Why poor management is threatening survival of coops

Jean d’Amour Uwimana could only manage to make about a dozen pairs of low quality sandals that he would then sell on city streets, earning a few hundreds in profits. That was, however, to change when he made a bold move to open up his own workshop. The young entrepreneur now makes over Rwf200,000 daily from sales of leather products, including shoes and belts, writes michel nkurunziza. many farmer cooperatives in Rwanda face huge challenges including mismanagement and other governance issues like fraud and misuse of property as well as lack of sustainable markets and capacity to operate efficiently. In addition, some of the members side-sell produce, affecting the performance and cash flow of the cooperatives in the country, sector experts say. With a membership of over three million people, Rwanda’s cooperative movement is a strong vehicle for development and economic empowerment especially among the disadvantaged groups like women, youth and PWDs. However, many cooperatives struggle to stay operational given the above challenges, according to Dr Augustin Katabarwa, the chairperson of the National Cooperative Confederation Rwanda (NCCR). Katabarwa said these challenges require urgent interventions to ensure that “coops are run professionally”. “In addition, those who head cooperatives should be honest, and promote good governance and accountability practices that ensure transparency and good management,” he said. According to Gian Nicola Francesconi, a senior technical advisor at Cooperative Agribusiness Development, the common challenge faced by cooperatives is that farmers sell off the produce to middlemen at low prices whenever they need money in cases of emergency. It is challenges like these that have held the development and expansion of most cooperatives, the officials said during a recent training targeting coop leaders and managers. Over 100 leaders from 100 agricultural cooperatives and farmers associations attended the training that aimed at sharpening their skills so that they are able to minimise challenges faced by coops and also create an enabling environment to improve performance. Francesconi noted that cooperatives play an essential role, provide farmers with extension services and inputs, but only a few can mobilise and sustain a collective market, among others. The expert, however, said that many cooperatives “remain largely dependent on donors and government because they are still not strong when it comes to doing business”. “Therefore, leaders must acquire the necessary skills that will help improve the performance of these groups and ensure cooperatives are self-reliant,” Francesconi said. According to Katabarwa, though most cooperatives started with the intention of raising funds, they have failed and are now depending handouts. However, we are working with local governments to see those that can be supported and those to be eliminated, he added. Cooperatives are key pillar for delivering training and access to inputs to many farmers as well as collection and storage of produce before marketing, said Denis Karamuzi, the programme manager at Land O’Lake. Karamuzi added that cooperatives are important to increase productivity of land with many benefits such as distribution of inputs, extension service delivery, subsidy management, financial services access, infrastructure utilisation (irrigation, mechanisation) and post-harvest management. Over 72 per cent of the Rwandan population are employed in the agriculture sector, which also contributes 33 per cent of the total national GDP. Why support coop movement It is important for leaders and managers to understand the importance of cooperatives and how they work. This way, they will be able to exploit the potential of the sector and benefit members. According to statistics about 40 per cent of the agricultural commodities in the EU and the USA are marketed through cooperatives, but agricultural cooperatives in Africa handle only 10 per cent. This has left the majority of farmers at the mercy of middlemen because they lack the negotiation power as individuals to get good bargains as those that market the produce through cooperatives, the experts said. Francesconi said selling in bulk assures farmers of better prices and market, including supplying industries and supermarkets, thanks to higher bargaining power. The coop leaders should also promote value addition to be more competitive and also support the country’s drive to reduce agro-imports, the experts said. Value addition reduces perishability and improves the shelf life of local products and will, therefore, provide export opportunities, said Karamuzi. Cooperative leaders speak out Jean Damascene Nkurikiyimfura, an advisor at KOTEGABU, a cooperative of tea growers in Nyamagabe District, said cooperative leaders should be trained in management principles and other skills to improve their capacity to steer the cooperatives toward the “right path”. He said business management skills, as well as promotion of good governance and professional conduct is essential and will help cooperatives grow in a sustainable manner. Lambert Sinzayigaya, the head of Rungo Zirakamwa Cooperative (RUZICO) which runs milk collection centres in Ruhango District, said leaders should mobilise and sensitise members about the benefits of collective marketing and the power of working through cooperatives. Poor infrastructure is another setback the group faces. He adds that lack of milk cooling tankers and lack of electricity affect their revenues. “Some members also prefer selling their milk to individuals instead of delivering it to their cooperatives, leading to fluctuation in supply,” he added. He said milk processors also like taking advantage of cooperatives, wanting to underpay them. Status of cooperatives According to Katabarwa, the co-operative sector in Rwanda is large and diverse, consisting of agricultural, handicraft and artisanal co-operatives savings and credit groups. There are about 8,700 cooperatives with over 3.6 million members countrywide involved in tea, rice, grain and flowers production, as well as small processing and marketing co-operatives, and transport co-operatives, among others. Both financial and non-financial cooperatives control a total of Rwf53.2 billion share capital as at December 2017.

News

Why poor management is threatening survival of coops