(Previously published in The Island on 8th and 9th January 2008)
In the present critical context of sky-rocketing global fuel and food prices attention is being focused on a revitalization of the cooperative sector in Sri Lanka. Enhancing its development and effectiveness should be a central concern of all those who are responsible.
Cooperative enterprises are non-profit business organizations whose essential mission is to serve the interest of their member community. They are different from both the public and the private sector businesses. Normal businesses are all for-profit or profit-oriented organizations whose principal motive is to maximize profits at the expense of consumers. In the case of cooperative enterprises, the main aim being the promotion of the welfare of the members, the profits made are either distributed among the members or ploughed back into the business. There is no room for exploitation of consumers by a few capitalists.
A major challenge that any non-profit or for-profit organization must accept is the task of enhancing its ability to achieve its mission, i.e. capacity building. Capacity building in respect of cooperative enterprises involves devising strategies, developing skills, and increasing resources in order for them to survive, adapt and thrive in a fast-changing socio-economic , and political environment. As far as Sri Lanka is concerned, the cooperative movement enjoys favour among all shades of political opinion, and its success and survival will naturally be the concern of whatever political party assumes power. Enhancing the effectiveness of cooperative enterprises should therefore be considered a key national concern. As a result, capacity building is the main priority for cooperative enterprises.
Cooperation means working together for a shared purpose. Though not defined or articulated as such, the cooperative principle was actively adopted even by our most primitive cave-dwelling ancestors in their daily struggle for survival, and it has been in operation to date among human communities since the time of the world’s earliest civilizations such as those of the Byzantine, Chinese, Egyptian, Greek, Indian, and Roman nations. However, the modern cooperative movement cannot be said to have naturally evolved from the form of cooperation found in ancient societies. It is, instead, a consequence of Europe’s socio-economic development in the 18th and 19th centuries accelerated by technical and mechanical innovations during what is known as the Industrial Revolution, a term which refers to changes such as those that took place in Britain between 1750 and 1850. Scientific discoveries and the resulting technological advances together contributed to great changes in industry. Capitalist entrepreneurs established factories which employed thousands of workers for low pay. These workers were the dispossessed poor who had nothing but their labour to sell. During the Industrial Revolution a minority of wealthy capitalists monopolized the means of production, exploiting a large majority of dispossessed workers who had to work for them just in order to survive. The Industrial Revolution brought poverty, social injustice and inequality to the societies in Europe in spite of their rapid economic advancement at the state level.
These problems were acute in Lancashire, England which was an industrial centre where cotton and woollen industries were mechanized in the last quarter of the 18th century. It was in Rochdale in Lancashire that the first cooperative society was founded in 1844 to relieve the poverty of the textile factory workers; but in Germany the cooperative movement started among poor farmers. That was in 1849.
This modern cooperative movement which started in Europe was introduced to Sri Lanka at the beginning of the last century. It was an easy task because Sri Lanka from ancient times had adopted communal cooperation in their economic, cultural, social, and religious activities. Sri Lankans formed a mainly agrarian society. They always cooperated with their neighbours in all forms of agricultural labour such as tilling, planting, weeding, harvesting, etc, and also in maintaining and repairing irrigation works, and so on. Therefore the cooperative idea found a hospitable environment in our country.
Since the colonial government focused all its attention on the plantation sector to the virtual neglect of the rural agrarian economy the Sri Lankan peasants who formed the major proportion of the country’s population were left chronically poor and indebted. It was with a view to relieving them that the Crawford Commission of 1909 recommended the setting up of credit unions – the pioneer cooperative venture in Sri Lanka. Then the first cooperative society was registered under the Cooperative Societies Act in 1911. The cooperative movement in Sri Lanka gradually expanded. The Department of Cooperatives was made a separate unit on 1st October 1930. Until then it had remained a sub-department of the Department of Agriculture. In response to the acute shortage of consumer goods during the Second World War, which allowed profiteers to fleece the already suffering populace, the government established consumer cooperative societies, which later spread to all parts of the island. The Cooperative Wholesale Establishment (CWE) was set up in 1943 for the purpose of meeting the needs of the large number of consumer cooperative societies.
Since the cooperative movement played a very important role in the implementation of the government’s development plan, and in the distribution of consumer goods, the government included in the Throne Speech of 8th July 1967 its intention to appoint a commission to look into the movement. The Royal Commission appointed in 1968 consisted of five members and a secretary, and was headed by Dr Alexander Fraser Laidlaw, an internationally recognized authority on the cooperative movement.
The commission’s first recommendation was that the cooperative movement should be recognized as a distinct economic sector between pubic and private sectors, and that it should be a public-owned voluntary organization subjected to little government control it should be reorganized in such a way that it could contribute well to the economic and social development of the nation. The commission envisaged a rapid development of the movement through the reorganization of both urban and rural cooperatives. Between 1970 and 1972 three acts were passed in the parliament based on the Royal Commission recommendations.
Today the cooperative movement is involved in a large number of various enterprises: fisheries, textiles, agriculture, industry, insurance, etc. in all their numerous divisions. The nearly one-hundred year old Sri Lanka cooperative movement, both under the British and after, has steadily developed, survived crises, and made a great contribution to the economic well-being of the nation, especially through catering to the less affluent sections of the society.
