Development is the positive change in terms of variables that make up or that are responsible for the sustainability of the task. Consider a Chinese farmer in the upcountry parts of China who owns 55 acres of land but only cultivates 67% of that land due to lack of capital. Development for this farmer would be considered a factor that will depend on how much more land he cultivates the next time farming season comes. However, the variables for development do not involve quantifying premises or the surface area of operation. If the same farmer grew French been or was engaged in aquaculture for indigenous species and shifts attention to a more beneficial plants and species, development can be considered a goal rather than a reality in this case. If by involving himself in the more beneficial of financially profitable plants or aquaculture species, he is able to get more money out of it and therefore extend his activities to the remaining 33% portion of his land, then this can be considered development (Engelhardt, 1986: 102).
There are two types of developments that we will be discussing in this paper and they include coverage development and financial development. Coverage development involves extension of activities to a bigger margin while at the same time covering a bigger set of objectives and goals. Financial development does not necessary need to reflect on the type, and size of operation one is involved in although it still can. Financial development involves monetary and financial security variables in which one could be operating in a medium-sized premises but this time providing insurance cover for the organization or type of business. Financial development is more security oriented than expansion oriented. Like for the farmer discussed earlier, he may decide to use the 67% land but use a better irrigational system that would transform his farming from seasonal to all-seasons type.
The relevance of the above definition and examples of development to the context of this paper is to make the reader understand the difference between fiscal development and marginal expansion of cooperatives in the developing-countries settings.
Cooperative development unlike organizational or individual development depends on the input of members and their share in the cooperatives. In different settings, cooperative development depends on different input and goals of the cooperative. The settings are defined by the political, socio-economic, and moral values of the communities or nations that the cooperatives are hosted. In a setting where political values or elements play a role, policies are drafted and constitutional implementation considered. For this case, the cooperatives could be state owned while control is given to its members. Therefore development such like co-operatives would be depending on the initial government or political input and then the primary efforts employed by the members. Developmental factors for these cooperatives assumes political based role in that the share of the government or its control affects the level and scope of the cooperatives. Development in this case is quite guaranteed in that times of crisis or funds for expansion are likely to be provided relative to the approval of how logical the proposals may be.
Out of the political scene, development of cooperatives considers economies of scale inspite of the fact that these cooperatives do not care about the economy in terms of market. Economies of scale means financial benefits accrued from expansion of small enterprises. On the issue of cooperatives, economies of scale, although out of context with microeconomics, development of the cooperatives depends on the number of members integrated into the cooperatives. The reason for this is that the more the members, the more their contribution and less the cost incurred by the cooperatives. In third world countries, cooperatives are not only partnerships for the members but also working places for the members. For this reason, those members who would like to have salary increments as other organizations’ employees can wait or wave their interests so that they can make use of the money to reinvest to the cooperatives (Enriquez, 1986: 145).
Evolution of Co-operatives
The evolution of cooperatives started with the post-economic crunch of the 1930s whereby the less privileged African Americans entered unions to deal with the economic issues they were dealing with. Considering the state of affairs between the White Americans and the Black Americans, it is noteworthy for one to understand that unions were formed as a mechanism to fight racism. The impact of racism was that Black Americans could not be hired to work for the White counterparts. As result of racism, the economic standards of the Black Americans were subsiding further and with the impacts of the stock market crunch, it was almost impossible for the Blacks to get a livelihood in the Whites-dominated economy.
To save themselves from the issues of unfavorable economic activities and practices in terms of racial orientation, the blacks found it worthy trying to build up a union that would be used to fight racism and build up an economic foundation. Considering that the racial element that the Whites, who owned most of the industries in the 1930’s, the blacks decided that they should find a way of depending on themselves. This way was to formulate unions in which they would contribute in terms of finances and labor to make their own livelihoods. Although an industry was a thing for the Whites, some African Americans were wealthy enough to start their own. Industries was one side of the coin while crafts was the other; black Americans joined crafts unions so that they could benefit from working for themselves and dealing with the predicament posed by the whites (Fairbairn et al., 1990: 201).
