990s, farmers were exiting cooperatives in droves.

The dairy sector thrived much longer in Kenya, but later it also started to decline. The other sector which has been affected in Kenya is coffee. And this has made the dreams that governments had to leverage cooperatives for growth and transformation fade.

The cooperatives now have an alternative to stay competitive in a changing world. A publication by McKinsey and Company on cooperatives points out that just like any other sector disrupted by technology, cooperatives can leverage the explosive growth of available data.

Giving the example of agricultural cooperatives, the publication noted that for the industry to remain relevant to its members, it will need to grasp and respond to these emerging trends quickly.

Blockchain can, for example, can restore the trust that many members have lost in their cooperatives and improve governance. Cooperatives can operate on a blockchain-based system where enabling by-laws, modifications, membership terms, and voting rosters are all entered, resulting in a detailed record of all legal and administrative activities. Already some countries have started new systems referred to as Platform Co-operative Movement (PCM).

The distributed nature of blockchain makes the system difficult to break in, meaning that the data recorded cannot be changed in any way and accessed by every member of the cooperative. The emerging technology promotes greater transparency.

And considering that the Fourth Industrial Revolution (4IR) seems to mirror the 1IR by threatening the livelihood of workers through digitalisation, it is no longer a concept out there. The technologies that will drive this revolution are disruptive and require a concerted effort to distribute wealth across the world fairly.

But it will not come easy. Therefore, it calls for a renewed effort to modernise cooperative movement through digitalisation, PCMs and seamless interconnection of systems that can talk to each other. Such changes could be the only way to alter the future that few transnational organisations could easily control.