በፌዴራል ኅብረት ስራ ኤጀንሲ እና መቐለ ዩኒቨርሲቲ የተዘጋጀ

ሰኔ 26-27 ቀን 2006 ዓ.ም

1. መግቢያ

በአገራችን እየተመዘገበ ለሚገኘዉ የኢኮኖሚ ዕድገት የኅብረት ሥራ ማኅበራት ሚና ከፍተኛ ነዉ፡፡ የኅብበረት ሥራ ማኅበራት ለአርሶ አደሩና አርብቶ አደሩ ህብረተሰብ አስፈላጊዉን የግብርና ግብዓቶችንና ብድር በማቅረብ የግብርናዉ ምርትና

ምርታማነት እንዲሻሻል በማድረግ ከፍተኛ አስተዋፅኦ እያበረከቱ ይገኛሉ፡፡ከዚህም በተጨማሪ አባላት ካመረቱት ምርት ይበልጥ ተጠቃሚ እንዲሆኑ ለምርቶቹ የተሻለ ገበያ በማፈላለግ የግብይት ተግባራት በመፈፀም የአባላትን ተጠቃሚነት

በማረጋጋጥ ላይ ይገኛሉ፡፡ ከዚህም ባሻገር አነስተኛ ገቢ ያላቸዉን የከተማ ነዋሮዎች ለኑሯቸዉ አስፈላጊ የሆኑ መሠረታዊ የፍጆታ ዕቃዎችን በተመጣጣኝ ዋጋ እንዲያገኙ በማድረግ ተሳፋ ሰጪ የሥራ እንቅስቃሴ እያደረጉ ይገኛሉ፡፡ የኅብረት ሥራ

ዩኒየኖችና አንዳንድ መሠረታዊ ኅብረት ሥራ ማኅበራት የአርሶ አደሩን ምርት በግዓትነት የሚጠቀሙ እንዱስትሪዎችን በማቋቋም በግብርና ምርት ላይ እሴት በመጨመር አባላት በላቀ ደረጃ ተጠቃሚ እንዲሆኑ ከማድረግ ባሻገር ለዜጎች የሥራ

ዕድል ፈጥረዋል፡፡ በተጨማሪም በከተማም ና ገጠር የሚኖረዉ ህብረተሰብ የቁጠባ ባህሉ እንዲዳብር በማድረግ ረገድ የኅብረት ሥራ ማኅበራት ሚና እየጎለበተ መጥቷል፡፡

የኅብረት ሥራ ማኅበራትን ኢኮኖሚያዊና ማኅበራዊ አስተዋፅኦ እንዲሻሻል ለኅብረት ሥራ ማኅበራቱ መስፋፋትና መጠናከር ሁሉም የሚመለከታቸዉ ባለድርሻ አካላት የበኩላቸዉን አስተዋፅኦ በዉል ተገንዝበዉ ሊያደርጉ ይገባል፡፡ በተጨማሪም

በሃገራችን የኅብረት ሥራ እንቅስቃሴ ላይ በኅብረት ሥራ ዘርፍ ምሁራንና ተመራማሪዎች የሚካሄዱ የጥናትና የምርምር ሥራዎች ወሳኝነት አላቸዉ፡፡ በዚህም መሠረት ብዛታቸዉ ከአንድ መቶ ስልሳ በላይ የሆኑ የሚመለከታቸዉን የዘርፉን ባለድርሻ አካላት በማሰባሰብ በሴክተሩ ልማት ላይ እንዲመክሩ አገር አቀፍ የኅብረት ሥራ ልማት ኮንፈረንስ በፌዴራል

ኅብረት ሥራ ኤጀንሲና በመቀሌ ዩኒቨርስቲ አዘጋጅነት በሰኔ 26 እስከ ሰኔ 27 ቀን 2006 ዓ. ም በመቀሌ ከተማ ተካሂዷል፡፡ በዚህም መሠረት አጠቃላይ ዓላማና የተከናወኑ ዓበይት ተግባራት ከዚህ እንደሚከተለዉ ቀርበዋል፡፡

2. ዓላማ

የኅብረት ሥራ ማኅበራት ዘላቂ ልማትን በማፋጠን የህብረተሰቡን ፍትሃዊ የኢኮኖሚ ተጠቃሚነት ለማረጋገጥ እንዲሁም የዲሚክራሲያዊ ስርዓት እየጎለበተ እንዲሄድ በማድረግ ፣የተረጋጋ ኢኮኖሚያዊና ማኅበራዊ መሠረት ያለዉን ህብረተሰብ

በመፍጠር እና ድህነትን በመቀነስ ረገድ የላቸዉን አስተዋፅኦ ለመገምገም እንዲሁም በፖሊሲ፣አዋጆች፣ደንቦች፣አደረጃጀቶች፣አሠራሮችና በሁሉም ደረጃዎች በማስፈፀም አቅም ያሉትን ተግዳሮቶች በተጨማሪም

በጥናትና በምርምር የተገኙ ዉጤቶችን በመገምገም እና በአተገባበር ሂደት እያጋጠሙ ያሉትን ማነቆዎች በመለየት ለመንግስትና ለፖሊሲ አዉጪዎች ግብዓት ሊሆኑ የሚችሉ የመፍትሄ ሃሳቦች በማቅረብ የኅብረት ሥራ ዘርፍን የሥራ

እንቅስቃሴ ለማጠናከር ነዉ፡፡

2 | P a g e

ኮንፈረንሱን ያዘጋጁ አካላት፡- የፌዴራል ኅብረት ሥራ ኤጀንሲ እና መቐለ ዩኒቨርስቲ

ኮንፈረንሱ የተካሄደበት ቦታ፡- መቐለ / አክሱም ሆቴል/

በኮንፈረንሱ ተሳታፊ የነበሩ አካላት፡- የከፍተኛ ትምህርት ተቋማት፣የኅብረት ሥራ ማኅበራት ተወካዮች፣የክልል ኅ/ሥራ ማስፋፊያ ከፍተኛ የሥራ ኃላፊዎች፣ እና ሌሎች መንግስታዊና መንግስታዊ ያልሆኑ ተቋማት ተወካዮች ናቸዉ፡፡

ኮንፈረንሱ የተካሄደባቸዉ ቀናት፡- ከሰኔ 26 – 27 ቀን 2006 ዓ. ም ድረስ፤

3 | P a g e

የእንኳን ደህና መጣችሁ ንግግር

በ ዶ/ ር ክንደያ ገ/ ሂወት፣ የመቐለ ዩኒቨርሲቲ ፕሬዚደንት

መንግስት የህብረት ስራ ማህበራት ኢኮኖሚያዊና ማህበራዊ ልማትን

በማረጋገጥ ረገድ ያላቸውን የላቀ ሚናና ድህነትን ለመዋጋት አይነተኛ መሳርያ

መሆናቸውን

በመገንዘብ በሃገራችን የማህበራት እድገትን ለማቀላጠፍ ልዩ ድጋፍ እያደረገና ምቹ

ሁኔታን ለመፍጠር ከፍተኛ ጥረት እያደረገ ይገኛል፡፡ ከዚህ ጋር በተያያዘ በሀገራችን ከፌደራል ጀምሮ እስከ ወረዳ በየደረጃው

የህብረት ስራ ማህበራት

ማደራጃና ማስፋፊያ ቢሮዎችን ከማዋቀር

ባሻገር፤ በዘርፉ ጠለቅ ያለ እውቀት ያላቸው

ሙያተኞች የሚመረቁባቸው የትምህርት

ክፍሎች በርከት ያለ ቁጥር ባላቸው

የሀገራችን ዩኒቨርሲቲዎች ተከፍተው እንዲሰሩ አድርጓል፡፡ የመቐለ ዩኒቨርሲቲ የህብረት ስራ ትምህርት ክፍልም ለተጠቀሰው አላማ

ከተከፈቱት የትምህርት ክፍሎች አንዱ ሲሆን፤ የመንግስታችንን ጥረት ለመደገፍና ከግቡ ለማድረስ የበኩሉን ሚና እያበረከተ

ይገኛል፡፡ ይህ የትምህርት ክፍል ከመደበኛው የህብረት ስራ ባለሙያዎችን ማስመረቅ ተግባሩ ባሻገር የተለያዩ ተግባራትን

በማከናወን የህብረት ስራ ማህበራት እድገትን ለማፋጠን እየሰራ ይገኛል፡፡ ከነዚህም አንዱ የውይይት ኮንፈረንስን ማዘጋጀት

ሲሆን፤ ከአስር ዓመታት በፊት በህብረት ስራ ማህበራት እንቅስቃሴ ዙርያ የግንዛቤ ማስጨበጫ ኮንፈረንስ አካሂዶ እንደነበረ

ይታወሳል፡፡ ይሁን እንጂ ከተጠቀሱት ዓመታት በፊት በሀገራችን የነበረው የህብረት ስራ ማህበራት ቁጥር፣የእድገት ደረጃና የዜጎች

ግንዛቤ እምብዛም ስላልነበር፤ የኮንፈረንሱ ውጤት አመረቂ ነበር ለማለት ያዳግታል፡፡

በአሁኑ ሰዓት ግን የሀገራችን የህብረት ስራ ማህበራት ቁጥር፣ዓይነትና የእድገት ሁኔታ የላቀ ደረጃ ላይ ደርሷል፡፡ ይሁን

እንጂ፤ ሀገራችን ከህብረት ስራ ማህበራት ኢኮኖሚን የማሳደግ እምቅ አቅም ተጠቃሚ ሆናለች ማለት ግን አይቻልም፡፡

ዩኒቨርሲቲያችን የህብረት ስራ ማህበራት የሚያስገኙትን ኢኮኖሚያዊና ማህበራዊ ጠቀሜታን በሚገባ ለመጠቀም መጠነ-ሰፊ

የምርምርና ውይይት ስራዎች መሰራት አለባቸው ብሎ ያምናል፡፡ ስለሆነም የሀገራችን የህብረት ስራ ማህበራት ባለፉት አስር

ዓመታት ያከናወ ቸውን ተግባራት፣ ያሳኩአቸውን ግቦች፣ ያጋጠሙአቸውን ተግዳሮቶችንና የመፍትሄ አቅጣጫዎችን የሚዳስስ

4 | P a g e

የተለያዩ ባለሙያዎች የሚሳተፉበት አገር አቀፍ ኮንፈረንስ ለማካሄድ ዩኒቨርሲቲያችንና የሀገራችን የህብረት ስራ ማህበራት

እንቅስቃሴ ባለቤት የሆነው ፌደራል ህብረት ስራ ኤጀንሲ ባደረጉት ከፍተኛ እቅስቃሴ የዛሬዉ ኮንፈረንስ እውን ሆል፡፡

ከኮንፈረንሱ ዓላማዎች አንዱ፤ ካሁን በፊት ተሰርተው ነገር ግን ተግባር ላይ ያልዋሉ ጥናቶችን በማሰባሰብ ውይይት

እንዲካሄድባቸውና ወደ ተግባር የሚመነዘሩበት ሁኔታን በመፍጠር ላይ የሚያተኩር ነው፡፡ ስለሆነም፣ ይህ ኮንፈረንስ የሀገራችን

የህብረት ስራ ዘርፍ እያጋጠሙት ያሉትን ተግዳሮቶችን በመለየት ለዘርፉ እድገት የሚበጁ የወደፊት የመፍትሄ አቅጣጫዎችን

በመጠቆም ረገድ ዓይነተኛ ሚና እንደሚኖረው እምነቴ የፀና ነው፡፡

አመሰግናለሁ!

5 | P a g e

በክቡር አቶ ኡስማን ሱሩር፣ የፌደራል ህብረት ስራ ኤጀንሲ ዋና ዳይሬክተር

ክቡር የኢፌዴሪ በህዝብ ተወካዮች ም/ ቤት የግብርና ጉዳዮች ቋ/ኮ/አባላት ክቡር ዶ/ ር ክንዴያ ገ/ ሂወት የመቀሌ ዩንቨርሲቲ ፕሬዝዳንት

የተከበራችሁ የፌደራልና የክልል የመንግስት የስራ ሀላፊዎችና ተወካዮች

የተከበራችሁ የኅብረት ሥራ ማደራጃና ማስፋፊያ የስራ ሀላፊዎች፤

የተከበራችሁ የኅብረት ሥራ ማኅበራት አባላትና አመራሮች፤

የተከበራችሁ ጥሪ የተደረገላችሁ እንግዶች፤

የተከበራችሁ የኮንፈረንሱ ታሳታፊዎች፤

ክቡራና ክቡራት!!

በቅድሚያ በዚህ በአይነቱ ልዩ በሆነው በፌደራል ህብረት ስራ ኤጀንሲና በመቀሌ ዩንቨርሲቲ አማካይነት በሀገራችን ለመጀመሪያ ጊዜ በተዘጋጀው የሀራችንን ህብረት ስራ ማህበራት ስኬቶች፤ማነቆዎችና የቀጣይ መፍትሄዎች ላይ በሚመክረው የኢትዮጵያ

ህብረት ስራ ልማት ኮንፈረንስ ላይ ለመሳተፍ ጥሪያችንን አክብራችሁ እንኳን በሠላም መጣችሁ እያልኩኝ ያለኝን ታላቅ አክብሮትና ምስጋና በራሴና በፌዴራል ኅብረት ሥራ ኤጀንሲ ስም እንዳቀርብ እንዲፈቀደልኝ እጠይቃለሁ፡፡

ሀገራችን የምትታወቅበትን የድህነትና ኋላ- ቀርነት ገፅታ ለመቀየር፤ የሕዝቦችን ተሳታፊትፎና ተጠቃሚነት ደረጃ በደረጃ ለማረጋገጥ በመንገስታችን በተቀየሱ የሰላም፣ የልማትና የዲሞክራሲ ስርዓት ግንባታ ፖሊሲዎች፣ ስትራቴጂዎች እና ስልቶች

ተጨባጭ ውጤቶችን ማስመዝገብ ከጀመርን አስር አመታትን አሰቆጥረናል፡፡ እነዚህ ትክክለኛ የማስፈፀሚያ ፖሊሲና ስትራቴጂዎች ሀገራችንን በማይገታ ፈጣን የዕድገት መሠላል ላይ እንድትወጣ ያስቻሉዋት መሆኑን የሁሉንም አካላት አወንታ

አስገኝቷል።

የሀገሪቱን ቁልፍ የልማት መሳሪያዎች ወደ መላው ህዝብ በማድረስ የዜጎችን ተሳትፎና ተጠቃሚነትን ለማረጋገጥ ቁልፍ ከሆኑ የሀገራችን የልማት መሳሪያዎች መካከል የህብረት ስራ ማህበራት ተጠቃሾች ናቸው፡፡ የህብረት ስራ ማህበራት በአብዛኛው

የዓለምሀገራት እንደሚታየው ዕድገትን ወደ ላቀ ደረጃ ለማሸጋገር እና የኢኮኖሚ ቀውስንና የልማት ማነቆዎችን ለመቋቋም ከሚሰለፉ የልማት ኃይሎች መካከል መተኪያ የሌላቸው ተቋሞች እንደሆኑ ባለፉት ዓመታት በደጉት አገሮች በተከሰተው የኢኮኖሚ

ቀውስ ወቅት እንኳ ቀውሱን ተቋቁመው በማለፍ ማስመስከር ችለዋል፡፡

የኅብረት ሥራ ማኅበራት የአባላትን የልማት ተጠቃሚነት በማረጋገጥ ብቻ ሳይወሰኑ ሕዝብን እንደዋነኛ የልማት ኃይል በተደራጀ የህዝብ ተሳትፎ እንቅስቃሴ ውስጥ በማስገባት ፈጣንና ቀጣይነት ያለው የኢኮኖሚና ማህበራዊ ልማት የሚመዘገብባቸውና

ዴሞክራሲያዊ አሰራር በተግባር የሚገለጽባቸው ተቋማት ናቸው፡፡ የ ኅብረትሥራማኅበራት በሀገራችን የተጀመረውን ዕድገት ወደ

6 | P a g e

ላቀ ደረጃ ለማሸጋገር የዜጎችን ተሳታትፎና ተጠቃሚነትን ለማረጋገጥ ከተሰለፉ የልማት ኃይሎች መካከል መሆቸውን ሊሰመርበት የሚገባ ጉዳይ ነው።

በሀገራችን የተጀመረውን ፈጣን ቀጣይነት ያለው የዕድገት፤የለውጥ እና የህዳሴ ጉዞ ወደታለመለት ደረጃ ለማሸጋገር ከተሰለፉ የልማት ኃይሎች መካከል የኅብረተሰቡ ጠንካራ ኢኮኖሚያዊና ማህበራዊ ከሆኑ ተቋማት መካከል የኅብረት ስራ ማህበራት

ተጠቃሾች ናቸው፡፡ በመሆኑም መንግስታችን ህብረት ስራ ማህበራት በኢኮኖሚ ማህበራዊ ዘርፍ ያላቸውን ጉልህ አስተዋፅኦ ከግምት በማስገባት ከፌደራል እስከ ቀበሌ ድረስ አደራጅ ተቋም በማደራጀት፤ዘርፉን ሊያግዝ የሚችል

አዋጅና ልዩ ል የህግ ማእቀፎች በማዘጋጀትና በዘርፉ የሰለጠነ የሰው ሀይል ለማፍራት የሚቻልበት ስርዓት በመዘርጋት በኩል ዘርፈ ብዙ ድጋፎችን እያደረገ ይገኛል፡፡ በተለይም በቀድሞ ስርአቶች ተቃማቱ የተደራጁበትን አላማ

እንዳያሳኩ በርካታ ተፅዕኖዎች የነበሩ በመሆኑ ህብረት ስራ ማህበራት በህረተሰባችን ዘንድ በተዛባ መልኩ እንዲሳሉ (እንዲታዩ) አድርጎ ቆይታል፡፡ ይሁን እንጂ ልማታዊ መንግስታችን በፈጠረው ምቹ ሁኔታ በሀገራችን የህብረት ስራ

ማህበራትን በስፋት የማዳጀትና የመጠናክር ስራ እየተሰራ ይገኛል፡፡

በመሆኑም በሀገራችን ሰላም፤ልማት፤ ዲሞክራሲ እና ፍትሃዊ የዜጎች የልማት ታጠቃሚነትን ለማረጋገጥ ወሳኝ ድርሻ ካላቸው ተቋማት መካካል የህብረት ስራ ማህበራት ስለመሆናቸው በልማት ፖሊሲዎቻችና ስትራቴጂዎቻችን በግልጽና በዝርዝር

አስቀምጦዋል፡፡ በዚህም መሰራት በለፉት ዓመታት በተደረገው መጠነ ሰፊ ጥረት ከ 9.2 ሚሊዮን አባላት ያሏቸው 56ሺህ መሠረታዊ የኅብረት ሥራ ማኅበራት በተለያዩ የስራ ዘርፎች ተደራጅተው ከ 8.7 ቢሊዮን ብር ካፒታል ማፍራት ችለዋል፡፡ እንዲሁም

ከ 2.2 ቢሊዮን ብር ካፒታል ያፈሩ 311 የኅብረት ሥራ ዩኒየኖች ( ሁለተኛ ደረጃ የህብረት ስራ ማህበራት) እና 4 የህብረት ስራ ፌደሬሽኖች ( ሶስተኛ ደረጃ የህብረት ስራ ማህበራት) በተላያዩ የስራ መስኮች ተደራጅተው በመንቀሳቀስ ላይ ይገኛሉ፡፡ የህብረት

ስራ ማህበራቱ ከተሰማሩባቸው የስራ መስኮች መካከልም ለአርሶና አርብቶ አደሩ በግብርና ምርት ማሳደጊያ ቴክኖሎጂዎች እና

ግብዓቶች አቅርቦትና ስርጭት፤በምርት ግብይትና በግብርና ምርቶች እሴት መጨመር ( በአግሮ ፕሮሰሲንግ) ፤በገንዘብ ቁጠባና ብድር

እና የሸማቾች ህብረት ስራማህበራት ከተሰማሩባቸው ብዙዎቹ የስራመስኮችመካከል ለአብነት ያህል ተጠቃሾች ናቸው፡፡

ክቡራን የኮንፈንሱ ተሳታፊዎች

ክቡራንና ክቡራት

በቴክኖሎጂ ሽግግር የተገኘው የግብርና ምርት ዕድገት ገበያ በማጣት የግብርና ቴክኖሎጂና የተሸሻሉ ግብዓቶች አጠቃቀም ወደ ኋላ እንዳይመለስ አምራቹ አርሶና አርብቶ አደር ከምርቱ ፍትሃዊና ተመጣጣኝ ዋጋ ተቀባይ ብቻ ሳይሆን የገበያ ዋጋንም መወሰን

እንዲችል በነፃ ገበያው መርህ የመደራደር አቅሙ እንዲጎለብት ለተሻለ የልማት ስራና ምርታማነትን ለማሳደግ ቀጣይነት ያለው የቴክኖሎጂ አጠቃቀም ባህሉ እንዲጎለብት እና የሚጠቀመውን ምርት ማሳደጊያ ግብዓት መጠንና ጥምርታውንም የበለሙያ

ምክረ ሀሳብን መሰረት አድርጎ ቀጣይነት ባላው መልኩ ለመጠቀም የበለጠ እንዲነሳሳ የጎላ አስተዋጽኦ አበርክቶዋል፤ በማበርከትም ላይ ይገኛሉ፡፡

የኅብረት ስራ ማህበራት በሀገር ውስጥ ገበያ የተዛባ፤ተለዋዋጭ እና ጥቂቶች ብቻ ያልተገባ ጥቅም ለማጋበስ ሲሉ ሲፈጥሩት

የነበረውን የገበያ ቀውስ በማስተካከል እና የአምራች አርሶና አርብቶ አደሩን ተጠቃሚነት በማረጋገጥ በኩል ከጊዜ ወደ ጊዜ

መሻሻሎች ማሳየት ችለዋል፡፡ ሌላው ህብረት ስራ ማህበራቱ በሀገር ውስጥ ገበያ ብቻ ሳይወሰኑ የአባሎቻቸውን ምርቶች ወደ ውጭ

7 | P a g e

ሀገር በመላክ የሀገራችንን ምርቶች ለመለው ዓለም ከማስተዋወቃቸውም በላይ የግብይት ተሳትፎአቸው ከጊዜ ወደ ጊዜ እያደገ

መጥቶዋል፡፡ በተለይም በቡናና ሰሊጥ ምርቶች የወጪ ገበያ ድርሻቸው ከማሻሻሉም ባሻገር የሀገሪቱ የውጭ ምንዛሪ ከፍ እንዲል ጉልህ ሚና ተጫውተዋል፤ እየተጫወቱም ይገኛሉ፡፡ በመሆኑም አምራቹ አርብቶና አርሶ አደር ለምርቱ ተመጣጣኝ ዋጋ እንዲያገኝ

ቁልፍሚና ተጫውተዋል፤ በመጫወት ላይም ይገኛሉ፡፡

ከዚህ አንፃር የህብረት ስራ ማህበራት ለሃገራችን ፈጣንና ቀጣይነት ያለው የእድገት፤የለውጥ እና የህዳሴ ጉዞና ግስጋሴም ሆነ

ለዕድገትና ትራንስፎርሜሽኑ ዕቅድ ስኬት ድርሻቸው የላቀ ነው እንደሆነ መገንዘብ ይቻላል፡፡ የሀገራችን ኅብረት ሥራ ማኅበራት ከነውስንነተታቸውም ቢሆን የአባላትን ኑሮ ከማሻሻል በዘለለ ሀገሪቱ ላስመዘገበቻቸው እና ዓለምን ላስደመሙት የኢኮኖሚያዊና

መህበራዊ ልማት ድሎች ስኬት የጎላ አስተዋጽኦ አበርክተዋል፤ እያበረከቱም ይገኛሉ፡፡ በመሆኑም በሀገራችን እየተመዘገበ ያለው ፈጣን፤ቀጣይና ፍትሐዊ የዜጎችን እኩል ተጠቃሚነት እያረጋገጠ ያለው የኢኮኖሚ ዕድገትን በዘላቂነት አጠናክሮ ማስቀጠልና

ሕዝቡን በየደረጃው ተጠቃሚ በማድረግ ሥር የሰደደውን ድህነት ለማስወገድ የሀገራችን ህብረት ስራ ማህበራት የሚጫወቱት ሚና የማይተካ ሚና ይኖረዋል።

ክቡራንና ክቡራት

ሌላው የህብረት ስራ ማህበራት የአባሎቻቸውን ምርት በጥሬ መልኩ ከመሸጥ በዘለለ በምርቱ እሴት ጨምረው መሸጥ የሚያስችሏቸው የአግሮ ፕሮሰሲንግ ሥራዎች በመሥራት በኩልም ተስፋ ሰጪ እንቅስቃሴ ውስጥ መግባት ጀምረዋል፡፡

በመሆኑም በገጠር አግሮ- ኢንዱስትሪዎች እንዲስፋፉ የኅብረት ሥራ ማኅበራት ፈር ቀዳጅ እንቅስቃሴዎች በማድረግ ላይ ይገኛሉ፡፡ ለአብነት ገብስን ቆልቶ አዘጋጅቶ ለሱፐር ማርኬት ከማቅረብ እስከ ስንዴን ወደ ዱቄትና ዳቦ ማምረት መጀመራቸው ተጠቃሽ ስራዎች ናቸው፡፡ ይህም ልማታዊ መንግስታችን ያስቀመጠውን ከግብርና ወደ ኢንዱስትሪ በሚደረገው ሽግግር ውስጥ የህብረት ስራ ማህበራት በዋናነት እንቅስቃሴ ውስጥ መግባት መጀመራቸው በአብነት ሊጠቀስ የሚችል የጉዞው ውጤት ማሳያ

ነው፡፡

በፋይናንስ ግብይቱ ዘርፍም የሀገራችን የገንዘብ ቁጠባና ብድር የኅብረት ሥራ ማኅበራት የፋይናንስ አሠራር ሥርዓት በገጠርና በከተማ እንዲስፋፋ በማድረግ፣ የህብረተሰቡን የቁጠባ ባህል በማጐልበትና ለአባሎቻቸው የምርት ግብአቶች መግዣ፣ መለስተኛ

ኢንቬስትመንቶችን ለመክፈት በተላይም ህብረት ስራ ማህበራቱ በአግሮ- ፕሮሰሲንግ ስራዎች መሳተፍ እንዲችሉ ለማድረግ፣ አባላት አካባቢያቸውን መሰረት ባደረጉ የገቢ ማስገኛ ስራዎች ውስጥ እንዲሳተፉ ለማድረግ፤ ለአባላት መኖሪያ ቤት ግንባታና ለሌሎች ማህባራዊ ተግባራት የሚሆኑ ብድሮችን ለአባሎቻቸው በማቅረብ የአባላቱን የኑሮ ደረጃና ህይወት መለወጥ የሚያግዙ

እንቅስቃሴዎችን እያደረጉ ይገኛሉ፡፡

በተጨማሪምበሁሉም የሀገሪቱ አካባቢዎች የተለያዩ የስራ ፈጠራዎችን ለማስፋፋት ከማገዛቸውም ባሻገር ለትላልቅ ኢንቨስትመንቶች የሚሆን የሀገር ውስጥ የፋይናንስ ምንጭን በማጎልበት ረገድም የድርሻቸውን በማበርከት ላይ የሚገኙ ሲሆን

ከ 1.5 ቢሊዮን ብር በላይ ቁጠባ ከአባሎቻቸው አሰባስባው ለልማት ስራእንዲውል በማድረግ በሂደቱም ለበርካታ ዜጎች የስራ ዕድል መፍጠር ችለዋል፡፡ በሀገራችን ዘርፈ ብዙ የህብረተ ስራ ልማት እንቅስቃሴ ውስጥ የበርካታ ሴቶችና ወጣቶችን ተሳትፎና

ተጠቃሚነትማረጋገጥምችለዋል፡፡

8 | P a g e

ይህ በኢንዲህ እንዳለ በከተሞች የሚታየውን የኑሮ ውድነት በማረጋጋት ረገድ በተለይም በመሰረታዊ የፍጆታ እቃዎችና ሸቀጦች ላይ የሚታየውን ያልተገባ የዋጋ ንረት ችግርን ከመፍታት አንፃር የሸማቾች የኅብረት ሥራ ማኅበራት ለአባላትም ሆነ ለአብዛኛው

ሸማቹ ኅብረተሰብ እንደ አንድ አማራጭ ሆነው አገልግሎት በመስጠት ገበያን በማረጋጋትና የኑሮ ውድነትን በመቅረፍ የአባላትና የኅብረተሰቡ ችግር እንዲፈታ እየደረጉት ያለው እንቅስቃሴ ተስፋ ሰጪ እንደሆነ መገንዘብ ይቻላል፡፡

ክቡራንና ክቡራት

በአንጻሩ ደግሞ የሀገራችን ኅብረት ሥራ ማኅበራትን በዓይነትና በብዛት ለማደራጀት የተደረገው ጥረት አበረታች ቢሆንም የደረስንበት የአባላት ቁጥር አኳያ ሲመዘን የታቀፈው የህብረተሰብ ቁጥር እጅግ ዝቅተኛ መሆን፤የአባላት ተሳትፎና ተጠቃሚነት

ዝቅተኛነት፤የህብረት ስራ ማህበራቱ ከአባሎቻቸው መካከል በግንባር ቀደሞች ያለመመራት፤የአባላት የባለቤትነትና ተቆጣጣሪነት አሰተሳሰብና አሰራር ያለመዳበሩ፤የተሻለ አቅም ያላቸው ህብረት ስራ ማህበራት በተቀጣሪ ባለሙያ ያለመመራት፤ የሕብረት ሥራ

ሕግና መርሆዎችን የሚጣረስ ተግባር በብዙ ሕብረት ስራ ማህበራት ዘንድ መኖሩ፤አባላትን እንደ ዋነኛ የፋይናንስና የካፒታል ምንጭ አድርጎ ያለመጠቀም፤ የመሰረተ ልማት አቅርቦት እጥረት፤ ለዘርፉ መጠናከር በኃለፊነት የሚሠሩ በርካታ ተቋማት ቢኖሩም

ተቀናጅቶና ተናቦ ያለመስራት እና ለህብረት ሥራ ማህበራት መጠናከር የባለድርሻ አካላት ተሳትፎና አሰተዋጽ ኦ በቂ ያለመሆንና በተይለም በዞንና ወረዳ መዋቅር ያለው አመራር ለዘርፉ በቂ ትኩረት የነፈገው በመሆኑ ህብረት ስራ ማህበራቱ የሚጠበቅባቸውን

ተልዕኮ እንዳይወጡ ያደረጉ ቁልፍ ማነቆዎች አሉ፡፡

ክቡራንና ክቡራት

በመሆኑም መንግስታችን የነደፈቸውን ዘርፈ ብዙ የልማት ውጥኖች በተደራጀ የህዝብ ተሳትፎና የዜጎች እኩል ተጠቃሚነትን በመራረጋገጥ ረገድ በተለይም ቀጣይነት ያለው የዕድገት፤ የብልጽግናና የህዳሴ ጉዞአችንን ግስጋሴ ስኬት እውን በማድረግ እና

ሀገራችንን ወደ መካከለኛ ገቢ ሀገሮች ተርታ ለማሰለፍ ለምናደርገው ዘርፈ ብዙ ጥረት የህብረት ስራ ማህበራት መላውን የገጠርና የከተማውን ህብረተሰብ በተደራጀ መንገድ ለማንቀሳቀስ እና ውጥኖቹን ለማሳካት የማይተካ ሚና ያላቸው ተቋማት

መሆናቸውን በየደረጃው ያለው አመራር፤ ባለሙያ እና ባለድርሻ አካላት በሙሉ ተገንዝበው ማነቆዎቹን ለመፍታትና ውጤታማ ህብረት ስራ ማህበራትን ለመፍጠር የሚያስችል የአጋዥነት ሚናቸውን እንዲጫወቱ ማድረግ በቀጣይ የሚጠብቀን ቁልፍ ተግባር ይሆናል፡፡

በዘርፉ የሚታዩ ችግሮችን ለመፍታት የህብረት ስራ ማህበራት አባላትንና የየአካባቢውን ህብረተሰብ በማሳተፍ የተጀመረውን ተሳትፎዓዊ የህብረት ሥራ ንቅናቄ አጠናክሮ በማስቀጠል በሂደቱም የአባላትን የባለቤትነት፤ተሳትፎ፤የተቆጣጣሪነትና ተጠቃሚነት

አሰራርና አመለካከት ማሳደግ በትኩረት ልንፈጽመው የሚገባን ተግባር ይሆናል፡፡

በሌላ በኩል ደግሞ በየደረጃው ያለው በተለይም በዞንና ወረዳ ደረጃ ያለው የመንግስት አመራር የህብረት ስራ ልማትን ውጤታማነት የማረጋገጥ ጉዳይ በሀገራችን የግብርና በተለይም የገጠር ትራንስፎርሜሽንን የማሳካት ያለማሳክት ጉዳይ መሆኑን

በግልጽ መያዝ የስፈልጋል፡፡ በመሆኑም በየአካባቢው አዳዲስ የህብረት ስራ ማህበራት እንዲደራጁ ከማድረግ ይልቅ ነባር የህብረት ስራ ማህበራትን የማጠናከር ስራ እንዲሰራ ለማድረግ በዞንና ወረዳ ደረጃ ያለውን የህብረት ስራ መዋቅር በአመራር፤ በአሰራር፤ በባለሙያ፤ በበጀትና በሎጂስቲክስ ትኩረት ሰጥቶ ማጠናከር ከቀጣዩ የበጀት ዓመት ጀምሮ ልዩ ትኩረት ሊሰጠው

የሚገባ ተግባር ይሆናል፡፡

9 | P a g e

በአጠቃላይ በህብረት ስራ ማህበራት ዘንድ በሚታዩ ጅምር ስኬቶች፤ማነቆዎችና እና የቀጣይ መፍትሄዎቻቸው ዙሪያ በዘርፉ የተሰማሩ የከፍተኛ ትምህርትና ምርምር ታቋማት ከፌደራል ጀምሮ በየደረጃው ከሚገኙ አደራጅ መስሪያ ቤት እና ባለድርሻ አካላት