Secondarily, considering that Black Americans were financially challenged, the crafts unions that they formed was a way to deal with economic challenges they were in. For this reason, it was easy for the Black Americans to afford items from craft unions than from the industries that were run by the White Americans. Although racism is not anything to be proud of, it is noteworthy how beneficial it was for the Black Americans in terms of economy. Crafts Unions in the 1930s were formed to act like lifesavers for the Black Americans. However, as the stock market crisis ended in 1942, more significance of the crafts unions was discovered through modifications to include practices rather than talents and culture. This was the beginning of cooperatives outside the context of racism, stock market crisis, and unequal rights for the inhabitants of the United States.
Pre-colonial Period and the State of Affairs
Before the colonial periods, very few nations in the likes of UK, Germany, and probably India were actively involved in trade. Trade in this period involved the fir, iron, seashells, and slaves. As the trading area grew further, USA and Canada were involved in the trading of fir and the other goods. At the same time, UK which was known to be the number one fir consumer was industrially developed and most of the time she used to bring finished goods to the market. As a result, the trade partners thought they could embrace the same industrialization prospect to benefit as well. Benefits from industrialization were to cut on resource wastage and maximize on labor locally. For the US, trade was active to include prisoners from Europe who were sold to the US to provide labour in the extensive agricultural projects. As time advanced, the demand for European slaves subsided after Africans were discovered to be hard working than the Europeans. This period of active trade and transformation of trade trends ranged from mid 17th century to the early 20s of the 20th century (Fairbairn, 1990: 229).
Within the period between mid 17th century and early 20s of the 20th century, UK had acclaimed to have discovered United States through the 15th and 16th century’s voyages of Christopher Columbus. However, the term discovery did not and still does not make sense given that American Indians lived in the US before Christopher negotiated deals with the Monarchs’ and the Queen regarding discovery of new territories. Therefore, the right term that can be used to describe Christopher’s role in making the existence of North America existence reporting. All the nations that used to have people living in them can only have been reported t o the queen rather than discovered by Christopher.
How is barter trade between UK and other nations and the voyages of Christopher Columbus in context with the issue cooperatives? During the period when these events were taking place, most of the nations were in their developing phases. The US for example, was involved in home industry where farmers, ironsmiths, herdsmen, and artisans would produce and provide items and products to be used domestically. Those homesteads that could not make all the products they needed were forced to give up what they had in order to acquire what they not did from those who had it. When free trade between European nations and the rest of the world began, sheep farmers joined hands to form financial and social cooperatives to provide enough fir to keep the trade active. The relevance of the financial cooperatives is that they had the economic benefits for the farmers in that new materials were brought in from the other traders. The social cooperatives were not formed outside the context of the financial cooperatives; instead, the gains from the financial cooperatives were used to make the social status of the communities hence making social cooperatives a means of survival.
Post-Colonial Period and the State of Affairs
Most of the colonized nations were the poor in economy and rich in resources. Africa was a destination where most colonizers scrambled for a position to take control of resources and conducive weather. The Sub-Sahara regions were well adored for the richness of minerals they possessed while the Saharan regions were a potential oil depository. Given the facts, it was very hard for the European colonizers to resist from colonizing Africa to take control of the resources and cheap labor. In this case, the last country to gain independence in Africa did that before 1990 (Fals, 1990: 89). Technically, the lack of coordination between the European settlers and the Africans and the issue of uneducated Africans could not make it possible for development of the African territories. Rebellion from Africans disrupted the courses these European settlers were following hence translating the entire period to almost an absolute waste of time.
In the line of development, African lacked the audacity to learn from the settlers therefore making their efforts almost fruitless. The reason for picking Africa is that it houses the highest number of developing nations. In this case, the issues that hindered development when the White settlers were around included lack of education, mechanism to embrace industrialization, and absence of active governments. For this case, most of the treaties and policies that were made by the White Settlers decades ago are still in active until this moment. With the technological, social-economic, and political changes of the 21st century, the use of ancient policy to govern these African territories have led to the slow pace of development.
