BY LAKACHEW ATINAFU
If Ethiopia can establish a large number of agricultural cooperatives at the national level, it can achieve at least two goals. First they enable the results/benefits of large-scale farming to be realized in a short period of time.
Secondly, by enabling the development of agricultural technology and know-how, they enable productivity to reach higher levels in a shorter period of time. In the areas of the Nile River basin and in Tekeze, Baro Akobo, Omogibe, Mereb, Awash, and Wabe Shebele Rivers, modern irrigation farming and watershed development on the large fertile lands of the lowlands and wine plateaus in the area will be the primary beneficiaries of projects that will primarily benefit Ethiopians who graduate from the universities and return from emigration.
If Ethiopia can attract a special agricultural investment, especially in rehabilitation projects, by designing policy in which the unemployed citizens are mostly included, it can minimize joblessness thereby securing food self sufficiency. To this end, the government should take a leading role and discuss and communicate with various Ethiopian investors, with regional governments and with lenders.
Perhaps during the discussion, it would be very good if the government plays an important role in establishing agricultural cooperatives in which local citizens, the government and investors have shareholdings around the initial capital. Mechanized agriculture should have a vision to include the provision of fertile lands, supply of essential agricultural inputs, reliable economic support, training and education support, and housing facilities within a certain number of years.
If the role of agricultural cooperatives and the condition of initial capital is based on the following idea, for example, to enable 30 % of citizens returning from exile to buy shares, the government provides agricultural land to them for free or the price they can afford, with the contribution they make by their labor, and monthly savings other than salary, they would be fruitful.
The rate should be allowed to the starting capital when the money borrowed from the bank is added. The capital allocated by the government will be cash as the starting point, and if an agreement can be made on enabling investors to purchase inputs and operate cash, it will greatly contribute to the success of the establishment.
Also, the investors will be in charge of providing professional support in the agricultural work, including administrative tasks and membership of the stock board. They will have a place, and the government will be in charge of the role of control and evaluation, and it would be good if the basic idea is that the repatriated citizens will be mainly responsible for labor work, but they will have enough representative members in board membership and management roles.
Ethiopia’s policy seems to run a liberal economy, but in view of its current serious problems, it could be of paramount importance for Agricultural sector as it is necessary for agricultural cooperatives to be established on large agricultural lands.
India has facilitated the organization of agricultural cooperatives among the poor in the country, allowing the members to have their own capital and contributing to the elimination of the problems of division between communities.
As it can be learnt from documents, though agriculture accounts for 90 % of exports and 86 % of total employment in Ethiopia, smallholder farmers have traditionally been underserved—even exploited and marginalized.
To help these farmers gain the skills and influence necessary to alleviate this situation, over years as part of the groundbreaking initiative, ACE aided the Oromia, Sidama, Yerga chefie and Kafa Coffee Farmers’ Cooperative Unions.
A first step was to gain permission from the government to bypass the central coffee auction and act as direct exporters on behalf of their members. Thus the farmers enjoyed more control over their affairs as well as increased market share.
Cooperatives have been playing important roles in the socio-economic lives of communities for a long time during which they have also encountered challenges and weaknesses. These have made countries to have their own distinct histories of the development of cooperatives and of course sometimes having similarities. Based on a critical review of literature and analysis of secondary data, this article presents a brief history of the development of the Ethiopian cooperatives with a focus on agricultural cooperatives.
It indicates that although modern cooperatives have rapidly increased and positively contributed to community development, several weaknesses and challenges still remain being rooted in the economic, social, institutional, political and environmental settings. Due to the importance given to agricultural cooperatives in today’s Ethiopia, sustaining the contributions of cooperatives to members and the larger community becomes vital that deserves policymakers’ attention.
According to a study by Kifle Tesfamariam, Savings and Credit Cooperatives (SACCOs) in Ethiopia are playing an active role both in rural and urban areas. SACCOs are considered to have immense potential in financing short term loans for agricultural production technologies and undertake off-farm income generating activities in areas where both the state and the private sector have failed. Serious efforts are being made to strengthen capital resource of SACCO’s base through increasing members’ subscription and mobilization of savings in rural and urban areas.
Cooperatives have played a significant role towards achieving the growth and poverty reduction strategy by promoting income generating activities and improving access to near banking services to rural and urban households. In response to the changing needs of farmers-members, the government instituted an overarching strategy of Agricultural Cooperative Sector Development Strategy 2012-2016 (ACSDS). One of ACSDS’s derivative features is to improve smallholder farmers` productivity and income by leveraging a cooperative sector; hence the promotion of cooperative movement is in line with the national strategy.
Based on the savings mobilized domestically a resource will be generated to finance the various investment opportunities from time to time. Most cooperatives have access to some financial provisions, but more sophisticated services like warehouse receipts and insurance are rare. Although significant progress has been made in recent years, many rural financial institutions what the contemporary development challenges of SACCOs in Ethiopia whatever the SACCOs do should be analyzed in terms of its contribution on the socio-economic development.
A well-articulated studies on the sector puts forward that traditional forms of associations such as Iqub, a rotating savings and credit association; work groups such as Wonfel and Debo; and Idir, which raise funds that will be used during emergencies, have a long history in Ethiopia. However, the first formal cooperative organization was established in Ethiopia around the 1960s. Since then, three distinct periods of cooperative movement were observed in the country: cooperative movement during the Emperor period, the Socialist period, and the EPRDF.
The modern cooperative movement was started in the Emperor period under Farm Workers’ Cooperatives Decree (Cooperatives Decree No. 44/1968) primarily to solve unemployment problems of retired workers. However, the voluntary and open membership principle of the cooperatives was not fully practiced in this era. As a person was required to have land to be a member of cooperatives, the feudal land tenure system excluded the peasant farmers from joining cooperatives.
Lack of credit facilities and trained manpower were also among the most important constraints which cooperative movement faced at that time. It was during this time that agricultural cooperatives were also started to produce commercial and industrial crops. Few cooperatives were also engaged in producing industrial crops for export markets, and their members were mostly large landholders.
After the overthrow of the Emperor regime in 1974, the Socialist government (1974–1991) that viewed cooperatives as a key instrument to build a socialist economy pursued the cooperative agenda more aggressively to ensure equitable resource mobilization and distribution in the country. The regime also issued a new cooperative proclamation (Proclamation No. 138/1978).
The roles of cooperatives during this period were completely different from those of Western-type cooperatives as they were based on the socialist principles. Compared with the Emperor Regime, the types and numbers of cooperatives increased. Mandatory membership and production quotas were among the features of the cooperatives.
The regime had made cooperatives a platform for conducting political agitation by ignoring their basic principle. With the downfall of the socialist regime in May 1991, some of these cooperatives were looted and vandalized for their assets and dissolved in such a disorderly manner that twisted an eternal suspicion and mistrust of cooperatives, the stigma of which is haunting cooperatives until today.
One of the drastic changes after the breakneck reform in Ethiopia is registered in the agriculture sector organizing farmers and operators. A few years before, Prime Minister Abiy Ahmed has given due emphasis to the production of summer wheat using cooperatives and cluster farming as a key component and strategic input. Ethiopia’s Agricultural Transformation Agency (ATA) has been setting that to harvest millions of quintals of wheat using cluster farming and agricultural cooperatives and also implement market-led farming under the leadership of the new administration.
The Ethiopian herald April 30/2023