እና የኮንፍረንሱ ተሳታፊዎች የሀገራችንን የህብረት ሥራ እንቅስቃሴ ለማጠናከር እና መወሰድ ስለሚገባቸው የማጠናከሪያና የቀጣይ የመፍትሄ ሃሰቦች ዙሪያ ያጋራ መግባባበት መድረስ በማስፈለጉ ይህ በዘርፉ የተሰማሩ የትምህርትና የምርምር ተቋማትናና በቀጥታ የማደራጀትና የመጠናከር ስራውን የሚሰሩ አካላትን የገናኘ ሀገራዊ የህብረት ስራ ልማት ኮንፈረንስ ተዘጋጅቶዋል፡፡

በመሆኑም የሀገራችን ህብረት ስራ ማህበራት በተሰማሩባቸው ልዩ ልዩ የስራ ዘርፎች የተገኙ ስኬቶችንና የስኬቶቹን ሚስጢሮች እና ስኬቶቹን ወደ ሁሉም አካባቢ በመስፋፋት የአባላትን ተጠቃሚነት የማረጋገጥ ጉዳይ በጣም አስፈላጊ ከመሆኑም በላይ

ችግሮቹን ለመፍታትና ለቀጣይ መፍትሄዎቻቸው የጋራ አቅጣጫ አስቀምጦ የጋራ ርበርብ ለማድረግ የሚያስችል የባለድርሻ አካላት የምክክር መድረክ ማዘጋጀት አስፈላጊ ሆኖ በመገኘቱ ይህ የኢትዮጵያ ህብረት ስራ ልማት ኮንፈረንስ በፌደራል ህብረት

ስራ ኤጀንሲና በመቀሌ ዩንቨርሲቲ እንዲዘጋጅ ተደርጎዋል፡፡

ስለሆነም በህብረትሥራ ማህበራት አካባቢ የሚታዩ ስኬቶችን ወደ ሁለም አካባቢ የማስፋፋት እና ያሉባቸዉን መነቆዎች በመፍታት የአባሎቻቸውን ተሳትፎና ተጠቃሚነትን በማረጋገጥ በሀገራችን ለተጀመረው የዕድገትና የብልጽግና ጉዞ የድርሻቸውን በማበርከት በኩል ተገቢ ሚናቸዉን እንዲጫወቱ ማድረግ ብቻ ሳይሆን ኢኮኖሚያዊና ማህበራዊ ልማታችንን እድገት ግለቱን

ጠብቆ ግስጋሴውን ማስቀጠልና የህዝቡን ተሳትፎና ተጠቃሚነት ማረጋገጥ በመሆኑ የመድረኩ ተሳታፊዎች ተሳትፎ የላቀ ድርሻ እንደሚኖረው ይታመናል፡፡

ክቡራንና ክቡራት

በመጨረሻም ከዛሬ ጀምሮ ለሁለት ቀናት በሚቀርቡት በሀገራችን በተለያዩ ዘርፎች ተደራጅተው የሚገኙ የሕብረት ስራ ማህበራት ዘንድ የሚታዩ ስኬቶች፤ማነቆዎችና የቀጣይ መፍትሄዎቻቸው ዙሪያ በሀገራችን የዩንቭሲቲዎች ተመራማሪ ምሁራን የሚቀርቡት

ጥናታዊ ጽሁፎች እና የስኬታማ ህብረት ስራ ማህበራት ተሞክሮዎች ቀርበው የምናደርገዉ የፓናል ውይይት የሀገራችንን ኅብረት ሥራ ማኅበራት ስኬቶች በማስፋፋት እና በህብረት ስራ ማህበራቱ አካባቢ የሚስተዋሉ ማነቆዎችን ሊፈታ የሚችል የመፍትሄ

አቅጣጫ በመጠቆም የኅብረት ሥራ ማኅበራት በሀገራችን ኢኮኖሚያዊና በማኅበራዊ እድገት እና ቀጣይነት ያለው የብልጸግና ጉዞ ግስጋሴን ማፋጠን ላይ ሊያበራክቱ የሚገባቸውን ድርሻ ወደ ላቀ ደረጃ ማሳደግ ዋነው ትኩረታችን ነው፡፡

በመሆኑም ይህ በአይነቱ የመጀመሪያ የሆነው የኢትዮጵያ ህብረት ስራ ልማት ኮንፈረንስ በህብረትሥራ ማህበራት ዘንድ የሚገኙ ስኬቶችን ወደ ሁሉም አካባቢ በማስፋፋት ነባር ህብረት ስራ ማህበራትን ማጠናከር ዋናው የትኩረታችን ማዕከል ነው፡፡ በሌላ

በኩል የህብረተ ስራ ማህበራትን ስኬታማነት ቀፍድደው ለያዙ ችግሮቻቸው መፍትሄዎችን በመጠቆም የሀገራችን ህብረት ስራ ማህበራት የአባሎቻቸውን ተጠቃሚነት በማረጋገጥ ቀጣይነት ያለውን የግብርና ምርትና ምርታማነት ለማሳደግ የሚያስችል የግብይት ተሳትፎአቸውን ማሳደግ፤በሀገራችን የተረጋጋና የማይናወጥ የግብይት ስርዓት እንዲኖር የድርሻቸውን

መወጣት፤የኤክስፖርት ጋበያ ድርሻቸውን ማሰደግ፤ግብርናን ወደ ኢንዱስትሪ ለሚደረገው ሽግግር የድርሻቸውን እንዲያበክቱ ማስቻል፤የአባሎቻቸውን የቁጠባ ባህል በማሰደግ ለበርካቶች የስራ ዕድል መፍጠር፤ በህብረት ስራ ማህበራት አካባቢ

ለሚስተዋሉ ማነቆዎች የጋራ የመፍትሄ ሀሳቦችን በመጠቆም ለቀጣይ የጋራ ርብርብ ለማድረግ ምቹ ሁኔታ ሊፈጥር እንደሚችል ይጠበቃል፡፡ በመሆኑም ሁሉም የኮንፈረንሱ ተሳታፊዎች የሀገራችንን ህብረት ስራ ማህበራት ስኬቶች ለማስፋፋትና

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መነቆዎቻቸውን ለመፍታት በሚደረገው ውይይት የነቃ ሳትፎ በማድረግ የደርሻችሁን እንድትወጡ ጥሪዬን በአክብሮት እያቀረብኩኝ መድረኩን በይፋ እንዲከፍቱልን የዕለቱን የክብር እንግዳ የትግራይ ብሄራዊ ክልላዊ መንግስት ርዕሰ መስተዳደር ክቡር አቶ አባይ

ወልዱን በታላቅ አክብሮት ወደ መድረክ እጋብዛለሁ፡፡

“ የኅብረት ስራ ማኅበራት ዘላቂ ልማትን ያረጋግጣሉ! ››አመሰግናለሁ!!!!!

በኮንፈረንሱ የሥራ ተሞክሮና ልምድ ያካፈሉ የኅብረት ሥራ ማኅበራት እና የቡድን ዉይይት፤

በኮንፈረንሱ የሥራ ተሞክሮና ልምድ ያካፈሉ የኅብረት ሥራ ማኅበራት

የኅብረት ሥራ ማኅበራቱ ከምሥረታ ጀምሮ እስከ አሁን ድረስ የደረሱበትን(የሚገኙበትን) ደረጃ የሚያሳይ የሥራ ተሞክሮና ልምድ ለኮንፈረንስ ተሳታፊዎች ያካፈሉ ሲሆን ተሳታፊ ከነበሩ ስድስት ማኅበራትም፤

The Experience Of Oromiya Coffee Farmers’ Cooperative Union from 1994 – 2014. By Ato Tedesse Meskella, Manager.

The Experience of Embeba Haya Saving and Credit Cooperatives. Southern Tigray, Tigray. By Ato G/kidan, chairman.

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The Experience of Tsehay Multipurpose Cooperative Union. North Gondar, Amhara. By Ato Endalkachew Abe, Manager.

The Experience of Agar Consumer Cooperative Union. Addis Ababa. By Ato Tadesse Demissie, chairman.

The Experience of Lidet saving and Credit Cooperative union .South Gondar? The experience of Becho woliso Multipurpose Farmers’ Cooperative Union.

South western Shoa, Oromiya. By Ato Dejene Hirpha.

የቡድን ዉይይት

ጠቅላላላ የኮንፈረንስ ተሳታዎችን ሰብጥር ጠብቆ በ አራት ቡድን እንዲከፈሉ በማድረግ የቡድን ዉያይት የተደረገ ሲሆን ለውይይት የቀረቡ የመነሻ ሃሳቦችም

1. የኢትዮጵያ ኅብረት ሥራ ማኅበራት

ዋና ዋና ስኬቶች ምን ምን ናቸዉ? ያሉባቸዉ ማነቆዎች በቅደም ተከተል ምን ምን ናቸዉ? ስኬታቸዉን ለማስፋፋትና ማነቆዎችን ለመፍታት ምን መደረግ አለበት?

2. ማን ምን ያድርግ ? በአደራጅ ተቋሙ ከፌዴራል እስከ ወረዳ ያለዉ መዋቅር

የኅብረት ሥራ ማኅበራት

ዩኒቨርስቲዎች

ባለድርሻ አካላት( በተለይ የኅብረት ሥራ ማኅበራት ቅም ገንቢዎችና መንግስታዊ ድርጅቶች

የተገኙ ዉጤቶች

የሃገራችንን የኅብረት ሥራ እንቅስቃሴ ለማጠናከር በየደረጃዉ መወሰድ ስለሚገባቸዉ ርምጃዎች ግንዛቤ

ተይዟል፡፡

የአባላትን የኑሮ ደረጃ ሊያሻሽሉ የሚችሉ የኅብረት ሥራ ተኮር የግብይትና ሌሎች አገልግሎቶችን መለየት

ተችሏል፡፡

ምርጥ ተሞክሮ ያላቸዉ የኅብረት ሥራ ማኅበራት የሥራ እንቅስቃሴ እንዲታወቅ ተደርጓል፡፡

12 | P a g e

የወደፊት አቅጣጫ

በኮንፈረንሱ ተሳታፊዎች ከተነሱ ዋና ዋና ጭብጦች በመነሳት የኅብረት ሥራ ማኅበራቱን የሥራ እንቅስቃሴ ለማጠናከር

ሁሉም የሚመለከታቸዉ ባለድርሻ አካላት በቅንጅትና በመደጋገፍ ስሜት መሥራት እንዳለባቸዉና ለተግባራዊነቱም

የበኩላቸዉን ጥረትና ርብርብ ማድረግ እንደሚገባቸዉ ተጠቅሷል፡፡

በኮንፈረንሱ የቀረቡ ጥናታዊ ፅሁፎች

በኮንፈረንሱ ላይ ስምንት የተለያዩ ጥናቶች የቀረቡ ሲሆን እነሱም፡-1) Cooperative Movement in Ethiopia; Development, Challenges and proposed

intervention. By Kifle Tefamariam, Mekelle University.

2) Assessment of Managerial Efficiency and Effectiveness of Multipurpose Primary Agricultural Cooperatives in East Wollega Zone, Ethiopia. By Asfaw Temesgen, Wollega University.

3) The Role Of Cooperatives In Poverty Alleviation: The Case Of Tigray, Ethiopia. By Seifu G/hiwet, Mekelle University.

4) Economic Contribution of Coffee Cooperatives towards their members in Yirga Cheffe woreda, Gedeo Zone, SNNPR. By Muhabie Mekonen, Mizan-Tepi University.

5) Consumer Cooperatives: Institutionalization, Participation and Roles in Distribution of Essential Commodities. By Afework G.Kassa, Arba Minch University.

6) Distribution Channel System Management In the Case of Consumer Cooperatives, South West Ethiopia. By Geremew Teklu, Jimma University.

7) Challenges and Prospects of Saving and Credit Cooperatives in Kalu Woreda. By Ergete Temeche, Gondar University.

8) Audit Practices and Problems on Selected Saving and Credit Cooperatives in South Wollo Zone, Amhara Regional State. By Messele Kebede, Wollo University.

1 ኛው የኢትዮጵያሕብረት ስራ ልማት ኮንፈረንስ የአቋም መግለጫ

ሰኔ 27/2006 ዓ.ም.

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በኢትዮጵያ ፌዴራላዊ ዲሞክራሲያዊ መንግስት የፌደራል ሕብረት ስራ ማሕበራት ኤጀንሲ እና በመቐለ ዩኒቨርሲቲ ትብብር በመቐለ ከተማ አክሱም ሆቴል ከሰኔ 26/2006 ዓ.ም. እስከ ሰኔ 27/2006 ዓ.ም. “ የሕብረት ስራ ማሕበራት ልማት

” በኢትዮጵያ በሚል ርእስ ለሁለት ቀናት በተካሄደው አገር አቀፍ ጉባኤ የፌደራል አና የክልል መንግስታት የሕብረት ስራ ማሕበራት የበላይ አመራሮች፣ በሕብረት ስራ ልማት ዙሪያ የሚሰሩ መንግስታዊ ያልሆኑ ድርጅቶች ሃላፊዎች፣ ኢትዮጵያ ውስጥ በሕብረት ስራ

ማሕበራት ጥናት እና ምርምር በማካሄድ ላይ ያሉት የዩኒቨርሲቲ ተመራማሪዎች፣ ከህብረት ስራ ማሕበራት እና ዩኒየኖች የተወከሉ የስራ ሓላፊዎች፣ አማካሪ ድርጅቶች እና የዩኒቨርሲቲ ተማሪዎች ተወካዮች በድምሩ ከ 150 በላይ የሚሆኑ ባለሙያዎች

ተሳትፈዋል፡፡

የጉባኤው ዝርዝር ፕሮግራም ከቀረበ በኋላ የመቐለ ዩኒቨርሲቲ ፕሬዝዳንት ክቡር ዶ/ ር ክንደያ ገ/ “ህይወት ጉባኤውን በእንኳን ” ደሕና መጣችሁ መልእክት አስተላልፏል፡፡ በመቀጠልም የፌደራል ሕብረት ስራ ማሕበራት ኤጀንሲ ዋና ዳይሬክተር ክቡር አቶ

ኡስማን ሱሩር በኢትዮጵያ ያለውን የሕብረት ስራ እንቅስቃሴ እና ተግዳሮቶች በመዳሰስ የጉባኤውን መጀመር አብስረዋል፡፡

የአገር አቀፍ ጉባኤው ዓላማ የሕብረት ስራ ማሕበራት ዘላቂ ልማትን በማፋጠን፣ የሕብረተሰቡን ፍትሃዊ የኢኮኖሚ ተጠቃሚነት ለማረጋገጥ፣ የዲሞክራሲያዊ ስርዓት እየጎለበተ እንዲሄድ በማድረግ፣ የተረጋጋ ኢኮኖሚያዊ እፀ ማሕበራዊ መሰረት ያለው

ሕብረተሰብ በመፍጠር እና ድህነትን በመቀነስ ረገድ ያላቸው አስተዋጽኦ ለመገምገም እንዲሁም በፖሊሲ፣ አዋጆች፣ ደንቦች፣ አደረጃጀቶች፣ አሰራሮች እና በሁሉም ደረጃዎች በማስፈፀም ዓቅም ያሉትን ተግዳረቶች በጥናት እና በምርምር የተገኙ ውጤቶችን በመገምገም እና በተግባር እያጋጠሙ ያሉትን ማነቆዎች በመለየት ለመንግስት እና ለፖሊሲ አውጪዎች ግብአት ሊሆኑ የሚችሉ

የውሳኔ ሐሳቦች ለማቅረብ ነው፡፡

በዚህ ጉባኤ በዩኒቨርስቲ ተመራማሪዎች ሳምንት የጥናት ውጤቶች ለውይይት የቀረቡ ሲሆን ሰፊ ውይይት እና ገንቢ አስተያየት ተደርጎባቸዋል፡፡ ከዚህ በተጨማሪም ስድስት የሕብረት ስራ ማሕበራት/ ዩኒየኖች ተሞክሮአቸውን ያቀረቡ ሲሆን አራት ፖስተሮችም

ለጉባኤው ቀርቧል፡፡ በቀረቡት ጉዳዮች ላይ ጥያቄ እና መልስ ከመቅረቡ ባሻገር የጉባኤው አባላት በቡዱን በመከፋፈል ሰፊ ውይይት የተደረገ ሲሆን ዝርዝር ጉዳዮችን ለጉባኤው ቀርበው ውይይት ተደርጎባቸዋል፡፡

ጉባኤው በአጠቃላይ የሕብረት ስራ ማሕበራት በአገራችን የተጀመረውን ፈጣን ልማት፣ ቀጣይነት ያለው እድገት እና የዜጎች ፍትሐዊና እኩል ተጠቃሚነት በማረጋገጥ ረገድ እየተጫወቱት ያለው ሚና ከፍተኛ መሆኑ በመገምገም በተለይም በግብርና

ግብአት አቅርቦት እና ስርጭት፣ በምርት ግብይት፣ በአግሮ ኢንዱስትሪ፣ ቁጠባን በማሰባሰብ አና የህብረተሰቡን የቁጠባ ባህል በማሳደግ፣ የስራ ዕድል በመፍጠር፣ የዋጋ ንረትን በማረጋጋት፣ ለአገሪቱ የውጭ ምንዛሬ በማስገኘት ረገድ ያላቸው አስተዋጽኦ እና

መሰል ስራዎችን በመስራት የአባሎቻቸውን ተጠቃሚነት ረገድ ያላቸው አስተዋጽኦ እና መሰል ስራዎችን በመስሪት የአባሎቻቸውን ተጠቃማነት በማረጋገጥ ረገድ ጉልህ ሚና እንዳላቸው በጉባኤው ተገምግሟል፡፡ ይሁን እና ውጤታማ እና ጥራቱን የጠበቀ አገልግሎት ለአባሎቻቸው ከመስጠት አኳያ ውሱንነት መኖር፣ የሕብረት ስራ ማሕበራት በሙያው ትምህርት፣ እውቀት እና ክህሎት

ባላቸው ባለሙያዎች አለመመራታቸው፣ የኪራይ ሰብሳቢነት አመለካከት እና አሰራር መኖሩ፣ የአባላት የባለቤትነት ስሜት አነስተኛ መሆን፣ የገበያ ጥናት በተሟላ መልኩ በማካሄድ እና የገበያ መረጃ ረገድ በማሰባሰብ ረገድ ውሱንነቶች መኖራቸው፣ የማሕበራት የገንዘብ ዓቅም ውሱን መሆን፣ የሒሳብ ሰነዶችን በአግባቡ ከመያዝ እና በወቅቱ ኦዲት ከማድረግ አኳያ ክፍተት በመኖሩ፣ የተቀናጀ የመንግስት የክትትል እና ድጋፍ ስራ በመሰራት ረገድ ውሱንነቶች መኖራቸው፣ እንዲሁም ሌሎች ተመሳሳይ ችግሮች

በመኖራቸው የአገራችን የሕብረት ስራ ማሕበራት መንግስት ባስቀመጠው አቅጣጫ እና በማፈለገው መልኩ ውጤታማ ሆነው እንዳይቀጥሉ ማነቆዎች እና ተግዳሮቶች እንደሆኑባቸው በጉባኤው ተገምግሟል፡፡

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በመጨረሻምጉባኤው የሚከተሉትን አበይት ጉዳዮች የጉባኤው የአቋም

መግለጫ ያወጣ ሲሆን እና ለተግባራዊነታቸውም የሚመለከታቸው

አካላት ሁሉ የበኩላቸውን ጥረት እንዲያደርጉ ጥሪ አቅርቧል፡፡

ኮንፈረንሱ ሲጠናቀቅ የሚከተለውን ባለ አስራአንድ ነጥብ የአቋም መግለጫ አውጥቶዋል፡፤

1. መንግስት ያስቀመጠው የልማት አቅጣጫ ማለትም አገራችን መካከለኛ ገቢ ካላቸው ሃገራት ተርታ የመሰለፍ ራእይ ጉዞ የሕብረት ስራ ማሕበራት ተልእኮ ተተኪ የሌለው በመሆኑ ይህንን ተልእኮአቸውን ተወጥተው የአባላት ባለቤትነት እና

ተጠቃሚነት ሁኔታ አሁን ካለበት ወደላቀ ደረጃ ለማድረስ እና የአገራችን የሕብረት ስራ ማሕበራት በማጠናከር፣ በማደራጀት እና በማስፋፋት ረገድ ጉልህ ሚና ያለን አካላት ሁሉ ማለትም በፌደራል የሕብረት ስራ ማሕበራት ኤጀንሲ እስከ ወረዳ

የሕብረት ስራ ማሕበራት ጽሕፈት ቤት ያለን የመንግስት የሕብረት ስራ ማሕበራት ሰራተኞች፣ በዘርፉ የተሰማራን ባለሙያዎች፣ በዘርፉ የተሰማራን የትምህርት፣ ስልጠና እና ምርምር ተቋማት፣ ተባባሪ እና አጋዥ አካላት በሙሉ ለሕብረት ስራ ማሕበራት

መጠናከር በተቀናጀ መልኩ ድጋፍ ለማድረግ የድርሻችንን ለመወጣት ቃል እንገባለን፡፡

2. የሕብረት ስራ ማሕበራት ከልማዳዊ አሰራር ወጥተው ዕለታዊ ስራዎቻቸውን ዘመናዊ፣ ቀልጣፋ እና በተደራጀ መልኩ በማካሄድ በገበያ ተወዳዳሪ ሆነው የአባሎቻቸውን ተሳትፎ እና ተጠቃሚነት ለማረጋገጥ ያስችል ዘንድ የጠቅላላ ጉባኤውን

እና የስራ አስፈጻማው ኮሚቴ አባላት ስልጣን እና ተግባር እንደ ተጠበቀ ሆኖ የእለት ተእለት ስራዎችን ደረጃ በደረጃ እና የሕብረት ስራ ማሕበራት አቅም ባገናዘበ መልኩ በሙያው በሰለጠነ የሰው ሃይል መመራት እንዳለባቸው በመርህ ደረጃ የጉባኤው አባላት የተስማማን ስንሆን ለውጤታማነቱም የበኩላችንን አስተዋጽኦ ለማድረግ ቃል እንገባለን፡፡

3. በአገራችን በሕብረት ስራ ማሕበራት አደረጃጀት ማለትም የፌዴራል የሕብረት ስራ ኤጀንሲ፣ የክልል ቢሮ/ ጽ/ ቤት፣ የዞን እና የወረዳ የሕብረት ስራ ማሕበራት ጽሕፈት ቤቶች ያለን የሕብረት ስራ ማሕበራት አመራር እና ሰራተኞች የሕብረት ስራ

ማሕበራት ተልእኮን በአግባቡ በመገንዘብ መላውን ሕብረተሰብ ለማንቀሳቀስ እና ለለውጥ እንዲሰለፍ ብሎም በዘላቂነት ውጤታማ ስራ ለመስራት እንዲችል የዓቅም ግንባታ ስራዎች፣ የክትትል እና ድጋፍ ስራዎች በተደራጀ እና በተጠናከረ መልኩ ለመስራት ቃል እንገባለን፡፡

4. በሕብረት ስራ ማሕበራት ብቁ እና ውጤታማ ተመራጮች እንዲኖሩ ለማድረግ ብሎም የአባላት ተሳትፎ እና ግንዛቤ ለማሳደግ ለተመራጭ አባላት ይሁን ለአባላት የሕብረት ስራ ማሕበራት መሰረታዊ ጽንሰ ሃሳብ፣ መርሆዎች፣ የጋራ እሴቶች

እና አሰራሮች ግንዛቤ ለማሳደግ ተከታታይ እና ውጤታማ ስልጠናዎች መስጠት አስፈላጊ መሆኑን ጉባአው አስምሮበታል፡፡

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5. በዩኒቨርሲቲዎች የተጀመረውን የዓቅም ግንባታ እና የምርምር ስራዎች በተጠናከረ ሁኔታ መቀጠል ያለበት እንዳለበት ሆኖ በተለይም ችግር ፈቺ ጥናቶች ላይ ትኩረት በማድረግ ውጤቶቹም ለሚመለከታቸው የፌደራል እና ክልል መንግስታት ፖሊሲ

አስፈጻሚዎች በወቅቱ የሚቀርብበት ሁኔታ ማመቻቸት አስፈላጊ መሆኑ በጉባኤው ተሳታፊዎች ታምኖበታል፡፡

6. በሕብረት ስራ ማሕበራት የሚታየውን የገንዘብ እጥረት እና የብድር ፍላጎት ያለመሟላት ችግር ለማቃለል የሕብረት ስራ ማሕበራት አባሎቻቸው ተጨማሪ ድርሻ እንዲገዙ እና የቁጠባ ባህል እንዲስፋፋ ከፍተኛ ትኩረት በመስጠት መንቀሳቀስ እንደሚገባ እና በቀጣይም የህብረት ስራ ባንክ የሚቋቋምበት ሁኔታ ለመፍጠር ካሁን ጀምሮ ስራዎች መስራት እንደሚገባ በጉባኤው ታምኖበታል፡፡

7. የሕብረት ስራ ማሕበራት ገንዘብ እና ንብረት ከብክነት ከሙስና እና ከብልሹ አሰራር ለመታደግ ብሎም ተቀባይነት ያለው የሒሳብ አያያዝ ስርዓት ለመዘርጋት የኦዲት ስራዎች በተከታታይ እና ቀጣይነት ባለው መንገድ መካሄድ እንዳለበት

ታምኖበታል፡፡

8. በአንዳንድ አካባቢ ያሉትን ምርጥ ተሞክሮዎች በአገር አቀፍ ደረጃ የሚስፋፋበት ሁኔታዎችን በማመቻቸት ሃገራዊ የህብረት ስራ ትራንስፎርሜሽን በተደራጀ መልኩ ማካሄድ፡፡

9. የመንግስት እና የግል የሚዲያ ተቋማት አሁን የህብረት ስራ በተመለከተ እየሰሩት ያሉ ስራዎች ጥሩ ቢሆንም የህብረት ስራ ትራንስፎርሜሽን ለማረጋገጥ እና ምርጥ ተሞክሮዎችን ለህብረተሰቡ መረጀ በማድረስ ረገድ በበለጠ ትኩረት ሰጥተው

እንዲንቀሳቀሱ እና የበኩላቸውን አስተዋፅኦ እንዲያደርጉ ጉባኤው ጥሪ ያቀርባል፡፡

10. የህብረት ስራ ማህበራት እሴት በመጨመር በአግሮ ፕሮሰሲንግ፣ ምርታማነት በሚጨምሩ የመስኖ ስራዎች፣ የተፈጥሮ ሃብት ጥበቃ እና የአካባቢ ልማት ስራዎች እና የግብርና ሜካናይዜሽን በቂ ትኩረት ሰጥተው እንዲሰሩ ማድረግ አስፈላጊ መሆኑ ጉባኤው አምኖበታል፡፡

11. በመጨረሻም በዞን እና በወረዳ ደረጃ የሚገኙ የህብረት ስራ ማህበራት ፅህፈት ቤቶች በሞያው በሰለጠነ የሰው ሀይል በበጀት እን ሎጂስቲክስ የማጠናከር ስራ ከመንግስት እና ልማታዊ ድርጅቶች በቂ ትኩረት አግኝቶ፣ ድጋፍ እና ክትትል

የማድረግ አቅሙ የተሻለ ማድረግ እንደሚገባ ጉባኤው አስምሮበታል፡፡

መቐለ

ሰኔ 27/2006 ዓ.ም.

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ዓብደርቃድር ከዲር(ዶ/ር) የመቐለ ዩኒቨርሲቲ የአካዳሚክ ም/ፕሬዚዳንት

የተከበሩ አቶ ዑስማን ስሩር ሲራጅ የፌዴራል ኅብረት ሥራ ኤጀንሲ ዋና ዳይሬክተር

የተከበራችሁ የኮንፈረንሱ ተሳታፊዎች

ኅብረት ሥራ ማኅበራት በአገራችን የዕድገትና ትራንስፎርሜሽን ዕቅድ ከማሳካት አንፃር የላቀ ድርሻ እንዳላቸዉ ግልፅ

ነዉ፡፡ከዚህም በመነሳት ዩኒቨርስቲያችን የኅብረት ሥራ ጥናት ትምህርት ክፍል በማቋቋም ለዘርፉ አጋዥ የሆኑ በቅድመ

ምረቃና ድህረ ምረቃ ትምህርት ከመስጠቱም በላይ በማህበረሰብ አገልግሎትና ምርምር በኩልም የተለያዩ እገዛዎች

እያደረገ ይገኛል፡፡ ይህ ኮንፈረንስ የተዘጋጀዉም ለኅብረት ሥራ ዕድገት ከሚሰሩ ሥራዎች አንዱ ማሳያ ነዉ፡፡

ይህ በዓይነቱ ልዩ የሆነ አገር አቀፋዊ ክንፈረንስ ለሁለት ቀናት ሲካሄድ ተሳታፊዎች ብዙ እንደተማማሩበትና ብዙ

ዕዉቀት እንደተገበያዩበት አጠራጣሪ አይደለም፡፡በመሆኑም የዩኒቨርስቲ ተመራማሪዎችና በዘርፉ ሥራ ላይ የተሰማሩ

የኀብረት ሥራ ባለሙያዎች ተገናኝተዉ ሃሳብ ለሃሳብ የተለዋወጡበት ሲሆን ይህም ለወደፊቱ ስርዓተ ትምህርቱ ተግባር

ተኮር ሆኖ እንዲሻሻል የላቀ ድርሻ ይኖረዋል፡፡

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ከዚህ በተጨማሪ በዚህ ክንፈረንስ በተማራማሪዎች ፣በኅብረት ሥራ ባለሙያዎች እንዲሁም በኅብረት ሥራ ማኅበራት

አባላትና አመራር አካላት ብዙ የህብረት ሥራ ማኅበራት ጠንካራ ጎኖችና ደካማ ጎኖች የተነሱበት ሁኔታዎች

በመኖራቸዉ ብዙ ችግር ፈቺ የሆኑ ሃሳቦች ሲነሱም ለፖሊሲ አዉጪዉ የሚረዱ ሃሳቦችም ተገኝተዉበታል፡፡ በብዙ

መልኩ ኮንፈረንሱ በጣም የተሳካ ነበር ማለት ይቻላል፡፡ በመሆኑም ይህ አገር አቀፋዊ ኮንፈረንስ በዚህ ባማረና

በተሳካ መልኩ እንዲካሄድ ከፍተኛ አስተዋፅኦ ላደረጉ ባለድርሻ አካላት በዋናነት

- የፌዴራል ኅብረት ሥራ ኤጀንሲ

- Mekelle University – Norad- ACDI/VOCA-CDP- ACDI/VOCA-AMDe - ግብርናና ገጠር ልማት ሚኒስቴር - AGP- የትግራይ ክልል ኅብረት ሥራ ማኅበራት ማስፋፊያና ግብይት ኤጀንሲ

- በመቐሌ ዩኒቨርስቲ የቢዝነስና ኢኮኖሚክስ ኮሌጅ

- በመቐሌ ዩኒቨርስቲ የኅብረት ሥራ ትምህርት ክፍልን ማመስገን እፈልጋለሁ፡፡

እንዲሁም የፌዴራል ኅብረት ሥራ ኤጀንሲ ዋና ዳይሬክተርን የተከበሩ አቶ ዑስማን ስሩርን በተለየ ሁኔታ ማመስገን

እፈልጋለሁ፡፡

አመሠግናለሁ፡፡

ዓብደርቃድር ከዲር(ዶ/ር)

የአካዳሚክ ም/ፕሬዚዳንት

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Edited and compiled by:

Tekeste Berhanu (PhD) Tafesse Weldegzina Kifle Tesfamariam

Department of Cooperative Studies, Mekelle University

February 25, 2015

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Cooperative Movement in Ethiopia:

Development, Challenges and Proposed Intervention

Kifle Tesfamariam

Assistant Professor, Department of Cooperative Studies, Mekell University

E-mail:kifletesfamariam@gmail.com

A paper presented atthe National Conference Organized by Mekelle University and Federal Cooperative Agency (FCA)

Abstract

Cooperatives in Ethiopia are playing an active role in the fields of banking, input and output marketing, agro-processing, storage, dairy, and many other social and economic activities. Performance analyses of the sector indicate that the number of cooperatives has increased from 26,672 in 2009 to 56,044in May 2014 showing a double-digit growth rate of 22% per year. The aggregate number of members during the same period increased from 5.8 million to 9.2million (10% of the population) and their capital increased from 1.2 billion birr to 8.8 billion birr. These figures indicate that cooperatives have had the support of the people in undertaking activities contributing to their economic development. Cooperatives have inherent advantages in tackling the problems of poverty alleviation, food security and job creation. They are also considered to have immense potential to deliver goods and services in areas where both the state and the private sector have failed. Serious efforts are being made to strengthen capital of cooperatives base through increasing members’ subscription, mobilization of savings and value addition.

The objective of this paper is to examine the current status and challenges of cooperatives in Ethiopia. The study is based on review of pertinent literature on cooperative in Ethiopia, policy and regulatory framework documents as well as secondary data. The paper identifies challenges such as, absence of cooperatives policy, weak institutional capacity, over-dependence on government and lack of professionalism. Finally, it suggests that the evolving strong communication and public relations strategies which can promote the concept of cooperation among the people of the country.

Keywords:Cooperative, job creation, mobilization of savings, value addition

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1. Introduction

Agriculture is the foundation for Ethiopian economy, and the overall economic growth of the country is highly linked to the success of the agriculture sector. In 2012/13, real GDP growth was 9.7% moderately lower than the 11.4% growth a year earlier. Accordingly, agriculture accounts for about 43% of the country’s gross domestic product (GDP), 90% of export, and 85% of employment (NBE, 2013).As agriculture continues to be an important to the Ethiopian economy, the cooperative sector providing vital support services and play a crucial role for the transformation of the agriculture sector. It play an active role in the fields of banking, input and output marketing, agro-processing, storage, dairy, and many other social and economic activities.

