Cooperatives are intrinsic means of accumulating finance for rural and urban societies. And they have still been playing indispensable role in nations’ economic development across the world. Most developed countries have been using cooperatives as a tool to get financial security in order to reach where they are right now. They are also supporting farmers in accessing their agricultural productivity for market ingestion.
As agriculture is a backbone of Ethiopian economy, saving and credit cooperatives could play an important role in alleviating agricultural productivity, enhancing financial capacity of those on the sector, and enabling other stakeholders contribute to nation’s economic and social development.
In this regard, the government is, on its part, exerting ceaseless effort to build up and support cooperative unions, especially on rural areas of the country where agriculture takes eminent portion of the country’s economy.
Recently, the Ethiopian Federal Cooperatives Agency has held a two day-long National Motivation and Awareness Raising Forum at Adama for cooperative unions on a theme: “Saving and Credit Cooperatives for Fair Financial Inclusion,” which aimed at supporting cooperatives.
During the event, participants drawn from all states have shared their experiences on the role of cooperatives, and its challenges and prospects.
Apart from providing credit and saving services, Cooperatives have many functions for rural people. Cooperatives could increase agricultural productivity through creating linkage between the grower and the marketer. While selling their product, cooperatives could enable the farmers to bargain and make negotiation through practicing the Free Market principle. The harvester and seller are bound by cooperatives. Moreover, the transformation of agricultural technology is also being ensured through such cooperatives.
Embaba Haya Saving and Credit Cooperative Union was established in Enda Mehoni, Meswaiti farmers Kebele association in Tigray, in northern part of Ethiopia.
G/kidan Hailu, Head of this Union, said that Embeba Haya was established with only 51 members comprising 8 female and 43 males, with a capital of 225 Birr.
“Currently, the members have reached 1,833. Of these, 867 are men and 966 are women. Their saving capacity reached at 798.077 Birr,” he said.
According to G/kidan, the union, as its principle, grants 30 per cent credit to members of agriculture, 25 per cent for animal breeders, 25 per cent for traders, 10 per cent for construction, 5 per cent for education and health. “We gave credit services for 35,071.5 members,” G/kidan said.
“After establishing the association, we have witnessed many changes in our lives, we have seen our village improved in transportation, job creation, health, productivity, and financial transaction. Our farming union has managed to save 4,455.000 Birr.”
“In addition, our union is also working to avoid unnecessary expenses on cultural habits like wedding, graduation, funereal, birth and other harmful practices.”
Embeba Haya has also savings for 380 children; 210 are males and 177 female.
In Ethiopia, the Saving and Credit Cooperatives Agency has the age of 50 years. Its members are enormously increased both in urban and rural parts of the country in the last 20 years.
According to Birhanu Dufera, Federal Cooperative Agency Finance Cooperatives Director, there are, currently, above 18 thousand 959 main cooperative agencies, 373 cooperative unions and 4 cooperative federations operating with 15.4 million cooperative members. Of these, 40 per cent consists of women, with total capital of 17.6 billion Birr and 11.2 billion Birr savings.
“These cooperatives are engaged in various sectors mainly in agriculture, upgrading technologies, input output circulation, marketing and aggro processing and among others,” he said.
According to him, the Ethiopian Federal Cooperative Agency gives emphasis to widen the scope of cooperative unions particularly those who work on agriculture.
Birhanu said, “Cooperatives are the bases for investment, job creation, economic empowerment for the society. Youth and women are highly benefited from cooperatives.
“The increasing number of cooperatives in the last 20 years can be seen as an encouraging effort of the incumbent government. However, the culture of saving does not yet reached at satisfactory level. For instance, the annual saving capacity in rural areas reached at 900 Birr per individual, whereas the annual saving, in urban areas, has been reached at 8,000 in percentile per individual. This shows that the saving habit is not much progressing,” he said.
Birhanu further indicated that the agency is exerting everlasting effort to support cooperatives to develop their financial capacity. But, a lot remains to be done in the rural cooperative unions to tackle their financial problems.
On the other hand, Awach Saving and Credit Cooperative Union was established by 41 members in Addis Ababa in 1999 with the objective to sustain financial capacity of its members, establish a saving culture among society.
It has now above 3,622 members and has granted above 80 million Birr for 1,500 members. The association has become a reason for changing the lives of many people. Members are currently engaged in various works on their own firms.
Awach was the first member of the International Cooperative Agency (ICA). It still gives saving and credit service, training and counseling service for members as well as saving service for children.
The Union has created jobs for many enabling members to own their own firm by granting credit opportunities. Tesfaye Tiruneh is among the members who took 116,000 Birr, and engaged in taxi service to help himself and his family.
Elini Bizuneh is another member who become successful at opening males’ beauty salon. Like Eleni, the Union has enabled many to engage in business and small farms. Many youth and women are benefiting from such cooperative businesses. The government and other stakeholders need to strengthen the potential of Cooperative Unions to enable them contribute for the national economic development.