Issues and Challenges Confronting Cooperatives

In the previous columns the concept of Big Brother-Small Brother or Koop Kapatid Program had been thoroughly discussed by my partner in this column. Relative to the encouragement of the Cooperative Development Authority for potential partnerships among cooperatives, allow me to share some insights regarding issues and challenges encountered by micro and small cooperatives. These factors could be classified as financial and non-financial concerns but what specific areas need to be addressed?

In our observation as development worker, micro and small cooperatives have limited capital for operations. It can be attributed to the business orientation of the cooperative to rely on share capital and retained patronage or interest on share capital as the source of fund. Also, aside from share capital generation cooperatives are allowed to embark on savings and time deposit mobilization program to augment limited resources. However, the law provides that it is for specific purposes in accordance with the provisions of the Articles of Cooperation and by-laws otherwise the unrelated earnings can be considered as taxable. In short, single type cooperatives like consumers, credit, transport service, etc. can engage in savings and time deposit mobilization but can only be used to fund the services they undertake based on the objectives or purposes enumerated in the registered Articles of cooperation.

Complicating the issue is the lack or absence of development plan, budget and operational policies. These documents serve as guide for the cooperative officers and staff to maximize the use of limited resources to prevent high receivables or past due that further stifles the growth of the cooperative. As development worker, it had been our advocacy that all cooperatives regardless of size or category must have a crafted manual of operations or policies that provides the safety nets especially in the internal control on use of funds and the allowable limits of exposures to individual members. Some of these cooperatives heeded our call but others continue to defy recommendations and operate on a trial basis leading to incurrence of losses. This situation can also be viewed on the governance and management practices employed by the cooperative officers and staff. While the cooperative may have crafted policies some elected or appointed officers and hired management staff fails to implement probably because they don’t understand their functions.

Further, some officers and miss the need for harmonious relationship within the organization as they have objectives not aligned with organizational goals. One way of correcting these flaws is to encourage all officers to attend trainings and seminars. The need to conduct Office Bearers’ Orientation to newly elected and appointed officers and revisit the vision, mission and goals of the cooperative can help motivate and empower them perform their functions. Enhancing the capabilities of officers to be familiar with their functions and be equipped with the needed attitude, skills and knowledge allow them to conceptualize and implement measures to improve the delivery of quality of services of their respective organization. Hence, the need for relevant seminars to address the prevailing issues must be undertaken by stakeholders.

The current move of CDA to support micro and small cooperatives through the conduct of free seminars is still to be realized. However, partnership with training providers and local government units provided opportunities for cooperative officers to interact with fellow cooperators. The series of encounters among the different cooperatives allow ventilation of issues and concerns that affect their respective cooperatives. The exchange of ideas and resolution of queries creates an impact on how officers and staff handle matters arising in their respective areas. Along this line, CDA-CAR initiated training needs assessment among officers, members and staff of cooperatives basis in the conduct of trainings by CDA and the accredited training providers.

Another factor that affects micro and small cooperative operations is the grant of donations or financial assistance without the needed capacity building to ensure effective and efficient implementation. It is worth mentioning that some cooperatives are organized to avail of such assistance. Cooperative operations are dynamic and changes occur that goes with turn-over of officers and staff.  Experiences in the past taught us that there is a need to evaluate the capabilities of recipient organizations prior to implementation or introduction of the needed intervention. Conduct of Strengths, Weaknesses, Opportunities and Threats Analysis prior to engagement of partnerships or joint activities may guide stakeholders and host organizations on how to effectively and efficiently undertake the project.

Furthermore, indifference among stakeholders and cooperative leaders creates problems in the operations of cooperatives. Some institutions prefer to organize new cooperatives or organizations as channels of assistance than making use of existing cooperatives in the community. This further divides the community instead of promoting cohesion. This situation is often justified by the terrain and geographic locations of communities in the Cordillera that serve as reasons in registering too many cooperatives in one barangay. One alternative to this is harnessing of the existing CDA issuance on satellite cooperatives that can prevent the notion of “divide and rule” to happen.

In order to sustain micro and small cooperative operations the support of all players to harness existing issuances and opportunities need to be strengthened. The determination of members, officers and staff to help their organization grow is equally important. While CDA act as a regulator and development agency, it is inherent upon all stakeholders to unite and collectively address the issues and challenges confronting cooperatives. To sum it up, this author subscribe to the statement of the former UN Secretary General when he said, “Founded on the principles of private initiative, entrepreneurship and self-employment, underpinned by the values of democracy, equality and solidarity, the cooperative movement can help pave the way to a more just and inclusive economic order”, Kofi  Annan-7^th United Nations Secretary General.  HAPPY EASTER SUNDAY!!!