Cooperatives have played a significant role towards achieving the growth and poverty reduction strategy by promoting income generating activities and improving access to banking services to rural and urban households. In response to the changing needs of farmers-members with in today`s dynamic business environment, the government instituted an overarching strategy of Agricultural Cooperative Sector Development Strategy (ACSDS). One of ACSDS’s derivative features is to improve smallholder farmers` productivity and income by leveraging a cooperative sector; hence the promotion of cooperative movement is in line with the national strategy. Moreover, in the growth and transformation plan (GTP) due emphasis was given for the cooperative sector as the driving force for savings mobilization. Based on the savings mobilized domestically a resource will be generated to finance the various investment opportunities from time to come. The extent to which their contributions could be realized partly depends on the expansion and growth of coops which in turn depends on the environment they operate and delineated by the legal and policy framework. However, there is little understanding of what the current status and contribution of cooperatives in Ethiopia. Whatever the cooperative does should be analyzed in terms of its contribution on the economic development. Such a holistic approach to the study of the current status and challenges is necessary for understanding the contribution of cooperatives on the economic development. What is the social reach of cooperation? Have cooperatives generated employment? Many such issues need to be addressed for a holistic assessment of the social and economic contribution of cooperatives. Therefore, the driving force for initiating this study is that very little is known about the current status of cooperatives in Ethiopia on the one hand and the recognition of cooperatives plays in the socio-economic development on the other. Therefore, this paper examines the current status of cooperatives in Ethiopia and its implication for the growth and sustainability.

2. Study approach

The study is based on review of pertinent literature on cooperatives in Ethiopia, policy and regulatory framework documents, past study reports; cooperatives annual reports,international experiences from different countries on cooperativesas well as secondary data obtained from Federal Cooperative Agency. The most important documents reviewed include Federal Cooperative Proclamation No 147/1998, Cooperative Societies (Amendment) Proclamation No 402/2004 and Council of Ministers Regulation. 1How important is the cooperative sector?

What contribution ithas made in the past to economic development? Data compiled by the International Cooperative Alliance (ICA) reveal that the cooperative movement brings together over 1 billion people around the world. The United Nations estimated in 1994 that the livelihood of nearly 3 billion people, or half of the world's population, was made secure by cooperative enterprise. These enterprises continue to play significant

1International Cooperative Alliance (ICA) Http://Ica.coop/en/whats-co-op/co-operative-facts(Accessed 15/05/2014)21 | P a g e

economic and social roles in their communities.Here is a brief overview showing just how important cooperatives are to the economies of most countries. Their relevance and contribution of cooperative movement to economic and social development can be seen from the evidences given below

Large segments of the population are members of cooperatives

- In Canada, four out of every ten Canadians are members of at least one cooperative. In Quebec, approximately 70% of the populations are members ofcooperatives.While in Saskatchewan 56% are members.

- In Malaysia, 6.78 million people or 27% of the total population are members of cooperatives in 2009.- In Norway out of the population of 4.8 million people, 2 million are members of cooperatives.- In Paraguay, 783,000 people or 18% of the population are members of 1,047 cooperatives. These coops

have a direct impact on the livelihoods of over 6 million people.- In Spain, 15 % of the population or 6.7 million people are members of cooperativesin 2008.

- In Ethiopia,9.2 million people or 10% of the population are members of cooperatives in 2014.Assume the total population of Ethiopia is 90 million

Cooperatives create and maintain employment

- In France, 21,000 cooperatives provide over 1 million jobs representing 3.5% of the active working population in 2010.

- In Kenya, 63% of the population derives their livelihoods from cooperatives. Approximately 250,000 Kenyans are employed or gain most of their income from cooperatives in 2009.

- In Colombia, the cooperative movement provides137, 888 jobs through direct employment and an additional 559,118 jobs as worker-owners in workers cooperatives- providing 3.65% of all jobs in the country.

- In Indonesia, cooperatives provide jobs to 288,589 individuals in 2004

- In the United States, 30,000 cooperatives provide more than 2 million jobs.

- In Ethiopia, 50% of the population directly benefited from the service of cooperatives. Exactly805 thousandEthiopian are employed or gain most of their income from cooperatives in 2014. That means a member on average may have 5 family,cooperatives serving for 45million of the population.

Cooperatives are significant economic factors in national economies

- In Denmark, consumer cooperatives in 2007 held 36.4% of consumer retail market.

- In Japan, the agricultural cooperative report statesoutputs of USD 90 billion with 91% of all Japanese farmers are in membership. In 2007 consumer cooperatives reported a total turnover of USD 34.048 billion with 5.9% the food market share.

- In Mauritius, in the agricultural sector, cooperatives play an important role in the production of sugar, vegetable, fruit and flower, milk, meat and fish. Nearly 50% of sugar-cane planters are grouped in cooperatives.

- In Côte d`Ivoire, cooperatives invested USD 26 million in to setting up schools, building rural roads and establishing clinics in 2002.

- In New Zealand, 3% of the gross domestic product (GDP) is generated by cooperative enterprise in 2007.

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- In Uruguay, cooperatives are responsible for 3% of the GDP. They produce 90% of the total milk production, 34% of honey and 30% of wheat. 60% of the production is exported to over 40 countries in the world.

The International Cooperative Alliance (ICA) represents close to 1billion individual members. This statistics have beencalculated from 94 ICA`s member countries (as of October, 2013). Accordingly, the country with the largest number of individual members indirectly represented by the ICA is the United States with 256 million members. There are nearly 30,000 cooperatives in the US. The next countries are in Asia, with India following next behind the US with 93.7 million individual members. And then Japan with 77 million individual members. The fourth largest number of members is in Iran with 36.9 million individual members. All in all, five of the top ten countries, by membership, that the ICA represents- are in Asia. Italy is the first European country with 22.5 million individual members, represented through their organizations by ICA.

3. Historical development of cooperatives in Ethiopia

The historical development of cooperatives in Ethiopia is briefly discussed under three perspectives. These are (i) during the imperial regime, (ii) during the military rule, and (iii) under thepresent government.

Cooperatives during the Imperial Regime (Before 1974)

In Ethiopia, successive regimes, starting from the Imperial period to the EPRDF government, gave due recognition to the role of coops and made deliberate effort to promote the same. However, the principles and approaches followed were markedly different, reflecting the political thinking and ideology of the regimes. In its Five Year Development Plan, the Imperial regime envisaged an important role for coops in transforming smallholding agriculture. Thus, it set the stage by providing the first legal framework (the Farmer Workers Cooperative Decree No. 44 later replaced by the Cooperative Societies Proclamation No. 241/1966). The legal framework was relatively comprehensive and contained most of the essential contents of the legal framework issued more than three decades later in 1998 and coops were rightly viewed as primarily voluntary undertakings. However, success was limited during the period.

Cooperatives in the Military Regime (1974-1991)

The Military regime, which viewed coops as a key instrument to build a socialist economy pursued the cooperatives agenda more aggressively. The approach followed combined coercion with extensive support including priority access to resources, goods and services (such as land, irrigation, bank loans at lower interest rate, capital goods, inputs and extension services, and consumer goods). Whereas number of coops and membership size were relatively large, it is not regarded as a particular success for a number of reasons (for details see Partners Consultancy and Information Services, 2006). Coops were so unpopular that following the demise of the Dergregime in 1992 most of them disappeared quickly. What is worse is that they dissolved in such a disorderly manner (e.g. bank loans and other obligations were not settled; no distribution of assets between members; etc.) that it created a lasting suspicion and distrust of cooperatives the stigma of which is haunting cooperatives until today. In an attempt for a fresh start with promotion of cooperatives, the incumbent government issued a new legal framework (Proclamation No. 147/1998 and 402/2004). In addition to being comprehensive it incorporated universally accepted principles of cooperatives.

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In the history of cooperative movement in Ethiopia, the government has taken serious measures after 1996. The measures include, organizing and reorganizing different types of agricultural cooperativesand establishingCooperative Promotion Bureaus in regions. At the Federal structure the government has been established the cooperative promotion desk under the Prime Minister office. A proclamation No. 147/ 1998 to provide for the establishment of cooperative societies had also declared by the Federal Government to bring all types of cooperative societies under one umbrella. TheFederal Cooperative Commission (currently Federal Cooperative Agency) based on proclamation No. 274 / 2002 was established in 2002. More over to correct the short comings in the proclamation 147/1998andamendment 402/2004 and regulation number 106/2002 became an important instrumental document in the cooperative movement of the country.

Cooperatives under the present Government (Since 1991)

The present government provided a legal framework which is both comprehensive in many respects (including its ability to accommodate coops in various sectors/sub-sectors) and incorporates universally accepted principles of cooperatives including voluntary membership (Proclamation No. 147/1998 and 402/2004). As a result some improvements have been seen in cooperative societies in the country. Cooperative societies started todistribute inputs, provide loan to their members, market produces of members in the domestic and foreign market, Unions (secondary cooperatives) were formed with the assistance of Cooperative Union Project (CUP) funded by VOCA/Ethiopia/USAID), dividend payments were made by the unions as well as primary cooperatives. The number of Primary and secondary cooperatives of different types with significant increase in number of member beneficiaries is achieved.

Both ADLI (the government's development programme) and the Marketing Strategy explicitly envisage cooperatives to play a critical role in the development and poverty reduction efforts of the country (see Ministry of Finance and Economic Development 2003, 2003; Ministry of Agriculture and Rural Development 2005). In line with this a general legislation setting out the formal rules and procedures by which the development and activities of all types2 of co-operatives in the country are to be guided (Proc. Nos. 147/1998 and 402/2004) was issued. As such, it constitutes the incentive structure that shapes the behavior of Co-operatives and their members. According to the proclamation, the objectives of Co-operative Societies are to create savings and mutual assistance among its members by pooling their resources, knowledge and property, to enable them to actively participate in the free market economic system (Proc. No. 147/1998).

4. Growth of cooperative sector in Ethiopia

Ethiopia is an agrarian economy, 80% of its total population reside in rural areas and the rest in urban areas. The rural people require many services in daily life which are met by village cooperative societies. The village cooperative societies provide necessary strategic inputs for the agricultural sector (such as fertilizer, improved seeds, pesticide, etc.) and consumable goods (such as edible oil, sugar, flour, etc.) to members and non-members to meet at concessional rates, cooperative processing units help in value addition. The sectors are promoted, supervised and supported from every angle by the Cooperative Promotion Agency at regional and federal levels. The cooperative movement is functioning through important sectors like saving and credit, coffee, beekeeping, seed multiplication, sugarcane, livestock, dairy, mining, marketing, consumer, fisheries and construction etc. Thus, cooperatives in Ethiopia are playing multi-functional roles in rural and urban areas.

2The cooperative sectors covered include Agricultural, Housing, Industrial & Artisans Producers, Consumer, Savings & Credit, Fishery, and Mining cooperative societies.

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Through vigorous efforts of cooperative promotion agency, cooperatives have established themselves in various segments of the Ethiopian economy. Performance analyses of the sector indicate that thenumber of cooperatives has increased from 26,672in 2009 to 556,044 in May 2014 showing a double-digit growth rate of 22% per year. The aggregate number of members during the same period increased from 5.8 million to 9.2million (10% of the population) and their capital increased from 1billion birr to 8.8 billion birr. These figures indicate that cooperatives have had the support of the people in undertaking activities contributing to their economic development. The government continuous commitment to cooperative development is a reflection of confidence in cooperative movement in the country. Financial cooperatives are considered to have immense potential in financing short term loans for agricultural production technologies and undertake off-farm and non-farm income generating activities in areas where both the state and the private sector have failed.Serious efforts are being made to strengthen capital of cooperatives base through increasing members’ subscription, mobilization of savings and value addition.

According to the information obtained from Federal Cooperative Agency (FCA), from the year 2006 to 2008cooperatives weresole importer and distributer of fertilizer to the extent of 70% of the total fertilizer consumption in the country and staring from 2010onwards they involved in distributing government imported fertilizer to farmers and pastoralists to the extent of 90-95% in the country.

Coffee is the most significant agricultural products in the Ethiopian in which millions of farmers grow the commodity for a living, hundreds of thousands of middlemen are involved in the collection of the commodityfrom farmers and supply to the export and domestic market, and a sizable amount of foreign exchange accounting up to 30 percent of the total yearly export income is derived from. It is thus a very important agricultural commodity with a significant contribution to the growth and functioning of the economy and the social stability of the country as the main source of income to tens of millions of small-scale farmers. In this regards, the contribution of coffee cooperatives in the export market is greater. They enabled Ethiopia to attain seventh largest producer of coffee in the world and top producer in Africa. They have exported several grades of organic coffee likeHarar,Yirgacheffe and Sidamo grades, which have carved out competitive edge not only in Africa but also in the world. The foreign exchange earned over the past seven years 2007-2013 by seven cooperative unions has been on the rise, where the export volume rose from 6,967 metric tons(MTs) in 2007 to 11,532 MTs in 2013, and the export value grew considerably to456.38million birr(USD24.02 million)in 2007 from 1.44 billion birr (USD 75.60 million) in 2013. Generally, coffee export performance and value recorded for the last seven years by seven cooperative unions were 61,632 MTs and 6.37 billion birr (USD335.30 million) respectively.

Considering the rise in demand for sesame seed in the international market, many cooperatives involved in the sesame export business, the export performance during 2013 reaches at 4,034 MTs and revenue generated more than 130.9million birr (USD6.89 million). Apart from their economy contribution, cooperatives also playing a significant role in improving socio-economic condition of the weaker sections of society as reflected in beekeeping, livestock and handicraft etc.They are also operating through retail price shops, which supply essential agricultural and non-agricultural commodities to the rural and urban society at concessional rates. Various development activities in agriculture, small-scale industry marketing and processing, distribution and supplies are now carried on through cooperatives. They have made an all-round progress and their role in, and contribution to agricultural progress has been highly significant.

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4.1. Trends and progress of membership and capital in cooperatives

Despite the ups and downs experienced, cooperatives movement in Ethiopia has registered numerical growth over the past decade both in terms of membership and capital. However, membership is still much smaller against the huge potential. The table below indicates that cooperative have been constantly growing in terms of number, membership and capital mobilized over the period.

Table1.Trends in membership and capital

Year No. of Coops No. of members(million) Capital(in Billion birr)

2009 26,672 5.9 1.00

2014(May) 56,044 9.2 8.8

Growth 110 55 780

Source: Federal Cooperative Agency, June 2014

As can be noted from the abovetable, the number of cooperatives has increased by 110 percent between 2009 and 2014from26,672to 56,044. Similarly, the aggregate membership has increased from 5.9 million to 9.2millionover the same period representing nearly two-fold increase (accounts55%). The capital of the society has also shown an increase of 780 percent over the same period.

3.2.Geographical distribution of cooperatives

Due to non-availabilityof sufficient and latest information about the sector, it is difficult to analyze the financial performance of cooperatives. In general, table2 presented the regional distribution of cooperatives, their membership size and capital as of May2014 indicated that:

o In Addis Ababa, there were 12,130 of cooperatives with 1,359 members and capital of 5 billion birr. The City accounts for 21.6 percent of cooperatives and 9.8 percent of membership;

o In Oromiya, there were 16,419 cooperatives with 3 million membersand capital of 1.3 billion birr. The region accounts for approximately 29.3percent of cooperatives and 31.6 percent of membership;

o In Tigray, there were 4,539 cooperatives (exactly 8 percent of the total) with membership of 815 thousands(8.6 percent);

o In Southern Nations, Nationalities and People’s (SNNP) region, there were 11,702 of cooperatives with 1.7million members. The region accounts for 20.9 percent of cooperatives and 18.7 percent of membership;

o In Amhara, there were 7,412 cooperatives with 2.8 million members. The region accounts for exactly 13 percent of cooperatives and 29.8 percent of membership; and

o In the remaining five regions (Somalia, Afar,Gambella,Beneshangul andHarar) and one city administration’s (Dire Dawa) there were a total of 3,842cooperatives with 133,139 members. These collectively accounted for 6.86 percent of cooperatives and 1.4 percent of the total membership in the country.

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Table2.Geographical distribution of cooperatives

Region No. of coops Membership Capital

Addis Ababa 12,130 940,991 5,014,148,620

Oromiya 16,419 3,011,019 1,334,726,531

Tigrai 4,539 815,255 766,960,753

SNNP 11,702 1,784,756 746,448,895

Amhara 7,412 2,840,370 730,313,611

Somalia 1,821 46,668 90,255,720Afar 777 27,693 23,993,029

Gambella 516 11,673 18,992,021Beneshangul 349 22,194 17,153,085

Harar 178 11,040 8,246,881Diredawa 201 13,871 4,336,865

Total 56,044 9,165,267 8,755,576,011

Source: Federal Cooperative Agency, June 2014

3.3.Number of cooperative unions

The existence of clear and accommodating governmental policy and all-inclusive structures and the government’s commitment to transform the subsistence economy have created conducive environment for the development of voluntary based cooperatives in the country.

In response to the prevailing favorable environment, the number and the diversity of cooperatives mushroom very rapidly. Accordingly, there are 294 cooperative unions with a total membership of 8,433 and a capital amount of 1.5 billion birr. Out of this number 139(47.3 %) are multi-purpose cooperatives followed by saving and credit cooperatives 76(25.9%) and consumer cooperatives 20 (6.8 %). Thus, multipurpose cooperatives currently constitute the first most common type of coops in the country in terms of number, membership and capital.

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Table3.Number of cooperative unions in Ethiopia by type

Type of cooperatives No. of CoopsNo of coop affiliated to

unionsCapital(in million birr)

Multi-purpose 139 4031 751Dairy 6 63 4.1

Beekeeping 3 33 0.2Saving and Credit 76 2442 348Food processing 2 30 0.9 Grain purchasing 5 81 5.4

Coffee 12 563 276Forestry 2 16 0.4 Livestock 4 36 2.8

Sugarcane 1 7 8.8Mining 7 386 0.8

Fruits and Vegetables 8 181 13Consumer 20 432 23Fisheries 1 10 0.1

Construction 2 44 1.3Seed multiplication 3 55 2.3

Irrigation 3 23 1.5

Total 294 8433 1439.6

Source: Federal Cooperative Agency, 2013

5. Challenges of Cooperative Movements in Ethiopia

Despite rapid growth the overall progress of cooperative movement during the last 50 years of its existence is not very impressive. According to different document analysis and field reports results indicate that the cooperative movement in Ethiopia is beset with several challenges related to over dependence on government, absence of cooperative policy and weak institutional capacity. The major challenges of cooperatives include the followings.

o Lack of awarenessPeople are not well informed about the objective of the movement, the contributions it can make in rebuilding the society and the rules and regulations of cooperative institutions. Regrettably, no special efforts have been made in this direction. People look upon these institutions as means for obtaining facilities and concessions from the government. So long as people expect to get something from the government, they see to it that societies somehow continue to function.

o Weak governanceManagement committee members have no knowledge about cooperative business transaction. In most cases cooperatives are unable to employ high caliber management staff and the burden of due diligence is left to members who may have limited education on management. The committee members elected

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by the general assembly to lead the affairs of the societies for fixed period do not have the necessary capacity to bring good governance, not undergone in skill upgrading. Thus, good governance is the main and crucial weakness of cooperatives.

o Inadequate support and weak regulation and supervisionThe capacity of FCA and regional cooperative promotion agency to effectively promote, regulate and supervise cooperatives is severely constrained for the following reasons:-

- Absence of separate specialized units at the federal, regional and woreda levels in charge of promoting, supervising and regulating different type of cooperatives; and

- Limited mobility of staff due to shortage of vehicles and motorbike andhigh costs associated.

o Accountability of the cooperative agency and regional officesThe Federal Cooperative Agency and the Regional Cooperative Agency are accountable to the Ministry of Agriculture and Rural Development. However, saving and credit cooperatives are part and parcel of the financial sector the authorities that regulate them require prudential standards that are relevant to financial institutions operations. Hence, the FCA requires to develop these standards which must be complied with by the SACCOs and their unions in their daily operations and mitigate various financial risks.

o Lack of differentiated productsApart from the above stated problems, cooperatives have not yet provided demand driven products that could address the needs of their members in spite of their older age and better outreach to the grass roots level and unbanked community. It has been observed that there is no clearly articulated and defined product development and revision policy within. If it happens it is either by chance or arbitrarily; it is not done in a systematic organized manner and by experts but rather by interested individuals or group of people (professionals or otherwise) and does not follow the necessary steps. It arises simply from a felt need or a problem prevailing in cooperatives. In general, there are no planned and structured ways of developing new products or revising the existing.

o Differences in interpretation of the cooperative legislation at various levelsIn some cases the demarcation of authorities between federal and the regional states are not clearly understood. A typical example would be the formation of cooperative federation. According to the FCA strategic plan, the country follows four tier vertical structures: primary, union, federation and league. In practice some regions like SNNP and Tigrai regions have establishing federation at regional level backed by the irrespective regional level cooperatives law. If cooperatives continue to integrate vertically, the federations established/ would be established at regional levels are expected to form another layer before joining the league or the league will be established including the regional level federations. It is believed that such misunderstanding emanated from misinterpretation of the grand federal cooperative law and such confusions need to be cleared.

o Operation areasThe federal cooperative law proclamation No.147/1998, amendment No.402/2004 and regional states cooperative proclamations and cooperative agency SACCO guideline do not define operational areas for SACCO unions. What is stated both in the federal and national regional states’ cooperative proclamations and the guideline is that any two and primary SACCOs may establish SACCO unions.

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The SACCO unions in urban areas established on the bases of work areas and community based organization. The Addis Ababa SACCO union is established by employed workers’ saving and credit cooperatives while Women in self-employment SACCO union is established by individual self-employed members organized at community level. However, in the case of rural SACCO unions, they are established on the bases of geographical proximity which covers one woredain the minimum and up to eight woredasas a maximum.

6. Proposed Intervention

Based on the results and experiences of the cooperatives movement, and not to repeat the problems encountered, the major solutions that should be undertaken are stated below:

o Conduct cooperatives education and training in organized manner As we have seen the past experience there was no continuous organized cooperatives education and training programs conducted, thus in a country like Ethiopia the consciousness of the people is very low it is indispensable in designing and providing cooperatives education and training to promote different types of cooperatives. Therefore it is important to establish training centers in regional states and provide the appropriate training for management committee and employees. In addition to this trainings and education will be designed transmitted thorough the government media and formal educational programs.

o Strategies should be designed to minimize capital and infrastructural problems of cooperatives

It is vivid that the main capital source of cooperatives is member`s share capital. However the current situation clearly shows that cooperative is not in a position to collect sufficient capital from their members. This is mainly due to capital base/background and low income of members. Moreover, cooperatives are not in a position to get a credit from financial institutions due to collateral problems. Hence a financial capacity building system should be designed in a short period of time.

Some of the majors to be undertaken are state below:-

-Establishment of a cooperative bank is the best and sustainable means to combat the problem. Saving and credit cooperatives (SACCO) and different types of cooperatives are the main potential resources for the establishment. More over government support is vital. Since there is a shortage of financial institutions, government should establish refinancing institutions, like the experience in national Bank for Agricultural and Rural Development (NABARD) and Small Industries Development Bank (SIDB) of India.

-To improve cooperatives involvement in the rural development programs cooperatives storage and infrastructure (road, telecommunication etc.) should be included in the rural development policy.

o Diversify membership Expand membership to include diverse groups rather than being limited to specific income groups such as the poor. Doing so allows coops to diversify their products/services and portfolio, thereby improving their capacity to serve the poor and their sustainability. Diversity in membership will also lead to diversity in interests which have to be met thereby forcing coops to provide diversified products and services.

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Specially, SACCO products are basically limited to savings and loans. Yet, in many cases there are opportunities for them to provide additional services both to members and others including handling transfer of payments such as remitances, supplying consumer itmes, etc. Rolling out the credit life insurance that some urban SACCOs have already introduced may be another important measure by which SACCOs improve thier services.

o Enabling legislation and regulationA sound cooperative sector needs an enabling legislation and regulation. Thus, laws governing cooperatives should be continuously revised to keep up with the country’s dynamic economic system. In this regard, a special legislation that specifically focuses on SACCOs based on recognition that SACCOs are financial institutions and hence treats and nurtures them as such is required. However, in view of the large number and dispersed location of the financial coops, formally regulating them may be demanding in terms of capacity. The National Bank of Ethiopia (NBE) cannot be expected to handle this on top of its current responsibility of regulating and supervising banks and Microfinance Institutions (MFIs). Specific recommendation regarding the regulatory arrangement should be based on a careful consideration of a number of issues including capacity issues as well as the effects of different arrangements on the growth and sustainability of financial cooperatives which is beyond the scope of this study.

Reference

Agricultural cooperative sector development strategy 2012-2016.

National Bank Of Ethiopia (NBE). 2013. Annual Report.

Federal cooperative agency .2014. Annual Publication, Vol1,No11

BEST, J. R. 2005. Market-Based Management: Strategies for Growing Customer Value, 4th Edition, Prentice Hall of India. journal of marketing.

ETHIOPIA, I. G. O. 1960. Commercial Code of the Empire of Ethiopia of 1960, NegaritGazeta - Extraordinary Issue No. 3 of 1960, Addis Ababa.

NEGARITGAZETA, F. 1998a. Cooperative Societies (Amendment) Proclamation No. 402/2004, Addis Ababa, Ethiopia.

NEGARITGAZETA, F. 1998b. Cooperative Societies Proclamation No. 147/1998, Addis Ababa, Ethiopia.

SERVICES, P. C. A. I. 2006. Developments in Saving and Credit Cooperatives in Ethiopia: Evolution, Performances, Challenges and Interventions with Particular Emphasis on RUSACCOs (September): Addis Ababa, Ethiopia.

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Assessment of Managerial Efficiency and Effectiveness of Multipurpose Primary Agricultural

Cooperatives in East Wollega Zone, Oromia, Ethiopia

By Asfaw Temesgen Bari

Wollega University, College of Business and Economics, Department of Cooperative,

e-mail asfaw.tembari@gmail.com, P.O. Box 596 Nekemte, ETHIOPIA

National conference organized on Cooperative Movement in Ethiopia by Mekelle University, College of Business and Economics in collaboration with Federal Cooperative Agency July 3-4, 2014, Mekelle

Abstract

A study was designed to examine the managerial efficiency and effectiveness of cooperative leaders of primary multipurpose agricultural cooperative in serving their member in East Wollega Zone. 245 individual respondents were selected from ten primary multipurpose cooperative societies from three districts using systematic sampling technique for primary data collection; 12 key informants and five focus group discussion were administer; and structured scheduled questionnaires, open ended in-depth interview and checklist data collection tools were used respectively. The secondary data were collected from documents of sample cooperatives societies such as annual reports and minutes of the management and other committees of the cooperative.

The result of the research indicated that the cooperative leaders in the study are managerially inefficient and ineffective because it is found that the services delivered were inadequate, with no quality, the fail to minimize cost of operation, service are not timely provided as per member need and weak capital mobilization generally the overall management performance of the leader are low consequently resulted in low member satisfaction. The main factors that affect the managerial efficiency and effectiveness of the cooperative leaders negatively are commitment and competency of management committee; market information and market research, cooperative training, incentive.

For improving the managerial efficiency and effectiveness of the cooperative leaders it is recommended that the cooperative need to provide programed training and elect leaders with relatively educated and committed; the leaders need to be hunt market information and conduct member need assessment to provide demand driven services so as satisfying members in service. And also cooperative promotion office or the cooperative policy maker required to device motivational schemes which would be inspire the leader for their striving efforts to serve members efficiently and effectively.

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1. IntroductionCooperative societies are member owned and controlled organization formed by people of similar

problem. Cooperatives are business enterprise established mainly for providing service for members.

This entails that unlike corporate business organization,cooperatives are service motive organization.

Cooperatives must maintain effective interactive and collaboration between leaders, members,

employees and marketing operators so as enhancing its business performance which need management

dedication as one measure of managerial efficiency. This is due to that managerial efficiency and

effectiveness in cooperative is indispensible for providing sufficient services for members and

determining sustainability of the cooperative in the market. As it is indicated by Ariyaratneet. al(2000)

efficiency and effectiveness of cooperative is a critical for future individual cooperative endeavor.

Thus, Cooperative leaders, most importantly management committee required to be competent in

identifying main members’ demand and needs, the key markets and marketing agents and planning

accordingly, to use the limited cooperative resources effectively for producing goods or providing

services in order to accomplishing the organizational goals and objectives of the cooperative for

satisfying members’ need for which the cooperatives are established (Krishnaswami and

Kulandaiswamy, 2000).

Vibrant cooperative leaders are effective in delegation of authority and communicating internal and external

stakeholders planning based on members’ need and exploiting the market and policy opportunities for

producing intended result that satisfying members need through efficient cooperative resource utilization and

formulating strategies and policies (Boldenet.al, 2003).

Purpose and objective

Present research on “Assessment of Managerial Efficiency and Effectiveness of Multipurpose Primary

Agricultural Cooperatives in East Wollega Zone, Oromia, Ethiopia” is designedtoexamine the managerial

efficiency and effectiveness of cooperative leaders of primary multipurpose agricultural cooperative in serving

their member in east Wollega zone.

The general objective of the study is examining managerial efficiency and effectiveness of cooperative leaders

of primary multipurpose agricultural cooperative in serving their member in east Wollega zone.

Specific objectives

i. To study efficiency and effectiveness of cooperative leaders in serving membersii. To investigate the indicators of managerial efficiency and effectiveness of cooperatives leaders.iii. To identify factors related to managerial efficiency and effectiveness of cooperatives leaders

2. Brief literature review

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Efficiency and effectiveness are mutually exclusive things. For a manager, they are both fundamental

preconditions (Drucker, 2005). From this being effective manager is able to properly analyze the

evolving environment and selecting the right things as the areas of strategic focus for the enterprise

performance. On the other hand, being efficient requires a carefully carved cultural and operational

framework which helps the manager to achieve a particular degree of success, given the level of

resources applied to a particular objective (Halager, 2008). However, efficiency in cooperative cannot

be measured by this yardstick (index) because cooperatives are service oriented rather than financial

returns for member on their investment in their cooperative (Krishnaswami and Kulandaiswamy, 2000).

Instead, managerial efficiency in cooperative is measured by the extent of effective timely and adequate

service rendered by the cooperative for their members, membership coverage and member users’

satisfaction.

To be competitive, cooperatives have to offer efficient services at attractive prices. In cooperative, efficiency

increased through minimizing business operation costs while maintaining quality of services(Rouse and Von

Pischke 1997). This can be achieved through improved management practices; management training

programs,member education andimplementing democratic control intelligently all help toimprove the efficient

use of available resources.These are consistent with efficient operations and long-run sustainability of

cooperative society. Therefore, managerial efficiency is essential in cooperative business to produce a goods or

service that primarily satisfies members and then earns fair margin to survive in competitive market so as

providing sustainable services.

Cooperative leaders would be effective in serving members by their striving efforts as a work team

(Schermerhorn et. al 2010) for achieving the goal of the cooperative in satisfying member-owners needs and

sustaining the cooperative in the competitive market through providing goods and services of member need

timely, mobilizing adequate capital internally and practicing democratic control by members.

From all these, leaders of the cooperative as a managerial teams at each hierarchy should be set

objectives based on the need and demand of members, dedicating for serving members need,

communicating each other for evaluating the business performance as how far it satisfying the need and

demand of members so as creating viable cooperative. This is for the fact that cooperative managerial

efficiency is measured in terms of securing members benefit and creating the feasible society in the

long-term. And also it is about effective in resource utilization for realization of maximum services for

members.

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3. Research Methodology

The target population for the present study is the members of primary cooperative societies in East Wollega

zone. There are 238 are multipurpose farmers’ cooperatives whose members are 110,440 and capital of

42,810,934.35 (East Wollega Zone Cooperative Promotion Office 2013). Ten primary multipurpose cooperative

societies with members of 4895were selected from three districts using random sampling procedure. 245

individual respondents were selected using systematic sampling technique from sample societies

proportionally. This accounts for 5% of members of cooperative societies under study. Table 3.1 presents the

sample distribution. Twelve (12) key informants were selected; threefrom the Zone, six from the districts and

from farmers’ cooperative union (3) for which the sample cooperatives are affiliated using purposive sampling

technique and five focus group discussions were managed with management committee of the sample

societies.

Table 3.1

Sample distribution

sample WoredasNo of

sample coop

Members Sample respondents

Male Female Total Male Female Total

Guto Gida 4 2114 358 2472 108 16 124

Gobu Sayo 3 1195 187 1382 60 9 69

Sasiga 3 910 131 1041 45 7 52

Total 10 4219 676 4895 214 31 245

Present study used both primary and secondary data. The primary data were collected from individual

respondents, key informants and focus group discussion using structured scheduled questionnaires, open

ended in-depth interview and checklist respectively. The secondary data were collected from documents of

sample cooperatives societies such as annual reports and minutes of the management and other committees of

the cooperative. The collected data were analyzed by using SPSS Version 20 and presented in frequencies,

descriptive statistics, and inferential statistics used for generalizing the findings from sample cooperative to the

all similar cooperative in the study area.

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4. Result and discussion 4.1. Managerial efficiency and effectiveness

4.1.1. Managerial efficiency and effectiveness of cooperative leadersThe respondents have asked their views about the managerial efficiency and effectiveness of their cooperative

leader and found out that 11.0% of the respondents are agreed, however 85.3% of the respondents are argued

that the leaders of cooperative under study are inefficient and ineffective in serving members need, mean of

respondent is 4.04 and standard deviation 0.960 (table 4.1).

