03 / 1999
1. Challenge and Context
In Uganda, the trade liberalisation changed drastically the context for the established rural co-operatives and their district unions. No bank were anymore interested in financing agricultural activities in the rural areas. All privatised banks now concentrate financial activities in urban areas where it is easier to follow-up and less costly to operate. Liberalisation of trade broke the monopoly of purchase that was detained by the co-operative unions on the export crops that were then sold to the export crop respective boards. On the other hand, the private sector has up to now fail to cover all the producing areas. Where it operates, it is yet to be challenged to avoid that few big traderes impose a new monoply. If the farmers owned co-operative is to play a role in this regard, it is however important to reform the co-operative movement and to re-instill co-operative values, on which one can built genuine capacities.
2. The actors
Main actors are the area cooperative enterprises. They are established by the members to fulfill an economical goal at the local level. All their activities must be geared towards the needs of their member on an economically viable basis. These can be co-operative service centers, village banks and co-operative marketing centre. At the local area level, these different structures interact without having to refer to district unions as it was the case under the previous hierarchical structure. Village banks are opened to everybody and mobilised savings that they can use to offer loans either to private people, to traders or to the other co-operatives if village banks are satisfied with their economic performances.
Uganda Cooperative Alliance is not any more a supreme apex. It radically changed to become a training catalyst who assists co-operatives to re-organise their approach and their structure. It is a very flexible structure that is controlled by whoever decides to become a member. Many area co-operatives took this opportunity and they are more dynamic than the previous arrangement which was a succession of delegates’ delegates of delegates. At the end of the day, the big shots who were representing the people, cared very few for the cooperatives which they were meant to speak for. UCA lost its past prestige of being an apex, although inefficient, to become a rather small organisation but which is member based and member concerned.
A small core team composed of the Secretary and his Deputy handle administrative issues as well as management of funds. It financially relies on members’ subscriptions and incomes from its own investment. Development and educational programmes are specifically donors funded and they are targeted at grass-root level activities. Implemented programmes focus on business development for area co-operatives, training in building capacities in management and accounting and women empowerment in the cooperative movement.
Two years after the reform, one can say that the changes are obvious. There is more participation and more women involvement. Integrated services at the local area are facilitated by the village banks. Since all transcations are done locally and that different actors’ money is managed by the same local village bank, economy is boosted in these areas. Co-operatives compete with private traders to buy agricultural products and increase their added value locally. Village banks are the central vital institution in the new set-up. Such banks need that their members are strong enough before being fully established - 10 million shillings in capital shares (650,000 euros)and 30 million shillings in savings (2,000,000 euros). Cooperatives can play a role in the democratisation process since they are the most ancient democratic structure that has been existing in rural Uganda.
Communication technologies change the movement. Computerisation of the area co-operative and the introduction of cellular phones allow new flows of information that can directly benefit the farmers.
5. Relationships with donors
UCA already successfully managed STABEX funds from the European Union. After the collapse of the Cotton Board, it helped to purchase cotton within the new co-operative structure. It shows that one can still be confident in co-operatives since the funds was duely used and reimbursed. This contributed to improve the image of the co-operative, inside and outside of the movement.
It is now crucial that donors understand that village banks need to be financially fed in order to boost the local economy and the local actors. Village banks become permanent funding institutions in the area and this is the best way to sustain economical activities of the members and hence their well being.
The reform that took place is very interesting and theoretically very pleasant. However, it is not sure that all villagers already understood it. The crucial role of village banks - that have to be understood as saving and credit cooperatives - limits also this approach to already moneytised and organised areas. There is therefore a big effort of training promotion to be done that UCA has not the power to do alone.
UCA provided a new framework for the cooperative movement but it might remain an empty shell if members’ education is not given a priority in collaboration with donors.
All the same, when a village bank exists, it must be assisted to be able to reach external financial resources whether through grants, self loans or commercial loans. Other organisations met in Uganda do not seem either to trust or to be aware of the newly reformed area co-operatives.
General Secretary - Uganda Cooperative Alliance Ltd - P.O. Box 2215 - Kampala, UGANDA.
Tel: 256 41 258848 - Fax: 256 41 258856 - E-mail: UCA@starcom.co.ug.
[[Written for the public debate "Actors and processes of the cooperation", which could feed the next Lome Convention (European Union/ACP countries relations). This debate, animated by the FPH, has been started by the Cooperation and Development Commission of the European Parliament and is supported by the European Commission.]
Interview with KABUGA, Charles