The document discusses the importance of cooperatives in Africa's agribusiness sector, highlighting their role in enhancing rural financial services and supporting family farms. It outlines the cooperative life cycle framework and various phases, emphasizing the need for effective governance and member participation to sustain cooperatives. The document also proposes maximizing cooperative health through organizational diagnostics, leadership consensus, and global networking strategies to foster growth and innovation.

1. Partnering with Ease-Agr to Extend and Expand
Cooperative Agribusiness in Africa:
organizational diagnostics, international networking and big data
Nicola Francesconi, CIAT-CGIAR
g.n.francesconi@cigar.org
IFPRI/IITA office, Naguru Hill
CIAT office, Kawanda
Tel. 0794756336
EDC
Enhancing
Development
through Cooperatives

2. Did you know?
• the UN declared 2012 as the International Year of Cooperatives
• cooperatives play a major role in rural financial and extension services worldwide
• 50% of global agricultural output is marketed through cooperatives
• cooperatives were instrumental for the success of family farms in the US and EU
Coops prevalence
in Africa
% of rural villages
with at least one coop
Senegal 47
Burkina Faso 56
Ethiopia 35
Uganda 31
Recent data from CIAT shows that 80%
of Ugandan bean producers are
members of at least one coop

3. What is a cooperative?
Not an NGO or a parastatal because it is a for profit organization
Not an Investor-Owned Firm (IOF) because it is:
an organization owned/controlled by individuals benefiting from its services
or
a user-owned, user-controlled and user-benefitted organization

4. The History of Rural Cooperation in Africa
(from defensive to offensive)
Time
Market-driven
State-driven
Community-driven Mutuals
Coops
New-Coops
(FOs/POs)
Pre-colonial Colonial &
Post Independence
Post Structural
Adjustment
Governance
Hundreds of thousand of new coops
are arising…but they are still
small and uncompetitive

5. Our previous research shows that:
• Cooperatives are widespread and resilient organizations in Africa
• Participation in cooperatives improves farmers’ technical efficiency
(i.e. adoption of improved technology, to produce with less..)
• Cooperatives tend to be affected by allocative inefficiency:
elite-capture and side-selling (no inclusive business)
How to help cooperatives optimize their sustainability?

6. The Cooperative Life Cycle Framework

7. How Do you Measure Coop Health?
• Is it just financial performance (i.e. investments and profit)?
• What about membership size, social inclusion and members’ patronage
(i.e. participation)?
Minimizing governance problems that hinders participation
is as important as maximizing profit and investments…

8. Health of Cooperative
P1
Phase 1 = Economic Justification
Time
Phase 1

9. Phase 1: Economic Justification
• Better Access to Markets?
• Economies of scale?
• Social capital?
• Bargaining/Countervailing power?
• Multiple rent extraction?

10. Phase 2
Health of Cooperative
P2
Phase 2 = Organizational Design
Time

11. Phase 2: Organizational Design
(the rules of the game)
• Who can be a member?
• Who/how is risk capital acquired?
• Who has residual claim rights?
• Who has residual control rights?
• Sanctions - Enforcement

12. Phase 3
P3
Health of Cooperative
Phase 3 = Growth–Glory–Heterogeneity
Time

13. Phase 3: Glory and Growth
Glory = external incentives, i.e. better price, tax exemptions, subsidized inputs/credit
This competitive advantage triggers:
Growth = expansion in membership and increasing members’ patronage
However, growth tends to add managerial and leadership complexity, due to the rise of:
1. the free-rider problem = when many new members enter a group and claim the same
benefits of existing members
2. horizon or portfolio problems = when members’ patronage is used to pursue investment
strategies that are either too risky (i.e. one big and long term investment) or too cautious
(i.e. multiple small and short term investments)
3. agency cost problems = when growth is associated with high internal monitoring, influence
and decision making costs

14. Phase 3: Heterogeneity
• These governance problems create increasing disincentives for members’ participation (side-selling
and membership expansion) affecting coop health
• To minimize these problems coop leaders and managers need to “tinker”, or adjust the rules of
the game, in such a way to design and enforce solutions
• When coop leaders and managers are able to “tinker” they extend the length of the life cycle
• “Tinkering” occurs only when there is consensus among coop managers and leaders, i.e. when
their preferences are homogenous enough to quickly craft and enforce solutions
• Yet, the preferences of coop leaders and managers tend to diverge over time (Heterogeneity)
• “Tinkering” is a temporary strategy, which can extend a life cycle, but not indefinitely…

15. Phase 4
P4
Health of Cooperative
Phase 4 = Recognition and Introspection
Time

16. Phase 4: Recognition and Introspection
• Factions?
• Apathy?
• Crisis?
• Members’ drift?
• Side-selling?
Sooner or later a cooperative will no longer be able
to “tinker”, due to increasing heterogeneity in the
preferences of its leaders/managers…
…and will have to do introspection and recognize its
governance problems
• Elite Capture? (the coop becomes a separate firm)

17. Reinvent
Spawn
Exit
P5
Health of Cooperative
Phase 5 = Choice
Time
Phase 5

18. Phase 5: Choices
• Reinvent?
• Spawn?
• Exit?
a cooperative that can no longer “tinker” can
decide to either dismantle itself or re-invent its
governance structure and enter a new life cycle…

19. In which phase are you in?

20. What exactly am I proposing?
1- to help you extend and optimize your business cycle
• To use this framework to perform organizational diagnostics of your
coops, to build leadership and management consensus (or reduce
heterogeneity) on how to “tinker”
• We are not offering solutions…but we can help you find your own,
through training and coaching sessions like this one

21. An International Network for Cooperative Research & Development
Donors:
USAID, Ford Foundation
CIAT/EURICSE
EASE-AGR/KDA
African
Coops
GICL/ISPRI
US, NZ, EU, Brazil,
China, etc. Coops
Projects:
(OCDC, CGIAR, OXFAM,
FAO, SNV, GIF, etc.)
Public funds (grants)
Private funds
strategy
(revenues), strategy
Research & Outreach
BDS, Network,
Diagnostics
MU

22. What exactly am I proposing?
2- to help you expand and globalize your business
Promoting and facilitating networking between your coops
and other ones at the local, national, regional and global level
to nurture (inter)national strategic alliances, joint ventures and mergers…
Large
mature and
offensive coops
Networking
Small, young and defensive coops

23. What do I need from you?
Time, Engagement, Trust and…Data, Data and more Data!
With your help we can build an ICT platform
that will not only help you sell your coffee, maize, etc.,
but also your data…
No more time-consuming surveys
but an automated ICT system for data collection