In context, the low development pace of the African nations has translated to economic difficulties that can only be tackled from within the confinements of joint efforts in respect to similarity of interests. For this case, most African nations, especially those lying within and along the tropics and the equator respectively have started showing development after they were allowed their freedom by the settlers. However, with the shaky political scenes and unstable local currencies, development has not been steered by the governments but rather community initiatives aimed at producing consumer items to be consumed by members for economically affordable prices. These are the cooperatives in developing nations and their development depends highly on the social, political, and economic structure of the nations.
Result of Colonialism and Impact to Co-operative Development
Colonization of territories is different from conquering of territories. The difference between colonization and conquering of territories can be explained using the activities of Hitler in his quest to take over England by invading Poland and UK moving to Africa to take away control of land from the natives of Africa. Colonization is however, a form of conquest in that the colonized lot in numerous instances has to lose a few lives to accept the social transition.
Considering the movement of the White settlers in Africa and their capture of the most fertile lands, the resultant effect on the welfare of the Africans was deteriorated economic status. With the retaliation that most African nations engaged in against the whites, most of the fertile lands were destroyed because of war and clashes. In this case, the colonizers were losing most of the prestigious farming lands and the cheap workmanship from Africans was transforming to crude armies. This forced most of the colonizing powers to leave Africa while the Africans incurred immense loss of fertile land (Fals, 1970: 94).
In this new wave of loss, the social background of the African communities was crippled. Alternatives like businesses influenced by the settler developments were one of the options for the Africans. This fact forced communities to come together to trade what they had for what they wanted but did not have. The manufacturing of items was done manually by a set of people who belonged to industrial units. These industrial units were the modern cooperatives we have today. Although most of the work was done manually, the livelihoods of these people improved along the lines of economy, embraced sophistication, and somehow afforded them entry to the educational system. Inspite of the negative impact of colonization from the perspective of land grabbing, slavery, and disrespect of human rights, positive impact like education and industrialization resulted from it. With the education African communities seemed to embrace at will, the industrial units that comprised of manual labor and acquired skills transformed to include the use of machinery and knowledge on how to make products appealing and quality. This was the first phase of positive change in the cooperatives. The situation can be quantified of assessed through the variables used to give the example of the upcountry Chinese farmer, cultivating 67% of his land (Fals, 1971: 148).
Cooperatives’ Development Differences Relative to Colonial Rulers
Emphasis on Africa as a developing territory is a crucial aspect of this writing because considering the pace at which her nations are developing; it is likely that the last nation to become developed will be African keeping other factors like war, pandemics, and political crumbling constant. In this case, the reason for such an allegation depends of the social, economic, political, and psychological aspects of the national leaders of African nations. However, history shows a difference in development of African nations in terms of both industries and non-government owned cooperatives. British colonies compared to French and German portray a bigger margin of general development especially in cooperatives and industries. However, German and French colonies portray mixed stable and unstable political scene that discourages national development. For example, Mauritania and Benin were German colonies of the 17th and 18th centuries; considering their political insignificance in the world, it is understandable why development of such territories may lag behind. Across the world, Tunisia, Libya, Cameroon, Djibouti, Niger, Ivory Coast, Syria, and Vietnam were all French colonies whose political situations have soured up over time. For the case of African French colonies, political instability has hindered general developments inspite of heavy resource deposits.
The development of cooperatives differs from one nation to the other but considering most of the developing nations in Africa, it can be noted that colonial rulers have a significant influence on the development. The French and Germany were territorial dictator nations and their rule on colonies transferred the same aspects of leadership. For this reason, leaders coming into power in nations once colonized by the French exercise totalitarianism therefore hindering cooperative development in the developing nations.
British colonies generally do better in development than French and German. The reason attributed to this is the historical organization and wealth of the Great Britain. Cooperatives emerging in the British colonies are more organized and goal oriented than those of most other nations. In Africa, Ghana was the first nation to acquire her independence from the British and six years later Kenya gained her independence as well. Considering the cooperatives’ development in these two nations, a significant difference with those of French and German is notable.
