Topic Mainstreaming coops in the SMME strategy in

Topic: “Mainstreaming coops in the SMME strategy in SA” 13 October 2011: Johannesburg

POLICY & LEGISLATIVE BACKGROUND FOR CO-OPS IN SA The Co-operatives Policy of 2004 Ø One of the objectives is “to increase the number of enterprises in the SA economy” Ø Sets out SA government intention about promoting co-operatives The Co-operatives Act of 2005 Ø Provides a legal framework for co-operatives in SA Ø Recognises other types of co-operatives, and not only agricultural co-operatives The Co-operatives Regulations of 2007 Ø Outlines the registration processes, forms, costs and governance of co-operatives The Co-operatives Strategy of 2011 Ø Articulates programmes that should be in place to support the development of an independent co-operatives movement. The Office of the Registrar of Co-operatives within CIPC Ø Responsible for all registrations and de-registration of Co-operatives in SA Ø Currently holding a database of about 35 000 registered co-operatives

MORTALITY / SURVIVAL RATE OF COOPS: CIPRO 2010

BACKGROUND TO EC CO-OPERATIVES FUND Ø Provincial Co-operatives Strategy adopted in 2009 Ø Strategy informed by a detailed Baseline Survey conducted in 2008 Ø R 63 million committed in 2011/2012 to create a Fund that supports cooperatives Ø The ECDC appointed to administer the Fund in 2010 Ø Governance of the Fund: Ø A specific Funding Policy, Funding Committee, Criteria and Guidelines within the ECDC Ø Application Processes for the Fund: Ø Applications are received, assessed against criteria, due diligence and site visit conducted, Funding Committee Submission developed and presented in the Funding Committee that then makes a decision. Ø Mentorship and Technical Skills Training: Ø All co-operatives approved for funding are entered into an intensive technical skills and training programme in order to enhance the skills of members

SERVICES NEEDED BY COOPS IN EC – Order of Priority! Training Support 54. 70% Financial Support 80. 80% Materials and Assets 80. 80% Mentorship 87. 20% Access to Markets 0. 00% 96. 10% 20. 00% 40. 00% 60. 00% 80. 00% 100. 00%

RESPONDING TO NEEDS ABOVE: ALLOCATION OF FUNDS Term Loans – R 40 million Ø Long term loans, linked to prime and repayable over a period of up to 5 years Seed Capital – R 10 million Ø Purchasing of basic equipment, certification for quality and standards in order to enhance competitiveness Technical Skills and Mentorship – R 4. 5 million Ø Providing access to technical skills training, access to markets and mentorship on bookkeeping and administration Governance Training – R 4. 5 million Ø Assisting members of co-operatives in understanding their constitutions and enhancing compliance with the requirements of the Co-operatives Act No. 14 of 2005 Marketing and Communications – R 4 million Ø Outreach programmes, information brochures, website, branding, etc

Economic Distribution of Funded Co-operatives Hospitality 1 Transport 5 Catering 1 Retail 3 Bakery 1 Manufacturing 12 Agriculture 20 0 5 10 15 20

PROGRESS ON THE USE OF FUNDS TO DATE……. 42 Co-operatives have been approved under the Co-operatives Fund since July 2010 – September 2011 R 26 million has been committed for Term Loans to the approved cooperatives R 1. 8 million has already been committed to Technical Skills and Quality Improvement of Products of Co-operatives Approved Agricultural Co-operatives include: Ø Piggery Producers – slaughtering, packaging and selling to the market (local supermarkets) Ø Vegetable and Crop Producers – planting, packaging and selling to the market (local supermarkets) Ø Poultry Producers – growing, slaughtering, packaging and selling to the market (local supermarkets) Ø Dairy Producing – milking, packaging and market (local supermarkets)

……. . PROGRESS ON THE USE OF FUNDS TO DATE Approved Manufacturing Co-operatives include: Ø Brickmaking co-operatives – producing and selling to local contractors Ø School Furniture – making desks and chairs for local schools Ø Bread making – baking bread and selling within communities, local supermarkets and other spaza shops Ø Sewing and textile – mainly producing uniforms for schools Ø Honey Production – harvesting honey directly from bees, packaging it and selling to local supermarkets These 42 Co-operatives are creating new jobs for approximately 674 people within their communities, over and above about 210 members that are also working in the co-operatives Our approach is strictly BUSINESS and we implement proper credit guidelines in granting loans. It is possible!

WHAT NEXT FOR THE ECDC will be signing formal Memorandum of Agreement with the SABS Ø Quality Assessment of co-operatives products Ø Training and Certification (SABS stamp on products) Ø Improved market access ECDC to engage Woolworths, Spar, Pick n Pay, Shoprite, Boxer, etc Ø Supply vegetables Ø Supply chickens and pork meat Ø Supply honey ECDC to engage Dept. of Health, Education, Clothing stores, etc Ø Supply of school uniforms, hospital linen, patience pyjamas, other garments These efforts are to improve access to markets whilst improving product quality for co-operatives. ECDC will now introduce bookkeeping and governance mentorship

LONGTERM VISION - ECDC seeks to ensure the loans are repaid, - Co-operatives sustain jobs that they create - Co-operatives conduct business in a sustainable manner - Co-operative grow their businesses by supplying the right quality products on time, all the time.

Qualifying Criteria for the Co-operatives Fund The following criteria needs to be satisfied in full in order for an application to be considered under Imvaba Co-operative Fund: • • • A Registered Co-operative under the Act No. 14 of 2005 A formal business plan; A fully completed application form; Resolution by members to apply for the funds; Certified copy of the Registration Certificate signed by the Registrar; Certified copies of the Constitution of the co-operative; Certified ID copies of the founding members; Tax Clearance Certificate of the Co-operative; Proof of Bank Account Short CV’s of founding members; Lease Agreements (where applicable) Letters of intent from the potential market for the products

ENKOSI KAKHULU! THANK YOU VERY MUCH! BAAIE DANKIE!