The Numbers Game: Cooperatives In South Africa

The 2005 Cooperative Act and the consequent amendments and other related acts have invigorated the cooperative sector in South Africa. In fact, if one looks at the numbers of the cooperatives registered in South Africa, it is... [ view full abstract ]

The 2005 Cooperative Act and the consequent amendments and other related acts have invigorated the cooperative sector in South Africa. In fact, if one looks at the numbers of the cooperatives registered in South Africa, it is quite impressive. The conducive legislative environment and the financial support that the country provides have resulted in cooperatives flourishing. There were about 4000 cooperatives in 2005 compared to the 50000 recently registered cooperatives in South Africa. Compared to its population and rate of urbanization trend in South Africa, this number is very high. It is because of that there is a need to look at these cooperatives much deeply. The sustainability of many of the registered cooperatives is doubtful and failure rate of these cooperatives is rather high. This paper is going to look at the historical development of cooperatives with especial focus on the last decade. The paper is to focus on certain factors that affect the development of the cooperative sector are; the criteria and assessment that is done when cooperatives want to register, training available for the emerging cooperatives and independent financial control and external auditing. Based on the available literature and statistics, the paper is going to show that financial incentives and creating an enabling environment has not been enough to create sustainable and successful cooperative sector in South Africa.