WELCOMING SPEECH BY THE EXECUTIVE MAYOR OF THE AMATHOLE DISTRICT MUNICIPALITY(27 OCTOBER 2010)

WELCOMING SPEECH BY THE EXECUTIVE MAYOR OF THE AMATHOLE DISTRICT MUNICIPALITY, ALDERMAN SAKHUMZI SOMYO, ON THE OCCASION OF THE ANNUAL EASTERN CAPE PROVINCIAL COOPERATIVE INDABA, EXPO AND THE LAUNCH OF THE INSTITUTE FOR COOPERATIVES DEVELOPMENT, AT THE CHRISTIAN CENTRE, EAST LONDON ON 27 OCTOBER 2010.

All protocols observed

I have great pleasure in welcoming you all here today to this very auspicious occasion – the Annual Eastern Cape Provincial Cooperatives Indaba, Expo and the launch of the Institute for Cooperatives Development.

Indeed we live in exciting times and it is good to see that our collective efforts in growing the economy of our province and in this district is gathering momentum and is starting to bear fruit.  The theme for this year’s Cooperatives Indaba is “Unleash Economic Development through Cooperatives”.

It is indeed befitting that we meet here today on the birthday of our revered leader, Oliver Tambo, who in his own words on the occasion of his installation as Chancellor of the University of Fort Hare and awarding of an honourary degree of doctors of law in 1993  said: “... we are therefore called upon to embark on the long and thorny road of transformation.  Transformation requires a more dynamic discourse that insists on capacity and potential, on originality and on creative existence that makes and remakes its own essence; that stimulates a will to overcome history, time and necessity, rather than encourage submission.  We need to introduce this to our universities as much as to our national fora.  South Africa needs to believe in our capacity to overcome our painful history, to begin again and to regard our failures, when they occur, not as finite moments, but as occasions for a new beginning.”

As government, we tend to take things apart, then box them up and package them for further consumption, only to re-examine them a year or two later to see if they still work for us.  And so it should be, I suppose.  We need new creative vision to make our local economy grow so that we can be counted on a global scale.  Our key role as government is basically to create a conducive environment for businesses to thrive and to provide platforms for constructive engagement.  We are proud that our partnership with the University of Fort Hare and other universities in the Eastern Cape will speedily assist us to realise this dream.

Since the ADM adopted its Amathole Regional Economic Development Strategy for 2007 to 2014, our economic development agency has progressed in leaps and bounds.  During the reviewal process it was resolved that our economic development agency, Aspire, would work together with the local municipalities to speed up implementation and service delivery and to ensure that economic decisions could be better influenced.  This has heralded the renewed role of Aspire to act as both a project manager on behalf of the ADM and as a partner in the implementation of projects at local municipalities.  And Aspire today is working hand in glove with communities to resurrect our small towns within our district and implementing catalyst projects that are designed to attract further investment and development to build our economy along our development corridors.

The Amathole District Municipality adopted its SMME strategy for the district which highlighted a number of challenges that are facing enterprises within the district.  Amongst these challenges is the lack of marketing skills hence in the past year we supported approximately 64 SMME enterprises to participate and exhibit in a number of different marketing platforms such as the Business Unlimited Expo, the Easter Rand Show in Gauteng, the Grahamstown National Arts Festival, the Macufe Exhibition in Bloemfontein and the ADM’s Tourism Indaba and Imbizo.  These marketing platforms were accompanied by the procurement of machinery and equipment and various training and capacity building programmes such as company registration, product development, financial management, business planning development and marketing skills etc.   These cooperatives are located in the sectors of tourism, agriculture, the performing arts and crafts, and manufacturing. 

The Amathole District Municipality commissioned a research into the district’s cooperatives which was undertaken by the team from Cooperative and Policy Alternative Centre or COPAC and published in a booklet.  All cooperatives in the case study booklet were classified as either marginal, self-developing, or commercially viable.  Recommended interventions were set out for all three types of cooperatives. 

