COOPERATIVES AND POVERTY REDUCTION

 

Cooperatives are critical to reducing poverty. All cooperatives, social or economic, are mechanisms that ensure the growth and prosperity of communities. In developing and transitioning countries that lack access to capital, education, and training, cooperative structures allow communities to pool together their resources to solve problems, identify common goals and target the causes and symptoms of poverty.

What Are Cooperatives?

Cooperatives, or co-ops, are organizations of all types that address a wide range of issues — from food producers and consumers in sub-Saharan Africa, to credit and hybrid cooperatives all around the globe.

Anytime people have common concerns, face similar struggles or are looking for solutions bigger than they alone can accomplish, cooperatives offer an answer via strength in numbers. This is why cooperatives are important to poverty reduction.

When Did Cooperatives Begin?

Co-ops date back to the 1840s when the Rochdale Society of Equitable Partners came together after losing their jobs to industrialization. This group decided to band its resources together and open a store that provided goods they all needed, but couldn’t afford on their own.

Out of their individual experiences, we were left with the Rochdale Principles — a set of operations still in use today that helped the pioneering group manage the realities of poverty in an organized and productive manner.

What Are Cooperatives Core Principles?

The success of co-ops depends upon seven core principles of cooperative development:

  • Voluntary and open membership
  • Democratic member control
  • Member economic participation
  • Autonomy and independence
  • Education, training and information
  • Cooperation among cooperative
  • Concern for community

More than 760 million people around the world are a part of the cooperative movement. Here are seven reasons why cooperatives are important to successful poverty reduction.

7 Reasons Cooperatives are Important to Poverty Reduction

  1. Co-ops directly answer community needs, adjusted to local concerns. They are anchors that distribute, recycle and multiply local expertise, resources and capital. Autonomous cooperatives reach the poorest people in the community, offering upward mobility and basic infrastructure ignored by large businesses. Consumer Cooperatives, like Rochdale play a vital role in distributing food and basic resources in poor and rural areas. Profits and benefits also circulate within the same community.
  2. Co-ops help build peaceful societies. In the process of transforming poverty-ridden communities into vibrant economies, cooperatives contribute to skill-development and education. They bolster gender equality and improve the health and living standards of an entire community. Cooperatives have been instrumental in meeting the Millenium Development Goals, as nations are more likely to stay peaceful by escaping the poverty trap.
  3. Co-ops enable farmers to obtain higher returns. Agricultural and fishing cooperatives support its members by providing training, credit and resources. Rural cooperatives, dependant on agriculture, don’t have to look to international companies to grow. In impoverished communities with low inputs, it is unlikely they can produce the quality and quantity desired to make profitable margins. Combining supply purchases, sales and other expenses can help cooperatives operate at lower cost-per-unit than their individual farmer counterparts. This can allow for an entire community to re-market their product at a higher price

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