Table 4. 1 Cooperative leader are managerial efficient and effective

Categories Frequency Percentage Mean SDStrongly agree 6 2.4

4.04 .960Agree 21 8.6Neutral 9 3.7Disagree 131 53.5Strongly Disagree 78 31.8Total 245 100.0Computed from field survey, 2013

This implies that majority of the respondents agreed that leaders of cooperative under study area are inefficient and ineffective in serving members. Results from Key informant interview also support this finding; however, the result from focus group discussion revealed that the cooperative under study are managerially, efficient and effective. Based on the result from individual respondents and key informants, cooperative leaders in the study area are managerial inefficiency and ineffectiveness.

4.1.2. Indicators of managerial efficiency and effectivenessManagerial efficiency and effectiveness of the cooperative leaders is justified by use of indicators. The opinion of respondents, the mean and standard deviation are shown in the table 4.2. From the result it is found that the service by sample cooperatives is inadequate (76.6% of respondents) as compared to members’ needs, the quality of most of the services are not good (66.5% of respondents) and cost of operation is relatively high (58.7% of respondents). However cooperative in the study are good in providing service with lower than market price (63.7% of respondent).

In similar way, it is found that the overall service performance of the cooperatives are low (64.5% of respondents), leaders are not serving members on time when members need (72.7% of respondents), capital mobilized from member is inadequate (61.6% of respondents), and generally members are not satisfied with the service of the cooperatives (66.9% of respondents).

Table 4.2 indicators of managerial efficiency and effectiveness of cooperative leaders

Efficiency and effectiveness

Categories Responses Frequency Percentage Mean SD

Service adequacy Adequate 57 23.3

1.77 0.423Inadequate 188 76.7Total 245 100.0

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Efficiency Service quality

Good 82 33.51.67 0.473Bad 163 66.5

Total 245 100.0

Price of serviceLower than market price 156 63.7

1.51 0.739At market price 53 21.6Higher than market price 36 14.7Total 245 100.0

Relative Cost of operation

High 144 58.71.41 0.493Low 101 41.3

Total 245 100.0

Effectiveness

Overall cooperative performance

High 87 35.51.64 0.480Low 158 64.5

Total 245 100.0Service delivery time

Timely 67 27.31.73 0.447Not timely 178 72.7

Total 245 100.0Capital mobilizing from members

Adequate 94 38.41.62 0.487Inadequate 151 61.6

Total 245 100.0Member satisfaction on service

High 81 33.11.67 0.471Low 164 66.9

Total 245 100.0Computed from field survey, 2013

Thus, all of these indicators justify that cooperative leaders in the case are managerially inefficient and ineffective for they were not achieving the goal of the cooperatives as per members’ needs. The result from KI also support most of these finding such as service inadequacy, high cost of operation, low overall performance of cooperative, and less member satisfaction.

4.2. Factors for managerial efficiency and effectiveness of the cooperative leaders4.2.1. Descriptive analysis

4.2.1.1. Management factors Management factors for managerial efficiency and effectiveness of the cooperative leaders are grouped into two as commitment and competence of cooperative leaders. Accordingly, as indicated in the table 4.3 below, 18.0% of the respondents perceived that cooperative management committee (leaders) are committed nevertheless 79.6 of the respondents are responded that the cooperative leaders in the study area are not committed to service the members efficiently and effectively. On the other hand 62.04% of respondents are said that cooperative leaders are not competent to perform cooperative societies’ business.

Table 4. 3 Cooperative leaders are committed and competent

Categories Frequency Percentage

Management factors

Commitment of cooperative leader

Committed 44 18.0Neutral 6 2.4 Mean 3.74Not committed 195 79,6 SD 1.139Total 245 100.0

Competent of the cooperative leader

Competent 93 37.96 Mean 1.62Not competent 152 62.04 SD 0.486

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Total 245 100.00Computed from field survey, 2013

The data collected from the Key Informant also confirmed the results from the respondents. However result

from FGD argued it. Educational level of the management committee is low that affect the competency.Thus,

these management factors are affecting managerial efficiency and effectiveness of the cooperative leaders

negatively. That means the result indicates that primary multipurpose agricultural cooperatives leaders in the

study are have little leadership and managerial capacity to pass efficient decision and effective resource

allocation and utilization to the best of members interests. These results are in concurrent with findings by

Bezabih (2012), which stated as cooperatives in Ethiopia are low in leadership and management capacity

because of low interest and literacy gap from the cooperative leaders.

4.2.1.2. Market factors As depicted in the table 4.5 below, 82.4% (62.8% disagree and 19.6% strongly disagree) of the respondents

disagree that cooperative leaders in the study area are unable to collect and use market information and

73.8% of the respondents agree that the cooperative under study fail to conduct market research to identify

market need and members need to plan members’ service.

Table 4. 5 uses of market information and market research by cooperative leaders Categories Frequency Percentage

Marketing factory

Collect and using market information

Strongly agree 12 4.9Agree 31 12.7 Mean 3.80Neutral 0 0.0 SD 1.052Disagree 154 62.8Strongly disagree 48 19.6Total 80 100.0

Conduct market research and use it

Yes 65 26.2 Mean 1.73No 180 73.8 SD 0.442Total 245 100.0

Computed from field survey, 2013

The results from KII are also agreed with such views of the respondents. Hence, these market factors also

negatively affecting managerial efficiency and effectiveness of the cooperative leaders. This result also agreed

with finding of Asfaw (2011) that indicated management committee of primary multipurpose agricultural

cooperatives in East Wollega zone failed to collect and use market information for undertaking marketing

activities to serve member effectively.

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4.2.1.3. Cooperative factors

As revealed in the table 4.6 below, 82.4% of the respondents agree that the multipurpose primary agricultural

cooperative societies in the study area were not providing training for the leaders to capacitate the leader and

75.1% of them said the cooperative failed to provide incentive for leaders due to low profit from the business

so as the leaders are not motivated to serve members in addition to these, 76.3% of the respondents agreed

that the cooperative operate business with low capital.

Table 4.6 provision of training and incentive and capital adequacy of cooperatives

Categories Frequency Percentage

Provision of training for leaders

Yes 43 17.6 Mean 1.82

No 202 82.4 SD 0.381

Total 245 100.0Provision of incentive for leaders

Yes 61 24.9 Mean 1.75

No 184 75.1 SD 0.433

Total 245 100.0

Capital of the cooperative

Adequate 58 23.7 Mean 1.76

Not adequate 187 76.3 SD 0.426

Total 245 100.0

Computed from field survey, 2013

Results from the KII and focus group discussion are also support these views of respondents. As well as the data

from the sample cooperative shows that there is no continuous training, no any incentive for the leaders and

the cooperative operated business with weak financial status. Therefore, lack of training and incentive for

leaders and operating business with inadequate capital are cooperative organizational factors affecting

cooperative managerial efficiency and effectiveness negatively.

This is in harmony with the finding of study by Chambo, (2009) in Africa and Prakash (2000) in Japanwhich

pinned out that agricultural cooperative in Africa are not yet cultivated committed and qualified leadership and

management due to lack of objective based training and incentive which attracts them.

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4. Conclusion and Recommendations4.1. ConclusionThe study is focusing on assessment of managerial efficiency and effectiveness of primary multipurpose

agricultural cooperative and identifying critical factors that affecting cooperative managerial efficiency and

effectiveness. Hence from this investigation the following conclusions have been made.

The result of the study clearly shows that the managerially the elected cooperative leaders in the study area

are inefficient and ineffective. The indicators of the managerialinefficiency and ineffectiveness according to the

finding are the cooperative management committee are low in educational level even most of them are with

primary education. Business planning and services were not adequate and also not diversified. At the same

time not based on members demand and not, as well as services were not supplied timely.

According to the finding of the study, none commitment and low competence of cooperative leaders from

management factors; fail to use market information and conduct market research from marketing factors and

lack of consistent leaders’ training and lack of incentive for management committee are found to be factors

that negatively affecting the elected cooperative leaders to serve the member effectively and efficiently.

5.2. RecommendationBased on the study, the following points are suggested for consideration in improving the efficiency and

effectiveness of the multipurpose agricultural cooperatives in the study zone.

For serving members efficiently and effectively, cooperative leaders required to plan services and diversify

services to meet members’ needs; deliver in time of their need especially those services which are time

bounded such as agricultural inputs. Thus, it is recommended that professionalize the business through

employing trained paid staff and delegate the employed professional staff to undertake routine business

activities and technically advice management committee of the cooperatives.

Commitment and competence of cooperative leaders are most important aspects of the managerial efficiency

and effectiveness of the cooperative leaders. So that it is advised that the cooperatives need to elect relatively

educated leaders among the members and providing training and education for elected cooperative leaders to

build competence and commitment of leaders to increase sense of ownership of the leaders and effectively

serving members.

Market information and market research are significantly important for improving managerial efficiency and

effectiveness of cooperatives. Therefore, cooperative in the study area need to gather market information and

utilize it and conduct market survey for identifying what members of the cooperatives need so as implement it

for efficiently and effectively serving members.

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For doing such, cooperative promoters and cooperative extension agents required to assist the cooperative

management committees and recommended to take leading role in improving the managerial efficiency and

effectiveness of cooperatives.

Policy issues the policy makers in the cooperative sector required to provide policy framework for

professionalizing primary cooperative societies’ business management through recruiting skilled in cooperative

at least technical and vocational training college graduates. The policy makers also required to provide training

and education schemes for building the capacity of the elected cooperative and device the system for electing

leaders relatively with higher education level among the members.

ReferencesAriyaratne B. Chatura, Featherstone M. Allen, Langemeier R. Michael, and Barton G. David

2000. Measuring X-Efficiency and Scale Efficiency for a Sample of Agricultural

Cooperatives Agricultural and Resource Economics Review 2912(October 2000) 198-

207. Northeastern Agricultural and Resource Economics Association

Asfaw, Temesgen (2011). Grain Marketing Performance, Problems and Prospects of

Cooperative: A Study on Multipurpose Agricultural Cooperatives in East Wollega

Zone, Oromia National Regional State. Ethiopia. Lambert Academic Publisher,

Germany.Bezabih Emana 2012, Cooperative Movement in Ethiopia:Workshop on perspectives for

Cooperatives in Eastern Africa October 2-3, Uganda

Bolden R., Gosling J., Marturano, A. and Dennison, P. 2003. A Review of Leadership Theory and Competency Frameworks. Centre for leadership studies.

Chambo Adam Suleiman 2009. Agricultural Co-operatives: Role in Food Security and

Rural Development. http://www.ecoinnovation.net.node.113

East Wollega Zone Cooperative Promotion Office, 2013. Annual Report. (Unpublished)

Nekemte, Ethiopia

Halageri Sadananda 2008 Efficient Versus Effective. www.thinkingmanagers.com accessed

on July, 2013

Drucker Peter 2005 Efficient Versus Effective. http://www.thinkingmanagers.com/peter-

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druker-efficient-effective m accessed on July, 2013

Krishnaswami V. and Kulandaiswamy O.R . (2000). Cooperation Concept and Theory. Tamilnadu: Arudra Academic Publisher.Prakash Daman, 2000. Development of Agricultural Cooperatives. Relevance of Japanese

Experiences to Developing Countries.www.uwcc.wisc.edu/info/intl/daman_japan.pdf

Accessed on July 06, 2009

Rouse G. John and Von Pischke D.J. 1997. Mobilizing Capital in Agricultural Service

Cooperatives.FAO publication

Schermerhorn, John R. Jr. Hunt, G James, Osborn N Richard and Uhl-Bien Mary 2010.

Organizational Behavior 11th ed. John Wiley & Sons, Inc.

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Distribution Channel System Management (The Role of Consumer Cooperatives): A look at The

Practice of some Selected Fast Moving Consumer Goods (FMCG) in South West Ethiopia

(Research Paper submitted to Symposium organized by Mekele University; Business and Economics College; In Collaboration with Federal Cooperatives Agency (FCA))

The theme: Agricultural Production and Marketing

Researchers Address

1. Geremew Teklu ( PhD candidate): Jimma University; Business and Economics College; Management

Department

- Mail: geremewt@gmail.com

- Telephone (mobile): 0911-116559

2. Tariku Dejene (Asst. Professor): Jimma University; College of Public health and Medical Science;

Department of Epidemiology

- Mail account: tariku_dejene@yahoo.com

- Telephone (mobile) 0911-727342

Abstract

Consumer coops play pivotal role as channel members that adds time and place value to customers. Fast moving consumer goods (FMCG) pass through different channel paths and these channel members perform different distribution channel functions. FMCG are those goods which have short shelf life and high turnover. Ethiopian governments used to issue enactments to govern the behavior of channel players and protect end users rights. Decree No. 44/1960, proclamation No.138/1978 and Proclamation No.147/1998 state how citizens can form a cooperative society to protect their common economic and social interests.

The main objective of this paper was to identify the roles channel members play in the distribution activities of the selected FMCG in South West Ethiopia. The goods considered in this study are cooking oil, Sugar, and Wheat flour. The study tried to look the network of distribution channel in three different areas (Jimma Zone - Jimma Town, Illu Ababora – Gambela and Bonga – Mizan – Tepi).

The study followed exploratory and descriptive research design. Data were collected from the distribution channel members: consumers, Consumer Coops, wholesalers, retailers and concerned government officials through structured and unstructured questionnaire, interview schedule and observation. Both qualitative and quantitative analysis techniques were employed to convert the raw data into information. Quantitative data

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were analyzed using SPSS. Factors were rated to see their magnitude of significance to overall channel distribution performance.

The major findings show that Consumer Coops played week role and thus there is availability problem on the products in the area considered. Having the Coops in the market system, the price used to fluctuate time and again that hampered end consumers’ daily living. Product availability and price influenced customer’s satisfaction most out of the variables considered in this study. Consumer Coops in ‘kebeles’ and public organizations played their part in minimizing the market problem but their effort was found less than was expected.

In the short run the government should take market settlement measures whereas in the long run it has to limit its role to facilitation and law enforcing.Wholesalers and retailers should cooperate with the government to solve the market problem. Consumer Coops administration and implementation capacity needs to be strengthened through training and support.

Keywords: distribution channel system; customer satisfaction; fast moving consumer goods; channel functionality, Consumer Coops, and South West Ethiopia.

1. Statement of the ProblemHistory witnessed consumer cooperatives play pivotal role in the economies endeavor to bounce back from the economic recession of 1930. Wars the world experienced before and after the recession hampered economic performances of countries. However, countries used cooperative societies to regain back the lost statute. Cooperative societies served as a means of equitable resources distribution among citizens and thus combating poverty; (Johnston; 2004). He further notes that cooperative societies contribute much to the endeavor to achieve Millennium Development Goals (MDG) of eradicating poverty and hunger.

Decree No. 44/1960, 241/1966 proclamation No. proclamation No.138/1978, Proclamation No.147/1998 and Proclamation No.402/2004 state how citizen can form a cooperative society to support and protect their common economic and social interests. According to Dagnachew and Addissie (2009); the attempt was futile as it never brought about change of fortune for the members. Because all the necessary pre-requisites for the formation of cooperatives wereabsent. The whole process was simply a change in form rather than in substance.

Stanton(1996) explains, FMCG are those goods which have short shelf life and high turnover. He further argues that these items demand special treatment in their distribution process. As companies producing these items have very wide range of business operations and large number of products, it is

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neither effective nor efficient for them to sell directly to the final consumers. Thus, different players come in as either as cooperatives or private traders.

FMCG are products that have short shelf life thus replaced within a year and are low priced. Among diverse mixtures of FMCG, this study considered Sugar, Cooking oil and Wheat flour.

The Fast Moving Consumer Goods (FMCG) sector is a corner stone of Ethiopian Economy. This sector touches every aspect of citizens’ life. It constitutes a large part of consumers’ budget in all aspects. Hence, Consumer Cooperatives play pivotal role to safeguard members’ common economic and social interests. Ethiopian governments used to issue policies and procedures to govern the behavior of channel players and protect end users rights. Cooperative societies used to be supported by lows and enactments.

Ethiopia has faced recurrent ups and downs in product shortages in this industry. Product price has fluctuated now and then that jeopardized consumers’ life. This affected consumer behavior expressed in different ways like purchased decision postponing, switching to low quality products, lowering purchase quantity, and many others. Thus, the cause of the problem needs to be investigated.

Therefore the main intention of this paper was to identify the roles played by the channel members (Wholesalers, Retailers, Cooperatives and Public administration) and the level of consumers’ satisfaction. The items considered for this study were Cooking oil, Sugar, and Wheat flour. The study tried to look the network of distribution channel in three different areas (Jimma Zone - Jimma Town, Illu Ababora – Gambela and Bonga – Mizan – Tepi).

The guiding research questions for this study were:

1. What does the distribution network of the selected FMCG looks like?2. What are the roles played by the members in the selected FMCG distribution channel in South West Ethiopia?3. What are the factors that contribute to Customer Satisfaction with regard to the distribution system of the

selected FMCG SW Ethiopia?

2. Objective of the Study The basic objective of this study was to assess the role of channel members and the level of customer satisfaction.

Specifically this study tried to address the following objectives:

1. To examine the distribution network of the selected FMCG.2. To identify the functions performed by the distribution channel members in the selected FMCG distribution

system in SW Ethiopia?3. To assess the factors those influence Customer Satisfaction on distribution channel system of the selected

FMCG.

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3. Research Design & MethodsThis part the report deals with the research design & methods that were used while sample selection, collecting data, and ethical grounds maintained in accomplishing the research objectives.

3.1 Research Design The study used exploratory and descriptive research designs that enabled to identify and elaborate on the FMCG distribution network and the roles played by the channel members. Survey research method was applied to assess the existing distribution network in the industry specified and to examine its role to the existing level of product accessibility.

3.2Instruments and Data collection techniques The necessary primary data were gathered through questionnaire, interview schedule and observation. Structured and unstructured questionnaire were administered to the explored distribution channel members and their customers. Statements that represent variables determining product accessibility were designed and converted into items which then were placed on scale (5-point Likert-type) and used in developing the questionnaire for final study. Interview was conducted with the appropriate government officials and major wholesalers. In addition, the researchers used their and data collectors’ observation to explore the existing distribution network.

The suitability of the question statements for the study, however, was judged by applying appropriate statistical techniques (reliability and factor analysis) and check they are fit for the study. Items pertaining to satisfaction with overall services and experiences with past channel members performance were also introduced. Additionally, the questionnaire tried to maintain a section on organizational (demographic) profile to further study the association of organizational variables (e.g. Capital, Service year, and Profit sought) with overall channel member performance/activities.

Table 1: Factors/Items Determining Customer Satisfaction and product availabilityDimension/Item

Product availability/channel accessibility

Channel member Competitiveness

Price charged

Product quality

Organizational structure and objectives

Order receiving and Delivery time

Value added by channel members

Product line carried ( length, width, depth, & consistency)

3.3 Sampling Technique and Sample size

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The population of the study consisted of FMCG distribution channel members and final consumers which constituted wholesalers, retailers, Consumer Coops and consumers. Selection of study units was carried out at different stages. Initially, after obtaining the list of whole sellers found in SW Ethiopia (Jimma zone – Jima town, Bonga - Mizan-Tepi, and Illu Ababora - Gambella) from Jimma area “JIN_AD”, 18 whole sellers, three from each study area, were selected using a stratified random sampling technique, strata was formed based on the product type under study. From these wholesalers, 103 retailers (Including the coops) were selected using simple random sampling technique and finally 384 consumers were interviewed (4 consumers from each retailer) by using convenience sampling technique with the approach of systematic random sampling technique based on the daily flow of customers at regular interval.

To obtain the required sample size of retailers and end users, satisfaction of customers was considered as a main variable of interest.

Sample size determination formula (Cochran, 2003) (Single proportion formula)

• n=sample size• P=the degree of satisfaction• d= margin of tolerable error• Z=reliability coefficient

3.4 Data analysis techniques

The collected data were edited, coded and entered into a computer using SPSS 16 for windows. Descriptive analysis together with multivariate (factor and logistic regression techniques) analyses was made. All the scale items with a factor loading of 0.5 and above were accepted for final analysis.

Significance was declared if p-value is less than 0.05. Tables and graphs were used to present the result of analysis.

3.5 Definition of terms

FMCG: Fast moving consumer goods include sugar, cooking oil and wheat flour.

4. Discussion 4.1 Networking

Dagnachew and Adissie (2009) states that coops in the previous regimes did not play their role for different reasons. Johnson (2004) supports this stance as, in fact; cooperatives – as autonomous member-owned businesses - had rarelybeen tried. Likewise, the coops we have to date in the area are not doing their job properly. The findings also show that the distribution network of the items under study is totally controlled by the government. The Ministry of Trade and Ministry of Finance jointly agreed to cooperate and manage the existing distribution problem of these products. The Ministry of Trade took over the importing process while the Ministry of Finance is financing it. Jin-ad takes care of the distribution of sugar and cooking oil while Ethiopian Grain Trade Enterprise manages the distribution of wheat flour to regions based on the quotas stated by the Ministry of Trade.

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n=[Zα

2√P (1−P)]

2

d2

The Ministry of Trade divides the imported items on quota bases to regions. According to the senior officer of the Ministry of Trade, the quotas are set based on population size and consumption pattern. Regional trade and market development bureaus again divide their share to their zones and towns on quota bases. According to the respective regional trade bureau officers, quotas to zones and towns are decided based on their population size and past consumption pattern.

Prices of these products are primarily set by the Ministry of Trade at national level. Respective regional trade bureaus calculate their costs of transportation, loading unloading and proposed profits to wholesalers and retailers and set the prices. Thus, prices at all levels of the distribution channel are stated and hence not competitive.

Ethiopian Grain Trade Enterprise and Jin-ad have different branches at different localities. Through these branches they distribute the items to the selected wholesalers and consumer cooperatives. The selected wholesalers in return distribute what they are given to their assigned retailers based on the quotas stipulated to retailers. The regional trade bureaus assign the selected and reported retailers by zones and town trade offices to wholesalers.

In addition to these privately owned wholesalers and retailers, the government is distributing these products through the use of consumer associations formed in different public organizations like schools, municipalities etc and government administrative structure such as “kebele”.

4.2 Market Characteristics

4.2.1 Consumer Market

Consumers are characterized by their demographics. Both male and females equally participate in the purchase of these items. Age wise the young and adult participates in this market. Almost half of the respondents are government employees. This can be attributed to the reason that the data was collected from towns. Average family size is 4.3 which is equal to Ethiopian Central Statistics Agency (CSA) report, 2005.The average monthly income is reported 1600 Birr.All the items were basically purchased by consumers for personal and/or family consumption. These items were mainly purchased form convenience/ ordinary shops. Local brands of sugar and wheat flour were used most while foreign brands of cooking oil were used most by consumers. This was justified by poor production capacity of cooking oil in the country. Most consumers used to buy these products monthly. This can be attributed to consumer respondents were government employees who earn their income monthly.

4.2.2 Retailer Market

An average number of retailers stayed in the business for four (4) years. This implies that the retailing business for the items under study is emerging. The working capital has more than doubled in this short life span in the business. This implies that there is an excellent opportunity of prosperity in the industry in shorter period of time.The majority of respondents produced the starting capital by their own and all were running licensed business in the stated area. It can be inferred that the role of credit providing institutions in this business is

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weak. The high magnitude increment in the working capital should have encouraged more retailers to the business. It did not happen implying there is some problem in the licensing procedures and requirements.

4.2.3 Wholesaler Market

The wholesaling market structure was characterized by government policy, functions performed, networking and profit sought. With the exception of profit, the rest implied there is poor wholesaling market structure. This is a market where few play significant role and there is frequent change of government policy and absolute government control that put the market in turmoil. Profit sought registered positive result because it is decided centrally by government. Government decides not only the price but also the distribution direction. The role of wholesalers in the market is to transfer the possession value to the retailers. That is why wholesalers were reported to hide the items to create artificial shortage to manipulate the price and earn more than the stated profit margin. The explicit emergence of the government in the market after 2010 aggravated the shortage problem and the extent of price fluctuation. Government lacked wisdom in managing the market that the problems still persists in the society.

Half of the wholesaling respondents were new to the business. Only few existed for more than five (5) years. This implies that there were few monopoly wholesalers in the area. Some of the wholesalers joined the business after the market has been observed to fail frequently recently. The government devised different supportive strategies to motivate business personalities to engage in this business recently. The majority of the respondents produced the working capital by their own and there is a substantial increase in their working capital.This implies the role of financial institutions in facilitating and stimulating this industry is weak. According to the existing literature, the substantial increase in the working capital observed was supposed to invite more competitors to the business but actually that did not happen.This can remark that there is some problem in licensing procedure and requirements by the government. All used to run a licensed wholesaling business. Half of the respondents engaged in wholesaling all the three items that made them multi dimensional businesses. There are researchers who recommend business to be multi dimensional in stocking these items against specialization as it helps to retain customers with variety of needs.

4.3. Satisfaction

4.3.1 Consumer Satisfaction

A considerable percentage of consumer respondents were not happy on overall service quality of sugar and cooking oil retailers. This was evidenced by their less interest to use their previous retailer and week interest in recommending their retailer to others. This is a big threat to retailers as their customers may shift away from them and produce a negative word of mouth against them that erodes their competitiveness.

Product availability, line carried and price have significantly influenced consumers’ satisfaction. The recurrent shortage and frequent price fluctuations observed in the market caused consumers to be dissatisfied. Some of the consumer associations and “kebeles” were reported to previlagize their relatives and neighbors while dividing the items. This partial treatment could cause some social problems such as conflict.

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4.3.2 Retailer Satisfaction

Eight satisfaction dimensions were raised to characterize retailers’ satisfaction on wholesalers’ services. These were product availability, competitiveness of wholesalers, price product quality, organizational structure, order submitting and delivery time, value added and product line carried. Among these, only product quality is found to satisfy its expected score. This is so because wholesalers did not interfere with the quality of the items produced in their manufacturers. Even if the remaining factors found below the expected score for a positive result, customer handling, product line carried and quality influenced retailers’ satisfaction most. These factors failed to meet the expectation because the wholesaling business used to be run traditionally for a longer period of time by few players and hence it lacked competitive behavior. Thus, significant number of retailing respondent was not happy on the services of wholesalers.

Service qualities of wholesalers were not complete as significant percentage of respondents was not happy about it. Even if the services were not to the expected, retailers were ready to come again and recommend their previous wholesalers to others. This implies that retailers have no better option to consider as alternative,as the competitiveness was found to be poor above. Thus, with all their dissatisfaction they came back to their previous wholesaler.

4.3.3 Wholesaler Satisfaction

Wholesalers were not happy basically for the government intervention and quota policy. Some wholesalers did not trust the government administration structure. They claim the administration is corrupt and weak.

There were zone or town trade bureaus those were reported to provide more than one trade license for their relative wholesalers. The administrative problems observed in the government structures aggravated the problem. Some zones or towns were not ready in terms of experts and office facilities to implement what the central government has planned. Thus, wholesalers agree government is responsible for the problem created.

On the contrary, the Ministry of Trade senior expert on this regard insists that the government imports these items and distribute on big subsidy. Thus, our market price is lower than the neighboring countries’ market price. Some wholesalers were found to export these items to the neighboring countries market.

5. Conclusions and Recommendations5.1 Conclusion

The finding shows that the distribution network in the area is controlled by the government. Even thought regimes enacted and decreed policies and laws, cooperatives in general and consumer cooperatives in particular did not play eminent role to solve the problem.Channel members did not add functional value on the items but time and place.

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Consumers were not happy on the services of the retailers. In return retailers were not happy on the services of the wholesalers. The wholesalers were not happy on the role of the government in the distribution system. The role of the wholesalers was transferring the items from either Jin ad or Ethiopian Grain Trade Enterprise to retailers the stated quota at the stated price and the role of retailers was moving the product to the consumers on their demanded quantity for the stated price. However, there were times when retailers could not get the items from wholesalers and thus the items disappear from the shelves for consumers. On the contrary, some retailers used to sell the items in the back door for higher price than was stated.

Despite some wholesalers and retailers has politicized it, legalizing the traditional market system has shown some improvement. As requirement wholesalers and retailers are supposed to work only on items they got license from the concerned government office. However, there were administrative problems from the government side. Zones and woredas were not ready in terms of human resource, office facility and commitment to effectively manage this market.

5.2 Recommendation

Based on the findings obtained from the result the following recommendations are forwarded to the concerned stakeholders of the distribution system.

The biggest problem observed in the market is supply shortage and channel members misbehavior. Importing more quantity can solve this problem in the short run and massification of local production of the items solves the problem in the long term.

According to Dagnachew and Addissie (2009); cooperatives are built on such noble values as self-help, self-responsibility, democracy, equality, equity, freedom, mutual responsibility and togetherness. Cooperatives are, therefore, the outcome of the coming together of citizens for a common good and the need to support oneself as well as those who are part of the public at large. Therefore, supporting financially and enabling the administration capacity of the cooperative would have not only social but also economic return. Thus, the ministry of finance and/or the ministry of trade at both federal and regional level should strengthen the existing support to the consumer cooperative societies.

Wholesalers should update their working system in a way that fits with the contemporary business requirements and the government should support this endeavor. Traditional process and family and blood tied system will not help them succeed in the long run. Therefore restructuring their work process professionally starting from their thinking towards their customers, other wholesalers, consumers, the government and their own should be interwoven in good faith for multilateral benefit. Honesty should be their best policy in networking the distribution system. Cheating and partiality will not help them maintain their long term objectives, if they have any.

Retailers too, like wholesalers need to develop community service providing attitude than only profit collection. They need to build trust in their customers. Hiding the items in their back side won’t enable them to cultivate their long run stay with their customers. Thus they need to be long run sighted in their endeavors.

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Consumers should strengthen their association as consumer cooperatives. Members should contribute their knowledge and time for the betterment of protecting their right and securing their benefits. Otherwise it will remain simply symbolic with no observable effect. Unless the association is run free from the influence of politics, it will attain the objectives and purpose will be mixed. This is what is observed in some consumer associations; role confusion.

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Jap, Sandy D and Erin Anderson (2003), "Safeguarding Interorganizational Performance and Continuity Under Ex Post Opportunism," Management Science, 49(12), 1684-1701.

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Philip Kotler, (2002): Marketing Management: 10th ed. New Jersey, Prentice-Hall, IncKotler, Philip, (2004). Principles of Marketing, 10th Ed. Prentice-Hall Inc, New DelhiLambe, C Jay, C. Michael Wittman, and Robert E. Spekman (2001), "Social Exchange Theory and Research on Business-to-Business Relational Exchange," Journal of Business to Business Marketing, 8(3), 1-36.Lilien, G.; Kotler, P.; Moorthy, K. (1992), “Marketing Models.” New Jersey: Prentice-Hall,Mallen, B. (1973), “Function Spin-off: A key to Anticipating Change in Distribution Structure”, Journal of Marketing, Vol.37, No.3, pp. 18–25.March, James G. (1994), A Primer on Decision Making: How Decisions Happen. New York: The Free Press.McCammon, B.C. and Little, R.W. (1965), Marketing Channels: Analytical Systems and Approaches, New York: John Wiley & Sons, Inc.M. Mohan; Economic and Political Weekly, Vol. 5, No. 22 (May 30, 1970), pp. M59+M61+M63-M64; Published by: Economic and Political Weekly; Accessed: 04/10/2011 08:17Office of Fair Trade (2009), “Governments in Market: Why competition matters – a guide for policy makers” Crown publishers.Rampersad Hubert; 2001, 75 painful questions about your customer satisfaction; The TQM Magazine; Vol. 13, No 5, pp. 341-347.

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CONSUMER COOPERATIVES: INSTITUTIONALIZATION, PARTICIPATION AND ROLE

IN DISTRIBUTION OF ESSENTIAL COMMODITIES

A study on the SNNPR Region, Ethiopia

By:

Afework G. Kassa (MBA)

Lecturer, CBE, Arba Minch University, Ethiopia

PhD Scholar, Department of Commerce and Management Studies, Andhra University, Visakhapatnam, India

Address: Email: afitamission@gmail.com, Mobile: 0911 747371

Sileshi Mengistu(MA)

Lecturer, Collegeof SocialScience&Humanities, Arba Minch University, Ethiopia

E-mail:msil eshi @ya h oo.com

Abstract

The extant literature holds that Cooperatives have basic social, economic and political motives that underscore their relevance. In Ethiopia, the cooperative organization is deep rooted, particularly in the agricultural sector. The history of consumer cooperatives however, is only at its infancy whereby most are formed following the 2008 nationwide inflation, the basic purpose being distribution of essential commodities and stabilizing market price. On the other hand, there is limited empirical evidence regarding the characteristics of consumer cooperatives and the role they have been playing. This study, therefore, was undertaken with the rationale of filling this gap. The study followed a mixed methodology and through multi-stage stratified sampling technique, 17 kebelles were taken from 6 Cities in five zones in the SNNPR. In order to analyze the data, descriptive analysis was employed. In the findings, most of the cooperatives were found to be characterized by low member base, and limited Institutional autonomy, as most are influenced by the government structure, contrasting with the conventional belief for the autonomy of cooperatives. Concerning the availability, findings show that there exist an acute shortage of commodities and only two; i.e, edible oil

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and sugar are mostly available to consumers. In addition, results indicate that corruption, discrimination as well as lack of consumer ethics are prevalent problems in the distribution of the commodities. Based on the findings, it is recommended that consumer cooperatives should be institutionalized independently with wide consumer base and membership and the assortment of stocks should be broadened to include the basic food items where the inflation is higher of all. Furthermore, the public should be made aware of the role cooperation might play for economic growth of same in a self help empowerment so that they can join hands to solve their own problems by themselves.

Key Words: Cooperatives, Consumers, Commodities, Market stability.

I: INTRODUCTION

1.1 Background and Justification

Theconceptofhumancooperationcanbetracedbackasearlyastheemergence o f communallife.A

formalorganizedcooperationstartedhoweverin1884whenagroupof28tradersinEnglandformeda consumer(buyer)

cooperativehavingitsownbusinessprinciples.Different authors and institutions defined cooperatives in different

ways and meanings. For instance, Center for Cooperatives (2002) defined cooperative as a private business

organization that is owned and controlled by the people who use its products, supplies or services. Although

cooperatives vary in type and membership size, all were formed to meet the specific objectives of members,

and are structured to adapt to members’ changing needs. Chukwu (1990) Contemplate cooperative as a

democratically controlled business i.e. it is owned and controlled by the members and gives benefit to the

members.

