MOSHI UNIVERSITY COLLEGE OF CO-OPERATIVE ABD BUSINESS STUDIES (MUCCOBS). THE CONSTITUENT COLLEGE OF SOKOINE UNIVERSITY OF AGRICULTURE.

FACULTY OF CO-OPERATIVE AND COMMUNITY DEVELOPMENT DEPARTMENT OF COOPERATIVE DEVELOPMENT AND MANAGEMENT
YEAR OF STUDY: 2013/2014 COURSE: PERSPECTIVES AND PROCESSES OF COOP. MNGT

Qn. Discuss indicators for good governance in cooperatives

Qn. Discuss indicators for good governance in cooperatives

INTRODUCTION A co-operative is a non-governmental, independent, autonomous organisation which has been promoted by the members on their free will to meet their social and economic needs. The ICA Statement of Co-operative Identity [ISCI] defines a co-operative thus: A cooperative is an autonomous association of persons united voluntarily to meet their common economic, social and cultural needs and aspirations through a jointly-owned and democratically-controlled enterprise. Co-operatives are based on the values of self-help, self-responsibility, democracy, equality, equity and solidarity. In the tradition of their founders, co-operative members believe in the ethical values of honesty, openness, social responsibility and caring for others. Good governance calls for belief in systems, the systems which ensure continuity and faith. It also calls for the leaders to change and adapt with times and circumstances and enable the organization also to change to walk along with the needs and requirements of times. Indifference, cussedness and stubborn attitudes do not produce good governance. It also is necessary to take proper care while taking decisions. Decisions taken should not be subjective and partial. All views, facts and opinions should be taken into consideration before arriving at decisions. The good co-operative governance will: i. ensure that board and management pursue objectives that are in the interests of coperatives and members ii. iii. iv. v. lead to effective monitoring of activities of societies; ensure efficient and effective use of available resources; reduce conflicts; and increase accountability and transparency in co-operatives

The main pillars of the Good Governance are transparency, accountability, predictability, participation, risk management and control. Accountability is the capacity to call officials to account for their actions; Transparency entails low-cost access to relevant information; Predictability results primarily from laws and regulations that are clear, known in advance and uniformly and effectively enforced; and Participation is needed to obtain reliable information and to serve as a reality check and watchdog for government action. Governance intervention

should encourage the formation of social capital i.e., the stock of trust and information exchange at the base of civil society. The Co-operatives Act 2003 has made provisions for greater transparency and accountability at the level of co-operative societies in the code of conduct for cooperatives. The Code of conduct provides effective guidelines for the proper functioning of co-operatives and eventually ensures sound co-operative development. Co-operative governance regulates the relationship between members of co-operatives, the Board of representatives of members (that advises management on behalf of members) and management (that has the care and control of the co-operative). The General provisions for the cooperative code of conduct as per the Cooperatives Act 2003 states that: In managing cooperatives societies, provisions in the act and cooperative rules concerning cooperative management shall be strictly observed. Cooperative societies shall be managed according to the ICA cooperative principles A cooperative member aspiring to become a member of the management board or a person applying for a post in the executive staff shall have to prove to the satisfaction of the appointing or electing body or authority, as the case may be, thet, he/she understands and is prepared to enforce the act and the cooperatives rules. Cooperative leadership shall be of a high integrity and any cooperative member aspiring to become a member of the management board or any person applying for a post in the executive staff shall have to prove to the satisfaction of the appointing or electing body or authority that: Has a good education, sufficient to enable that person to handle the relevant; responsibilities; Has ability to manage the affairs of the cooperative society Has records of honesty of the highest level; Is participating fully in cooperative societys membership affairs Has never been disqualified from cooperative leadership at any level of the cooperative system

The cooperative general meeting shall be respected and given its appropriate importance. The cooperative management shall make efforts to ensure that all members are informed of the general meeting

