Issue of gouvernance of cooperatives

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Issue of gouvernance of cooperatives

• Présenté par Oumou Sidibé VANHOOREBEKE
• Expert en microfinance, chef de projet CCOM

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Plan de la présentation

• Part I Cooperatives
• Types
• Nature of cooperatives
• Financial cooperatives
• Assumptions

• Part II Governance
• Concepts
• Democratic structure
• Dual structure
• Characteristics of the cooperatives
• Management demands
• Combination of governance strategies
• Roles of the stakeholders
• Conclusion

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Cooperatives general characteristics

• Types of cooperatives
• Two groups of cooperatives
• Financial cooperatives (savings and credit
  cooperatives, Sacco, housing cooperatives)
• Non-financial cooperatives
• Workers
• Producers (coffe, cocoa, cotton)
• Consumers
• Shared services

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Nature of cooperatives

• A cooperative could be defined as a corporate
  body bringing together individuals who have
  shared economic and social concerns and whom, in
  order to address them, join forces to run an
  organisation in accordance with standards, norms,
  principles and values proper to co-operative
  actions.

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Cooperatives (cont.)

• A company controlled by an association
  constituted of persons (members)
• This association groups one or many types of user
  of the company - suppliers and/or clients, and/or
  employees

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Cooperatives (cont.)

• 3. The first objective of a cooperative is not to
  maximise profit, or to effect social change? but
  to maximise the benefits or profits that its
  members can earn from their transactions with the
  cooperative.
• 4. This form of company is regulated (governed)
  by particular rules of equity and values.

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Financial cooperatives

• A group of people constituting a legal entity,
  which is non-profit and with variable equity,
  based on the principles of union, solidarity,
  mutual help, with the aim of collecting the
  savings of its members and offering them credit.

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Consensus

• General consensus about
• the role and impact of cooperatives in economies
• a large number of members are involved
• Possible contribution to achieving the millenium
  goals,
• Cover an increasing number of people
• widespread Europe, North America, Africa, Asia,
  Latin America
• They are neglected by policies makers because of
  their structure,
• The view of cooperatives is changing
• Good governance is fundamental to the viability
  of cooperatives and influences their rate of
  growth

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Part II Governance of cooperatives
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Governance

• Concept All institutional and behavioural assets
  governing the life of an institution are
  implemented to achieve its goal
•  Lensemble du dispositif institutionnel et
  comportemental régissant la vie dune
  institution et mis en œuvre pour réaliser sa
  mission

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Particular structure (all types)

• Association
• Board of managers
• Administration committee
• Credit committee
• Control Committee
• Ethical or deontology Committee
• General Assembly

• Company
• Management
• Staff

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Special Characteristics ..

• Rules of associations
• Members are influenced by their living conditions
• Influenced by politics
• Rules of the corporation

• Management demands,
• Performance,
• Efficiency
• Viability

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A democratic structure
Cooperatives
Local level
Cooperatives Annual General Assembly
regional level
Union Annual General Assembly (meeting of all
delegates of each cooperative
Network level
Administration board and control comettee
President of board And others officials
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Financial cooperative

• Because of a cooperatives nature, it has both an
  economic and a social goal that is to offer
  advantageous financial services (or other types
  of service) to its members whilst also providing
  training to its members.
• So, if the members constitute a homogenous group
  with similar concerns, their financial service
  requirements will be the same (segmentation) and
  decisions about the direction that the
  cooperative should take and the products that it
  should offer will be easier to negotiate.
• Therefore when the target group is heterogeneous,
  and individuals approach a cooperative with a
  range of ambitions and expectations (this is
  usually the case), the management and the elected
  postholders tasks become very complex.

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Stakeholders

• State
• Members (owners, representatives, clients)
• Employees ( salaried ),
• Officials, or board members (administration,
  supervisory or control committee, deontology
  committee)
• Partners

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Dual structure.

• Association
• Board or managers
• Administration committee
• Credit committee
• Control Committee
• Ethical or deontology Committee
• General Assembly
• Benevolat

• Company
• Management
• Executive
• Staff
• Salariat

The board of director
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Double structure

• The board of directors is the link between the
  association and the company. He is responsible
  for general management, the establishing of
  performance targets, the employment or dismissal
  a general manager, the definition and validation
  of the pay and staff management policies.
• Its role, its cohesion, solidarity and its
  integrity are essential for the survival of the
  cooperative and the Union.

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Management requirements

• If cooperative values and principles have not
  changed much, a range of roles and
  responsibilities for the elected post holders
  emerge as the cooperative itself develops
  (different phases of the institution). However,
  changes in the external environment in terms of
  behaviour and social values (on the part of the
  clients, staff, the competition etc) also bring
  new demands for the managers.

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Management requirements

• As the result of the global shift in the economic
  and social environment, todays leaders must be
  skilful in order to anticipate future
  developments, solve problems, lay down strategic
  objectives, make choices, reduce uncertainties,
  evaluate performance, re-direct, and lay down
  objectives. These are also the challenges facing
  the leaders of the cooperatives. However,
  competence is not one of the criteria that is
  necessarily considered when there are elections
  (one member one voice) and this results in
  shortcomings in some places.

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Examples of governance problems

• Confusion of role and mission,
• Culture of silence
• Gerontocracies especially in Africa
• Conflict between the principles of profitability
  and the social objectives,
• Slowness in the decision-making
• Lack of confidentiality concerning the
  strategies,
• Lack of solidarity
• Conception of volunteering (the Benevolat),
• Politicisation of the system
• Corruption
• Increase in costs
• Poor motivation amongst the staff.
• All these problems have a direct impact on the
  image of cooperatives

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Combination of governance approaches

• A combination of the elements within the
  organization
• The structure of the process, the division of
  power throughout the institution should be
  dynamic and proactive in accordance with the
  internal environment but also in accordance with
  the external environment.
• Here are some elements of this governance make-up
  drawn from my own experience

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Element of governance mix

• To institutionalise the mechanisms and means of
  control and protection
• Mechanisms to ensure the re-taking control of
  power (preventive and curative measures)
• Develop a company culture based on the
  performance (economic, gender and social issues)
• Limit the leaders mandates and prevent an
  accumulation of functions
• Renew board (one third of members or partial
  renewal) and have a limited term
• To remain faithful to its mission
• If the need for a renewal of the cooperative is
  accepted, the question is then who is to fulfil
  which role and at which level? Can one have a
  common charter for all types of cooperative?

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Principles

• Elements that are external to the institution
• National law governing cooperatives revised
  regularly ,
• Standards of performance, institutional
  supervision mechanisms... etc
• Elements that are internal to the institution
  Statutes and internal regulations revised
  regularly
• Manual covering policies, procedures and
  accounting practices
• Codes of ethics applicable to the leaders and the
  employees,
• Clear separation between the administrative and
  the supervisory bodies

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Conclusion

• If it is clear that a cooperative needs to be
  renewed, we must determine what the common
  principles are, what the indicators should be,
  what the management norms should be, and the
  roles of each stakeholder
• Establish what is necessary to create an enabling
  environment.
• What the internal control measures should be
• What the role should be for the government,
  partners, professional associations, UN
  organisations, international cooperative
  organisations and practitioners
• Determine whether it is possible to have the same
  legislation, or standards for all types of
  cooperative
• Of course all this should happen within the
  framework of the governance of cooperatives

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Thanks , Merci, obrigada

• Oumou Sidibé vanhoorebeke