The recommendations for the marginal cooperatives include the following:

• Development of a pre-registration toolkit such as a checklist of crucial tasks for aspirant co-operators and cooperatives.  Such a tool to assist with feasibility assessment and business planning of a cooperative concept.
• Education about the importance of registration and making registration accessible in the municipality.  This might mean asking the registrar of cooperatives to devolve registration powers under the 2005 Act, down to the district municipality to assist the registration process.
• Government funding streams like grants need to build in exit strategies. 
• The municipality needs to revisit procurement practices for cooperatives to encourage capacity building and diversification.
• Municipality to develop a training assessment tool and support network for cooperatives.  This should take the form of an annual survey to assess training needs of cooperatives.
• Cooperatives need to be given training in three crucial areas as a matter of urgency – firstly how to ensure organisational and financial reporting on activities to members and to the registrar of cooperatives as required by the Act.  Secondly, financial management training, and thirdly strategic planning as it relates to linking income generation, working capital and development of the cooperative.
• Encourage learning by utilising research reports and other available resources.
• Empowering cooperatives by more effectively utilising public spaces and infrastructure provided by the municipality for office use and cooperative meetings.
• Municipality to consider developing a directory of cooperative support organisations, mentors and trainers in the Eastern Cape and online training resources available for cooperative self training.  Such directory to be shared with the cooperatives which can also use the information to strengthen their webs of support.

The recommendations for self-developing cooperatives include:

• Member-based education on the basics of cooperatives such as values, principles, forms and types.  Consider institutionalising education and training inside the cooperative for such education and training in every forum of the cooperative.  This should also include structured study circles to engage in collective learning about cooperatives.
• Education on the Cooperatives Act to ensure legal requirements are adhered to.
• Municipality to consider providing preferential municipal rates for services like water and electricity for cooperatives.  This would assist in bringing down operating costs and creating a conducive enabling environment for self-developing cooperatives.
• A dedicated mechanicsm for operating capital needs to be developed linked with proper cooperative business and strategic planning.
• Encourage all local municipalities to create consumer cooperatives that can host bi-weekly town or city cooperative markets in a central public space with potential to capture passing trade.  Such markets to be open to all cooperatives to bring in their products and services for sale.  The municipalities to market such markets and to actively encourage community support.

Recommendations for the Commercially Viable Cooperatives include:

• Diversification into commercial markets and the public sector market to be encouraged through tender agreements with cooperatives..  In other words cooperatives need to be given tenders with “sunset clauses” placing a compulsion on the cooperative to organise beyond the immediate tender opportunity.
• Building and strengthening strategic planning in commercially viable cooperatives.  There is a need to develop tools for a planning cycle for annual and medium term plans which are directly linked to planning capitalisation.
• Ongoing strategic planning through annual and medium term cooperative business plans.  These plans have to be implemented and constantly evaluated to assess progress.
• Diversification through different strategies for different markets such as household, community, commercial, commodity and public to ensure viability.

This year, the ADM also successfully hosted the Franchise Opportunity Day which was mainly an information sharing day.  This sector was identified as a market that had not yet been tapped by black businesses due to a number of regulations and tough requirements, hence the session focused mainly on empowering those that wanted to start their own franchise businesses.  The event was attended by over 160 aspiring franchisees and served as a build up to our planned Franchise Expo which will be hosted by the ADM in the next financial year.

In order to strengthen the ADM’s support initiatives, a Cooperatives Indaba was established in December 2008 and this is now held annually where enterprises can network and learn and share from each other’s experiences.  Last year the event was held in December 2009 and was attended by more than 200 cooperatives from the district and even from further afield.  The ADM’s Supply Chain Management Unit is currently developing policies that will be favourable for local cooperatives to tap into the municipality’s procurement.  This year the Cooperatives Indaba will be held from 1 – 3 December 2010 and the focus will be on financial cooperatives.  As a result, the ADM has invited representatives from Uganda who will be talking on their credit union best practices.  The ADM has just returned from a visit to Glasgow where similar lessons on credit unions and community benefit clauses have been learnt and will shortly be instituting its own workers’ credit union.  The benefits of these kinds of initiatives will empower our communities to be free of debt and to instil a culture of savings.

These developments within our district will only add to the initiatives such as the launch of the Institute for Cooperatives Development.  In the words of Oliver Tambo, “To find a way forward we have to turn back to what our people tried to build here at Fort Hare.  First there are the intellectual traditions pioneered here and carried to our country and the world by Fort Hareans.  The best of these are inextricably bound with the national democratic project.”

So I am very pleased indeed to welcome you all to this event here today.  I understand that this Indaba will serve as a platform for policy makers, institutions for higher learning, the cooperative sector, development financial institutions, organised labour, the private sector, community based organisations, state-owned enterprises, international organisations and municipalities to share experiences of best practice for the global cooperatives movement.

And so as you deliberate amongst yourselves for the next day or two, I wish you all well in your endeavours and hope that the outcomes will be fruitful indeed.  We hope that you will have a pleasant stay within our district and enjoy its sights, smells, tastes and hospitality and that you will leave with happy memories that will ensure your return to our district in the near future.

I thank you.