Upload
claud-newton
View
220
Download
0
Tags:
Embed Size (px)
Citation preview
Bringing Co-operatives to Centre
Stage
Dr Shanta Raj Sharma Neupane Independent Consultant
International Cooperative Alliance Asia Pacific Research ConferenceKobe, Japan November 26, 2012
What distinguishes co-operatives from business firms?
A South Asian perspective in measuring the efficiency of co-operative enterprises.
Studied the co-operative movements of South Asia; Nepal, India, Bangladesh and Sri Lanka
Examined the trend and impact of co-operatives and identified the best cases in South Asia.
Background
Rapid globalization and recent failures of privately managed banks and financial institutions
Public and co-operative enterprises facing pressure from private enterprises
Background
To elaborate the role and efficiency of co-operative enterprises when competing with private enterprises
To demonstrate that it is important for coops and private enterprises to co-exist in the competitive market
Purpose
Public and government enterprises are being rapidly privatized globally
Privatization adversely affects the population
Private enterprises emphasize on profit sustainability and growth of the business benefitting few owners and senior executives
Issues
Privatization poses competition and a new challenge for co-operative enterprises
Co-operative enterprises would be the best alternative in this Public-Private tango with its restructured new face
Issues
Draperi (1997) shows the importance of cooperatives on the verge of de-regulated capitalism and a state managed regulatory system
The cooperative sector versus contemporary globalized capitalist multinational private sector
Literature Review
Primary data from cooperatives and individuals
Secondary data from publications and international organizations database
Data analyzed in SPSS software
Data Sources and Analysis
DEA was originally proposed by Charnes et.al (1978)◦ a linear programming procedure for a frontier analysis of
inputs and outputs. ◦ assigns a score of 1 to a unit only when compared with
other relevant units◦ assigns an efficiency score of less than 1 to relatively
inefficient units for estimating the relative technical efficiency (TE) of production activities
DEA is commonly used to evaluate the efficiency of a number of products or services provided by an organization
Data Envelopment Analysis (DEA) Model
Data Envelopment Analysis is concerned with comparing the efficiency of Co-operative organizations at the local, district, and central levels.
If there was a single input and a single output, it would define a measure of efficiency. If every one could agree on a common set of weights that would end the story, however, people cannot agree.
Measuring Efficiency of the Cooperative Organizations
DEA allows units in the systems to choose their own weights in the way, which is most advantageous to them.
If the unit is inefficient, even with the set of weights which is most favorable to it, then there are serious grounds for investigating further.
Measuring Efficiency of the Cooperative Organizations
Health care institutions
Education (schools, universities)
Financial Services (banks and co-operatives)
Manufacturing , Benchmarking, Management Evaluation, Fast Food Restaurants , Retail Stores
Model Applicable to
Fi(y,x | C,S) Gross Profit and Capital Inputs:
◦ X1=Total Share Capital ◦ X2= Ratio of AM/TM◦ X3= Ratio of TS/TM
Output:◦ Y1= Total Profit
Fi(y,x | C,S) Per Capita Profit and Capital Input:
◦ X1= Per Capita Share Capital◦ X2= Ratio of AM/TM;◦ X3= Ratio of TS/TM and
Output:◦ Y1= Per Capita Profit
DEA Efficiency index
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 300
0.2
0.4
0.6
0.8
1
1.2
Results: Data Envelopment Analysis
30 cooperatives under study
DEA
Effi
ciency
index
Gross Profit and capitalPer Capita Profit and capital
Using a threshold of 0.75 on DEA efficiency index . Out of 30 coops there were◦ 7 (23.34%) efficient cooperatives in terms of Gross Profit
◦8 (26.67%) efficient cooperatives in terms of Per Capita Profit
Number of efficient Coops
In order to characterize the efficient and inefficient cooperatives, I used qualitative traits of the coops under observation
Efficiency Results Analysis
27% (8) of the co-operatives were found efficient or nearer to efficiency in terms of per capita profit◦ minimal but qualified and professional staff, who is
assigning optimum workloads. ◦ higher and regular participation of board members ◦ regular and pro-active participation of general members
in day to day business, services and management◦ regular savings and credit mobilization program in
different schemes of business◦ careful in using the balance or surplus money in their
own co-operative’s business activities◦ very high business turnover and a limited number of
members are retained to maximize per capita income.