The International Cooperatives alliance (ICA) defined cooperative in 1995 as an autonomous association of

persons united voluntarily to meet their common economic, social and cultural needs and aspirations through a

jointly owned and democratically controlled enterprise (ICA, 1995). The statement is often supplemented with

the distinguishing features of seven principles adopted by ICA. Moreover, according to the 1995 statement,

cooperatives function based on the values of self-help, self-responsibility, democracy, equality, equity, and

solidarity. In the tradition of their founders, cooperative members believe in the ethical values of honesty,

openness, social responsibility, and caring for others (ICA, 1995).

Inthedevelopedworld,theyhavehadatendency togrowandto

relymoreandmoreonprofessionalmanagement,whichhasmeanttheirbeingdistancedfrom

theirmembersandbecomingmorelike conventionalbusinesses(USAID, 2005;Holmen, 1990). In the developing

world, they have often been used as tools of development bygovernmentsthat have not allowed them to

become fully autonomous, member-ownedbusinesses. Depending on their stage of development and

institutionalization, there are four tiers ofcooperatives, namely primary cooperative, cooperative unions,

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cooperative federation andcooperative confederation.

1.2 The cooperative movement in Ethiopia

Thespiritofself-helpandco-operationhaslongbeenapartofthefarmingcommunityinEthiopia.There

havebeenmutualorganizationsinurbanareas,too.Whencommunitiesface problems,theydevisewaysof

addressingtheseproblemsbasedontheirvalues,cultureandbeliefs.InEthiopia,variousself-helpco-

operativesstillexist(Emana,2009;Alema2008,Dawit

2005).Theyarelocallevelinstitutionswithanorganizationalbasethatareindigenous,suchasDebo,Mahiber,

Iddir,andIqub.Thesetraditionalinformalcooperativeswouldbeabasefor formalcooperatives.

Ethiopiahasintroducedmoderntypesofco-

operativesinvariousareasofendeavorafterthemajorityofAfricancountries, wheretheirco-

operativeswereestablishedbytheWesternpowersduringtheir colonizationperiod.Infact,thefirst consumerco-

o

perativewasestablishedinAddisAbabain1945(ILO,1975).However,itwasafterdecreeNo.241of1964thatmodernor

‘Imported’ co-operatives wer eofficia l ly introduced( Alemayehu, 2002). The 1966 Cooperative Societies

Proclamation No. 44/1966 replaced decree number 241/1964 with the aim of providing a more

comprehensive situation for the formation of cooperatives of different kinds. These proclamations were

indications of efforts by the side of the imperial regime to provide proper basis for the formation of

cooperative societies.

Formation of different types of cooperatives continued with more emphasis and rigor in the military regime

and like other proclamations, the cooperative proclamation does not escape replacement. Thus proclamation

No 241/1966 was replaced by proclamation No. 71/1975. This proclamation gave rise to the formation of

peasant associations in which the objectives, power and duties of agricultural producers and service

cooperatives were stipulated. Following this to provide for a more inclusive legal framework, proclamation

number 138/1978 was issued with the aim of promoting different types of cooperative societies.

According to this new proclamation, four types of cooperatives societies were to be established: (i) Producer

Cooperatives; (ii) Service Cooperatives; (iii) Credit Cooperatives and (iv) Housing Cooperative. As a result of

collectivization policy of the government in the era 1990s, there were 3,723 producer and 4,052 service

cooperatives with a total membership of about 10 million persons. Even though the military government issued

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a proclamation to promote and support cooperatives, its main target was to promote the socialist ideology

throughout the rural Ethiopia using cooperative as a means of attaining its objectives. The members were

forced to form or join in to cooperatives (Zerihun, 1998).

The first two years in the tenure of the incumbent government were totally inattentive to the development of

cooperatives. Since 1993 however, the government was trying to facilitate the development of cooperatives.

This was witnessed by the development of an improved legal framework. Despite this however, the frequent

restructuring of government institutions involved in cooperative promotion has quite often hindered the

growth and development of cooperatives (Emana, 2009). In the meantime, many cooperative proclamations

and policies have been formulated, including a five year cooperative development plan. In addition to this, the

Federal Cooperative Agency was established with branches at Regional and local levels, providing for the

development of cooperatives. Emana (2009) reviewed secondary data from Chalchissa (2000), Lemma (2009),

(FCA 2007), and found that there were approximately:

149 cooperatives in the imperial regime up to 1974, 10,524 primary cooperatives during Derg regime (1974-1991), 7,366 cooperatives in 1991 in the fall of the derg regime, 8,009 primary cooperatives up to 2004, 14,081, cooperatives in 2005 19,147 cooperatives in 2006.

Hence, the total number of primary cooperatives rise in the incumbent government and the capital base of

cooperatives expand to ETB 1.475 billion (USD 147.94 million) The number of primary cooperatives further increased from 19,147 in 2006 to 24,167 in 2007(Emana, 2009).Proclamation no 147/1998 provided a new legal

framework with a more detailed manner for the formation of different cooperative associations. The emphasis is evidenced particularly in the policy documents envisaged in this decade.

1.2.1 Consumer Cooperatives

Consumer cooperatives are enterprises owned by consumers and managed democratically which aim at

fulfilling the needs and aspirations of their members (Sheffin, 2003). They operate within the market system,

independently of the state, as a form of mutual aid, oriented toward service rather than pecuniary profit

(Peter, 1950). Consumers' cooperatives often take the form of retail outlets owned and operated by their

consumers, such as food co-ops (Euro Coop., 2010). However, there are many types of consumers'

cooperatives, operating in areas such as health care, insurance, housing, utilities and personal finance

(including credit unions).

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Until 2008, consumer cooperatives were least emphasized in Ethiopia. An exceptional increase however, was

observed in the number of consumers’ cooperatives formed in Addis Ababa in 2008. This was primarily in

response to the high prices of goods and services that occurred in commodity markets in 2007/08. Within a

year approximately 115 new consumers’ cooperatives were registered in Addis Ababa, which brought the

number of consumers’ cooperatives in the metropolitan to 159 in 2008. Altogether, these consumers’

cooperatives had 251,423 members and a capital of ETB 39,204,266 (USD 3,932,223). These consumers’

cooperatives were established mainly to stabilize the market and supply consumable goods at fair prices for

members and other consumers (Emana, 2009).

1.3 Rationale for this study

AnILOstatement(2002),statesthatmanycooperativesinAfricaarenot“genuine”,becausetheyservedthe

stat

e,apoliticalpartyorindividualsinsteadoftheirmembers.TheEthiopiancooperativesinthepreviousregimeweretypic

alcasestothis. Animprovementhowever ismadebyproclamationNo.85/1994,which

restrictsthegovernmentfrom unfavorable interference in the internal affairs of co-operatives and initiates

theorganizationoffree, autonomousand

independentcooperatives.Studiesintheareaofcooperativesinthecountry(Alema,2008;Dawit2005,Emana2009,

Alemayehu2002),enumeratedthedifferentproblems;institutionalcapacity, inadequatequalifiedpersonnel,low

entrepreneurialskill,lackoffinancialresources,lackofmarket information,

poormemberparticipationinthedifferentactivities, which are undermining the capacity of cooperatives to

serve their member’s interests and contribute to development.

Consumer cooperatives are in their stage of infancy in this country of ours andtheempiricalevidence regarding

their role and characteristics is verymuchlimited. Despite

theresearchers’attempttogetsomeliteraturesinthearea,studiesandstatisticsareleastavailableandthevery

fewthatarereviewedsaynothing

a

boutconsumercooperatives.Ifinstitutionalizedandoperatedproperlyhowever,consumercooperativescanmakea

nimportant tooltonotonlyshortterm

activitiesofmarketpricestabilizationandcommoditydistributionbutalsotolong termissuesof

povertyreduction.Andfillingtheempiricalgapisoneimportantactivitytomakingthemostof

consumercooperatives.Thereforeinresponsetothelimitedamountofempiricalevidencesinthearea,thisstudy

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wasundertakenaimingto answerthefollowingquestions:

What is the characteristic of consumer cooperatives in the study area?

What is the level of membership and participation in consumer cooperatives?

How effective are consumer cooperatives in distributing essential commodities?

II: METHODS

2.1 Design

A descriptive surveymethodisselected as an appropriate technique to characterize the phenomenon of the

consumer cooperatives.Thisresearchfocusesonareallife phenomenonbasedoncurrentfactsandthe

selecteddesignisanidealoneassupportedbydifferentauthors(e.g Nachmias&Nachmias, 1996). The

researchreportembodiesbothqualitativeandquantitativeperspectives.

2.2 Populationand samplingtechnique

Thesouthernnationsandnationalitiesregionhas13zonal

a

dministrationsand8specialworedas.Amultistagesamplingtechniquewasemployedtotakerepresentativesamples

from five zones in the region namely; Gamo Gofa, Wolaita, Gurage, Hadiya as well as Sidama Zones which

were taken judgmentally.Inthesecondstage a purposive sampling method was employed to take 6 cities from

the five zonal administrations selected in the first stage.Inthethirdstage, 17 kebeles were taken considering

proportion. In the final phase consumer cooperativesfrom eachkebelle

selectedweretakenjudgmentallyconsidering activenessandoperationcapacity and this makes a total of 24

consumer cooperatives. Thus from the total 17 kebelles included in the final sample, 1500 respondents were

included in the study.

2.3 Materials and instruments

Bothqualitativeandquantitativedataintheformofprimaryandsecondarymanner

w e r e collectedfortheconsumptionofthestudy.Demographiccharacteristicsaswellasopinionsofmembersandnon-

membersregardingtheactivitiesoftheconsumercooperativesindistributing essentialcommoditiesand t h e

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d i ff e r e n t p r o b l e m t h e y f a c e m a d e a n importantportionofthematerialforthestudy.An opinion of

administrators

wa

salsousedalongwith.Inthisstudymultiitemquestionnaireareselectedasonedatagatheringtool.Thequestionnaires

wereemployedp a r ti c u l a r l y tothe members andnon-member respondents .

Inadditiontoquestionnaires,aninterviewwas madewith

o ffi c i a l s o f c o o p e r a ti v e s a n d l o c a l a d m i n i s t r a t o r s . Secondarydata were also are explored to

substantiate the study.

2.4 DataAnalysisand PresentationTechniques

Descriptive analysis was employed inthisstudy, usinga generalanalyticalstrategybasedonprevioustheories

andstudies.Thesetheoriesandstudiesprovidedthefoundationforthe

c

ollection,analysisandcomparisonofdata.Aspartofthedataanalysis,validityandreliabilitytestsweredoneusingempi

ricallysupportedtechniques.

III: RESULTS

3.1 Demographics

Valid questionnaire provides 48 % male and 52% female respondents and it is found that there is a religion

distribution of 439 (32.7%), 384 (28.6%), 179(13.3%), 341 (25.4%) for Orthodox, Muslim, Catholic, and

Protestant followers respectively. The data regarding marital status of respondents indicates that the majority

of them are married, accounting to 47% of the total. The rest is shared by singles, divorced and widowed for

19.4%, 14.45, and 19.1% respectively. Among the total respondents in the valid questionnaires, 31 % are

government employed. On the other hand, 15.5%, 21.6%, and 31.8% of the respondents are NGO employed,

Self-employed as well as Farmers respectively in that order. As far as income is concerned, responses indicated

that the majority of the respondents lie in the income range of 500 to 1000, accounting for 60% of the total

respondents included in the survey. Comparatively, only less than 10% of the total respondents get a monthly

total income of 3500 to 4500. In addition to this, 20% of the respondents are found to be in the income range

of 1000 up to 2000 total monthly income. Average business experience in years was found to be 1.203.ዘ

Table: Descriptive statistical values of the continuous variables

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Variables

Member (N=578)

Non-member(N=976) Total

p-value t-value

Mean SD Mean SD Mean SD

Respondents age 42.5 7.67 45.3 7.26 43.8 7.01 0.01*** 10.456

Family size 4.58 3.45 3.4 2.98 3.98 4.02 0.002** 11.567

Income level 1435.6 1706 1898.7 2018 1568 1987 0.01*** 9.786

Average expenditure on basic commodities

0.56 0.258 0.35 0.29 0.398 1.02 0.000*** 7.015

Business experience in years

1.56 0.345 1.06 1.153 1.203 0.567 0.000*** 8.034

Level of education 14.2 8.79 15.3 7.98 13.75 9.07 0.000*** 5.477

*significant at 10% level of significance

**significant at 5% level of significance

***significant at 1% level of significance

Source: SPSS output (2012)

As shown on the above table, independent samples t-test for all the continuous variables revealed a mean

difference between members and non-members with a significance level of 1%.

3.3 Characteristics of cooperatives

3.3.1 Institutional arrangements

Among the 24 consumer cooperatives considered in this study, only 5 were found to be independently

established based on the proclamation with professional structure and management. The rest were found

under kebelle administrations, undermining their autonomy. Furthermore findings show that the studied

cooperatives are characterized by organizational and structural problems, lack of resource and capacity, huge

interference of the political tier in the functioning of the cooperatives and the like. These findings are

consistent with other studies in the country (e.g Veerakumaran, 2007). Interview with cooperative

administrators revealed the following characteristics:

Absence of professional management: with the exception of the five cooperatives (2 of them are in higher

educational institutions, 1 a condominium cooperative and the other two neighborhoods cooperative), the

rest do not have a proper organizational structure and dedicated management as well as hired

professional workers.

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Lack of strategic plans: a cooperative is one type of legal form of business, requiring for proper planning

with a growth orientation. However, out of the 24 cooperatives included in this study, 19 of them do not

have proper planning document.

Lack of entrepreneurial and marketing skills: with the exception of 3 cooperatives, the rest do not have any

clear marketing strategy that guides growth oriented product introduction and marketing mix plan. They

just receive limited products (mainly sugar and edible oil) from the ministry of trade following the

government’s distribution scheme and distribute to consumers based on government regulation. This

limits their ability to grow by their own entrepreneurial ability.

Previous Studiesintheareaofcooperativesinthecountry(Alema,2008;Dawit2005,Emana2009,

Alemayehu2002),state that most of the cooperatives in our country are characterized by;limited

institutionalcapacity, inadequatequalifiedpersonnel,low

entrepreneurialskill,lackoffinancialresources,lackofmarket information,

poormemberparticipationinthedifferentactivities. The findings in this study are consistent with the other

similar studies.

3.3.2 Respondents Awareness Regarding Consumer cooperatives

Assessment of respondent’s awareness about consumer cooperatives reveals that nearly ninety percent of the

respondents are aware of at least the existence of consumer cooperatives. Comparatively only 10.7 % of the

respondents are unaware of the existence of consumer cooperatives. However, most respondents do not have

the favorable awareness and attitude towards consumer cooperatives; E.g nearly 65% respondents believe that

cooperatives are affiliated to the political structure. consistent with this finding , Veerakumaran(2007) state

that in many developing countries people feel that a cooperative is a government organization. Furthermore,

nearly 71% are not well aware of the economic and social benefit of consumer cooperatives. On the other

hand, cooperatives found in educational institutions and large organizations have a better awareness and

attitude towards cooperatives and their benefits to the members.

3.3.3 Membership to Consumer Cooperatives

Responses show that the vast majority i.e. 78.7% of the respondents were non-members to consumer

cooperatives. This is an astonishing result given the fact that 89.3% of the same sizes of respondents were

aware of the existence of consumer cooperatives. From this, one might ask ‘why are the vast majority of the

respondents not members of consumers cooperatives, while they are aware of the existence of the

associations?’ which is a logical question to ask.Building on the premises of the results, the researchers asked

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the non member respondents regarding their reason of not joining consumer cooperatives. The findings from

the open ended question provide several reasons. But, the common ones include; low awareness regarding the

benefits of consumer cooperatives, hesitation, low regard to the proper administration by cooperative

management, discrimination and the like. Some also indicated that they have never thought of the idea at all.

3.4 level of participation

The study examined the level of participation of members by analyzing the distribution of cooperative shares

among members. Accordingly it was found within the 24 cooperatives included in the study only 18% of the

members own more than 75% of the shares. On the other hand, 50%, 9.5% and 16.5% of the members hold

10%, 7.5% and 6% of the total shares respectively. The rest 1.5% of the shares go to 6% of the respondents.

This shows an unbalanced distribution of shares and therefore poor participation of the majority of the

members.

3.5 Commodities Most in stock

Among other things, consumer cooperatives are meant to provide consumers the most basic commodities that

are consumed very frequently in the most affordable manner. The researchers try to identify the most basic

commodities that are supposed to be consumed very frequently and include them in the survey. In addition to

the listed items; respondents were asked to state other commodities that are frequently available if there are

any at all.

The researchers tallied the responses to identify the most available commodities based on respondents’

opinions. In addition to the listed items for choice by respondents, those identified by consumers are also

included in the analysis. Accordingly, as it is shown in the above table, the most available items are only sugar

and edible oil. On the ‘sometimes available’ list are found the likes of wheat flour, wheat, vegetables as well as

detergents. Fruits on the other hand are identified by respondents as rarely available. Items like teff, meat and

corn were included in the list but none were identified as even to be rarely available in the consumer

cooperatives in the study areas.

3.7 Availability of supply of Commodities

The explanations provided in the section above witnesses that only two of the various basic commodities are

mostly in stock by consumer cooperatives. Now, it is very logical to ask how often these are available. This is

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simply to know that how often customers get the commodities when they need them the most. Accordingly,

respondents show that commodities are not abundantly available all the time. According to the responses, just

half of the respondents agree that commodities are rarely available when they need them. On the other hand

6.4% of the respondents state that they find commodities most of the time and 42.2 % state that they

sometimes found. In an open ended question, respondents were asked to list the possible reasons for the

frequent shortage of commodities. Based on the responses, the most common reasons identified by

respondents are tallied and summarized on the table below.

Table: Common Reasons for Shortage of Commodities

Frequency of Prevalence

Most prevalent Sometimes prevalent Rarely prevalent

Category of respondents Member Non- Member

Member Non- Member

Member Non- Member

Common reasons Identified for Shortage of Commodities

Corruption 38% 42% 40% 40.8% 22% 18.2%

Supply shortage 18% 15% 32.5% 32% 45.5% 50%

Discrimination 28% 38% 40% 32.6% 32% 29.4%

Consumer discipline

35% 38% 45.7% 47% 19.3% 15%

Source: Researchers Survey (2012)

Notwithstanding the above explanations to the shortage of commodities, most consumers commonly state that

there really exists supply problem .Building on this premise therefore respondents were asked as to when

commodities are most available. The responses from the open ended question are tallied to identify the most

common responses and it is found that commodities are most available during holidays, during price hacks as

well as during certain political events like election.

IV: CONCLUSIONS

Consumer cooperatives are enterprises owned by consumers and managed democraticallyto fulfill identified

needs of members and non-members (ICA, 2005; Proclamation no 147/1998, Sheffin, 2003). They operate

within the market system, independently of the state, as a form of mutual aid, oriented toward service rather

than pecuniary profit (Peter, 1950). Consumers' cooperatives often take the form of retail outlets owned and

operated by their consumers, such as food co-ops (Euro Coop., 2010). They are very important tools to solve

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commodity shortage problems particularly at times of price hacks in the market place. Furthermore, they help

in distribution of wealth to the wider community by pooling members together for self help and growth.

The main objective of a consumer store is to serve its members and customers with goods required by them for

household consumption. They are also expected to provide goods at a reasonable price and to protect the

interest of the members. These stores are also expected to stabilize the price line and check the exploitation of

the consumers by the private businessmen.This study was undertaken with the basic purpose of characterizing

consumer cooperatives and investigating the roles they have been playing in distributing essential commodities

and cooperating a pool of members in the case of the SNNPR region, Ethiopia.

The revised literature informed this study that there was significant movement to use consumer cooperatives

to help distribute essential commodities at affordable and fair prices throughout the country. This is evident

particularly after the 2008 nationwide inflation. The findings in this study indicated that the consumer

cooperatives are characterised by weak institutional capacity, lack of market and entrepreneurial ability as well

as limited application of strategic planning. Moreover, the cooperatives included in the study have limited

member base despite good consumer awareness regarding their existence. Regarding participation in holding

shares, it is shown that the majority i.e. around 75% of the shares are hold by nearly 18% of the members,

indicating poor participation.

In addition, the cooperatives are characterised by limited assortment of stocks and seasonal availability of

commodities. The study also shows that there is frequent shortage of commodities and the reason indicated for

this include; corruption of cooperative officials, discrimination, lack of consumer ethics as well as shortage of

supplies.

V: RECOMMENDATIONS

The researchers recommend the following points for consideration by the concerned parties.

Consumer cooperatives should be established as independent voluntary organizations with strong

member base and consciously designed management body as per the proclamation. And they should be

free from the influence of kebele administrations.

In this study it is indicated that even though most consumers are aware of the existence of cooperatives,

very few are members. Strong member base is one factor for the establishment and operation of strong

consumer cooperatives which can effectively address such issues of distributing essential commodities and

stabilizing market price. Thus consumer cooperatives should be promoted and consumers should be

encouraged to join forces in to such associations for their mutual benefit. Furthermore mechanisms should

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be designed to have balanced distribution of shares to protect cooperatives from taking the form of share

companies.

Market price instability and shortage of essential commodities will affect the low income consumers more

than any party. Hence, family size as well as income level should be taken into consideration in distribution

of commodities by consumer cooperatives.

Awareness should be created by both consumer cooperative managers and consumers for the ethical

standards that each part should follow for the fair and equitable distribution of commodities.

By and large the government and all concerned should create awareness by the side of consumers that

there is a relevant legal framework for the establishment of independent, voluntary, member owned and

administered consumer cooperatives with autonomous entity from government bodies and encourage

consumers to join hands and form consumer cooperatives according to the proclamation.

Similar other studies should be conducted with a more rigorous scope including the analysis of

institutionalization and autonomy of consumer cooperatives for a better result.

V: BIBLIOGRAPHY

AlemaWoldemariam,(2008).Analysisoftheroleofcooperativesinagriculturalinputandoutputmarketingin southernZoneoftigray.Mekelle, Ethiopia.

Alemayehu,Z.(2002)“Co-operativesinEthiopia:PastExperiencesandFutureTrends”inSelf-helpInitiativesin Ethiopia:ProspectsandChallenges,Redie,A.andHinrichsen, I.2002.

BezabihEmana,(2009).Cooperatives:Apathtoeconomicandsocial empowermentinEthiopia.International LaborOrganization(ILO)Geneva, Swizerland.

Chukwu, S.K., (1990). Economics of the Cooperative Business Enterprise. Marburg, Germany.

DawitAlemu,(2005).ThestatusandchallengesofagriculturalmarketinginEthiopia,Melkassa Agricultural ResearchCenter,EAROPaperpresentedatapaneldiscussionorganizedbytheEthiopianAssociationof AgriculturalProfessionals(EAAP),AddisAbaba,Ethiopia.

Euro Coop. "Consumer Co-operatives: Democracy - Development - Employment". p. 4. Retrieved 2011-06-07.

Warbasse, James Peter (1950). Co-operative Peace.

FCA (Federal Cooperative Agency), (2007). Cooperative annual magazine. Addis Ababa, Ethiopia.

Nachmias&Nachmias1996:Researchmethodsinthesocialscience,5th edition.New York St.Martin’sPress.

NegaritGazeta,47 | P a g e

(1966).TheImperialGovernmentofEthiopiaMinistryofPen.CooperativeSocietiesProclamationNo.241,3rdSeptember.1966,AddisAbaba.

NegaritGazeta,(1998).TheFederalDemocraticRepublicofEthiopia.Co-operativeSocieties ProclamationNo.147,29thDecember,1998,AddisAbaba.

Holman,H.:State,CooperativesandDevelopmentinAfrica,ScandinavianInstituteofAfrican Studies(Uppsala1990).

International Co-operative Alliance (ICA),(1995). Statement on the Co-operative identity, in review of internationalcooperation,Vol.88,No.30.

International Labor Organization (ILO) (2002) The Promotion of Cooperatives. Geneva, Switzerland.

Steven M. Sheffrin (2003). Economics: Principles in action. Upper Saddle River, New Jersey 07458: Pearson Prentice Hall. p. 203. ISBN 0-13-063085-3.

USAID /Ethiopia, (2005). Evaluation of Agricultural Cooperatives in Ethiopia (ACE)Statement on the Cooperative Identity. International Cooperative Alliance.The UN's officialwebsite at http://social.un.org/coopsyear/ retrieved on 25 Feb 2012.

Veerakumaran G.(2007). Ethiopia cooperative movement-An explorative study. Mekele University. Mekelle Ethiopia.

Zerihun Alemayehu. (1998). Cooperatives Movement in Ethiopia, Unpublished paper presented in the National Workshop in Addis Ababa, Ethiopia.

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AUDIT PRACTICES AND PROBLEMS ON SELECTED SAVING AND CREDIT

COOPERATIVES IN SOUTH WOLLO ZONE, AMAHARA NATIONAL REGIONAL STATE

By : Mesele Kebede (Msc)

Wollo University

College of business and Economics

Department of cooperatives

Contact address: cell phone +251-912-14-48-80

Email:- mesiyek2002@yahoo.com

Pobox-1145

Wollo University

Dessie, Ethiopia

1. Introduction

1.1. Statement of the problem

The aim of this paper is to give some information from well experienced countries about audit practices to the cooperatives and to throw new light on the above mentioned problems and discuss them from

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different angles (appointments, due professional cares, program, routine checking, vouching receipts and payments, verification and valuation, audit report classification and audit control system). Today it is quite clear that saving and credit cooperatives are facing serious and fundamental problems. Issues at the center of such problems such basic concepts as the nature and aim of cooperatives, as well as its structural and the principles on which it operates. Saving and credit cooperatives were formed as social organizations and did not operate their cooperatives as businesses.(ILO, 1995). A second problem, which existed people were scared to take up leadership positions to control and follow up in each primary cooperative activity. The problem of non-viable saving and credit cooperatives still existed so that this condition was creating gap between the management and external auditors (updated: D.de Jong, 2006). Cooperative societies have no internal auditors because of their limited financial capacity. Thus the absence of internal auditor in each primary cooperatives create difficulty to control day to day activities and ready to external auditors in a given period of time.(ILO,1995).

Auditing has numerous advantages but has certain limitations too. At the time of auditing, auditors have to depend on the books of accounts and records produced before they prepared by the staff of the organization staff without intention or in convince with the management law misrepresentation of such records. Auditor’s management is in a position to bring them to light uncover all sorts of manipulations. In other words, audit may not trace out all type of errors misappropriations or manipulations.(Chandier and et al, 1996). Though the cooperative proclamation No. 147/98 and its amendment proclamation No. 402/2004 of Ethiopia gives due attention to dealing with the audit, inspection, keeping audit and inspection results and actions to be taken to avoid different problems, challenges and to keep fund of the society, there are unsolved problems. So, the study try to identify major problems and good practices of cooperative auditing based on selected saving and credit cooperatives in South Wollo Zone.

1.3. Objectives of the Study

The researcher, so, has inspired to investigate problems in cooperative auditing practices in the selected saving and credit cooperatives. The general objective of the study is to investigate the problems of cooperative auditing practices in selected saving and credit cooperatives in south Wollo Zone.

Specific objectives

To study the audit practices in selected saving and credit cooperatives in south Wollo Zone. To investigate the problems related to audit of selected saving and credit cooperatives in

South Wollo Zone. To identify mechanisms to overcome the problems of cooperative auditing practices in the selected

study units.

Part II: Methodology

3.1. Methods of Data collection and Sampling

Study design

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The survey would conducted on woreda promoters, audit and inspection case team, senior and junior auditors, members and key informants of selected saving and credit cooperatives in south Wollo zone.

Sampling:-

Since the study objective is to investigate problems of cooperative auditing practices. A representative sample is taken from the woredas of south Wollo administrative Zone. Cluster sampling procedures were followed along with purposive sampling in order to select the study area and respondents.

Selection of respondents

The study is intended to analyze the problems of Cooperative auditing practices in the selected saving and credit cooperatives. The study respondents were selected from the committees of saving and credit cooperatives; Woreda audit promotion bureaus and the members of the saving and credit cooperatives. The respondents from committees of the saving and credit cooperatives and auditors and promoters from the woredas promotion bureaus were the key informants. The members as a group of the saving and credit cooperatives were used for focus group discussion (FGD).

Sources of Data

The organization of this paper was based on two sources (primary and secondary sources). The main source of primary data were the questionnaire has closed and open-ended questions from the respondents and interview (FGD). Besides, secondary data was collected from Books, published and unpublished reports, journal articles, audit reports, etc.

Data collection

The researcher had gathered data from the respondents through both open-ended and closed-ended questionnaires.

3.4. Method of Data analysis

Both method of data analysis were used (i.e. qualitative and quantitative data analysis methods would used in the study). Because the research is survey type, which is basically designed to examine the extent of problemsof cooperative auditing practices in selected saving and credit cooperatives in south wollo zone; descriptive survey method were employed in this study.

Results and Discussion: Cooperative audit practices

3.1.1. Audit program

During the survey, all the respondents of the selected woredas auditors said that there is an audit program when they are auditing the saving and credit cooperatives.

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On the contrary, 100% (25) of the respondents of the saving and credit cooperatives said that since the auditors that came from each woredas are constant, the full audit program contents do not set and revised each year. As result of these the saving and credit cooperatives simply accept whatever any content including in the program because of dependency of audit fees from the government.

On the other hand, auditors doing the audit program through experience rather than drafting and modifying the content each year. As we can understand from the responses of the saving and credit cooperatives respondents, audit program, which is designed by auditors, is constant procedures from year after year.

3.1.2 Verification and Valuation of balance sheet and income statement

According to Ravinder Kumar and Virender Sharma (2001:147), the term “Verification” implies providing the truth or confirmation. To “verify” means to ascertain whether the actual facts are in conformity with those reported or asserted.

Financial statement audit contains balance sheet, trial balances, and loss and profit statements and bank reconciliation should incorporate.

Table 6. Verification and valuation of balance sheet

Transactions Source documents

Current assets Cash memos, cashiers summaries, bank slip

Petty cash

Cash in bank Outstanding check, deposit check

Supply Purchase invoice, purchase requisition

Accounts receivable Credit notes, promissory note

Fixed assets

Building Purchase invoices, cost of purchase or purchase requisitions

Machines

Liabilities

Current liabilities

Members contributions Personal ledger , pass book

Undistributed profit Profit and loss statement

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Account payable Personal ledger , loan purchase invoice

Source:based on the survey data, 2012

Method of verifications and auditors duties

According to all respondents (sub woredas auditors) Said that the method to verification and valuation of financial statement in cooperatives is as follows: Existence or occurrence ,Completeness,Right and obligation,Valuation and allocations Presentation and disclosure

Duties related to verification and valuation elaborated as follows:

To verify petty cash auditors doing test for evidence of arithmetical check on petty cash records, examine evidence of independent check of petty cash balance and test petty cash vouchers for approval. Cash in bank also verified through bank reconciliation in order to check the amount of cash in bank reconcile the book of the society.

Saving and credit cooperatives purchase supplies for operational either in cash or in account. In this case the auditors verify purchase invoice and purchase requisitions how much amount of quantity purchased, unit price and from whom it purchased, who ordered and approved.

The other part of assets is receivables form members’. Auditors verify the amount of receivables that will be collected from members through promissory notes in which the maturity value, maturity date, interest and proceed should be examined and evaluated by auditors. On the other hand, fixed assets like building and machinery are verified through purchase invoice and their initial costs by considering this and their initial costs by considering this, auditors valued the book value of fixed assets through straight-line depreciation methods.

Table 11 indicated that there are liabilities mostly current liabilities such as member contribution, account payable and undistributed dividend. Likewise, assets the auditor’s duty each liability elaborated as follows:

Auditors verify members’ contribution in which total amount of money paid by new members during registration not only this but also date of registration, amount paid, by whom it was paid is verified and valued correspondence with personal ledgers.

Sometimes saving and credit cooperatives purchase items on account without immediate payment. In this situation, the auditors verify how much amount of quantity purchased, from whom it was purchased; when it will be paid should also checked through purchase and credit invoices.

The other type of liability indicated in table (11) is undistributed dividend. According to all respondents (auditors), investigating and evaluating whether 70% of the surplus distributed to the members based on their participation. This is verified through financial statements of saving and credit cooperatives with personal ledgers.

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According to the respondents of all selected saving and credit cooperatives respondents said that the above method of verification and valuation is applicable in their cooperatives.

From the above result, it can be concluded that auditors applied the five financial statement assertions like other business in cooperatives.

Problems faced during verification and valuation

According to auditors, they have faced several problems when doing verification and valuation along with the absence of sufficient source documents. These are the lack of existing and recurrence of assets and liabilities at a given date, transferability of account receivables and payable (dividend) from year to year and the depreciation expenses of fixed assets exceeds the book value of that assets. In order to tackle these problems from the saving and credit cooperatives, auditors give suggestions, ways, methods and opinions to the members.

From this analysis, one can understand that above problems generated due to lack of trained labor that records transactions on time and attached source documents on its own separate files.

3.1.3 Audit report and classification

According to S.K. BASU, on completion of audit work, the auditor issues a written report containing his or her opinion and submits report with relevant details to the board of directors.

The report classified based on the criteria, which is established by Ethiopian federal democratic republic cooperative agency commission saving and credit cooperatives promotion. Therefore, the detail of classification elaborated in the following table:

Table.7. Criteria for audit report classification

Measurement

Kind of audit report

Color Rank certification

Above and equal to 70%

Unqualified Green high satisfactory

50_69% qualified Blue Satisfactory

30_49% Adverse Yellow Below satisfactory

1_29% Disclaimer Red Unsatisfactory

Source: Amahara national regional cooperative promotion bureau, 2012

According to Amahara National regional cooperative promotion office, auditors express their opinion about the fairness of financial statements of saving and credit cooperatives by using the color of green, Blue, yellow, and Red.