Although there are clashes of opinion between different political parties allied to opposing economic ideologies regarding how to manage the various cooperative enterprises in the best interest of their members and of the nation as a whole, there is overwhelming consensus in respect of the vital importance to the country of the cooperative movement itself . So it is universally recognized without any dispute that the effectiveness of the movement must be increased.
Capacity Building , therefore, is the key priority for the cooperative movement at present. The Rochdale pioneers of the cooperative movement included democratic control as one of the eight cardinal principles on which it was based. This applies even today. Therefore cooperative enterprises enjoy a measure of autonomy not usually found in either public or private business organizations, a condition favourable for the implementation of capacity building.
According to Carter McNamara MBA, PhD, amongst the variety of definitions of ‘capacity building’ the most fundamental one is ‘actions that improve non-profit effectiveness’ . Carter quotes this basic definition from Barbara Bluementhal’s book ‘Investing in Capacity Building’ published by the Foundation Centre. Alternatively, we may say that the idea of capacity building concerns practices aimed at improving a non-profit organization’s ability to work towards its mission.
Cooperative enterprises are non-profit organizations. In our country we have a large number of cooperative enterprises in different fields of business, both producers and consumers, ranging from the common village cooperative society to the Cooperative Wholesale Establishment. The importance of the numerous cooperative enterprises to the nation’s economic well-being need hardly be reiterated. So the effectiveness of their functioning is vital for the whole country. This is where the concept of capacity building becomes relevant, because enhancing the ability of an organization towards the fulfillment of its mission is what capacity building is all about.
The concept of capacity building we are applying for cooperative ventures is not different to the concepts of organizational development, and organizational effectiveness with or without performance management applied in for-profit organizations. Capacity building efforts may include a wide range of approaches such as granting management development funds, providing training and development sessions, providing coaching, and supporting collaboration with other similar organizations.
At this point we may look at a more explicit definition of the concept of capacity building : ‘…. is the process of developing and strengthening the skills, instincts, abilities, processes and resources that organizations and communities need to survive, adapt and thrive in the fast changing world’. This is how Ann Philbin defines the phrase in her book ‘Capacity Building in Social Justice Organizations’ published by the Ford Foundation in 1996.
Deborah Linnell’s ‘Evolution of Capacity Building: Lessons from the Field’ contains an explanation of the term, the actions involved in the field, and the concept’s relationship with organizational effectiveness. In terms of this explanation capacity building, capacity itself, and organizational effectiveness are all related, but not identical. Capacity refers to an organization’s ability to achieve its mission effectively, and to sustain itself over the long term. It also refers to the skills and capabilities of individuals.
Capacity building therefore comprises the set of activities that improve an organization’s ability to achieve its mission or an individual’s ability to define and realize the goals or to do their job effectively. For organizations capacity building relates to almost any aspect of its work: improved governance, leadership, mission, strategy, administration including human resources, financial management and legal matters, programme development and implementation, fundraising and income generation, diversity, partnerships, and collaboration, evaluation, advocacy and policy change, marketing, positioning, planning, etc. For individuals capacity building relates to leadership development, advocacy skills, training and speaking abilities, technical skills, organizing skills, and other areas of personal and professional development. There is a large range of capacity building approaches that include peer-to-peer learning, facilitated organizational development, training and academic study, research, publishing and grant-making.
Capacity building agents are of various types: Management consultants provide expertise, coaching and referrals. Management support organizations provide consulting, training, resources, research, referrals, and other services. Grant-makers – foundations and government organizations - often get involved in capacity building either through their grants or by offering training, consulting and resources themselves. Researchers contribute to capacity building by identifying issues and trends, building knowledge for organizations and other capacity builders to use. Universities and other academic centres help by conducting training and providing certification. Organizational effectiveness relates to the capacity of an organization to sustain the people, strategies, learning, infrastructure and resources it needs to continue to achieve its mission.
To conclude, it is nearly a century since the introduction of the cooperative movement to Sri Lanka from Europe. The movement has survived in our small country through various crises- largely the result of global upheavals such as the two world wars in the last century, the Great Depression between 1929 and 1934 (the latter characterized by a sharp fall in output and prices), and fluctuations in fuel prices in the world market; critical situations also resulted from domestic political and social unrest. Over the decades cooperative enterprises have multiplied, and have been recognized as a vital part of our economy. Being owned and managed by combinations of consumer-customers who supply the capital they are non-profit originations; they focus on achieving mutual benefit for the members, rather than on profit-making. Such organizations, devoted though they are to a constant mission, must nevertheless operate in a fast-changing world, changing in technical achievement, economy, culture, politics, and in adapting to consequences of natural disasters like earthquakes, floods, etc, and also in innumerable other ways. To succeed in such a world, cooperative enterprises must adopt strategies to sustain and improve their effectiveness in achieving their mission. Capacity building is the way to do this, and that is the priority for cooperative enterprises in Sri Lanka today.
Rohana R.Wasala
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