The Portfolio Committee on Small Business Development has called for a complete overhaul of the cooperatives development approach in South Africa, following its study tour to the Basque country and Madrid in Spain.
The week-long study tour, which took place from 15 to 22 September 2018, included a visit to the Mondragon Corporation; Basque Ministry for Industry and Economic Development; Basque Trade and Investment Agency; Spanish Parliament and; Spanish Business Confederation of Social Economy.
The Mondragon Corporation is the largest business group in the Basque country and second largest in Spain with a total of 80 000 employees, 266 cooperatives as well as a total revenue of 15 billion Euros.
The Chairperson of the committee, Ms Ruth Bhengu, who was the leader of the delegation, said the success on the Mondragon Corporation’s economic and cooperative literature could be attributed to a number of observations, including education and training, high level of profit investment, a central banking company for all the cooperatives, open intellectual debate, social security measures and democratic debates.
“Although they play a critical role in transforming the economy, cooperatives are not small businesses. They are there to ensure that workers don’t only provide labour in exchange for a living wage, but they themselves become members and owners of the economy,” said Ms Bhengu.
Ms Bhengu said one of the biggest lessons learned from the study tour is the fact that the Basque country applies the bottom-up approach with regard to the policy formulation process in so far as cooperatives are concerned.
“This is the point which the committee has tried in vain, over the past four years, to get through to the Department of Small Business Development. We consistently advised that the support programmes and policies should be based on the felt needs of cooperatives on the ground, but the department always did the opposite. The department provides services based on the perceived needs by the officials in the department,” said Ms Bhengu.
In its report, the committee has made a number of recommendations, including, among others, that South Africa’s Cooperatives Development Act should be reviewed in order to redraft clauses of the Act which created bottlenecks and hindered bottom-up development of cooperatives.
It also recommended that the role of the Cooperative Banks Development Agency should be revisited, in order to make the agency more developmental than regulatory.