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The above analysis indicated that there are criteria or standard in which auditors express their opinion about saving and credit cooperatives performances in order to evaluate their efficiency and effectiveness operations.

3.2.1 Performance Audit Problems

The performance of saving and credit cooperatives is measured by audit report that is prepared by auditors. The following table indicates performance audit problems in saving and credit cooperatives.

Table 8. Audit report classification based on performance in selected saving and creditcooperatives

Name of sub woredas Achievement kind of audit report

color rank certification

Dessie Zuria

Dibbile ager saving and credit coopearative

50_69%

qualified

White blue Satisfactory

Dade kuyu saving and credit cooperative

39_40% Adverse Blue Below satisfactory

Dadji saving and credit cooperative

30_49% Adverse Blue Below Satisfactory

Kalu woreda

Selam saving and credit coopeartives

30_49% Adverse Blue

Below satisfactory

Kalu saving and credit coopeartives

50_69% qualified White Blue Satisfactory

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Source: Based on Survey Data, 2012

As we can understand, from the above table the three selected saving and creditcooperatives (dade kuyu, dadji and selam saving and creditcooperatives, their audit report is adverse and their certificate below satisfactory (30_49 %). According to the respondents, this is due to Lack of trained manpower especially in the area of cooperative accounting, Lack of proper account and record keeping, weak internal check and lack of responsibility among the members, particularly executives.

On the other hand, dibbile agere saving and creditcooperatives From Dessie Zuria Woredas and kalu saving and creditcooperatives from kalu woredas said that their audit report is qualified and their certificate is Satisfactory for the previous consecutive years.

The main reason for this according to them, they have better internal control, and accounting record system as compared to the others. From this, one can conclude that poor account keeping, recording system and weak internal check are the causes of poor audit performance in the cooperatives.

3.1.2. Submission of audit report

According to all respondents, audit report is submitted to the general assembly as per proclamation No 97 Article 36-39. During the meeting, those who members are not comfortable with the report they can able to ask the audit promotion bureau to be re-audited in order to examine more evidence. So, one copy of the report given to the saving and credit cooperatives and the other copy is given to the audit promotion bureaus. According to the auditors, there is an audit report problem during the annual meeting. Members are not fully aware about cooperative audit and they do not ask during the meeting rather simply accepted what it said. On the other hand, information obtained from (FGD) revealed that members do not know how what cooperative audit means. Beside to this, before submitted to the annual audit, the post audit activities through audit team and inspections do not practice.

One can understand from the above analysis members awareness is one of the main problems of cooperative audit.

3.1.3 Responsible Bodies to Audit Saving and Credit Cooperatives

All respondents (selected woredas auditors) along with evidences that gathered from focus group Discussion (FGD) said that the managements are responsible to audit the society; because they are the prominent stakeholders. But they do not ask the cooperative promotion bureaus to be audited.

According to the cooperative proclamation, each and every society should be audited at least once in a year. There is no such a regular audit system or they are failing to follow the legal provision, this is because, saving and credit cooperatives are perceived that auditors are faultfinders and if the auditors get some faults, cooperatives are liable to that mistake. Therefore, primary saving and credit cooperatives are not willing and are not responsible to ask auditors to audit.

According to them (selected woredas auditors), the accounting system adopted by the selected cooperatives is not good. It is not in accordance with Double entry system; even if it has given all the details of the business transaction during the audit period. This is due to, some of the selected cooperatives; they do not have such an, employee or accountant and they have no knowledge in maintaining the accounts of

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the society. They said also the source documents are not entered in the first cashbook, then recording in appropriate ledgers, journals are not followed. Regarding the cash receipts, they said, at present these are prepared by the cashier, but not preparing daily, they are accumulating for a week or 10 days, then one day they are preparing all vouchers by the cashier, without authorization of his or her superior.

As they said that, the most serious issue in the society at present, the auditor is responsible for the preparation of the account balances, trial balances, financial statements and audit report. This is a big exercise for the auditor appointed by the cooperative promotion office. The auditor is admitting or engaging this work as part of their work, due to lack of accounting knowledge of the society's accountant. The auditors are playing Dual role one as an auditor of the cooperative and another role is an accountant of the society.

3.1.4. Auditors due professional cares in Cooperatives

“Due professional care should be used in conducting the audit and in preparing the audit report.”(GAS (1994 revision). Beside to the above literature evidences auditors due professional care problems according to the respondents’ response elaborated in the following table (6) as follows:

Table. 9. Auditors due professional cares according to saving and creditcooperatives

Basis of evaluation

Yes No Percentage

number percent number percent Total

Qualified &experienced 10 40 15 60 100

Follow procedure & locating mistakes

7 30 18 70 100

Gather reliable and effective evidence

10 40 15 60 100

Source: Based on survey data, 2010.

From the above table one conclude that, even if,the government gives free audit services to the saving and credit cooperatives but the auditors are not sufficiently trained or equipped to carryout audit tasks related to cooperative by law and requirements and also they are failed to follow procedures for locating mistakes and gathering reliable and effective information.

3.1.6. Auditor’s familiarities with saving and creditcooperatives accounting, procedure and by-laws

100 %( 25) of respondents (selected saving and credit cooperatives) said that, auditors are not familiar with cooperative accounting. Not only auditors but also accountants do not know what cooperative accounting means and how it is applied in the cooperatives. According to them even, the selected saving and credit cooperatives most of they used double entry bookkeeping system. Auditors give suggestions

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to the saving and credit cooperatives to use double entry when they are preparing their financial statements because auditors use double entry system.

The main reason of this fact is that, there are no qualified accountants and auditors who did take cooperative account as a course. Therefore, they are doing whatever they know from their experience.

As we can understand from the responses of the respondents, auditors due professional care with familiarity of cooperative accounting system, all respondents said that auditors have no know how what cooperative accounting means and how to apply during the audit processes. Cooperative accounting is formulated for the simplicity and easy understanding of the members for the cooperatives but still not applicable for saving and credit cooperatives due to lack of trained man power in the area of this field.

Table 11. Auditor’s familiarity with saving and creditcooperatives rule and procedures

Respondents responses Proper knowledge of relevant law

number percent

Agree 5 20

Strongly agree - -

Disagree 20 80

Strongly disagree - -

Total 25 100

Source: based on survey data, 2012

As we can observe the above table, 20 %( 5) of the respondents said that auditors know cooperative by laws through experience. Even if; they did not learn cooperative legal system as a course, they are reading and using as a reference material during their performance. On the other hand, 80%(20) of the respondents said that since they are using like other businesses , auditors do not know the right cooperative bylaws, procedures and rules even the accounting system and emphasis only the accounting documents rather than the non-financial audit aspects in which the performance, rule, and regulation included.

Therefore, the above findings indicated that the proclamation 147/91 is not fully applicable by the auditors for the time being.

RecommendationsBased on finding result the researcher put some of the recommendations, which assists those who faced audit problems particularly the selected saving and credit cooperatives and other external users.

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This recommendation is also important to the auditors to know their weaknesses and strength in order to take improvements for their future careers.

Signal to their audit teams that providing high quality audit services is a top audit priority and that the office does not view such services as a commodity; the office can do this by emphasizing the importance of audit quality in training programs and annual performance reviews.

Encourage all personnel to maintain an attitude of professional skepticism that focuses on the importance of the auditor’s role in protecting the public interest and maintaining strong capital markets.

Beside to this the number of auditors with sufficient training in each sub Woreda should increases in order to balance the number of cooperatives so that there are graduated students those who have taken the course cooperative accounting along with its legal system, therefore, the government has to train these manpower collaborate with cooperatives to solve the challenges.

Cooperatives have to prepare their financial statement on time through cooperative accounting system that focus on transactions. It should provide a complete audit or transaction trial for each transaction.

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challenges and prospects of saving and credit cooperatives (the case of Kalu Woreda)

BY:

Ergetie Temeche (INSTRUCTOR)

Gondar University

DEPARTMENT OF MANAGEMENT

FACULTY OF BUSINESS AND ECONOMICS

Main Advisor: DR. Abebaw K. (Asst. Professor)

Co-Advisor: Gedif T. (MBA)

Gondar, Ethiopia

2014

ABSTRACT

Even though SACCOs are the main financial solution of the people who have low income level, they have their own challenges that retard their financial solution to their members and the economical contribution to a country. In Kalu Woreda, it is difficult to organize new SACCOs. The organized SACCOs are dissolute than being grown due to the existence of challenges the challenges (inadequate initial capital, limited capacity of mgt committees, poor participation of members, existence of low interest rate, lack of transparency and accountability, biasness during credit provision, delay of loan repayment, dependence on external support, lack of knowledge about rights & duties, influence of other financial institutions, religious believes, low awareness creation). Additionally, Passive members’ participation(during attending annual meeting, electing mgt committees, approving annual plan & budget, hearing of audit report, determining share values, sharing responsibilities, buying additional share capital, and approving & bylaw/ amendment ) is observed as another challenge for their growth retardation. Having seen such factors or factors in Kalu Woreda initiates the researcher to do this research. Hence, this study will try to explore the challenges and prospects of ten SACCOs to introduce feasible SACCOs to Kalu Woreda people in general and the members of ten selected SACCOs in particular. Cross sectional research design will be practice. Primary and secondary data sources were employed. Data questionnaires and interviews were the tools to collect the primary sources of data. Secondary sources of data was collected from different publishes. The total population of the study was the members of ten SACCOs’

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members. 218 sample respondents (103 males and 105 females were selected by stratified random probability sampling method. The collected data were analyzed by descriptive statistical methods and SPSS computer software program (correlation and regression tools). The findings of the study were illiteracy problems, negative perception of members on awareness of management committees,unfair dividend distribution and non satisfaction on the service areas of SACCOs such as creation of job opportunity, timely loan collection and non diversified service of SACCOs were their dissatisfaction areas, governance challenges and lack of awareness about the prospects of SACCOs.

Chapter One: IntroductionThe first SACCO Society, in Africa, was introduced in Ghana in 1959. Most of the Non-English speaking nations in Africa started appreciating SACCOs in 1960s, with major influx into SACCO community in 1970s (Mwakajumilo, 2011).

Cooperative as a legal institution first came into being in Ethiopia in 1960s/1953 E.C by cooperative proclamation number 44/1961/1953E.C. The first savings and credit co-operative in Ethiopia was established in 1964 by employees of Ethiopian Airlines. During the same period, credit cooperatives were established by employees of the Ethiopian Road Authority and the Telecommunication Agency (SIDA, 1996).

Poor internal control which is a result of the system failure to prevent and detect fraud or error, corruption and nepotism caused by granting loans to unworthy borrowers (members), risky investment done without making the fully required analysis, lack of training among the members and the Board of management committees, and lack of the decentralized financial system which can provide financial services to the SACCOs (KWCOPO report, 2013).

Hence, this study will try to explore the challenges and prospects of Admas, Andinet and Kalu SACCOs (AAKSACCOs) to introduce feasible SACCOs to Kalu Woreda people in general and the members of AAKSACCOs in particular. Consequently, policy makers and other stakeholders will be the beneficiaries of the study result for their informed decision making; especially it can be helpful to the establishment of new SACCOs.

1.2. Statement of the ProblemLack of awareness and poor saving culture, weak governance,policy and regulatory environment, weak institutional capacity, low capital base, inappropriate loan security requirements, and threats from other financial institutions (MFIs)were among the challenges affecting the outreach and sustainability of SACCOs (Tesfamariam, 2011).

The existing prospects like Weak private sector, the Support of NGOs and government, or its exploitative nature urges farmers to act in an organized manner, are not appropriately known and exploited by the SACCOs due to the existence of different challenges such as lack of awareness and capital inadequacy (Bezabih, 2012).

In Kalu Woreda, it is difficult to organize new SACCOs. The organized SACCOs are dissolute than being grown due to the challenges (inadequate initial capital, limited capacity of mgt committees, poor participation of members, existence of low interest rate, lack of transparency and accountability, delay of loan repayment, lack of knowledge about rights & duties, influence of other financial institutions, religious believes, low awareness

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creation). Additionally, Passive members’ participation(during attending annual meeting, electing mgt committees, approving annual plan & budget, hearing of audit report, determining share values, sharing responsibilities, buying additional share capital, and approving & bylaw/ amendment ) is observed as another challenge for their growth retardation. Having seen such factors in Kalu Woreda initiates the researcher to do this research.

On the bases of these concepts, it is possible to raise questions about the main challenges constraining the performance of ten Saving and Credit Cooperative Societies, the challenge affecting the participation of members, the possible prospects in SACCOs, and the level of challenges and prospects. For this matter, ten saving and credit cooperatives are taken as a case study area. These cooperative societies are found in Kalu woreda of South Wollo Zone.1.3. Objectives of the Study1.3.1. General ObjectiveThe general objective of the study is to assess the challenges and prospects of saving and credit cooperatives the case of Kaku Woreda, South wollo Zone of Amhara region.1.3.2. The Specific Objectives1. To identify the main challenges constraining the performance of Kalu Woreda SACCOs, 2. To assess the challenges affecting the participation of members of Kalu Woreda’s SACCOs, 3. To assess the possible prospects of Kalu Woreda SACCOs ,4. To determine the level of challenges and prospects of them.1.4. Research QuestionsThis study will address the following questions:

1. What are the main challenges constraining the performance of KWSACCOs?2. What are the challenges affecting the participation of members in KWSACCOs 3. What are the possible prospects of KWSACCOs?4. Up to what extent the level of challenges affect SACCOs?1.5. Scope of the StudyThis study will be took place in saving and credit Cooperatives of Kalu Woreda, South Wollo Zone of Amhara regional state. The study will investigate the challenges and prospects of SACCOs using ten SACCOs as the case study. The study will cover the period from 2008 /2000 E.C up to 2014/2006 E.C.

1.6. Significance of the studyThe study will point out some of the challenges of SACCOs in Ethiopia face and the untapped potential and opportunities waiting. Besides, the study will be expected to serve: as a service for further study in the sector; the results will be inputs for the concerned bodies and policy makers and future researchers; and the findings of this study will provide the necessary information to the AAKSACCOs movement and its various stakeholders for the purpose of meeting their current and long-term regulatory demands.

1.7. Definition of Terms and ConceptsSaving: means the accumulation of money regularly or irregularly by the members of saving and credit cooperative societies to secure or to gain interest rate or both. Saving can be defined simply as holding something back from today’s consumption.

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Credit: means the taking of money from SACCOS for consumption or investment based on the saving amount of the saver to repay after a long period of time or after a short period of time.

Cooperatives: are the cooperative Societies who are eligible and be organized in saving and credit form of cooperative societies to achieve their common objectives under the federal cooperative society’s proclamation. No 147/98.

Saving and credit cooperative societies are different from other micro finance enterprises. In SACCOS, the members should save first to get a credit but in micro finance the customers should take the credit and then they can save.

Managementcommittees: are the committees who are elected by the members from the members

Financialinstitution: is an institution that provides financial services for SACCOs members.

Challenges: are the hindrance factors that limits the expected services of SACCOs

Prospects: the opportunities, chances, expectations etc… that help the success of SACCOs.

1.8. Limitations and Problems of the StudyTherewere some challenges and problems facing to do this study. Sufficient documents concerning to the subject under study this were lacking. Time constraint had prevented proper and thorough review of empirical and theoretical data that are related to the study.

1.9. Organization of the ReportThe thesis has five chapters. The first chapter deals with the introduction. In the second chapter theoretical and empirical researches are presented through reviewing related literature. The third chapter is the methodology part. The fourth chapter is about discussion and data analysis part which shows the discussion and interpretation of the questionnaires collected, and at the last. The fifth and the last chapter presented the summery of findings, conclusions and recommendations of the paper. A references and questionnaire are following from chapter five.

Chapter Two: Literature ReviewUnder this topic different theoretical and empirical studies which are compatible with the objectives of the study are expressed in standard form.

Chapter Three: MethodologyResearch Design: Moreover, this study was utilized cross sectional descriptive research in the sense that all relevant data will be collected at a single point in time. Population:The total members of the selected SACCOs are the population of this study. The total numbers of these ten SACCOs are 483 (245 males & 238 females). Sample size and Sampling Technique: Based on age, monthly income, Gender, and location difference, ten (10) SACCOs were selected from 25 SACCOs by using stratified random sampling technique. From each stratum, sample respondents will be selected proportionally by simple random sampling technique (table 1).n = N = 483 = 219

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1+N (e) 2 1+483 (.05) 2

Types and Sources of Data: Primary (direct source of information) and secondary sources (books articles, journals, SACCOs’ documents and other related publishes) were considered as a source of data for this study. Primary data was collected by using personal interview for cooperative leaders and to illiterate SACCOs’ members and self administered questionnaire for the sample respondents.

Data Collection Methods: structured questionnaires and interviews were employed to collect the primary (the quantitative and qualitative) data. While secondary source was collected from books, articles, journals, magazines and other related publishes. The questionnaires were prepared both in English (to officers who are members of the sample SACCOs) and in Amharic version (to the other sample respondents) in order to administer all sample respondents.

Method of data analysis: The collected data was edited first to identify the items that would have been wrongly responded to and any blank spaces left unfilled, the information was categorized into topics. Responses received were thereafter coded and processed by computer through the Statistical Package for Social Science (SPSS 20.0) software. Inferential statistics (correlation and regression) were taken from this tool. Data was also analyzed by using descriptive statistics.

Variables in the StudyThe dependent variable (Yi) : is Members’ Participation

The Independent Variables: areSex of the members, Family size of members, Age of the members, Marital Status, Religion, Education level of the members, Occupation, Duration of Membership,Perception of Members’ to the SACCOs Management Committees, Perception of Members Satisfaction, Challenges,Prospects, Support of Cooperative Promoters and NGOs.

Chapter Four: Data Analysis Result Interpretation4.1. IntroductionAs it was indicated in the methodology part, all 218 sample respondents returned the distributed questions. The challenges and prospects of the SACCOs determine the active participation of the members. The soul of the SACCOs in particular and any cooperative societies in general depends on the active participation of the members. The challenges of SACCOs and the futures prospects have their own impact to the performance of cooperatives. These conditions will be analyzed through this paper as follow.4.2. Demographic Characteristics of Respondents

4.2.1. Sex of the RespondentsAmong the female members 66.7% of the active participants and 33.3% of them were passive participants. Among the male members only 16.8% males were active participants and the rest 83.2% of them were passive participants. 51.8% members were males and 48.2% of the members are females. Hence, there was no significance difference between male and female in terms of gender equality. But females were more active participant than males. 88.3% of males and 33.3% of females were passive participant.

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4.2.2. Age of the RespondentsGenerally, the young age group respondents have lack of awareness about SACCOs since their participation was lower than the adult age group respondents. As well as the elders who have above 60 years old were not trained well participated even though they have the highest age limit.

4.2.3. Family Size of the respondentsThe above table 4.4 shows that 75% of the active respondents and 56.9% passive participants have a family size 0-2. 30.2% active respondents and 69.8% of passive respondents have a family size ranged from 3 up to 5. 25% active respondents and 75% passive respondents family size ranges from 6-8.

As the result shows that when the family size increases, the level of the members participation is decrease. As the respondents view point, the highest family size increases their consumption expenditure.

4.2.4. Marital Status of Respondents100% of the single respondents were passive participants. 37.4% of the active respondents and 62.6% of the passive participants were married respondents. 100% of the divorced respondents were active participants.75%. of the widows were also favored because of the sympathy the community usually has for them as they were bread winners for their families. The single are less favored because they were looked to be unstable and the divorced were taken as untrustworthy and unable to control funds.4.2.5. Religion of the respondentsMuslim members have a religious prescription not to take a credit and not to use the interest rate what they will have in the SACCO. They have dominant in number (88.1%) in the SACCOS but their participation was passive. Therefore, the SACCOs have been challenged by the religious factors in Kalu Woreda. 4.2.6. Educational Status of the respondentsThis result indicated that, almost the respondents’ have illiteracy problems and have being a member of SACCOs by their own interest. Having 52.3% of illiterate member in the SACCO is a great challenge for the SACCOs performance. Hence, as educational level increases, the level of the participation increases.

4.2.7. Occupational status of the RespondentsSACCOs have not favor the agriculture sector still now and this may be due to the fact that they would not to be aware in line with the main aim for the prosperity for all programs improving the standards of rural people through SACCOs and where the most are involved in agriculture.

4.3. Membership Duration or Experience in Number of years?From the respondents’ majority of the active participants were those who have a better membership experience.

4.4. Members’ participationTable 4.10: Members’ participation in SACCOs

59.2% of the members of the SACCOs are passively participated either rarely or not at all. But 40.8% of the members are active participant.

Generally, sharing responsibility, hearing an audit report, and buying an additional share are the main challenging areas of member’s participation. Attending annual meeting, approving bylaw and annual plan and budget, determining share value, and electing management committees are the next challenging area.

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4.5. Members Perception4.5.1. Perception of Members’ On the Transparency & Accountability of MC CommitteesThe negative attitudes of the respondents were more reflected regarding to the awareness of MCs and the fair dividend distribution they perform. According to them, if these two parameters were not clear or transparent to the members, all other activities would be under the question mark. These two factors are the constraining challenges to the active participation of the members. They are statistically significant at 1% of the significant level.

4.5.2. Members’ Satisfaction on the Service of SACCOs54.2% of the passive respondents and 50.9% of the active respondents were not satisfied with over all services of the SACCOs except proximity to the village. Creation of job opportunity, timely loan collection and non diversified service of SACCOs were their dissatisfaction areas. These problems were eroding their intensity of participation more.

4.6. Challenges of SACCOsBased on the standardized beta coefficient, the largest influence on the performance of SACCOs is lack of knowledge about rights and duties (.299), Limited capacity of mgt committees (0.200), delay of loan repayment (.198), and poor participation of members (186). But inadequate initial capital with the beta value of .138, influence of other financial institutions (.110), failure to notify annual meetings (.100), and low interest rate (.094) are the poorest predictor of performance when it is compared with the other explanatory variables under study.

4.7. Prospects of SACCOsGenerally, 56.4 respondents have low information and awareness about the existing prospects of cooperatives. Only 22.5% of the respondents have better information about the prospects that strengthen SACCOs well. Hence, members’ of Kalu woreda SACCOs were not clear with the existing prospects. This also has its own contribution the passive role of the members and to the failures of the SACCOs.

4.8. Support of SACCO Promoters and NGOs33% of the respondents did not know the support of both cooperative promoters and NGOs. 33% of them also said that, the support of the promoters was unnecessary. 24.3% of them said the service was good. Only 9.6% respondents agreed about the necessary support of cooperative promoters.

4.9. Interview Results about Challenges and prospects of SACCOs4.9.1. ChallengesInterview results from cooperative promotion officers and leaders shows that there are several challenges as

well as prospects in the region with respect to SACCOS. such as : poor saving habit and lack of awareness, weak governance problems, lack of structurally organized regulation , lack of confidence about the cooperative

promoters and NGOs, lack of diversified services, competition from other business organization, weak institutional capacity, and religious problems

4.9.2. Prospects of SACCOs4.10. Summary of the Individual Respondents and Discussion Groups

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62.5% of the respondents have suggested commonly that: Awareness creation about SACCOs, Problem based training and education to promotion officers, management committees, members and other administrative bodies, equitable support from governments and NGOs, Skilled man power at Woreda level and kebele levels, and diversified services to the members and non members

Chapter Five: Conclusions and Recommendations5.1. IntroductionIn this chapter the conclusions and recommendations are discussed. To make it clear, the conclusions are based on the research objectives of the study. Based on the findings of the study, recommendations are made to government bodies and other cooperative promoters and suggestion for other researchers. 5.2 Conclusions5.3. ConclusionsCooperatives dig out the poor to make competitive with the rich. The small farmers who have lived in Ethiopia and have limited access to commercial bank deposit and credit, other private banks and the high interest rates charged by non institutional lenders were important factors that lead governments and donors to promote alternative rural saving and credit institutions. In Ethiopia, government support and significant donor involvement helped set up specialized agricultural financial institutions such as development banks, construction banks, and commercial banks. However, the expectation that these institutions would provide easier access to smaller farmers has often not materialized.

As the study result shows that, The Chi-square test applied in order to identify the significant percentage between the two sample groups of the discrete variables. It indicated that the discrete variables: age, family size, marital status, educational level, membership duration, educational status, and members’ perception revealed the significant differences between the two sample groups at less than 5% probability level. But sex and religion discrete variable have not a significant percentage different between the two sample groups.Age and sex have a negatively significant influence on the members’ active participation. When age increases up to a specific age limit that was up to 60 years old the active participation of the members were increasing but after above 60 years old, their participation was decreased. Sex also affects the members’ participation and level of participation. As the result shows that the 51.8% of the respondents were males and 48.2% of the respondents were females. But the participation intensity of female was better that male in the selected SACCOs.As the result shows that when the family size increases, the level of the members participation is decrease. As the respondents view point, the highest family size increases their consumption expenditure. This has a lower saving capacity of the members.

100% divorced, 75%, widowed, and married 37.4% respondents were favored in SACCOs. But all single respondents were passive respondents in this study. This finding coincides with Karuma Peace (2011). SACCOs have been challenged by the religious factors in Kalu Woreda. Even though 88.1% of the total respondents were Muslim religious followers, 61.5% of passive participants were the Muslims.

Having 52.3% of illiterate member in the SACCO is a great challenge for the SACCOs performance. Hence, as educational level increases, the level of the participation increases.67 | P a g e

Regarding to the occupational status, 63.6%, 41.7%, 38.3% and 50% of the active respondents were employees, traders, farmers, and others (like brokers and daily labors) respectively. As the farmers’ suggestion their saving activity was depending on the favorable season.

This result shows, the more they experienced the more they actively participated. Membership duration has a positive relation with members’ participation and level of their participation.

In this study the challenges of members’ participation were assessed whether it is active or passive participant in their SACCOs based on the seven cooperative principles and the other parameters (such as attending Annual Meeting, approving or amending bylaw, approving annual plan & budget, hearing of audit report, determining share values, sharing responsibilities, electing management committees as non financial participation and economical contribution like using of available loan and buying of additional shares) to identify the level of participation.

As the study result shows that 40.8% the respondents were active participant while the rest 59.2% of them were passive participants.

As the result shows, members are not exercising one of the cooperative principles that of members’ economic participation. Buying of share capital is economic participation but practiced passively. Hearing the audit report is one of the low participation areas of these respondents. There members; who are participating in annual meeting actively but are not participating in hearing the audit report. That means both activities are undergone with together. But 70% of the selected SACCOs have not been audited. Due to this reason only some members are getting the room to hear the audit report.

Sharing responsibility, hearing an audit report, and buying an additional share are the main challenging areas of member’s participation. Attending annual meeting, approving bylaw and annual plan and budget, determining share value, and electing management committees are the next challenging area. But loan taking was not that much challenge.

Since 88.1% of the members’ are Muslim religion followers, members’ are organized based on the extravagant hope to get a loan without interest without knowing the importance of SACCOs’. This ideology imposed a negative impact on the saving culture of the members.

Regarding to the members perception on the management committees’ transparency and accountability, the negative attitude of the respondents was more reflected up on the awareness of MCs and the fair dividend distribution they perform. These two factors are the constraining challenges to the active participation of the members.

54.2% of the passive respondents and 50.9% of the active respondents were not satisfied with the overall services of the SACCOs such as Creation of job opportunity, timely loan collection and non diversified service of SACCOs were their dissatisfaction areas.

Based on the correlation coefficient, lack of knowledge about rights & duties, limited capacity of mgt committees,and delay of loan repayment are a strong predictors.poor participation of members, inadequate initial capital, lack of transparency and accountability, and the performance of SACCOs. Failure to notify annual meetings and influence of financial institutions were positively related with the performance of SACCOs which

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are statistically significant at 99% confidence level.Low interest rate is also related with the performance of SACCOs and substantially significant at 95% confidence level.

Prospects have a great influence on the participation level of the members. 56.4% of respondents have low information and awareness about the existing prospects of cooperatives. Only 22.5% of the respondents have better information about the prospects that strengthen SACCOs well. Hence, members’ of Kalu woreda SACCOs were not clear with the existing prospects.

Regarding to the support of cooperative promoters and NGOs, 66% of the respondents said Kalu Woreda cooperative promotion office did not forward influential and problem based training and other technical supports. The support of NGOs also did not be accessible to the most of respondents. Most of the respondents said that there was a problem at the very beginning of their SACCOs’ formation. They were organized for the purpose of getting a loan and other gifts. But when the promise was left, they gave up their participation.

5.3. RecommendationsBased on the study results and conclusions, the researcher would like to recommend the following possible points to the concerned government bodies and other SACCOs’ promoters for effective participation and performance of SACCOs.

The Concerned Bodies Should Give a Great Attention to the Youth, Women, and Elders: as the result shows these groups of the members are victimized in the selected SACCOs. The youth were passive participant due to the condition they faced. Since the youngest members are the hopes of tomorrow, encouraging them to save and get a credit for new investment should be practiced. Gender equality has not fully achieved even though the existing females are active participant. Hence, the concerned bodies should pay a great value to empower women since women are half of the country’s population. Elders who have above 60 years old should be helped through SACCOs since they need a special treatment than other participants.

SACCOs Should Address All Household Groups equitably: as the study result revealed that single households were reluctant during financial and non financial participation than the married and others. Additionally, members who have many families should be encouraged and motivated to get a comprehensive growth through SACCOs. Unless these large family based members are fully involved, they seed another development bottlenecks to the country in general and Kalu Woreda in particular.

Member Driven Service should be given: in the study most of the members’ are Muslim religion followers who have in opposition to interest rate payments. To serve this member conditions should be arranged like encouraging them to save with free interest rate payment. Enforcing them without their interest creates laggardness in depth participation of the cooperative affairs. Any service should be given based on the members want than the promoters want to bring a tremendous change.

Members of SACCOs should have similar business grounds and a common objective: in the selected SACCOs employees, traders, farmers, and other income earners are organized with together. This also creates an interest difference among the members regarding to credit utilization and other services. Even the members have different objectives at similar cooperative. One group is coming to get a credit and gift and the other group also coming to get the services render by SACCOs. Therefore, based on the cooperative principles, members should have similar objective.

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Appropriate Training, Education, and Information should be given to All Stakeholders of SACCOs: A cooperative without a strong component of education is in danger of losing its essential character, that is, the human and personal characteristics which distinguish it as a cooperative. Unless all those responsible for cooperatives (directors, officers, members, staff) are well informed and knowledgeable, cooperatives are likely, in some countries, to become much like capitalist, profit-seeking business, or in other countries to become handmaids of the State. Education makes people easy to lead, but difficult to drive; easy to govern but impossible to enslave. As the result of this study shows, 52.3% of the members were illiterate. Different trainings have been given by government and NGOs. But the change is not recorded based on the expectation. Training, education, and information is the cooperatives; principles’ of principle. To make it fruitful, studied and influential training, education, and information should be given. Under this recommendation so many problems can be solved. Cooperative stakeholders such as government administrative bodies, promoters, members, and the surrounding communities should be accessible.

The negative perception of the members should be solved critically:perception of the members on the transparency and accountability of the management committees should be clear. Especially members are not confident up on the awareness of MCs and the fair dividend distribution they perform. These two factors are challenging the active participation of the members. Dividend distribution should be done on time and management committees should be clear about their awareness to get reliability from the other members.

Based on the perception of members’ attitude, they are not satisfied on the service areas of SACCOs such as creation of job opportunity, timely loan collection and non diversified service of SACCOs were their dissatisfaction areas. These areas should get a great emphasis to get reliable and active participant members.

Priority should be given to the Challenges based on their severity: due to the existence of resource constraints, all problems cannot be solved at over night. But problems that have high severity and high frequency should be solved first. This needs a research to identify the main severe challenges. Based on this study, the largest influence on the performance of SACCOs is lack of knowledge about rights and duties, l imited capacity of mgt committees, delay of loan repayment, and poor participation of members. But inadequate initial capital, the influence of other financial institutions, failure to notify annual meetings, and low interest rate are the poorest predictor of performance when they are compared with the other explanatory variables. Hence, lack of knowledge about rights and duties should be solved through continuous training.

The existing prospects or opportunities should be clear to the members: future prospects are the bight of future life to anyone. As a result this area should not be ignored since it has its own negative impact up on the participation of the members.

Lastly, other financial institutions should be recommended by the concerned bodies: SACCOs have a better matrix to address the majority of the population either in urban or rural areas and to serve the society at least cost. But micro financial institutions have not such coverage. This also hearts the development targets of the government. On top of that, they should be recommended seriously to stop their unfair competition with the SACCOs.

5.4. Suggestions for future researchThe challenges and prospects saving and credit cooperative societies was studied only in Kalu Woreda, South Wollo Zone Amhara regional State The other regions may have different contexts. So, it is worth to study the challenges and prospects of SACCOs in other regions of Ethiopia.

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Dusuki, AW. (2008). Banking for the Poor: the Role of Islamic Banking in Microfinance Initiatives.Humanomics, 24(1): pp. 49-66, accessed 19 December 2013, <http://www.kantakji.com/fiqh/Files/Economics/c429.pdf.

Emana, B. (2012). Cooperative Movement in Ethiopia. Workshop on perspectives for Cooperatives in Eastern: Uganda.

Ethiopian Negarit Gazeta. (1998). Cooperative Procl.No. 147/1998. Addis Ababa: Ethiopia.EU. (2011). The Role of Cooperatives, SACCOs and Traders in Value Chain Development. Borana

Zone: Ethiopia.Mugenda.O.M & Mugenda A.G (1999) Research Methods: Quantitative and Qualitative approaches.

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Janet, M., Ruane. (2006). Essentials of Research Methods.A Guide to Social Science Research, USA: Blackwell Publishing.

Jazayeri, A, DR. (2000). Supervision of Savings and Credit Cooperative Societies (SACCOs).www.ncua.gov/letters/Prior1996/E-LET167.html.

