Can the co-operative business model contribute to local economic development? A critical appraisal of three co-operatives in the City of Tshwane, South Africa

Abstract

The high unemployment and poverty rate in post-apartheid South Africa has necessitated the need to identify policies and programmes to provide economic and employment opportunities. This included a review of the practice of local economic development (LED), guided by the recognition that local government had a developmental role to play. Local government exercises a role in promoting LED initiatives such as enterprise development, locality development, community development and governance. The International Co-operative Alliance (ICA) states that more than 1 billion people benefit from co-operative enterprises, that co-operative enterprises are found in all sectors of the economy, and that co-operatives provide employment to more than 100 million people. By co-operating, people are able to gain economic and social advantages, such as employment, support for their businesses and access to social programmes being offered. In South Africa, co-operatives were identified as a vehicle through which economically active people could be absorbed into the economic mainstream. The idea in getting groups of people to work together is seen as an opportunity to fast-track development. Co-operatives have the potential to promote and support local economic development. Government has created an environment conducive for co-operatives through its policies and programmes. Much of the literature focuses on the failure of co-operatives in South Africa. This research, while acknowledging the many difficulties/challenges confronting co-operatives, investigates three relatively successful co-operatives in the City of Tshwane. In doing so, this research highlights the processes that make these co-operatives successful, and assesses what lessons, if any, these might hold for other co-operatives in South Africa. The research investigated the reasons behind their success and this information was used to analyse how co-operatives might contribute to LED. The key objectives of the study was to assess the economic and social impact of co-operatives on the livelihoods of the members, evaluate the economic impact of these co-operatives on LED in CoT, and formulate a set of recommendations that could be used to guide the implementation of the National Co-operative Strategy and provide lessons for other co-operatives.