CORPORATE CORPORATE GOVERNANCE FOR GOVERNANCE FOR CO-OPERATIVES: CO-OPERATIVES:

ISSUES, CHALLENGES, AND ISSUES, CHALLENGES, AND DEBATESDEBATES

By Faustine K. BEEBy Faustine K. BEESenior Lecturer and ResearcherSenior Lecturer and Researcher

Moshi University College of Co-operative and Moshi University College of Co-operative and Business Studies, Tanzania.Business Studies, Tanzania.

BACKGROUND BACKGROUND INFORMATIONINFORMATION Corporate Governance has become Corporate Governance has become

an important factor in the realization an important factor in the realization of a sustainable economic growth of a sustainable economic growth that is desired under the MDGs,that is desired under the MDGs,

However, it is not widely applied in However, it is not widely applied in Co-operatives. Hence, justification Co-operatives. Hence, justification for this study and this meeting in for this study and this meeting in London!London!

Why Co-operative Why Co-operative Crisis?Crisis? There is a growing consensus that There is a growing consensus that

co-operative crisis experienced in co-operative crisis experienced in the developing countries can be the developing countries can be attributed partly to weaknesses in attributed partly to weaknesses in governance. Of course there are governance. Of course there are other contributing factors – policies other contributing factors – policies and legislation, weak capital base, and legislation, weak capital base, competition, lack of professional competition, lack of professional management, general apathy, etc.management, general apathy, etc.

Co-operatives in a Co-operatives in a Global EconomyGlobal Economy

Globalization has facilitated:Globalization has facilitated: Growth in International Trade,Growth in International Trade, Enhanced access to technology and Enhanced access to technology and

Info.,Info., Increased DFIs,Increased DFIs, Enhanced privatization and dev. of Enhanced privatization and dev. of

free markets,free markets, Introduced GOVERNANCE as regulator.Introduced GOVERNANCE as regulator.

Co-operatives in a Co-operatives in a Global EconomyGlobal EconomyBUT Globalization has:BUT Globalization has:- Enhanced dominance of corporate entities Enhanced dominance of corporate entities

through acquisition and mergers through acquisition and mergers marginalizing the role of cooperatives,marginalizing the role of cooperatives,

- Environmental concerns have increased Environmental concerns have increased due to increased exploitation of natural due to increased exploitation of natural resources by corporate investments, andresources by corporate investments, and

- Increase in social inequality and povertyIncrease in social inequality and poverty

Co-operatives in a Co-operatives in a Global EconomyGlobal Economy Co-ops are caught unprepared in Co-ops are caught unprepared in

the global economy,the global economy, There is a need for a renewed There is a need for a renewed

examination of Co-operative examination of Co-operative Values, Principles and Practices in Values, Principles and Practices in order to conform with changing order to conform with changing global situationglobal situation

Issues For DebatesIssues For Debates

Democratic Member Control vs Economic Democratic Member Control vs Economic Benefits:Benefits:

- One man one vote …disregards One man one vote …disregards shareholdings, although limited to 20%shareholdings, although limited to 20%

- Financial benefits determined by patronage Financial benefits determined by patronage and not shareholding,and not shareholding,

- Raising capital from outside coop…risks its Raising capital from outside coop…risks its autonomy and independence,autonomy and independence,

- Education, training and access to info…very Education, training and access to info…very costly …how to finance? Whose costly …how to finance? Whose responsibility?responsibility?

Debate continues…Debate continues…

Improvement of coops performance Improvement of coops performance and image:and image:

- How and whose responsibility?How and whose responsibility?- What roles for Boards and What roles for Boards and

Professional Managers?Professional Managers?- Performance indicators: How to Performance indicators: How to

measure Governance in Coops?measure Governance in Coops?- Can Good Governance improve Can Good Governance improve

image?image?

Debates on …Debates on …

Coops form/types and structure:Coops form/types and structure:- What forms/types are more What forms/types are more

appropriate? – sector specific, appropriate? – sector specific, multipurpose, shared, or provide multipurpose, shared, or provide services only like ACE in Uganda?services only like ACE in Uganda?

- Structure – multi-tier structure of Structure – multi-tier structure of coops vs market efficiency! coops vs market efficiency!

- Coops and value chain … how?Coops and value chain … how?

Debates on …Debates on …

Decreasing local and International Decreasing local and International Support to coops:Support to coops:

- Why?Why?- Renewed support-How? Coops Renewed support-How? Coops

address very issues of poverty address very issues of poverty that development partners that development partners address – Cooperating Out Of address – Cooperating Out Of Poverty!Poverty!

THE ENDTHE END

ASANTENI SANA.ASANTENI SANA.

THANK YOU!THANK YOU!