Cooperative societies Breaking new grounds

The International Day of Cooperatives was observed on 1st July. As is customary, the day was marked by various activities across the island, including the holding of a market fair to promote the products and services of cooperative societies. The cooperative landscape is fast changing, with traditional societies breaking new grounds in emerging sectors. 

The International Day of Cooperatives was observed on 1st July. As is customary, the day was marked by various activities across the island, including the holding of a market fair to promote the products and services of cooperative societies. The cooperative landscape is fast changing, with traditional societies breaking new grounds in emerging sectors.

About 1,143 cooperative societies in Mauritius and Rodrigues are engaged in more than 40 economic activities, generating a combined turnover exceeding Rs 5.5 billion. If, in the past, cooperative societies were mainly engaged in the agricultural sector, essentially sugarcane and vegetable cultivation and cattle breeding, over time they entered such activities as financial services and consumer goods distribution today. Today, cooperative societies are making inroads into renewable energy and aquaculture farming. According to official statistics, nearly 65% of our onion production, 45% of potato and 70% of vegetable production are met by cooperative societies. Even private bus operators that account for 40% of the public transport network operate as cooperative societies. 

The country has about 160 ‘Cooperative Credit Unions’ consisting of more than 75,000 members and these unions manage more than Rs 2 billion of funds in the form of loans and advances to members. About 100 women cooperative societies also exist. 

While cooperative societies are popular means of entrepreneurship, the situation is not always rosy in the sector. In many cases, the cooperative spirit is nearly non-existent, as members operate individually and independently. Hence, the benefits accruing to cooperative culture are not reaped by members. Such a situation can affect the viability of projects as well as the income of members. For example, the absence of economies of scale can lead to rising costs. There could be a lack of strategic planning and inefficient investment. Thus, many cooperative societies remain stagnant and fail to adopt innovative means of operations. It is said that many cooperative societies are heavily indebted and some are facing financial difficulties. 

Incentives

Cooperative societies are exempted from ‘stamp duty’ as well as registration duties, except on the deeds of vehicle transfer. Dividends paid by a cooperative society are tax exempted. Some types of cooperative societies benefit from customs duty on acquisition of utility vehicles. Surplus generated by cooperative societies in the agricultural sector are tax exempted. 

Cooperative societies indeed represent a huge potential for the economy in Mauritius, though this form of entrepreneurship has so far failed to attract the younger generation. It must be recalled that in the old days, the youth were fully engaged in such ventures. However, things are now changing and with better awareness, our youngsters are now showing interest in the cooperative movement. In this context, the ministry of cooperatives is working on the setting up of a ‘Cooperative College’ at Bois Marchand, on the site of the current National Institute of Cooperative Entrepreneurship (NICE). The objective is to train our youths and provide the necessary support for their successful engagement in the cooperative movement. 

Emerging sectors

Cooperative societies are now breaking new grounds. Currently, the government is promoting the renewable sector among cooperatives, with a pack of incentives under the ‘Green Energy Scheme for Cooperatives’. The Peoples Cooperative Renewable Energy Society is embarking on a solar 500 KW farm project at Balaclava. If successful with the outcome, it plans to replicate the same project elsewhere in the country. 

Another similar project has been launched by the Long Mountain Cooperative Credit Union, under the ‘Green Energy Scheme for Cooperatives’. The government offers a grant of Rs 10,000 per Kw generated, up to a maximum of Rs 50,000. The Long Mountain Cooperative Credit Union consists of more than 2,000 members and manages a fund value of nearly 20 million annually. It has installed 11 solar panels with a capacity of 2.9 KW/h, at a cost of Rs 210,000. Other cooperative societies with similar projects in the pipeline include the Ministry of Health Cooperative Credit Union, the Paradise Integrated Farming Cooperative Society, the Al-Barakah Multi-Purpose Cooperative Society, the Primary Aided Employees Cooperative Credit Union, the Vacoas Popular Multi-Purpose Cooperative Society, the United Development Cooperative Credit Union Ltd and the Railway Agro-Mechanical Cooperative Society Ltd.

Top 100 Cooperatives

The cooperative sector in Mauritius has its ‘Top 100’. It is an annual publication of the ministry of cooperatives to highlight the 100 best cooperative societies in order to give them more visibility. However, those who make it to the list run the risk of being removed if they do not maintain their standards. 

National Award

The ministry of cooperatives is organising a ‘National Award for Cooperatives’, an annual event which was earlier known as ‘Excellence Awards’. Those interested to participate must register before 31 August 2017. The participants will be evaluated and monitored over three years to enable them attain excellence. The criteria to determine the winner include leadership, vision, creativity and innovation. 

The Award Night will be held on 10 November 2017 and each of the 12 winners will be offered a cash prize of Rs 25,000. We have sought the opinion of some societies and many find no incentive to participate, claiming the prize level is too low and not encouraging enough. They say it will cost them more than the cash prize amount to prepare for the award. 

Fairtrade

Fair trade is an alternative approach to conventional trade based on a partnership between producers and traders, businesses and consumers. The international Fairtrade system - made up of Fairtrade International and its member organisations - represents the world's largest and most recognized fair trade system. In Mauritius, there are about thirty cooperative societies regrouped under the ‘Mauritius Fairtrade Cooperative Federation’. Small producers, including SMEs and cooperatives, are being encouraged to join the Fairtrade recognition.

Adil Sohawon: “Agricultural services are stagnant”

Adil Sohawon, the president of the Cow Breeders Cooperative Society, based at Nouvelle Découverte, explains that the cooperative spirit is often lacking in societies. “There is a tendency for members to operate individually, but to some extent, this is seen as positive, as it is often difficult to get all members aligned towards a single management.”  Regarding services offered by the ministry of cooperatives, Adil Sohawon is on the same wavelength of the president of the Mauritius Cooperative Alliance. “I must say that things have improved a lot. Minister Sunil Bolah is striving to boost the cooperatives sector with an innovative approach. However, same cannot be said of the ministry of Agro industry, as I find services to be stagnant, muth to our detriment. For example, young entrepreneurs are eager to join the cow breeding sector, but there is a lack of animals in Mauritius.”