Traits of Efficient Coops
◦ encouragement to women members to remain active and participate regularly in cooperative activities
◦ Selected women members are taken to observation tour of best practiced projects in different parts of the country
◦ Women members are trained and motivated by the management staff to start small income generating activities like goat raring poultry vegetable production Sewing knitting petty trade vegetable and fruit vendor
Efficient Coops: Women members
Regular training provided to members
each member is running at least one income generating business activity
full understanding and maintenance of faith among board members, management staff and general members
Co-operatives are also involved in the social events or problems of their members’ community - marriages, deaths, emergencies
Efficient Coops: Member participation
maintaining strict budgetary control and business planning: expenses are incurred either to make more income or to provide quality services to the members
wholesale business and services and promoting to member co-operatives only .
standard and uniform pricing policy and minimum-profit margins which increase the volume of business and maintain faithful understanding among the business members
presence of unions to advocate on behalf of the member societies
Faithful understanding and strict to contractual agreement with business parties (members, banks, producers, suppliers, non-member bulk buyers like government agencies)
Efficient Coops: Business aspect
Incapable and careless board members.
Some of the board members took portion of the working capital away ◦ as an advance without paying any interest◦ without a time-bound document signed to settle the co-operative
assets◦ sometimes even took away without proper accounting records
Overstaffing due to hiring of unskilled and unprofessional staff through a coercion-hiring attitude of the board members
non-active and non-participative board members
managers who are non-transparent towards the board and general assembly
political or personal bias when passing resolutions in the general assembly and in the board
Inefficient coops: Board members
a severe lack of education, training, and motivation among the members
lack of communication between members resulting in an automatic loss of business
no budgetary control and no attempts are made to minimize unproductive expenses. It was also found, in our observations and discussions, that the members blame each other for the wrong doings
non-activeness and non-participative trend of the members in any business activities of the co-operatives
knowingly or unknowingly the results of their action (fraction of board members, members and staff) go wrong and cause failure of projects, which makes the members suffer economically
Inefficient coops: Members
Purpose Co-operative Sector
Business
(Members)
Service Driven and
Limited Profit
Private Sector
Business
(Investor Owned)
Profit-Driven
Public Sector Business
(Government) Mix of Service
and Profit-Driven
Ownership Ownership vested in
members
Ownership vested in
capital
Ownership vested in State
and / or Capital
Owners Member users Investor owners of
capital
Investor and/or state owners of
capital
Differences between co-operative (members-owned), private sector (investor-owned), and public sector (government-owned) businesses
Purpose Co-operative Sector
Business (Members)
Service Driven and
Limited Profit
Private Sector
Business
(Investor Owned)
Profit-Driven
Public Sector
Business
(Government) Mix of
Service and Profit-
Driven
Voting One vote per member
irrespective of number of
shares and usage
Number of votes depends
on number of shares
owned
Number of votes depends
on number of shares
owned
Management Management responsible
to members
Management responsible
to capital
Management responsible
to investor and/ or State
capital
Shareholding Usually one share for each
member Or
shareholding in limited
proportion
Changing value of shares
and no limits on shares
owned
Changing value of shares
and any limits on shares
owned dependent on
legislative requirements or
the Acts.
Co-operative enterprises are increasing moderately and have increasingly competitive role in the socio-economic sectors.
Public enterprises have decreased in numbers and have a diminishing role in the economy.
Private enterprises are increasing in numbers with higher coverage - technology of work and have an increasingly greater role in the economy
Conclusion
The co-operative will remain as a public-private partnership organization controlled by the public at large and its members and operate business in co-operative form and continue to grow in the future balancing the economy.
Conclusion
Review of International Cooperation, No 101, ICA, Geneva, 2005 Neupane, Shanta RS (2006), Co-operative Movement: Its role in the Economy of
Nepal, An unpublished PhD Thesis, Jamia Millia Islamia-Central University, New Delhi, India
Birchhal, W. (1994) Co-operatives A Members Business, Manchester University Press, Manchester, UK
World Development Report 2007, World Bank, Washington DC Frontiers of Development Economics: The Future in Perspective
Edited by Joseph E. Stiglitz, Gerald Meier, Published in April 2002, Oxford University Press for World Bank, Washington DC
Development, Trade, and the WTO: A Handbook, Edited by Bernard M. Hoekman, Philip English, Aaditya Mattoo, Published in June 2002, World Bank, Washington DC
Global Issues for Global Citizens: An Introduction to Key Development Challenges Edited by Vinay K. Bhargava, Published August 2006, World Bank, Washington DC
Tatyana P. Soubbotina (2004), Beyond Economic Growth: An Introduction to Sustainable Development, the World Bank, Washington D.C.
Jean-Francis Draperi, (1997) Co-operatives’ Role in Building Markets, Chief Editor of Co-op Journal ‘RECMA’, France 1997
Muhammad Yunus, (2005) Grameen Bank at a Glance, Grameen Bank, Dhaka, Bangladesh
References