John, W. (1986). History of Cooperative Thought. Coimbatore: Rainbow Publication.

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Mergia,G. (2006).Sustainable SACCO DevelopmentTraining Material. Uganda.

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Owen, G. (2007). Rural Outreach and Financial Cooperatives.SACCOS in Kenya, the International Bank for Reconstruction and Development /the World Bank 1818 H Street, NW: Washington, DC 20433.

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Selvan, J. (2003). Teaching Material on Cooperative Theory and Practice. Debub University: Ethiopia.

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The Role of Cooperatives in Poverty Alleviation:

The Case of Tigray, Ethiopia

By:

Tafesse W/Egziena (Lecturer)

Haftu Haile (Lecturer) and

Seifu Gebrehiwet (Lecturer)

July 2011

Mekelle

Abstract

This research aims at addressing objectives like: examining the contributions of cooperatives in generating employment, identifying the role of cooperatives in enhancing the economic empowerment of marginalized groups of people, assessing the role of cooperatives in controlling inflation, identifying the contributions of cooperatives in creating market access for smallholder farmers and finally assessing the role of cooperatives in rural financing. Three zones: Southern, Southeastern, and Eastern zones and nine woredas (three woredas from each sampled zone) were selected randomly to collect primary data. There were about 2,493 primary cooperatives, 39 unions, and one federation in Tigray as of the year 2010. The types of cooperative in the region were: artisan, bee keeping and honey marketing, bio-gas, cactus marketing, cafeteria, coble stone, construction, consumer, dairy, electric, fattening, fishery, gold mining, hide and skin, seed production, laborers, natural gum, poultry, recreation, stationery, stone and sand mining, and others. These cooperatives had a total membership of 419,338 individuals. Overall, a total sales volume of Birr 294,567,688.76 was made in Tigray during the period 1998 – 2010 only by fishery cooperatives, mining cooperatives, service cooperatives, vegetable marketing cooperatives, animal product marketing cooperatives, dairy cooperatives, and natural gum cooperatives.

The creation of market access has been taken as an indication for the role cooperatives play in economic empowerment of their members. The price cooperatives pay for members’ outputs and the price they charge their members for inputs are much better, to the advantage of members, than those paid and charged by traders. The role of cooperatives in controlling inflation was assessed on the basis of the volume of supply

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made by cooperatives to the market and the trend and fluctuation of the unit prices of some selected products sold by cooperatives in the region. The cooperatives under study have made a total supply worth of Birr 962,672,789.23 during the period considered. Relatively speaking, milk and fish prices showed a consistent trend over the period as compared to food grain, sesame, and hide and skin. There had been 611 RuSACCOs in Tigray with a total membership of 69,828 individuals as of June 30, 2003 E.C. These RuSACCOs had total asset worth of Birr 54,822,617.66. Of this, Birr 20,773,725.09 was members’ savings and Birr 6,132,221.77 members’ share. A total loan of Birr 26,214,335.35 was disbursed to member borrowers. Of this, Birr 17,661,467.36 was advanced to 11,917 male members and the remaining Birr 8,552,867.99 to 5,727 female members.

Keywords:Tigray, Cooperatives, Poverty reduction

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Chapter One: Introduction

1.1.Background and Justification: A cooperative is a business or service organization that has two unique characteristics. First, it is owned and democratically controlled by the people who use its services. Second, the benefits (services received and earnings allocations) are distributed to the user-owners on the basis of how much they use the cooperative. The focus of non cooperative, investor-owned businesses is strictly on the “bottom line,” or the highest profit. The stockholder-owners may never use the products their company produces.Their primary concern is increasing the value of their stock and/or dividend payments.A cooperative takes a different approach. A cooperative is not owned and controlled by outsiders, but rather by the people who use its services regularly, often daily. While a cooperative has to cover its costs to stay in business, it can focus its resources on meeting the needs of its user-owners, called members. Business decisions are made on the basis of what is in the overall best interests of the members. Each member maintains his or her status as an individual and the cooperative becomes a means to realize business and personal goals. Cooperatives are a means for people to achieve an honest day’s income for an honest day’s work or to meet other social and economic needs. To succeed, they require capital, commitment, patience, and a membership willing to work together even if it means giving up a little individuality in the process. But the rewards - respect, a higher income, new friends and acquaintances, the satisfaction of having solved problems - are well worth the effort.

The people of Ethiopia have got a very long social history of working together to fulfill their socio-economic needs. Agriculture, trade and military operations were carried out through cooperative efforts. In Ethiopia there are three well known traditional cooperatives or self-help groups namely, Edir, Ekub and Debo.Modern form of cooperatives started in Ethiopia during the ruling era of Emperor Haileselassie I.

In Tigray region, the cooperative movement has similar history with that of the whole country. In this region there are 1859, 39, and 1 primary cooperative societies, cooperative Unions and Cooperative Federation respectively. The total membership size of these cooperatives approaches to 406,377 persons with total capital amount of 79,630,849 Birr (Tigray Regional Cooperative Agency, 2001). Discussion about the role of cooperatives in poverty reduction should start with a brief discussion of poverty. Poverty is a complex concept which does not fit into a neat definition. It entails a complex interconnection of descriptors surrounding the livelihood status of people in communities. According to the World Summit for Social Development held in Copenhagen in 1995: “Poverty has various manifestations including lack of income and productive resources sufficient to ensure sustainable livelihoods; hunger and malnutrition; ill health; limited or lack of access to education and other basic services; increased morbidity and mortality from illness; homelessness and inadequate housing; unsafe environments; and social discrimination and exclusion. It is also characterized by lack of participation in decision making and in civil, social and cultural life“(Marburg, 1996).Poverty is multidimensional but specific to a location and a social group. However the striking common features in the experience of poverty is that poor people’s lives are characterized by powerlessness and voicelessnesswhich constrain

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the people’s choice and define the relationship and influence they are able to make with institutions in their environment (Narayan, 2000).

1.2 Statement of The problemCooperatives, in their various forms, promote the fullest possible participation in the economic and social development of all people, including women, youth, old persons and people with disabilities, and are a major factor for economic and social development (UN resolution 114, 2001). The recent financial and ensuing economic crisis has had negative impacts on the majority of enterprises; however, cooperative enterprises around the world are showing resilience to the crisis. Financial cooperatives remain financially sound; consumer cooperatives are reporting increased turnover; worker cooperatives are seeing growth as people choose the cooperative form of enterprise to respond to new economic realities. (ILO, 2009)

In Tigray region, there are around 1859 primary cooperatives, 34 cooperative unions, and 1 cooperative federation so far. It is assumed that cooperatives are playing a vital role in addressing social and economic problems like food insecurity, unemployment, lack of access to market, inflation, financial exclusion, and poverty in general in Tigray region. But, so far, a detailed and comprehensive study, concerning the contribution of the Cooperative Sector in addressing the above mentioned problems in the region has not been made. Therefore, the focus of this study will be on identifying the role that cooperatives play in poverty alleviation and transforming the region.

Hence, the question that is not addressed so far is “Are cooperatives really contributing to solve the problems of food insecurity, unemployment, access to market, marketing malpractices in agricultural products, inflation, empowering youth, disabled and women, generating investments, building entrepreneurial and managerial capabilities of members, building democracy and good governance, technology adoption, distribution of agricultural inputs, increasing savings, alleviating housing problems, natural resource management, etc.. ?” This needs a detailed and explorative study. Thus, this research aims at identifying the statistical database on the contribution and potential of the cooperative sector in solving the above mentioned problems in particular and to the economic and social development endeavors of Ethiopia in general.

1.3. Research Objectives:The study has set out the following general and specific objectives:

General Objective: To explore the Role Cooperatives Play in Poverty alleviation in Tigray.

Specific Objectives: To examine the contributions of cooperatives in generating employment To identify the role of cooperatives in enhancing the economic empowerment of

marginalized groups of people To assess the role of cooperatives in controlling inflation To identify the contributions of cooperatives in creating market access for

smallholder farmers

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To assess the role of cooperatives in rural financing.

Chapter Two: Review of Related Literature

2.1 Benefits of Being a Member of CooperativesThe benefits of being a cooperative member differ in two ways. First, the advantages are more numerous. Second, they are distributed on the basis of how much use you make of the cooperative, rather than your equity stake. Here are some benefits of cooperative membership and how they relate to use. Access to quality suppliesand services at reasonable cost: By banding together and purchasing business supplies and services as a group, individuals offset the market power advantage of firms providing those supplies. You can gain access to volume discounts and negotiate from a position of greater strength for better delivery terms, credit terms, and other arrangements. Suppliers will be more willing to discuss customizing products and services to meet your specifications if the purchasing group provides them sufficient volume to justify the extra time and expense.The larger the group purchasing supplies and services through the cooperative, the greater the potential for savings. And the more each individual member uses the supply operation, the more he or she may save over doing business elsewhere.Another option for cooperative members is to manufacture their own supplies and hire experts directly to provide essential services. This gives members even more reliable sources of supply and greater control over the types of products available, the cost, and the quality of the services received.

Increased clout in the marketplace: Marketing on a cooperative basis, like purchasing supplies and services, gives members the ability to combine their strength while maintaining their status as independent business people. They can lower distribution costs, conduct joint product promotion, and develop the ability to deliver their products in the amounts and types that will attract better offers from purchasers.Through cooperative marketing, members can share information and negotiate with buyers from a position of greater strength and security. They can also develop processing facilities by themselves or as part of a joint venture with other cooperative or non cooperative firms.A cooperative can also serve as a vehicle for people selling goods and services to work with their customers to promote industry research, reduce regulatory burdens, and develop markets for their products. The cooperative can thus help create a “win-win” situation for the entire industry, a business environment where both producers and buyers have more income to divide.

Share in the earnings: Some people talk about non cooperative firms operating “for profit” while cooperatives operate “at cost.” This isn’t totally accurate. Most cooperatives generate earnings. Where they differ from non cooperative firms is how they allocate and distribute their earnings. A non cooperative firm retains its earnings for its own account, or perhaps pays part of them out to shareholders as dividends, based on the amount of stock each investor owns. In a cooperative, earnings are usually allocated among the members on the basis of the amount of business each did with the cooperative during the year. For example, if a cooperative has net earnings of $20,000 during the year and 2 percent of its business was with Ms. Jones, then Ms. Jones would be allocated $400 of those

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earnings ($20,000 x .02). Typically, Ms. Jones would receive her allocation, called a patronage refund, partly in cash and the remainder as an addition to her equity account in the cooperative. Permitting their cooperative to accumulate retained patronage refunds is a relatively easy and painless way for members to help finance cooperative activities and growth. Also, if certain rules in the Internal Revenue Code are followed, the cooperative is permitted to deduct both the cash payouts and the retained patronage refunds from its taxable income. This makes cooperative earnings particularly valuable.

Political action: Growers, small business owners, and other rural residents have to realize that no one gives you a favorable law or regulatory ruling just because you think you deserve it. You have to build your case and argue your point convincingly.A cooperative gives people a means to organize for effective political action. They can meet to develop priorities and strategies. They can send representatives to meet with legislators and regulators. These persons will have more influence because they will be speaking for many, not just for themselves. They can also form coalitions with other groups having similar views on issues. The larger the voice calling for a specific action, the more likely that the system will respond with the policy you desire.Local economy enhanced and protected: Having its businesses owned and controlled on a cooperative basis helps your entire community. Cooperatives generate jobs and salaries for local residents. They pay taxes that help pay for schools, hospitals, and other community services.When a business is a cooperative, your town is less likely to lose those jobs and taxes. A business owned by one person, or a subsidiary of a big company, can easily be moved to another community. When many local people share the ownership of a cooperative, no individual or company can take it from your area or simply close it. Only the membership as a whole can make such decisions.

Why Not a Nonprofit? Sometimes people confuse cooperatives with nonprofit associations. Or they think organizing as a nonprofit sound appealing because they have heard that nonprofits are totally exempt from taxation and have easier access to grant funding.Clear distinctions exist between nonprofit groups and businesses. Nonprofit laws and tax treatment are designed for charitable and civic organizations, such as the Red Cross and the Rotary Club. They are not appropriate for business ventures. For example, one of the main characteristics of a cooperative is that earnings are returned to patrons on the basis of use. But in a nonprofit, all earnings must be retained in the organization and, upon dissolution; all assets usually must go to another nonprofit.

2.2 International Orientations towards CooperativesRecognizing that cooperatives, in their various forms, promote the fullest possible participation in the economic and social development of all people, including women, youth, older persons and people with disabilities, and are becoming a major factor of economic and social development. Recognizing also the important contribution and potential of all forms of cooperatives to the follow-up to the World Summit for Social Development, held at Copenhagen from 6 to 12 March 1995, the Fourth World Conference on Women, held at Beijing from 4 to 15 September 1995, and the second United Nations Conference on Human Settlements (Habitat II), held at Istanbul, Turkey, from 3 to 14 June 1996, and their five-year reviews, as well as the World Food Summit, held at Rome from 13 to 17 November 1996, the United Nations General Assembly passed Resolution 56/114 concerning the role of cooperatives in social

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Development in its 56th session held on 18 January, 2002. Moreover, Recognizing the importance of cooperatives in job creation, mobilizing resources, generating investment and their contribution to the economy, and Recognizing that cooperatives in their various forms promote the fullest participation in the economic and social development of all people, and recognizing also that globalization has created new and different pressures, problems, challenges and opportunities for cooperatives, and that stronger forms of human solidarity at national and international levels are required to facilitate a more equitable distribution of the benefits of globalization, the International Labor Organization (ILO) crafted and adopted Recommendation 193 concerning the promotion of Cooperatives is its 90 th session held on June 2002.

Chapter Three: Materials and Methods

3.1 Description of the study areaTigray Region is the Northernmost of the nineethnic regions of Ethiopia. Tigray is bordered by Eritrea to the North, Sudan to the West, the Afar Region to the East and the Amhara Region to the South. Based on the 2007 Census conducted by the Central Statistical Agency of Ethiopia (CSA), the Tigray Region had an estimated total population of 4,314,456, of which 2,124,853 are men and 2,189,603 women; urban inhabitants numbered 842,723 or 19.53% of the population. With an estimated area of 50,078.64 square kilometers, this region has an estimated density of 86.15 people per square kilometer. For the entire region, 985,654 households were counted which results in an average for the Region of 4.4 persons to a household, with urban households having on average 3.4 and rural households 4.6 people. 3.2 Type and Sources of DataThe study has been conducted based mainly on secondary sources of data. The secondary data were collected from documents and reports already maintained by Tigray Cooperative Promotion and Market Development Agency (TCPMDA), cooperative promotion bureaus in selected woredas of the region, and related research studies. Furthermore, websites, reports of the Central Statistical Agency, and other international agencies and organizations like United Nations, International Labor Organization, International Cooperative Alliance, Food and Agricultural Organization etc have been consulted to establish the theoretical framework of the study.Hence, data collection for this study relied on many sources of evidence including documents, archival materials, and interviews. 3.3 Data Collectionand Analysis Designed to obtain a quick overview of the contribution of cooperative movement in Tigray, the study has heavily relied on secondary data. Three zones: Southern, Southeastern, and Eastern zones and nine woredas, i.e., three woredas from each sampled zone were selected randomly to collect supplementary primary data. So, secondary data were collected from woreda and zonal level offices to supplement the regional level office. The analysis part of the study has mainly utilized descriptive tools owing to the nature of the data and variables included. The data collected have been classified, summarized, and presented using tables, charts, and graphs. Descriptive statistical tools like percentage, mean, standard deviation, and coefficient of variation have been used to analyze the collected data. Besides, statistical

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tools such as time series analysis and trend analysis were employed to test the relationships between time and some variables and draw conclusions. MINITAB software has been used for data analysis purpose.

Chapter Four: Result and DiscussionThis chapter presents the results of the empirical analysis made based on the specified statistical tools given in section 3.4 above.

4.1: The Contribution of Cooperatives in Generating Employment

One of the objectives of the study is to assess the contribution of cooperatives in generating employment. To address this objective, secondary data on the number of primary cooperatives, unions, and federation and the number of individual members were taken from Tigray Cooperative Promotion and Market Development Agency (TCPMDA). The table below presents the data.

Table 4.1.: Cooperative Levels and Membership (1997 – 2010)

Membership

Cooperative LevelNumbe

r MaleFemal

e TotalPrimary Coop

Union Total Capital

1. Primary 2,493 377,421

113,917

491,338

- - 110,066,034.00

2. Union -Multipurpose

-Saving and Credit

-Milk Processing

3931 62

- - - 20531

14034

----

49,383,241.00

47,155,419.00

1,397,822.00

830,000.00

3. Federation 1 1 31 7,500,000.00Source: TCPMDA

As can be seen from table 4.1 above, there were about 2,493 primary cooperatives, 39 unions, and one federation in Tigray as of the year 2010. The primary cooperatives had a total capital of Birr 110,066,034.00 with a total membership of 419,338 individuals of which 377,421 were male and 113,917 female members. The 39 unions in the region had a total of 205 primary cooperatives under

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their umbrella and a capital of Birr 49,383,241.00. The unions were multi-purpose, savings and credit, and milk processing. A union is a secondary level cooperative wherein primary cooperatives are the members. On the other hand, a federation is a tertiary level cooperative constituted by unions. There had been a single federation in the region constituting a total of 31 unions as members with a total capital of Birr 7,500,000.

The total membership of 419,338 individuals can be a clue as to how many jobs the cooperatives in the region have created depending on their type. In principle, a cooperative is a business enterprise that is used, owned, and controlled by the same people, the members. In other words, the users of the services offered by the cooperative are the members themselves, not outsiders. The services offered by cooperatives to their members may include marketing services, financial services, and employment generation, among others, based on the nature of the cooperative. Except for some forms of cooperatives, such as, savings and credit cooperatives, marketing cooperatives, dairy cooperatives, and consumer cooperatives, which may be run by a few volunteer members or paid non-member employees, most other forms of cooperatives are supposed tobe run by all their members as employees, thereby creating employment opportunity for their members. On the other hand, higher-level cooperatives, namely, unions and federations are commonly run by employed non-member professionals owing to the huge capital and management complexity thereof. Unfortunately, no data on the number of non-member employees in all levels (primary, union, and federation) were readily available and, therefore, the employment issue of the study has been addressed based only on member-employees.

Literature has the following perspective of employment creation by cooperatives: “It has been argued that cooperatives are well placed to mobilize social capital and can therefore bridge the economic and the social gaps by providing employment, an equitable distribution of profits and above all, social justice. Typically, cooperatives place more emphasis on job security for employee-members, pay competitive wages, promote additional income through profit-sharing, distribution of dividends and other benefits, and support community facilities such as health clinics and schools, than do private sector businesses. They also address issues of concern such as the environment and food security. The cooperative model, therefore, offers an important employment creation opportunity in the face of the global unemployment and underemployment problem. “Currently, it is estimated that the global cooperative movement directly provides productive self-employment for several hundred million worker-owners/members of production and services cooperatives, as well as the non-member employees of these and other cooperative enterprises. An increasing number of worker-owned cooperatives worldwide provide employment to millions of worker-owners in diverse sectors as health and social services, public services, education, transport, and tourism. “Cooperatives are also major sources of employment in large-scale enterprises providing food stuffs, services to consumers, and financial services. Financial cooperatives provide people with secure institutions for the deposit of savings which also encourage the formation of new enterprises and thus create new jobs. In Europe alone, cooperatives provide employment to more than 5 million individuals.” (Social Policy and Development Division, May 2006).

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There are many types of cooperative in the region: artisan, bee keeping and honey marketing, bio-gas, cactus marketing, cafeteria, coble stone, construction, consumer, dairy, electric fattening, fishery, gold mining, hide and skin, seed production, laborers, natural gum, poultry, recreation, stationery, stone and sand mining, and others. Of these, bee keeping and honey marketing cooperatives, construction cooperatives, stone and sand mining cooperatives, and others have a total membership of about 3200, 3600, 5000, and 4000 individuals respectively. These individuals are the member-employees of their respective cooperatives in most cases.So, the number of jobs created by cooperatives can be approximated by the number of members of the cooperatives in many cases owing to the very nature of the business model. The job opportunities created by cooperatives in this way are only direct jobs, without considering indirect and induced jobs resulting from multiplier effects thereof. As mentioned above, there is no ground to say that all the members of a savings and credit cooperative are also employees. However, these types of cooperatives can create employment opportunity for non-member managers and/or accountants in addition to the motivation to begin one’s own business among their members due to increased income and business know-how gained as a result of membership. “Cooperatives help to create, improve and protect the income and employment opportunities of their members by pooling the limited individual resources of members to create business enterprises that enable them to participate in production, profit-sharing, cost-saving or risk-taking activities” (Department of Economic and Social Affairs (DESA) - Economic and Social Council (ECOSOC).

4.2: Role of Cooperatives in Enhancing the Economic Empowerment ofMarginalized Groups of People

The second objective of the study is to examine the role cooperatives play in promoting the economic empowerment of marginalized people: people who are excluded from the mainstream economic and financial system and market. Basically, cooperatives are established to solve the problems of low bargaining power, lack of market information, lack of transportation facilities, unfair prices, inefficiency, the problem of financial exclusion, and middlemen exploitation, among others. Economic empowerment may have many varied indicator variables to measure. The researchers of this study have chosen to measure economic empowerment in terms of market access as represented by purchase and sales volume of the cooperatives and savings and credit mobilization of cooperatives. To this end, secondary data on the sales volume of fishery, mining, service, vegetable marketing, animal product marketing, dairy, natural gum cooperatives, and the amount of total asset and loan disbursed by savings and credit cooperatives were gathered for the period 1998 to 2010 and have been presented below. An overview of the role of cooperatives in promoting economic empowerment through savings and credit mobilization has been presented in Section 4.5 of this chapter. There were 611 RuSACCOs in Tigray with a total membership of 69,828 individuals as of June 30, 2003 E.C. These RuSACCOs had total asset worth of Birr 54,822,617.66. Of this, Birr 20,773,725.09 was members’ savings and Birr 6,132,221.77 members’ share. It has also been found out that the RuSACCOs in the region had disbursed a total loan of Birr 26,214,335.35 to their member borrowers. Of this, Birr 17,661,467.36 was advanced to 11,917 male members and the remaining Birr 8,552,867.99 to 5,727 female members.

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Table 4.2.1: Volume Sales (in Birr) made bydifferent Cooperatives

Sales (Birr)

Year Fish

MiningProducts Service Vegetables

Animal Products Milk

Naturalgum

1998 - 434.71 52,664.80

-24,241.00

- -

1999 -

130,069.75

370,952.00

- 554,959.65

- -

2000 -

514,024.00 363.63

- 681,803.00

- 111.80

2001 -

1,085,737.00

532,201.00

- 1,202,623.00

-281.23

2002 -

2,093,086.00

112,668.00

- 185,460.00

- 403.18

2003 -

6,151,083.00

459,273.70

- 56,459.75

- 746.77

2004

34,016.00

5,302,900.00

560,869.00

- 775,356.00 13,552.00

12,588.02

2005

19,968.00

2,380,286.50

1,113,696.80 245,047.00

1,100,351.20 13,578.00

6,326.69

2006

25,380.00

2,771,921.00

1,620,153.90 93,709.50

1,054,181.00 310,679.00 7,387.94

2007

38,388.00

1,357,817.80

1,620,000.00

2,231,327.15

7,378,286.20 562,189.21 6,200.00

2008

42,475.00

11,665,422.00

1,109,610.00

10,035,421.00

2,599,186.00 593,149.00 12,191.00

2009

51,089.50 41,884,255.60

1,690,198.70

48,930,360.50

3,190,297.50 717,344.70 14,440.00

2010

52,800.00

29,994,321.30

1,597,337.60

90,604,996.50

3,774,028.06

1,128,373.51 14,588.41

Total

264,116.50

105,331,358.66

10,839,989.13

152,140,861.65

22,577,232.36

3,338,865.42 75,265.04

Mean

37,730.93

8,102,412.20

833,845.32

25,356,810.28

1,736,710.18

476,980.77

6,842.28

Stdv.

12,317.56

12,985,840.64

648,848.72

37,017,282.26

2,073,375.01

400,001.56

5,893.13

C.V* 32.6

5 160.2

7 77.8

1 145.9

9 119.3

9 83.8

6 86.1

3

Source: TCPMDA*Coefficient of Variation

As table 4.1.2 outlines, fishery cooperatives, mining cooperatives, service cooperatives (such as, mill cooperatives), vegetable marketing cooperatives, animal product marketing cooperatives, dairy cooperatives, and natural gum cooperatives had average sales of Birr 37,730.93, Birr 8,102,412.20, Birr

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833,845.32, Birr 25,356,810.28, Birr 1,736,710.18, Birr 476,980.77, and Birr 6,842.28, respectively for the period considered. Fish sales were the highest in 2010 at Birr 52,800.00 and the lowest in 2005 at Birr 19,968.00. Vegetable, milk, and natural gum sales were also the highest in the year 2010 at Birr 90,604,996.50, Birr 1,128,373.51, and Birr14,588.41 respectively. The highest sales of mining products, service, and animal products took place in 2009, 2009, and 2007 at Birr 41,884,255.60, 1,690,198.70, and Birr 7,378,286.20 respectively.These amounts of sales, though with large standard deviations, may be an indication for the role cooperatives play in pooling scattered and unused resources and create market opportunity for the people involved, thereby promoting their economic conditions. Even though the high standard deviations indicate a huge variation in sales volume, the following time series charts outline an overall increasing trend in sales, especially after the year 2005.

Except for the period 2004 – 2005, fish sales showed an increasing trend from Birr 19,968.00 in 2005 to Birr 52,800.00 in 2010 with a mean of Birr 37,730.93. Similarly, natural gum sales (mean = 6,842.28) followed an increasing trend from Birr 111.80 in 2000 to Birr 14,588.41 in 2010, except for the periods 2004 – 2005 and 2006 - 2007 during which sales decreased from Birr 12,588.02 to Birr 6,326.69 and from Birr 7,387.94 to Birr 6200.00 respectively.Service and milk sales also follow a general increasing trend from Birr 52,664.80 in 1998 to Birr 1,597,337.60 in 2010 and from Birr 13,552.00 in 2004 to Birr 1,128,373.51 in 2010. The average service sales were Birr 833,845.32 whereas the average milk sales were Birr 476,980.77. Relatively speaking, service sales show a much more fluctuating volume during the mentioned period. During the period 1998 – 2003, service sales underwent ups and downs. The period 2003 – 2006 witnessed an increasing trend of service sales which again fluctuated during the period 2007 – 2010. While vegetable and mining sales follow an overall increasing trend, animal product sales seem to follow a constant trend except for the period 2006 – 2008 during which some fluctuation is observed. Vegetable sales ranged from Birr 245,047.00 in 2005 to Birr 90,604,996.50 in 2010 with a mean of Birr 25,356,810.28. One may relate the sales volume and the generally increasing trend of the volume with the role that cooperatives are playing in economic empowerment. Overall, total sales of Birr 294,567,688.76 were made in Tigray during the period 1998 – 2010 only by fishery cooperatives, mining cooperatives, service cooperatives, vegetable marketing cooperatives, animal product marketing cooperatives, dairy cooperatives, and natural gum cooperatives.

4.3: Role of Cooperatives in Creating Market Access for Smallholder Farmers

The third objective of the study is to examine the role of cooperatives in creating market access. Creating market access is one of the main benefits of establishing a cooperative. Market access may be seen from two aspects: access to purchasing inputs and consumption goods, and access to selling outputs. In Tigray, cooperatives are engaged in both aspects. Some purchase members’ outputs and some supply production inputs and consumption items to members. The price cooperatives pay for members’ outputs and the price they charge their members for inputs are much better, to the advantage of members, than those paid and charged by traders.Table 4.2.1 above outlines a total sales volume of Birr 294,567,688.76. This amount indicates the sales made by cooperatives to the market.

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Firstly, the cooperatives purchase the products from their members. This process provides the individual members with an honest and low cost market for their products and dividend after their cooperative sells the products to the market at a reasonable profit margin.

Table 4.3.1: Purchase and Sales Volume Made by Cooperatives

Purchases/Sales (Birr)

YearFood Grain(Purchase)

Sesame(Purchase)

Hide & Skin(Purchase)

ConsumerGoods(Sales)

1997 -- - 146,009.3

7

1998 11,666,248.0

0 - -

3,593,853.00 1999 9,696,182.55 - - 6,218,349.40

2000 15,615,966.0

0 - -

7,698,868.00

2001 1,108,532.00 - - 10,846,852.0

0 2002 2,438,923.11 - - 3,700,489.00 2003 8,788,093.30 8,155,161.92* - 6,159,214.52

2004 2,363,551.0

0 16,157,369.0

0 98,302.0

0 11,171,905.00

2005 11,223,235.0

0 63,194,718.0

0 386,445.

00 21,462,689.0

0

2006 5,285,083.00 19,763,662.0

0 584,693.5

0 23,645,844.1

0

2007 12,634,133.4

2 19,927,273.4

3 109,990.

00 30,814,176.1

0

2008 30,424,910.0

0 50,495,841.0

0 720,723.

00 31,439,667.0

0

2009 56,134,701.3

0 31,056,143.74 477,637.00 37,008,462.6

0

2010 16,468,018.2

1 52,274,696.4

0 106,360.

50 26,842,128.0

0

Total 183,847,576.

89 261,024,865.

49 2,484,151

.00 220,748,507.

09

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Mean 14,142,121.3 36,124,243.37 354,878.7143 15,767,750.51Standard Deviation 14,791,509.39 18,949,770.06 255,044.5385 12,316,750.84

Coefficient of Variation 104.59 52.46

71.87 78.11

Source: TCPMDA *(1997-2003)

In addition to the volume of sales shown in table 4.2.1, a total purchase volume, from members, of Birr 447,356,593.38 and a total consumer goods supply volume of Birr 220,748,507.09 is presented in table 4.3.1. All together, only the selected cooperatives for the study made a total transaction of Birr 962,672,789.23 during the period 1997 – 2010 in the region, thereby promoting market access to a better situation, especially, for rural people.Sesame sales were the highest in 2005 at Birr 63,194,718.00 with a mean of Birr 36,124,243.37.Food grain and consumer goods had the highest sales volume in the year 2009 with a mean of Birr 14,142,121.3 and Birr 15,767,750.51. Hide and skin sales showed a relatively constant trend (c.v. = 71.87) with a mean of Birr 354,878.7143 next to sesame (c.v. = 52.46).

4.4: Role of Cooperatives in Controlling Inflation

Table 4.4.1: Average Unit Price of Products Sold by Cooperatives

Unit Price (Birr)

87

Source: TCPMDA

The fourth objective of the study is to examine the role of cooperatives in controlling inflation. The study has made an attempt to address the objective based on the volume of supply made by cooperatives to the market and the trend and fluctuation of the unit prices of some selected products sold by cooperatives in the region. Cooperatives play a role in creating market access for scattered and remote resources through pooling them into a significant amount. By doing so, they add to the total supply in the market which may have a price stabilizing effect as a result of the economic relationship between price and total supply in the market. Cooperatives purchase products from their individual members and then inject the amount to the market in urban areas. As can be seen from tables 4.2.1 and 4.3.1, the cooperatives under study have made a total supply worth of Birr 962,672,789.23 during the period considered.

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Year

Food Grain(Qtl.

)

Hide &Skin(no.

)

Sesame(Qtl.)

Fish(no.)

Milk(Ltr.)

1998 107.065 - - - -1999 140.321 - - - -2000 181.742 - - - -2001 138.567 - - - -2002 143.466 - - - -2003 407.186 - 142.780 - -2004 171.015 14.193 525.013 1.906 2.0002005 242.841 21.981 618.097 1.500 2.0002006 229.208 17.616 490.097 1.500 3.0452007 528.607 4.482 600.078 2.269 3.514

2008 462.212 15.8281215.93

5 2.500 3.5142009 706.453 7.836 877.907 2.500 3.885

2010 511.217 8.3091467.22

5 4.000 5.495

Mean 305.38 12.89 742.14 2.3

1 3.3

5

Standard Deviation 194.01 6.23 426.64 0.8

6 1.2

0

Coefficient of Variation 63.53 48.29 57.49 37.0

8 35.9

0

Table 4.4.1 outlines the trend of average unit prices of food grain, hide and skin, fish, and milk sold by cooperatives along with respective mean, standard deviation, and coefficient of variation (c.v.). Food grain and sesame were respectively sold at a mean price of Birr 305.38 (s.d. = Birr 194.01) and Birr 742.14 (s.d. = Birr 426.64). The mean unit prices of hide and skin, fish, and milk (liter) were Birr 12.89, (s.d. = Birr 6.23), Birr 2.31(s.d. = Birr 0.86), and Birr 3.35 (s.d. = Birr 1.20) respectively. The coefficient of variation shows the relative consistency of the prices over the period considered. It measures the extent of variation as a percentage of the average price of each product. The coefficientsof variation of the products may indicatethe extent of consistency in price. Relatively speaking, milk and fish prices showed a consistent trend over the period as compared to food grain, sesame, and hide and skin. The price of food grain underwent ups and downs with sharp increases in the years 2003, 2007, and 2009. The overall direction of food grain price follows an increasing trend. As can be seen from the chart, the price seems to undergo alternative increases and decreases during consecutive years. This alternate variation seems to be the result of the amount of food grain supplied by cooperatives.The highest price of hide and skin appeared in 2005 at Birr 21.981 followed by the price in 2008, Birr 15.828.

4.5: Role of Cooperatives in Rural Financing

Another objective of the study is assessing the role of cooperatives in rural financing. Rural financing refers to the availability and accessibility of credit, savings andinsurance services in rural areas (Andrew el et.al, 1999). However, the context of this study does not include insurance services.

Table 4.5.1: RuSACCOs and their Financial Structure in Tigray as of June 30, 2003 E.C.

