Cooperatives key to poverty reduction
Malawi is one of the poorest countries in the world with some of the worst development statistics for a country not to have been involved in any war. It is 173rd on the 2015 Human Development Index (HDI) out of 188 countries.
The population is on the boom and it is expected to double from 13 million in 2010 to 26 million in 2030. The number of people below the poverty line is heart-breaking, about 40 percent of the population. The country’s economy remains predominantly agro-based, creating at least 90 percent of the country’s paid and self employment.
The smallholder agriculture sector faces herculean constraints for it to be uplifted. Some of the constraints include small economies of scale, market failure, fragmentation of customary land, lack of access to credit facilities, poor utilisation of technology and poor bargaining power at the market.
But these constraints can be circumvented through use of social trusts notions imbued in the idea of cooperatives societies, particularly, smallholder agricultural cooperative.
A cooperative means an autonomous association of persons united voluntarily to meet their common economic and social needs in accordance with cooperative principles through a jointly-owned and democratically-controlled enterprise.
These are governed by the following principles: membership of a society is voluntary and open; management of the society is carried out democratically whereby each member has one vote and there is no voting by proxy; the distribution of surplus is done justly in proportion to the amount of the business contribution of each member; there is payment of limited return on capital, there is self-reliance; race, creed, ethnic origins, language or political beliefs are no bar to voluntary membership and membership is open to all who can use the services of the society.
The fact that cooperative societies entrench democratic principles and self-reliance has led to their recognition as ideal tools for democratisation and economic empowerment in developing countries.
They have long been earmarked as the bedrock for social security and economic growth as Hilde Johnson once said: “Cooperatives improve the incomes of their members by getting better prices for their products, lowering costs of inputs and needed services, strengthening bargaining power, gaining greater control of market channels and thus offering a better chance to be profitable. This would trigger countrywide economic growth …”
The pooling of meagre resources by various farmers is when this idea of cooperative trusts becomes critical to the solving of constraints faced by smallholder farmers in the country.
The end product of resources from various smallholders being pulled together is the circumvention of the constraints that these smallholder farmers face. This will be so because through the pooling of resources, smallholder agricultural cooperatives are going to increase the economies of scale of farmers, end market failure and improve the bargaining power at the market among other benefits.
The notion of smallholder agricultural cooperatives would offer a paradigm shift in economic reform by focusing on the relation of a number of people with smallholdings and pooling their resources together which can then be subjected to fiduciary management and social trust protect.
If Malawi wants to uplift herself from her current economic predicament, one of the basic solutions is here on the table—the smallholder agricultural cooperatives.
The future of economic development in Malawi is smallholder agricultural cooperatives.
