Co-ops are businesses based on ethics, values and principles – Janaka Perera

Cooperatives and their services come to mind every time a disaster hits our country. Their value becomes evident in times of crisis – including the pandemic – es­pecially as regards the distribution of goods and services to the public.

As the British sought to add­ress the abject poverty that pervaded the island at the time, they introduced a cooperative business model to Sri Lanka in 1906.

The first credit cooperative societies were established in Dumbara and Waligampattuwa. And the Department of Coo­perative Development was established following the enactment of the Cooperative Society Act in 1911.

Sri Lanka’s cooperative move­ment celebrated its centenary in July 2011 and marked International Co-operative Day at the Welagedera Stadium in Kurunegala.

Cooperative societies became popular during World War II for the distribution of food rations among the people. Currently, the system comprises multipurpose cooperative societies, thrift and credit cooperative societies, and cooperative rural banks – and the number of agricultural co-ops is nearly 10,000.

Since the establishment of provincial councils, the subject of cooperatives has been devolved to the provinces.

Co-ops became important state delivery systems under Prime Minister Sirimavo Bandaranaike’s SLFP-led government from 1970 to 1977. Eventually, the open market economy introduced by President J. R. Jayewardene in 1977 ended the prominence afforded to cooperatives under previous governments.

However, President Ranasinghe Premadasa’s One Million Hou­ses Programme from 1986 onwards helped form new thrift and credit co-ops whereby loans to build new houses were distributed through cooperative mechanisms. But due to his decision to cancel the recovery of loans, several thrift and credit co-ops went belly-up.

Although many people tend to think that cooperatives are state institutions, they’re in fact publicly owned. Anyone above 18 can become a member of a local co-op society, irrespective of whether it’s a financial or multipurpose cooperative.

Co-ops are enterprises based on ethics, values and principles. They allow people to take control of their economic future; and because these aren’t owned by shareholders, the economic and social benefits of their activities remain within the respective communities. Profits generated are either reinvested in the enterprise or returned to its members.

Regardless of the number of shares a member owns, he or she has only one vote in the general body and this gives members an equal right to take part in the decision-making process. It makes co-ops an important vehicle for trans­for­ming monopolistic businesses into people owned entities, and provides goods and services to the community.

For their success, the regulator has to play a strong monitoring and advocacy role.

Unfortunately, the role of the Department of Cooperative Development is stagnant due to corruption and the collapse of financial co-ops. However, the problem doesn’t lie with the business model of a cooperative; instead, it is the result of ineffective monitoring and regulating.

Cooperative enterprises play a major role in countries such as China, India, Japan and South Korea, as they contribute to GDP, employment and the overall wellbeing of the economy.

Through self-help and em­powerment, and reinvesting in their communities – and concern for the wellbeing of people and the world in which we live – cooperatives nurture a long-term vision for sustainable economic growth, social development and environmental responsibility.

According to the International Cooperative Alliance (ICA), over 12 percent of humanity is part of one of three million cooperatives around the world. Co-ops contribute to sustainable economic growth, and stable and quality employment, since they provide work opportunities for 280 million people across the globe – that’s some 10 percent of the world’s employed popu­lation.

As businesses that are owned by members and run by them for their benefit, cooperatives empower people to realise their economic aspirations collectively while strengthening their social and human capital, and developing communities.

The ICA was founded in the UK on 19 August 1895 during the 1st Alliance Cooperative Congress to provide information, define and defend cooperative principles, and develop international trade.

Today, the ICA is one of the largest nongovernmental organisations in the world as a result of the number of people it represents – i.e. more than one billion cooperative members in three million cooperatives worldwide.

In Sri Lanka, the ILO runs a programme to promote the cooperative movement in the Northern Province through an ongoing project titled Local Empowerment through Economic Development (LEED).

As for the big picture, cooperatives have demonstrated their enormous potential in creating employment opportunities, empowering people, providing social protection and alleviating poverty the world over.