Written by Kristin Wilcox, blog originally appeared on Marketlinks, posted on July 31st.
Cooperative businesses have a simple formula for success — Aggregate production or services to reduce input and overhead costs and distribute profits based on participation.
After partnering with over one hundred cooperatives through USAID's Cooperative Development Program (CDP), I can say cooperatives generally make improvements in quality and quantity of service/production and gain market confidence within a short time. The incentive to join is clear. The benefit of cooperation for economic inclusion is straightforward — with a bit of ingenuity and a lot of perseverance, it could be profitable. It puzzles me that cooperatives around the world — innovative, flexible, and democratic — still struggle to attract youth. So in 2016, with support from USAID, we began a pilot program in Nairobi to work with young, urban professionals interested in starting their own cooperative businesses. Our goal was to leverage the service economy, appeal to the growing middle class, and get smarter about youth and the cooperative business model.
The challenge, as it turned out, was not lack of attraction to the business model. Right away Global Communities was able to begin working with several groups of professionals and college students who were already finding their market niche providing a variety of services in marketing, IT, beauty, and building and construction. The challenge in Kenya was actually working with the public and the private sectors to envision cooperatives as businesses that could be involved in any sector, especially services, rather than pigeonholed as collectives which traditionally operate in agriculture, housing, or savings.
In truth, there are hundreds of service cooperatives in Kenya — just look at any boda-boda (motorcycle taxi) or minibus weaving through the crowded streets of Nairobi. They are all registered cooperatives, but they aren’t service cooperatives. The drivers all proudly bear the name "SACCO" on their vests or windows. The word is so ubiquitous in transport that a friend once asked if the word SACCO meant "bus" in Swahili. Nope! SACCO is the acronym for Savings and Credit Cooperative Organization, a popular form of savings and microfinance often referred to as a credit union in the United States. So when working with new cooperatives interested in providing services such as construction, IT, marketing or even salon services in Nairobi, it was really the public sector that needed the orientation. At the time, cooperatives struggled to become registered to operate. Then, after successful registration, services cooperatives further struggled with how to market their services in a way that could be understood by the private sector. It was an uphill battle.
What does this tell us? Innovation and determination have led the market, but awareness and education are the winning factors. After over a year and a half working with local governments and existing cooperatives in the housing sector, Global Communities was able to help facilitate a growing network of cooperatives which work together to broaden awareness and shift perspectives on cooperatives. The network aims to promote cooperatives as profitable businesses that can operate in any sector. The new service cooperatives which partner with Global Communities are the first service cooperatives to have registered in Kenya. And while they are still growing businesses, they are working with the Department of Cooperatives and the Ministry of Public Service, Youth and Gender to talk about their successes as a collection of professionals who are co-owners of their own businesses, a critical part of the education process. They are also models for what is possible in urban and peri-urban areas across Kenya. As a result of their early successes and our partnership in networking and education, the legislation is now changing. Local governments are seeing possibilities for economic inclusion and young professionals are seeing new opportunities for start-ups. The combination of the two has been the challenge, but it’s also been the solution.
This is the tenth post in the Cooperative Development Learning Series, which highlights learning from USAID’s Cooperative Development Program and was authored by Kristin Wilcox. Click the links to read the first, second, third, fourth, fifth, sixth, seventh, eighth, and ninth posts.
Kristin Wilcox has over 10 years’ experience working in global development. She has served as Chief of Party for the USAID/Enabling Market Integration through Rural Group Empowerment (EMIRGE) program since 2013 providing strategic and technical leadership to the cooperative development program. As Technical Specialist she provides technical expertise on a wide range of economic development and livelihoods focused programming with a special emphasis on inclusive business design and implementing value chain competitiveness and market integration strategies.