Instruments of Governance in Co-operatives A co-operative has a constitution [called by-laws] which establishes formally several organs of governance. These are: Annual General Meeting of Members [AGM] [also called General Body or Members General Meeting] which elects a Board of Directors [BOD] [or Managing Committee], a Board of Auditors [BOA] [or Audit and Supervision Committee]. These two organs are independent of each other and directly answerable to the AGM. The BOD appoints a General Manager [GM], the chief executive officer, who is also supported by several business sub-managers. The GM is answerable to the BOD. Indicators of good governance in a co-operative Application of the Co-operative Principles and belief in Basic Ethical Values, a cooperative institution must ensure that some of the following indicators of good governance are safeguarded: Fair dealings, transparency in business, objective and fair decision-making, ability to change with the times, respect for the members and their household members, clean and fresh work environment, education and training of members and office-bearers, professionalisation of employees, proper and genuine interaction between the management and office-bearers, concern for the community and environment etc. A cooperative should always remain keen and anxious to listen to the views of its members and strive hard to accomplish them. The following are the indicators that will ensure good governance by the leaders of a cooperative if it is to achieve its objective and most importantly, serve in the best interests of its members: a. Participation: Members active participation in their own development is central for good, effective and efficient leadership and management. All women and men who are shareholders in any co-operative should have a voice in the decision-making process either directly or through the organs that represent them. Such participation should be fair and free of intimidation, duress or undue influence.
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b. Transparency: All processes, decisions and relevant information should be conducted in a transparent manner and should be accessible to all those concerned. Leadership/Governance and management organs should hold regular meetings to direct the affairs of their co-operative. The committee and its sub-committee (if any) should meet at least once a month and the while the Annual General Meeting must be held once a year and in any case not later than 3 months after the close of the co-operatives financial year. For issues that require a special resolution, like changing the Bylaws, all members should be invited and there has to be a joint resolution. Being the supervisory organ of the co-operative, the Audit Committee should meet regularly to provide close and effective supervision of the co-operatives operations and general business. c. Accountability: All decision-makers; Committee members (including the loans committee members), Audit Committee and Management Staff must be accountable to their immediate supervisors or higher organs and ultimately, to the members (through the AGM) and their communities. d. Consensus Orientation: There is bound to be differing interests, views and opinions by different people in a cooperative. It is therefore important to reach a broad consensus on all matters critical to the co-operatives operations. This will best be achieved through an all-inclusive participatory approach, transparent systems and operations, and full accountability to the shareholders. People in positions of power, like chairpersons, should be open to differing viewpoints. e. Efficiency and Effectiveness: The governance and management organs of the co-operative must have policies, processes and procedures which produce results. The results should meet the needs of members. In doing all this, the co-operative governance organs should make the best use of the resources available. f. Equity (fairness to all) All members should have equal opportunities to benefit from the co-operatives services in order to improve their economic status and share in the vision of the co-operative.
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They should therefore, be equally accorded the co-operatives opportunities and services. The basis for equitable participation could either be a combination of the members share capital and patronage use of its services or any one of them as it may have been agreed upon. In the governance and management organs, none should be suppressed, ignored or shut up when they have suggestions. g. Respect for Rules, Policies and Regulations: The legal framework and policies under which co-operatives are regulated and operate should be respected, strictly and impartially enforced. They should be made known to all members at all times. The co-operatives By-laws and any other operating policies and regulations should always be complied with. h. Strategic and Visionary Leadership: The co-operative must have leaders and managers who have a vision for and commitment to the organization. The leaders and managers should seek and improve their institutions and do all that is necessary to satisfy the needs of their members and the communities in which they are based. Their character and past record should be free of any unprofessional reputation. Such leaders and managers need to have strategic thinking so that the affairs of the co-operative are managed with a sense of purpose. i. Knowledge and Skill in Leadership and management: The members of the governance and management organs should be knowledgeable and trainable in the matters of the co-operatives governance, management and operations. It would be good if all members of the governance and management committees (the committee, audit and management staff) were holders of Uganda Certificate of Education or higher professional qualifications.

j. Organizational Growth Co-operative growth both in size of operations, membership and geographical outreach is often an indication of good co-operative leadership/governance and management. Continued growth of the co-operative will result in its survival and sustainability in the long-term.

References Prakash, Daman(2004), in Professionalisation in Co-operatives Promotes Good Governance IFFCO Foundation, New Delhi. Republic Of Uganda:Guidelines For starting up successful, strong, viable and model cooperatives in Uganda Rwanda Cooperative Angency(RCA): Module One: ORGANISATION AND MANAGEMENT OF THE UMURENGE SACCOS. URT: Cooperatives Act 2003