Development of Agricultural Co-operatives in Ghana
Agriculture in Ghana is highly commercialized because of the growth of cocoa and rubber. It is believed that over 70% of world’s cocoa comes from Ghana while rubber demand is almost supplied with Ghana rubber. The reason why Ghana is doing so well in terms of agriculture is because of the economic value of the products she grows. In this case, the private sector and the public sector do not differ in terms of economic and social views on agriculture. The overall development of Ghana depends highly on both the sectors. The public sector is made up of government owned cooperatives and industries while the private sector is made of cooperatives, private industries, and foreign industries. The contribution of the elements making up each sector tells the degree of contribution for each sector.
Cocoa and rubber farmers in Ghana joined hands privately without the help of government and formed small scale cooperative that grew these plants for domestic commercial use since independence. As time advanced to reflect industrialization in Africa and technology worldwide, the market for cocoa and rubber expanded beyond Ghana and Africa to include major economies like the EU25 member states, United States of America, Brazil, and Canada. Considering the market growth towards late 1990s and the start of 21st century, cooperatives in Ghana had grown in both numbers and size per cooperative. The nature of the cooperatives was financial unlike the usual social-economic nature that helps farmers to invest and buy products at a lower rate. The reason for this nature of cooperatives is that the farmers who comprised the majority members of the cooperatives did not put social value to the undertakings they were involved in. The returns from the cocoa and rubber financial cooperatives were reinvested in food processing cooperatives where the members could exercise economical spending thus accruing more abilities for growth (Fals, 1976: 113).
Evolution of Agricultural Co-operatives in Kenya
Kenya is an East African nation of 40 million people globally known for producing long distance athletes. The economic arena of Kenya has been experienced with difficulties since she gained her independence from the British in 1963. To limit economic challenges that Kenyans found themselves in, they formed unions for doing intercommunity trade. Food stuffs and other social items were traded within communities and outside. Following the failed government attempts to improve the economy of Kenya through borrowing from the World Bank, entrepreneurs and investors feared that they may incur losses if they entered into business individually. On the other case, the moderate citizens and the assumed-to-be-poor lot could not survive the economic conditions on their own depending on steady inflation and non-production state of the land. Only the highland regions of Kenya were considered productive therefore communities leaving around decided to take advantage of the agriculture climate to make a living out of.
However, the highlands only were appropriate for the growth of coffee and tea therefore coffee and tea cooperatives sprung up. Initially, Kenya did not have the mechanism to process tea due to the lack of necessary machinery. To curb this issue, coffee berries and tea leaves were sold as units to Indian and European investment industries that could process them. Half to a decade later, the cooperatives had grown majorly and therefore coffee and tea processing machines were purchased to limit the likelihood of exploitation of the cooperative members by the Indian and European industries owners. This phase was a cumulative and distributive approach to cooperative development in the developing Kenya. Accumulation of financial benefits enabled the cooperatives to be reinvested on hence leading to marginal and value developments. Through distribution of financial benefits to all members increased their output individually and development of the cooperatives in general. The evolution of cooperatives in Kenya followed the union, small scale, large-scale sequence to reach the level of distributing coffee in major economies around the globe (Gyllström, 1988: 150).
Credit Co-operatives and their Evolutionary Development
Credit cooperatives are those whose purpose is to assist members deal with their financial issue through lending and then allowing that member to pay back the amount with less or no interest at all. The amount that can be lent out is brought in from the monthly, quarterly, or semiyearly contribution by the members. The purpose of credit cooperatives is to lend to members and even other people who are not members. However, the difference between members and non-member borrowing is in the factor of payments with interest. Credit cooperatives in most developing nations especially African are called Savings and Credit Cooperative Organizations (SACCOs) are they are defined through the usage of benefits, assets and opportunities by only the registered members.
In many nations like Ukraine, China, and Yemen republic, credit cooperatives are considered not-for-profit organizations. However, in Canada, credit cooperatives are listed as for-profit organizations and distinguish member privileges from other businesses with the non-members. Credit cooperatives evolved from the merry-go-round monetary contribution schemes that originated from African setting for funeral expenditure covering. The formal and informal funeral ceremonies in Africa depend highly on contribution to meet the expenses of travelling and organizing the events. For this reason, in the third world settings people met once or twice a month to contribute money aimed for dealing with emergencies like death. This was the scenario for credit cooperative evolution in the third-world settings in Africa as well as modification of the idea by other nations (Fuentes and Frank, 1989: 76).
