SUSTAINABLE COOPERATIVE DEVELOPMENT IN AFRICA Cooperatives play an important role in economic development of many countries across the continent. In Kenya, cooperatives are controlling about 43% of GDP and 31% of national savings and deposits. They have 70% of the coffee market, 76% dairy, 90% pyrethrum, and 95% of cotton. In Benin, FECECAM (Faitiere des caisses deparge et de credit agricole mutuel), a savings and credit cooperative federation, provided USD 16 million in rural loans in 2002. In Côte d'Ivoire cooperatives invested USD 26 million for setting up schools, building rural roads and establishing maternal clinics. In Kenya, over 300,000 people are directly employed by co-operatives Globally, cooperatives provide over 100 million jobs around the world, 20% more than multinational enterprises.

1. PKF Consulting
SUSTAINABLE COOPERATIVE DEVELOPMENT IN
AFRICA
By: Patrick Kuria
www.pkfea.com Global Expertise, Local Knowledge

2. Role of Cooperatives in Africa
Cooperatives play an important role in economic development of many
countries across the continent.
In Kenya, cooperatives are controlling about 43% of GDP and 31% of
national savings and deposits. They have 70% of the coffee market, 76%
dairy, 90% pyrethrum, and 95% of cotton.
In Benin, FECECAM (Faitiere des caisses deparge et de credit agricole
mutuel), a savings and credit cooperative federation, provided USD 16
million in rural loans in 2002.
In Côte d'Ivoire cooperatives invested USD 26 million for setting up
schools, building rural roads and establishing maternal clinics.
 In Kenya, over 300,000 people are directly employed by co-operatives
Globally, cooperatives provide over 100 million jobs around the world,
20% more than multinational enterprises.
www.pkfea.com Global Expertise, Local Knowledge

3. Cooperatives in Africa vs Cooperatives
in Western World
Global Expertise. Local Knowledgewww.pkfea.com

4. Challenges facing coop movement in
Africa
www.pkfea.com Global Expertise. Local Knowledge

5. www.pkfea.com Global Expertise, Local Knowledge
 Government interventions
through supporting
legislation that foster growth
of cooperative movement
across the continent
 Consolidation of small
cooperatives and formation
of federations
 Continuous education and
capacity building of officials
and members
Addressing the challenges

6. www.pkfea.com Global Expertise, Local Knowledge
 Value additions
 Adoption of farmers
producer company business
model
 Adoption of professional
management services
 Embracing modern
technology
Addressing the challenges

7. Addressing the challenges
Global Expertise, Local Knowledgewww.pkfea.com
Challenge Solution
Seasonal productivity Embracing modern technology
Low productivity Embracing modern technology
Access for financial services
Setting up of farmers friendly
financial institutions
High cost of production Embracing modern technology
Embracing professional
management and business
automation
Restrictive laws and regulations Farmers producer Company
Persistent misconceptions on the
cooperative business model

8. www.pkfea.com Global Expertise, Local Knowledge
Case study - PKF Kenya
We provide professional management
services to coops which include:
Business registrations and business
systems development
Improvement in governance
Professionalism in recruitment of
staff and formulation of reward
system

9. www.pkfea.com Global Expertise, Local Knowledge
 Establishment of strong internal
control and internal check system
 Establishing value chain
partnership that ensure a win-win
situations for all participants
 Management training and
capacity building
Case study - PKF Kenya

10. www.pkfea.com Global Expertise, Local Knowledge
 Support in formulation of growth
strategies and an establishment
of an elaborate evaluation
criteria to monitor achievement
 Support in development of
strong Business Plan, Business
Case and Strategic Plans
 Improving operational efficiency
though implementation of cost
cutting measure and business
automations
Case study - PKF Kenya cont’

11. Objective Lever
Maximize payout
to farmers
Increase milk price per kg
Increase payout ratio /
reduce operating costs
Increase productivity
per farm
x
x
Impact Feasibility
$
PKF case study - Increasing pay - out
to farmers
www.pkfea.com Global Expertise, Local Knowledge
Low
Moderate
High
Very high
Very low

12. PKF case study - Increasing pay - out
to farmers
Global Expertise, Local Knowledgewww.pkfea.com

13. PKF case study - Increasing pay - out
to farmers
Global Expertise, Local Knowledge
Increase payout ratio /
reduce operating costs
Reduce collection costs
Reduce staff costs
Reduce input & material costs
Increase number of farmers
Lever Impact FeasibilityAction needed
www.pkfea.com
Low
Moderate
High
Very high
Very low

14. PKF case study - Increasing pay - out
to farmers
Global Expertise, Local Knowledgewww.pkfea.com

15. Farmer Producer company (FPC)
concept - A case study of India
In 2002 India passed legislation that allowed farmers to form Farmers
Producer Company in place of the cooperatives.
It takes care of the flaws in the cooperative societies but keeps its
strengths, borrows its strength from corporate companies
According to this law only farmer producers can be members of the
FPC and the farmer members themselves manages this company
These FPCs are promoted by the farmers, run by the farmers and for
the benefits of the farmers. The surplus is shared among the farmers
only.
They are financially facilitated by the Government or donor agencies
and managed by professionals
www.pkfea.com Global Expertise, Local Knowledge

16. Why FPCs were established
 To encourage groups of small-scale primary producers to connect
with corporate buyers
 To establish basic business principles within farming communities,
to bring industry and agriculture closer and to boost rural
development
 To combine efficiency of a company with the spirit of traditional
cooperatives
 To integrate small-holder farmers into modern supply network-
minimizing transaction and coordination costs while benefiting from
economies of scale
www.pkfea.com Global Expertise, Local Knowledge

17. www.pkfea.com Global Expertise, Local Knowledge

18. Disclaimer
www.pkfea.com Global Expertise, Local Knowledge
The items contained in this document have been prepared as a general guide.
They are not substitute for professional advice, which would necessarily have
to take account of the particular circumstances. The information and opinions
given are liable to change without notice. Neither PKF nor its partners or
employees make any representation regarding the completeness or accuracy
thereof nor do they accept responsibility for any loss or damage incurred as a
result of any user acting or refraining from acting upon anything contained in
this document or upon its omission therefrom.
PKF firms in Eastern Africa are member firms of PKF International Association
Limited Network of legally independent firms and does not accept any
responsibility or liability for actions or inactions on the part of any other
individual member firm or firms. PKF Eastern Africa Firms in Africa operate in
Kenya, Uganda, Tanzania, Rwanda, Burundi, South Sudan, Somalia and
Zambia and associated office in the UK.
PKF operates a code of conduct to ensure that all types of data are managed
in a way which complies with regulatory authorities. If you wish to be informed
about the services we offer and forthcoming events, please contact your local
office.