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Free State Province
Co-operatives in South Africa PDF Print E-mail

The Co-operatives Development Policy 2004, asserts that government has acknowledged the existence, relevance and value of informal, traditional co-operative-type organisations. The policy highlights the importance of integrating them into the formal economy. One of the key benefits of the formalisation is access to state and private sector support – financial or non-financial – toward growing institutional capacity and sustainability of informal co-operative entities.

Financial Support

The dti is the main organ of government that facilitates support for co-operatives in South Africa. They provide and also facilitate the provision of financial support in the form of grants and funding for special projects aimed at co-operative development.

Financial provisions made available to co-operatives through the dti and its agencies include:

  • Start up grants, financing up to 90% of co-operative start up costs (not exceeding R300,000)
  • A special projects fund that is available for projects in excess of R300,000 subject to strict criteria; and
  • Funding to assist co-operatives with compliances, training and administration subject to a sound business plan.

The dti has partnerships with other government agencies and organizations that also ro9vide financial supo9rt to co-operatives. These include:

  • Samaf – provides affordable access to finance for small enterprises
  • Umsobomvu Youth Fund – provides financial assistance to co-operatives whose membership comprises at least 25% youth and women-only co-operatives
  • The Enterprise Organisation – provides support through the Co-operatives Incentives Scheme
  • National Empowerment Fund – promotes and support black business ventures financially;
  • Land Bank – support the development for co-operatives in the agricultural sector
  • Khula Enterprise Finance – provides financial guarantees to small-and-medium enterprise through banking and financial intermediaries.
  • Mafisa – the Micro Agricultural Finance Institution of South Africa drives and facilitates the development of financial services to develop small business in the agricultural sector

Government departments such as agriculture, housing, social development and public services and administration have made financial supports available to co-operatives.

Non –financial support

In South Africa, the following non-financial support is available:

  • Umsobomvu Trust – provides business development services in the form of training and linkages to markets for new and existing co-operative enterprises.
  • Copac – the co-operative and policy alternative centre provides grass roots approaches to supporting and promoting self-sustaining enterprises. It provides training, advocacy and research to support and inform the co-operative movement
  • Seda – the small enterprise development agency provides support by creating and improving the regulatory environment to foster entrepreneurship, works towards expanding market opportunities fro small enterprises as well as training for these enterprises
  • Department of Agriculture – the DoA also assists co-ops with registration and training, they also created a database called Codas which profiles co-operatives
  • Department of Housing – provides non-financial support through social housing foundations as well as technical support and training funded by donor agencies
  • Department of Social Development – provides training through the sustainable livelihoods programme
  • Department of Public Services and Administration – trains co-operative members as well as Community Development Workers to enable them to offer support to co-operatives in their communities
  • Department of Public Works – provides support to co-operatives through the EPWP programmes
  • National Treasury – developed legislation to assist co-operatives i.e. the Co-operative Banks Act of 2007.