In the developing nations, credit cooperatives have ceased from being mono directional to be multi-directional to include the financial gains as profits from their operations. In this case, profits gained from such operations like lending and providing mortgage loans have pushed credit cooperatives from small institutions to large consisting up to thousands of members.
Co-operative Development in Developing but Non-Third World Countries
There are facts and rumors when it comes to the developing nature of China. For the past one decade, economists and theorist have argued that China is one of the rapidly growing economies in the world. However, a question on how long china will continue developing so fast until it actually becomes fully developed raises eyebrows and debates. The theoretical approach of assessing China’s growth through market share of her cheap products is not sufficient to support the allegations. The truth is; China’s industrial scene is not fully developed neither is it nearing, so the survival of China depends of importation of machinery from developed economies. In this case, too many products made from cheap labor and sold at a very low rate equates the few products made from expensive labor and traded to her at a high rates. At the end of the day, China will purchase $6 billion worth of heavy-duty machinery from the USA and sell $5 - $6 billion dollars’ worth of toys and furniture. So the high rates of development as argued by theorists and economies are marginal development rather that value development.
The extensive China area and the corresponding population of almost 1.4 billion people as an aspect of dragging China behind in terms of equal development and salary distribution. A considerable number of Chinese rural dwellers are involved in the unbalanced migration to the urban areas. In the rural areas only the elderly, women, and children are left to struggle with life while the strong and healthy majority migrates to the cities to seek jobs. As a mechanism to deal with the situation, the lot left in the rural areas form cooperatives to achieve solidarity in regional and overall development. Cooperatives existed from as long ago as 1978; however, the economic situation of the Chinese was favorable to everyone and that hindered the continuation of active participation in the cooperatives. After the 2000 global financial crisis, these cooperatives started to revive in order to put the rural Chinese population back to the financial track they were in earlier on (Gagnon, 1976: 88).
Economic Value of Co-operatives
Valuation of the economy can be defined through the GDP of any particular nation. The GDP growth rate can be used to determine by how much the economy of that particular country would be like in a couple of years. Cooperatives had to the economy of the nation through reduction of budget allocation of the government to issues like welfare of the grassroots minority. Imagine the situation in Haiti where after the earthquake, uprising of criminals rocked the nations for the better part of that period inspite of donations and help from all over the globe. Now consider a situation where the whole burden was left for the government to take care; what percentage of the budget would be allocated to take Haiti back to its economic and social status? Let us now assume that everyone in Haiti or the parts that were affected by the earthquake belonged to an active cooperative. Businesses, social amenities, infrastructural renovation, and international trade assurances would be the only task the government would allocate funds to finance. The rest of the population affected would deal with its issues through the benefits from their cooperatives (Hall, 1946: 137).
The economic value of cooperatives is to cost share the expenses of maintaining a healthy and positive living of the entire population between the government and the members of various cooperatives. How is this achieved? The government assumes a role of constructing and creating infrastructure to foster national development. Cooperatives are put into operation to foster growth and development of certain regions or communities. The development that cooperatives foster may be infrastructural hence limiting the amount of work and expenses that the government would have incurred (Hirschfield, 1975: 165). In this case, cooperative members and members of the public who live within the developed regions benefit from the infrastructure. This brings in immediate development from the communities, while saving the government funds for other developmental activities in other regions that do not benefit from cooperatives benefits.
Social Value of Co-operatives
Most developing nations are faced by the problems of living below the poverty lines of a dollar per day. In the same case, education is below the international standards with numerous school dropouts. Given that, success in life of an individual translates to the growth and development of the social backbone of the nation and depends on quality education, then is it clear that national development is hindered by the social variables of education and poverty (Hedlund, 1988: 171).
Cooperatives in the light of SACCOs have been a thing for the developing nations in aiding with the social lives of the communities. SACCOs have been modified from just supportive tools to full time businesses. The members only own these businesses but they serve everyone in the community. Service to the community and the society as a whole in one instance of Africa provides transport means for the public while returns are invested in real estate and promoting quality education for family members of the cooperative members. As a result of this, financial value of cooperatives has resulted to the social values hence boosting the development of cooperatives in developing nations.