Zone

No. of RuSACCOs

Membership Asset Savings

Share Capital

Southern 107 19,858 13,678,025.25 6,870,073.15 2,014,255.3

5

South-Eastern 106 10,683 7,537,220.63 2,661,124.09

784,424.50

Eastern 145 14,752 16,503,782.98 5,086,594.65 1,692,496.8

6

Central 213 20,997 14,536,358.40 4,499,189.89 1,205,544.4

0

Western 40 3,538 2,567,230.40 1,656,743.31 435,500.6

6

TOTAL 61169,828 54,822,617.66 20,773,725.0

9 6,132,221.7

7

Source: TCPMDA

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As table 4.5.1 depicts, there had been 611 RuSACCOs in Tigray with a total membership of 69,828 individuals as of June 30, 2003 E.C. These RuSACCOs had total asset worth of Birr 54,822,617.66. Of this, Birr 20,773,725.09 was members’ savings and Birr 6,132,221.77 members’ share. The asset item also includes loan disbursed and other non-cash assets. Members’ savings is part of the total asset that is mobilized for loan disbursement to member borrowers, whereas members’ share is part of total asset that is kept in a bank or other financial institution as a guarantee. Of the total asset of Birr 54,822,617.66 owned by rural savings and credit cooperatives in the region, RuSACCOs in the Western, South-Eastern, Southern, Central, and Eastern Zones respectively accounted for 4.7%, 13.7%, 24.9%, 26.5%, and 30.1% .

RuSACCOs in the Eastern Zone had the highest amount of asset, Birr 16,503,782.98followed by RuSACCOs in the Central Zone, Birr 14,536,358.40. On the other hand, RuSACCOs in the Western Zone had the least amount of asset, Birr 2,567,230.40.

Chart 4.1: Amount of Asset, Savings, and Share of RuSACCOs by Zone

Source: TCPMDA

Table 4.5.2: Amount of Loan Disbursed by RuSACCOs in Tigray as of June 30, 2003 E.C.

Loan Beneficiaries

90

Zone Loan Disbursed Male (Birr)

Female (Birr) Male (No.)

Female (No.)

Southern 10,527,404.10 7,845,553.00 2,681,851.1

0 5,412 2,706

South-Eastern

6,200,165.00 3,639,397.00 2,560,768.0

0 1,783 891

Eastern 3,210,148.04 2,187,030.00 1,023,118.0

4 2,512 933

Central 2,091,787.97 1,565,235.12 526,552.8

5 1,345 326

Western 4,184,830.24 2,424,252.24 1,760,578.0

0 865 871

TOTAL 26,214,335.35 17,661,467.3

6 8,552,867.

99 11,917 5,727

Source: TCPMDA

Table 4.5.2 outlines the amount of loan disbursed by RuSACCOs to male and female members in the five zones of Tigray. In Savings and Credit Cooperatives, loan is accessed with less procedural bureaucracies, lower interest rate, nominal guarantee, and enough time to settle the loan. The interest paid by member borrowers is the source of profit which is distributed to all members, borrowers or not, as a dividend periodically. Of the total loan of Birr 54,822,617.66disbursed by rural savings and credit cooperatives in the region, RuSACCOs in the Central, Eastern, Western, South-Eastern, and Southern Zones accounted for 8.0%, 12.2%, 16.0%, 23.7%, and 40.2% respectively. As can be seen from chart 4.5.4 visually, RuSACCOs in the Southern Zone disbursed the highest amount of loan, Birr 10,527,404.10, while RuSACCOs in the Central Zone disbursed the least amount, Birr 2,091,787.97. In all cases, the loan disbursed to male members has a higher amount than the loan disbursed to female members. Chart 4.2 outlines the number of male and female loan beneficiaries by zone. The highest number of both sexes benefited in the Southern Zone. About 2,706 female and 5,412 male members were loan beneficiaries in this zone. The Central and Western Zones, on the other hand, witnessed the lowest number of female and male beneficiaries respectively. Overall, a total loan of Birr 26,214,335.35 was disbursed to member borrowers in the five zones of Tigray Region as of June 30, 2003. Of this, Birr 17,661,467.36 was advanced to 11,917 male members and the remaining Birr 8,552,867.99 to 5,727 female members.

Chapter Five: Conclusion and RecommendationThis chapter presents the main findings obtained from the undertaken empirical analysis in a summarized way. Policy implications have also been presented from the researchers’ side.

5.1: Conclusion

There were about 2,493 primary cooperatives, 39 unions, and one federation in Tigray as of the year 2010. The types of cooperative in the region were: artisan, bee keeping and honey marketing, bio-gas,

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cactus marketing, cafeteria, coble stone, construction, consumer, dairy, electric fattening, fishery, gold mining, hide and skin, seed production, laborers, natural gum, poultry, recreation, stationery, stone and sand mining, and others. These cooperatives had a total membership of 419,338 member individuals. The number of jobs created by cooperatives can be approximated by the number of members of the cooperatives in many cases, except for such cooperative as SACCOs, consumer cooperatives, and marketing cooperatives, owing to the very nature of the business model. Overall, a total sales volume of Birr 294,567,688.76 was made in Tigray during the period 1998 – 2010 only by fishery cooperatives, mining cooperatives, service cooperatives, vegetable marketing cooperatives, animal product marketing cooperatives, dairy cooperatives, and natural gum cooperatives. The creation of market access has been taken as an indication for the role cooperatives play in economic empowerment of their members.

Market access has been seen from two aspects: access to purchasing inputs and consumption goods, and access for selling outputs. In Tigray, cooperatives are engaged in both aspects. Some purchase members’ outputs and some supply production inputs and consumption items to members. The price cooperatives pay for members’ outputs and the price they charge their members for inputs are much better, to the advantage of members, than those paid and charged by traders. The role of cooperatives in controlling inflation was assessed on the basis of the volume of supply made by cooperatives to the market and the trend and fluctuation of the unit prices of some selected products sold by cooperatives in the region. The cooperatives under study have made a total supply worth of Birr 962,672,789.23 during the period considered. Overall, the coefficient of variation of each product is less than 100%. Relatively speaking, milk and fish prices showed a consistent trend over the period as compared to food grain, sesame, and hide and skin. Rural financing was a major issue of the study. There had been 611 RuSACCOs in Tigray with a total membership of 69,828 individuals as of June 30, 2003 E.C. These RuSACCOs had total asset worth of Birr 54,822,617.66. Of this, Birr 20,773,725.09 was members’ savings and Birr 6,132,221.77 members’ share. A total loan of Birr 26,214,335.35 was disbursed to member borrowers. Of this, Birr 17,661,467.36 was advanced to 11,917 male members and the remaining Birr 8,552,867.99 to 5,727 female members. Besides the facts presented above from secondary sources, primary data from randomly selected members indicated some practical problems facing cooperatives in the region. Some of the frequently raised problems were: lack of capital, lack of professional support, lack of autonomy, lack of credit, lack of common interest and purpose among members, lack of members’ awareness about cooperative values, distrust among members, lack of commitment among members and elected representatives, etc.

5.2: Recommendation

Although there is a significant contribution of the cooperatives in job creation, economic empowerment, market access, price stabilization, and rural financing, the need for educated man power in the area of cooperation cannot be overemphasized so as to achieve much better efficiency in performance.

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Educationand/or training sessions are needed to improve the know-how of the cooperative identity and business and management skills, including costmanagement skills, of the Cooperative personnel. Current and potential members should get awareness about the basic values (self-help, self-responsibility, equality, equity, democracy, solidarity, honesty, openness, social responsibility, and caring for others) and principles (voluntary and open membership; democratic member control; member economic participation; autonomy and independence; education, training, and information; cooperation among cooperatives; and concern for community) of the cooperative business model that are necessary for success. A reasonable adherence to these values and principles can contribute a lot to alleviating the problems mentioned by member respondents. Regular training to members is necessary so that they can develop a better awareness and commitment. Most importantly, a fertile ground needs to be created from the government’s side to promote Research Endeavors in the area of Cooperation to support Cooperative Businesses with scientific and fact based findings.

References:

Deepa Narayan (2000): Poverty is Powerlessness and Voicelessness; in Finance and Development; IMF

G.Veerakumaran, PhD. (2007): Ethiopian Cooperative Movement-An Explorative Study, Mekelle, Ethiopia

http://social.un.org/index/Cooperatives.aspx ILO Recommendation 193(2002): Recommendation for the Promotion of Cooperatives, Geneva,

Switzerland ILO (2009): Cooperatives: a path to economic and social empowerment in Ethiopia, COOP Africa

working Paper No. 9, Geneva Switzerland Marburg Consult(1996): Attacking the Roots of Poverty Social Policy and Development Division, May 2006 UN resolution 56/114 (2002): Cooperatives in Social Development, Geneva Switzerland.

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THE ECONOMIC CONTRIBUTIONS OF COFFEE COOPERATIVES TOWARDS

THEIR MEMBERS IN YIRGACHEFFE WOREDA, GEDEO ZONE, SNNPR,

ETHIOPIA

By Muhabie Mekonnen

Lecturer at Mizan-Tepi University

ABSTRACT

Cooperatives are people centered business enterprises which operate in all areas of economic activity in almost all countries of the world. In spite of their horrific history, cooperatives are widely acknowledged for their important direct and indirect impacts on economic development of members in terms of promoting and supporting entrepreneurial development, creating productive employment, raising incomes and helping to reduce poverty by reducing their vulnerability through allowing them to accrue savings, build assets, improve investment opportunities and smooth out consumption. As the world today faces severe poverty situations, unstable financial systems, increased insecurity of food supply, growing inequality worldwide and increased unemployment rates, it is highly compelling to consider the model of economic enterprise that cooperatives offer. Hence, this research aimed at assessing the economic contributions of coffee cooperatives towards their members was conducted by taking 120 sample respondents of five purposively selected Coffee Cooperative Societies (CCSs). To achieve the major objective, the study specifically focuses on analysis of CCSs performance, the members’ perception, determinant and the constraining factors. For measuring the performances of sample CCSs,simple percentages and financial ratios were employed. The result of these measures shows that CCSs in the study area (Yirgacheffe Woreda) shows improvement year by year though they were performing below expectations. On the other hand, members perception towards the economic significance of their cooperatives was analyzed using means, percentages, standard deviations and Pearson’s correlations and the findings depicts that members perceived their cooperatives as well since they avails most of economic benefits indicated in the likert scale. This implies that members of cooperatives perceive their societies as a ‘good economic performers’ which make them moderately satisfied. At the end, a statistical method called binary logistic regression model was intensified in order to identify factors which influences the economic contributions of coffee cooperatives and as a result determinants named Education, Income Generation, Employment, Asset, Productivity, Price, Marketing of produce, Participation, Dividend and Fair-trade benefits were significant explanatory factors at 5% level of significance. Among the major impinging factors that have an effect on cooperatives; insufficient and untimely credit services, inadequacy of capital, infrastructural and technicalproblems were the dominant ones.

Key Words: Cooperatives, Coffee, Economic Contributions, CCSs, Yirgacheffe.

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CHAPTER IINTRODUCTION

1.1. Background of the Study

The co-operative movement brings together over 1 billion people around the world. The United Nations

estimated in 1994 that the livelihood of nearly 3 billion people, or half of the world's population, was

made secure by co-operative enterprise. These enterprises continue to play significant economic and

social roles in their communities (Edward, (nd) available atwww.mtti.go.ug).They provide a unique tool

for achieving one or more economic goals in an increasingly competitive global economy.These goals

include achieving economy of size, improving bargaining power when dealing with other businesses,

purchasing in bulk to achieve lower prices, obtaining products or services otherwise unavailable,

obtaining market access or broadening market opportunities, improving product or service quality,

securing credit from financial institutions and increasing income (Bello, 2010).

1.2. The Problem Statement

Cooperatives have been noted for their role in enhancing economic activities(Pur, 2003).However,

cooperative societies were thought to be associations meant only for farmers, small traders and other

very low-income earners.

Cooperative activities could play an effective role in supporting coffee farmers by supplying the price

information, capital, and transportation that small-scale farmers often lack(Kodama,2007).But some

members of cooperatives have an experience of selling their produce to other marketing channels.The

actual volume of purchase, too, is limited due to financial constraints. They finance their transactions

using credit from banks. In cases in which they are unable to repay the credit, they are not granted new

credit. Moreover, cooperatives face real challenges in the form of over-control and regulation by

government; limited access to credit; inability to scale up their activities; and inability to penetrate

markets(http://www.gsdrc.org/docs/open/HD565.pdf).

Literatures available at disposal confirms that very few studies have attempted to measure the

economic contributions of coffee cooperatives in the context of Ethiopia, which means their

contribution to economic development has not been well studied. Hence, this research was conducted

having the aim of filling the gap on such areas of cooperatives.

95

1.3. Objective of the Study

1.3.1. General ObjectiveThe overall objective of the study is to examine the economic contributions of coffee cooperatives

towards their members.

1.3.2. Specific Objectives

Specific objectives of the study are:

1. To assess the performance of selected coffee cooperatives in Yirgacheffe woreda

2. To analyze the perception of members towards the economic contributions of coffee

cooperatives

3. To identify the determinant factors of economic contributions of CCSs in the study area

4. To examine the problems that affects the economic contributions of coffee cooperatives

towards their members.

2.7. Conceptual Model

There are a number of factors that affects the economic contributions of coffee cooperatives which in

turn have an impact on members’ satisfaction. However, the following major determinant variables are

the most important factors that are drawn after extensive reviews of highly related literatures.

96

CHAPTER IIIRESEARCH METHODOLOGY

3.2. Source of Data

Both primary and secondary sources of data were used for conducting the study. The primary data were

obtained from sample respondents of members and management bodies of cooperatives. On the other

hand, secondary data was extracted from different societal documents

3.3. Sampling Techniques and Sample Size

The process of sampling procedure (the techniques and size determination) has been discussed

hereunder.

In the first place, the researcher has selected SNNPR region and Gedeo Zone followed by Yirgacheffe

woreda were selected purposively. The rationale behind is that these areasare known for the

concentration and existence of more number of coffee cooperatives which are financially and

operationally sound.As to selection of study units, among seven coffee cooperative societies (Aramo,

Edido, Haru, Koke, Dumerso, Hafursa and Konga), found in the Woreda, only five societies i.e. Konga,

Hafursa,Koke, Dumerso and Haru have been selected for the study purpose by taking into account the

97

time and financial shortages and the remoteness of the unselected CCSs.Among different methods of

sample size determination, the one which has developed by Carvalho (1984), as cited by Tamrat (2007)

was used. Table 3.1 below shows the employed method.

Table3.1 Sample Size Determination

Population size Sample Size

Low Medium High

51-90 5 13 20

91-150 8 20 32

151-280 13 32 50

281-500 20 50 80

501-1200 32 80 125

1201-3200 50 125 200

3201-10000 80 200 315

10001-35000 125 315 500

35001-150000 200 500 800

(Source: Tamrat G., 2007)

As indicated above the population size of the study is 5,456 which range between 3201 and 10,000.

Thus, taking in to account a small population size variance and the cost of taking samples and time

consuming for large sample size, the sample size found between these two extremes will reduce the

polarity problems identified. Therefore, the sample size selected for the study under consideration was

120, which is above the lowest and below the highest possible sample sizes (table3.1).Finally, by

implementing Probability Proportional to Size Sampling Technique (ni= Pi x n/N, where ni = each

cooperative sample size, Pi= Number of members of each cooperatives, n= total sample size in this case

120 (2.2%) and N= total population (members)), the sample respondents were drawn from each

cooperative society as follows.

Table3.2 Proportional Allocation of Sample Size

S.No. Name of CCSs Number of members (Pi)

Sample Size (ni= Pi x n/N)

1 Konga 2,340 52

98

2 Hafursa 881 193 Koke 1,093 244 Dumerso 317 75 Haru 825 18

Total (N) 5,456 n= 120

Source: YWMCO, 2011

Therefore, the number of sample respondents taken from each cooperatives based on their number of

members were 52, 19, 24, 7 and 18 of Konga, Hafursa, Koke, Dumerso and Haru cooperatives

respectively.

3.4. Tools and Methods of Data CollectionIn the processes of gathering data, different methods have been utilized. As to primary data collection

concerns, both interview and focus group discussion methods with their respective data gathering tools

of Structured interview schedule and Checklists were employed. Finally, the secondary data relevant

for this research work were collected from cooperatives’ reports, related websites and necessary

documents of the concerned offices.

3.5. Methods of Data Analysis and InterpretationFollowing the completion of the data collection, the data were edited, structured, coded and entered in

to SPSS 16.0, for analysis and interpretation purposes. The data were analyzed using both descriptive

and inferential statistical methods. The descriptive statistics including percentages, means, paired

sample means, frequencies, ranges and standard deviations were used to summarize and give

condensed picture of the qualitative data. The descriptive parts were also tested using Cha square and t-

tests. On the other hand, inferential statistical methods such as Pearson’s correlation and binary logistic

regression model were utilized to infer the quantitative analytical aspects.Ratios as a measure of

financial positions of the societies were also employed.

CHAPTER IV

RESULTS AND DISCUSSION

4.1. Measuring Performances of CCSs/Documentary Analysis

4.2.1. Financial Performance

Table4.1. Financial Ratios for Coffee Cooperative Societies

99

Name of Cooperatives

CR=CurrentAsset

CurrentLiability

DER = Total debt

Total shareholders ' equity

APSR =

[ Accounts PayablesNet Sales

] x 100

NPM =

[ Net IncomeNet Sales ]x 100

CR2009 CR2010 DER2009 DER2010 APSR2009 APSR2010 NPM2009 NPM2010

Konga 2.86 3.53 1.89 1.87 86% 79% 34% 37%Hafursa 1.74 2.01 1.96 1.98 91% 87% 28% 25.6%Koke 1.37 1.19 1.93 1.89 89% 85% 22.7% 23.4%Dumerso 1.26 1.40 1.97 1.94 98% 98% 18% 21%Haru 0.83 1.16 1.99 1.95 96% 93% 16.3% 19%Average 1.61 1.86 1.95 1.93 92% 88.4% 23.8% 25.2%

Source: YMCO, 2011

The table above shows that the average current ratios of societies were below the minimum

requirement (2.00) though there was a progress from 2009 to 2010 with respective mean ratios of 1.61

and 1.86.

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4.2.1.2. Financial Leverage Management Ratio: this ratio revealed that majority of the

finances of all CCSs in the study area comes from creditors than their own accounts. Yearly

improvement was kept between 2009 and 10.

4.2.1.3. Efficiency Ratio : According to table 4.1 above the average result of APSR depicts that

92% (in 2009) and 88.4% (in 2010) of cooperatives sales were being funded by their suppliers.

This implies that at times of coffee transaction (purchases and sales) cooperatives face a severe

shortage of its own finance

4.2.1.4. Profitability Ratios:The result of the computation (table 4.1) proves that averagely

cooperatives make 0.238 and 0.252 cents on every br1.00 of Sale in 2009 and 2010 fiscal years

respectively.

4.2.3.3. Cooperatives Employment Creation

Basically sample coffee cooperatives have created both permanent and temporary employments. The

table below confirms that Konga employs maximum number of peoples permanently (8-15 permanent

employees) by paying a maximum amount of money accounting br 50,460 to 133,200 annually followed

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by Dumerso (92,400 to 111,500 for 5 permanent employees annually). Conversely, Koke constitutes the

least employment rate by extending for only 4-6 peoples but in terms of payment it precedes the least

paying society i.e. Haru, remunerating its workers br 15,440 to 30,320 annually.

4.3. Descriptive Analysis

4.3.2. Demographic and Socio-Economic Characteristics of Respondents

4.3.2.1. Sex: As indicated in Table 4.5 of sex of respondents, majority (88.3%) were males while the

remaining 11.7% were females. This is as a result of the fact that coffee cultivation and marketing

activities were exhaustive and needs more power for carrying out. This is in support of (Jemal, 2008

and Eshetu, 2008). Moreover, Statistical test using chi-square indicated that being maleness or

femaleness had no significant impact on satisfaction of members of the cooperatives (χ2= 0.091, P=

0.763).

4.3.2.2. Age:The highest age concentration lies between the age brackets of 20-60 (85%). This implies

that most farmer-members were in their productive age group whereby they can enhance economic

development of cooperatives.

4.3.2.3. Education:The result connotes that those who were found in between elementary (69.6%)and

high school (80%) educational levels were more satisfied than the other extrem

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Table 4.5. Demographic, Social and Economic Profile of the Sample Respondents

Variables Satisfied Dissatisfied Total χ2

/ t-test P-ValueN % N % N %

Sex of respondents χ2 P

Male 65 61.3 41 38.7 106 88.3 0.091 0.763Female 8 57.1 6 42.9 14 11.7Total 73 60.8 47 39.2 120 100.0

Age of respondents t- value P<20 2 100 0 0 2 1.7 4.773 0.18920-40 35 56.5 27 43.5 62 51.740-60 23 57.5 17 42.5 40 33.3

>60 13 81.2 3 18.8 16 13.3Total 73 60.8 47 39.2 120 100

Educational Status χ2 P

Illiterate 4 30.8 9 69.2 13 10.8 19.466 0.002Able to write and read 6 37.5 10 62.5 16 13.3Elementary 32 69.6 14 30.4 46 38.3High school 28 80 7 20 35 29.2Diploma 2 28.6 5 71.4 7 5.8Degree and above 1 33.3 2 66.7 3 2.5Total 73 60.8 47 39.2 120 100

Occupation χ2 P

Daily laborer 11 9.2 5 4.2 16 13.3 2.469 0.650Cooperative daily employee 16 13.3 16 13.3 32 26.7Government employee 7 5.8 5 4.2 12 10NGO employee 2 1.7 1 .8 3 2.5Farmer 37 30.8 20 16.7 57 47.5Total 73 60.8 47 39.2 120 100

Income Level χ2 P

Poor 12 10 18 15 30 25 7.378 0.025Medium 58 48.3 28 23.3 86 71.7Rich 3 2.5 1 0.8 4 3.3Total 73 60.8 47 39.2 120 100

Farming Experience χ2 P

< 5 years 4 3.3 9 7.5 13 10.8 10.942 0.0275-10 years 9 7.5 12 10 21 17.510-15 years 16 13.3 6 5 22 18.315-20 years 11 9.2 4 3.3 15 12.5>20 years 33 27.5 16 13.3 49 40.8Total 73 60.8 47 39.2 120 100

Farm Size χ2 P

<0.2 13 10.8 7 5.8 20 16.7 0.428 0.9800.2-0.8 24 20 17 14.2 41 34.20.8-1.4 16 13.3 9 7.5 25 20.8

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1.4-2 8 6.7 6 5 14 11.7>2 12 10 8 6.7 20 16.7Total 73 60.8 47 39.2 120 100

Source: Field Survey, Jan 2012

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4.3.5. Rating of Cooperatives with respect to different Economic Variables

Cooperatives in the study area are more known for their employment and income creation activities, whilst they are still important in improving

the economic situation of their members by reducing the cost of inputs, facilitating access to markets, reducing seasonal price fluctuations,

preventing income reductions through introducing and controlling higher levels of quality and standards of weights and measures, and by

bringing social and political improvements to their members. Cooperatives also encourage the successful diffusion of innovations which increase

farmers' productivity, efficiency and competitiveness.

As per the ratings given by individual respondents below; the studied coffee cooperatives were more inclined to stronger or medium level rates

in almost all economic indicators except credit availability and farm input provisions. Among the total (12) variables registered in the table

below, only five are significant variables at 1 and 5 percent probability levels.

Table 4.8. Rating of CCSs with respect to different Economic variables

Economic Variables Satisfaction Category

Rates (Total Sample Size= 120) t-value P-valueStrong Medium Weak Nil or Almost

NilTotal

N % N % N % N % N %Income generation Satisfied 70 58.3 3 2.5 0 0 0 0 73 60.8 28.780 0.000

Dissatisfied 27 22.5 9 7.5 8 6.7 3 2.5 47 39.2Total 97 80.8 12 10 8 6.7 3 2.5 120 100

Employment creation Satisfied 52 43.3 17 14.2 3 2.5 1 0.8 73 60.8 8.075 0.044Dissatisfied 25 20.8 12 10 9 7.5 1 0.8 47 39.2Total 77 64.2 29 24.2 12 10 2 1.7 120 100

Asset building Satisfied 29 24.2 24 20 16 13.3 4 3.3 73 60.8 2.808 0.422Dissatisfied 16 13.3 22 18.3 8 6.7 1 .8 47 39.2Total 45 37.5 46 38.3 24 20 5 4.2 120 100

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Productivity incrementNB Satisfied 34 28.3 26 21.7 7 5.8 6 5 73 60.8 5.993 0.112Dissatisfied 15 12.5 19 15.8 11 9.2 2 1.7 47 39.2Total 49 40.8 45 37.5 18 15 8 6.7 120 100

Quality Increase Satisfied 33 27.5 25 20.8 10 8.3 5 4.2 73 60.8 2.279 0.516Dissatisfied 20 16.7 21 17.5 3 2.5 3 2.5 47 39.2Total 53 44.2 46 38.3 13 10.8 8 6.7 120 100

Price Setting Satisfied 55 45.8 11 9.2 2 1.7 5 4.2 73 60.8 14.321 0.002Dissatisfied 21 17.5 14 11.7 8 6.7 4 3.3 47 39.2Total 76 63.3 25 20.8 10 8.3 9 7.5 120 100

Marketing of produce Satisfied 59 49.2 8 6.7 5 4.2 1 0.8 73 60.8 40.167 0.000Dissatisfied 11 9.2 24 20 7 5.8 5 4.2 47 39.2Total 70 58.3 32 26.7 12 10 6 5 120 100

Service at fair cost Satisfied 30 25 22 18.3 14 11.7 7 5.8 73 60.8 2.094 0.553Dissatisfied 21 17.5 14 11.7 5 4.2 7 5.8 47 39.2Total 51 42.5 36 30 19 15.8 14 11.7 120 100

Enable members to save and invest

Satisfied 33 27.5 25 20.8 8 6.7 7 5.8 73 60.8 2.809 0.422

Dissatisfied 28 23.3 13 10.8 4 3.3 2 1.7 47 39.2Total 61 50.8 38 31.7 12 10 9 7.5 120 100

Increasing access to capital Satisfied 27 22.5 30 25 12 10 4 3.3 73 60.8 2.438 0.487Dissatisfied 14 11.7 26 21.7 5 4.2 2 1.7 47 39.2Total 41 34.2 56 46.7 17 14.2 6 5 120 100

Credit accessibilityNB Satisfied 8 6.7 14 11.7 39 32.5 12 10 73 60.8 17.691 0.001Dissatisfied 16 13.3 16 13.3 12 10 3 2.5 47 39.2Total 24 20 30 25 51 42.5 15 12.5 120 100

Farm input Satisfied 4 3.3 17 14.2 27 22.5 25 20.8 73 60.8 2.720 0.437Dissatisfied 4 3.3 9 7.5 23 19.2 11 9.2 47 39.2Total 8 6.7 26 21.7 50 41.7 36 30 120 100

Source: Field Survey, Jan 2012

NB –coffee production trend and loan repayment of sample respondents were illustrated in table 4.9 and 4.11below respectively

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4.4. Results from Binary Logistic Regression Model Analysis

Binary logistic regression analysis was performed on 16 independent variables (four discrete and twelve

continuous) that affect the satisfaction level of members of cooperatives. The outcome variable of the study

was a dichotomous variable with an expected value of one indicting satisfied and zero otherwise.

Table 4.22. Determinants of Members’ Satisfaction from Binary Logistic Regression Analysis

Explanatory Variables Coeff (β)

S.E. Wald df Sig. Odds Ratio

(Exp(β))

95.0% C.I. for EXP(B)

Lower UpperConstant -7.780 5.001 2.420 1 0.120 0.000Age -1.268 0.867 2.139 1 0.144 0.281 0.051 1.539Education (Illiterate) 8.454 5 0.133Education (Able to write and read) 3.151 3.405 0.856 1 0.355 23.356 0.030 1.847E4Education (Elementary) -1.884 3.349 0.316 1 0.574 0.152 0.000 107.820Education (High school) 1.387 3.128 0.197 1 0.657 4.005 0.009 1.843E3Education (Diploma) -0.845 3.048 0.077 1 0.781 0.429 0.001 168.635Education (Degree and above) 10.105 4.533 4.969 1 0.026** 2.446E4 3.388 1.766E8Income 4.143 1.589 6.801 1 0.009* 63.001 2.799 1.418E3Employment 1.511 0.684 4.881 1 0.027** 4.533 1.186 17.325Asset -2.525 0.985 6.573 1 0.010** 0.080 0.012 0.552Productivity 1.474 0.675 4.761 1 0.029** 4.365 1.162 16.399Quality -0.709 0.629 1.270 1 0.260 0.492 0.143 1.689Price 2.092 0.790 7.021 1 0.008* 8.104 1.724 38.094Marketing of produce 2.678 0.932 8.255 1 0.004* 14.559 2.343 90.487Saving and investment -1.604 0.825 3.779 1 0.052 0.201 0.040 1.013Credit -0.953 0.602 2.509 1 0.113 0.386 0.119 1.254Participation 5.501 1.583 12.068 1 0.001* 244.895 10.993 5.455E3Dividend -2.752 1.205 5.217 1 0.022** 0.064 0.006 0.677Information Access -0.123 0.925 0.018 1 0.894 0.884 0.144 5.420Skill build & techno access -1.542 1.131 1.858 1 0.173 0.214 0.023 1.965Fair-trade benefit -3.225 1.412 5.216 1 0.022** 0.040 0.002 0.633Nagelkerke R- Square = 0.835Note: * and ** indicate significance at 0.01 and 0.05 probability level respectively

Source: Field Survey, Jan 2012

Among 16 independent variables used in the model, 10 variables were found to be statistically significant. This

implies that they do have a significant effect on the satisfaction of members of cooperatives by their respective

cooperative economic contributions. These variables include: Education (Degree and above), Income,

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Employment, Asset, Productivity, Price, Marketing of produce, Participation, Dividend and Fair-trade benefit.

However, the remaining predictor variables were not statistically significant to affect the satisfaction level of

members at 5% level of probability. Moreover, many of the covariates i.e. Age, Education (Elementary),

Education (Diploma), Asset, Quality, Saving and investment, Credit, Dividend, Information Access, Skill building

& technological access and Fair-trade benefit had (both significant and insignificant) negative effects on

members satisfaction.

In binary logistic regression analysis, influential predictor variables are characterized by odds ratios that are

significantly different from 1, 95% confidence intervals of odds ratios that do not contain 1, and P-values that

are smaller than 0.05, at the 5% level of significance. Accordingly, Participation (OR= 244.895), Income (OR=

63.001), Education (Degree and above) (OR=35.795), Marketing of produce (OR= 14.559), Price (OR= 8.104),

Employment (OR=4.533) and Productivity (OR= 4.365) were found to be highly influential at 5% level of

significance.

4.6. Problems Hindering Economic Contributions of Coffee Cooperatives

The following table gives a clear picture of problems that hold back Yirgacheffe Woreda Coffee Cooperatives

accelerating movements. Based on the impact that each problem imposeson cooperatives performances

especially their economic contributions, the response rates were divided in to less, medium and high

impactcategories. Among problems stated in the table below, the most important (high impact) problems

which affect the proper functioning of cooperatives were: Insufficient and untimely credit services (92.5%),

Inadequacy of capital (89.2%), Infrastructural problems (road, electricity, water, transportation and storage

services) (89.2%), Materials, Machine and Technical Problems (77.5%), Members dissatisfaction (unattractive

and untimely provision of dividend, coffee price, credit and incentives) (74.2%), Lack of training, information

and integration to technology (74.2%), Lack of skilled man power (72.5%), Un profitability (70.8%),

Management related problems(65%), Lack of additional projects(63.3%), Inadequate follow up and support by

the promotion office and its professionals (62.5%), Inadequate government support(61.7%), Undiversified

members’ source of income and low saving habit (60.8%) and Marketing related problems (input and output),

59.2%. Additionally, the result of the research revealed that almost all factors have greater and medium

impacts other than lesser influence.

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CHAPTER V

SUMMARY, CONCLUSION AND RECOMMENDATIONS

5.2. Conclusion

Coffee Cooperatives found to be one of the most effective but challenged rural-centered institutions which are

helpful in improving the economic lives of their members through enabling patrons to generate income,

employed under their societies, benefited from dividend and fair-trade premium (converted in to

infrastructural facilities), selling their produce in a better market for reasonable prices and improving the

production and productivity of small holder farmers which at the end impacts on a bit increment of their assets.

These economic contributions of CCSs become prevalent due to the fact that their members were actively

participated in the business undertakings of cooperatives specially by supplying coffee. And also the members’

hope, commitment and perception towards their cooperatives economic contributions are appreciable. To the

reverse, the members’ participation and the economic return from their cooperatives are hindered by

problems of infrastructure, finance, technical and managerial aspects and lack ofknowledge about

cooperatives. So, if all (government, individuals and organizations) need to improve the life of economically

weak peoples means coffee producers, they have to collaborate with cooperatives which are potentially and

practically significant in changing living standards of members as well as non-members. Overcoming these

problems together will enhance the role of cooperatives in uplifting the socio-economic conditions of their

members, local communities and economic development of the nation as a whole.

Undoubtedly, considerable contributions have been made by CCSs to improve the economic conditions of

Yirgacheffe farmer-members. Nevertheless, there is still much more to be done in the future in order to

maximize the cooperatives’ economic potential to make a difference on members’ livelihood. To this end, all

available resources of cooperatives will have to be mobilized and deployed without any further delay.

5.3. Recommendations

Based up on the findings of the study, the following recommendations are forwarded.

1. Financial Improvements2. Enhancement of Business Operations of Cooperatives3. Infrastructural Developments 4. Betterment of Members, Managements and Employees of Cooperatives5. Promoting Cooperatives and Awareness Creation Campaigns 6. Strengthening the Support of Partnering Organizations and Agencies

National, regional and local government, including agencies

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YCFCU, FCA, NGOs, Labor Organizations and Churches Financial Institutions

REFERENCES

To be enclosed in the main paper of final submission

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