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Partnering with Ease-Agr to Extend and Expand Cooperative Agribusiness in Africa:
organizational diagnostics, international networking and big data
Nicola Francesconi, CIAT-CGIAR
IFPRI/IITA office, Naguru Hill
CIAT office, Kawanda
Tel. 0794756336
EDC
Enhancing
Development
through Cooperatives
Did you know?
• the UN declared 2012 as the International Year of Cooperatives
• cooperatives play a major role in rural financial and extension services worldwide
• 50% of global agricultural output is marketed through cooperatives
• cooperatives were instrumental for the success of family farms in the US and EU
Coops prevalencein Africa
% of rural villages with at least one coop
Senegal 47
Burkina Faso 56
Ethiopia 35
Uganda 31
Recent data from CIAT shows that 80% of Ugandan bean producers are members of at least one coop
What is a cooperative?
Not an NGO or a parastatal because it is a for profit organization
Not an Investor-Owned Firm (IOF) because it is:
an organization owned/controlled by individuals benefiting from its services
or
a user-owned, user-controlled and user-benefitted organization
The History of Rural Cooperation in Africa (from defensive to offensive)
Time
Market-driven
State-driven
Community-driven Mutuals
Coops
New-Coops (FOs/POs)
Pre-colonial Colonial & Post Independence
Post StructuralAdjustment
Governance
Hundreds of thousand of new coopsare arising…but they are still
small and uncompetitive
Our previous research shows that:
• Cooperatives are widespread and resilient organizations in Africa
• Participation in cooperatives improves farmers’ technical efficiency(i.e. adoption of improved technology, to produce with less..)
• Cooperatives tend to be affected by allocative inefficiency: elite-capture and side-selling (no inclusive business)
How to help cooperatives optimize their sustainability?
The Cooperative Life Cycle Framework
How Do you Measure Coop Health?
• Is it just financial performance (i.e. investments and profit)?
• What about membership size, social inclusion and members’ patronage (i.e. participation)?
Minimizing governance problems that hinders participation
is as important as maximizing profit and investments…
P1
Phase 1 = Economic Justification
Health of Cooperative
Time
Phase 1
Phase 1: Economic Justification
• Better Access to Markets?
• Economies of scale?
• Social capital?
• Bargaining/Countervailing power?
• Multiple rent extraction?
Phase 2
P2
Phase 2 = Organizational Design
Health of Cooperative
Time
Phase 2: Organizational Design (the rules of the game)
• Who can be a member?
• Who/how is risk capital acquired?
• Who has residual claim rights?
• Who has residual control rights?
• Sanctions - Enforcement
Phase 3
P3
Phase 3 = Growth–Glory–Heterogeneity
Health of Cooperative
Time
Glory = external incentives, i.e. better price, tax exemptions, subsidized inputs/credit
This competitive advantage triggers:
Growth = expansion in membership and increasing members’ patronage
However, growth tends to add managerial and leadership complexity, due to the rise of:
1. the free-rider problem = when many new members enter a group and claim the same benefits of existing members
2. horizon or portfolio problems = when members’ patronage is used to pursue investment strategies that are either too risky (i.e. one big and long term investment) or too cautious (i.e. multiple small and short term investments)
3. agency cost problems = when growth is associated with high internal monitoring, influence and decision making costs
Phase 3: Glory and Growth
• These governance problems create increasing disincentives for members’ participation (side-selling and membership expansion) affecting coop health
• To minimize these problems coop leaders and managers need to “tinker”, or adjust the rules of the game, in such a way to design and enforce solutions
• When coop leaders and managers are able to “tinker” they extend the length of the life cycle
• “Tinkering” occurs only when there is consensus among coop managers and leaders, i.e. when their preferences are homogenous enough to quickly craft and enforce solutions
• Yet, the preferences of coop leaders and managers tend to diverge over time (Heterogeneity)
• “Tinkering” is a temporary strategy, which can extend a life cycle, but not indefinitely…
Phase 3: Heterogeneity
Phase 4
P4
Phase 4 = Recognition and Introspection
Health of Cooperative
Time
Phase 4: Recognition and Introspection
• Factions?
• Apathy?
• Crisis?
• Members’ drift?
• Side-selling?
• Elite Capture? (the coop becomes a separate firm)
Sooner or later a cooperative will no longer be able to “tinker”, due to increasing heterogeneity in the
preferences of its leaders/managers…
…and will have to do introspection and recognize its governance problems
Reinvent
Exit
P5
Phase 5 = Choice
Health of Cooperative
Time
Spawn
Phase 5
Phase 5: Choices
• Reinvent?
• Spawn?
• Exit?
a cooperative that can no longer “tinker” can decide to either dismantle itself or re-invent its governance structure and enter a new life cycle…
In which phase are you in?
What exactly am I proposing?1- to help you extend and optimize your business cycle
• To use this framework to perform organizational diagnostics of your coops, to build leadership and management consensus (or reduce heterogeneity) on how to “tinker”
• We are not offering solutions…but we can help you find your own, through training and coaching sessions like this one
Donors:
USAID, Ford Foundation
CIAT/EURICSE
EASE-AGR/KDA
African
Coops
GICL/ISPRI
US, NZ, EU, Brazil, China, etc. Coops
Projects:
(OCDC, CGIAR, OXFAM, FAO, SNV, GIF, etc.)
An International Network for Cooperative Research & DevelopmentP
riva
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ub
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trea
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Promoting and facilitating networking between your coops and other ones at the local, national, regional and global level
to nurture (inter)national strategic alliances, joint ventures and mergers…
Large
mature and
offensive coops
Small, young and defensive coops
Netw
orkin
g
What exactly am I proposing?2- to help you expand and globalize your business
What do I need from you?
Time, Engagement, Trust and…Data, Data and more Data!
With your help we can build an ICT platform
that will not only help you sell your coffee, maize, etc.,
but also your data…
No more time-consuming surveys
but an automated ICT system for data collection