Cooperatives can deliver lucrative economic benefits for the Middle East
The cooperative movement first started in 1844 in the English town of Rochdale. Living conditions were harsh at the time with basic food items — such as flour, sugar, butter, milk, and oats — too expensive for individuals.
However, a group of 28 working-class men decided to come together to establish a successful cooperative shop that sold quality products at a fair price for the local community.
To this day, cooperatives continue to provide quality goods and services at competitive prices. They are distinctively established, owned, and managed by a group of members to achieve economic goals, while being socially responsible.
Cooperatives operate in diverse sectors of the economy, from farming, education, and financial services, to retail, housing, and the arts. It is estimated that around 3 million cooperatives are operating in the world, employing 280 million people, and registering 1.2 billion members.
The top 300 cooperatives in the world generate over $2 trillion, delivered mostly by agricultural and insurance-related businesses, according to 2018 data published in the World Cooperative Monitor.
Cooperatives deliver a suite of economic gains, such as gaining access to economies of scale and offering competitive products or services at fair prices, establishing new markets, mitigating risks through cooperation of suppliers, promoting innovation in niche markets, and stabilizing prices in the agricultural sector.
Interestingly, profits generated by cooperatives are either reinvested in the business or distributed to members.
Cooperatives also play an important role in social development. During the COVID-19 pandemic, for example, many cooperatives provided essential goods to vulnerable communities affected by lockdowns. Cooperative banks waived late fees, utility providers offered broadband services to schools with low-interest loans, and housing services postponed rents.
Cooperatives can deliver lucrative economic and social benefits to the Middle East region. A full-fledged strategy should be formulated by governments to understand the market potential for cooperatives. This should take into account priority sectors where cooperatives could play a significant role in providing essential goods and services for communities.
Members of the community should be encouraged to join cooperative movements. This can be achieved through awareness campaigns shedding light on cooperatives’ contributions, marketing their unique products and services, relaxing membership criteria, and explaining membership benefits.
Cooperative education programs within schools are excellent forums for raising awareness on their importance for local communities and to instill the cooperative spirit among students.
University-level or executive education courses should revolve around the management of cooperatives, especially focusing on competitiveness, financial sustainability, and world-class day-to-day management. This will have the dual effect of inspiring students to possibly establish a cooperative in the future or equip them with the necessary knowledge and skills to work for one. Financing solutions are essential for cooperatives to see the light and expand. Government incentives are also key, such as fee exemptions, grants, and facilitation of government-related services.
Special financing packages would be vital for cooperatives to expand overseas, in addition to matchmaking them with foreign investors and providing useful market research data.
Additionally, stand-alone cooperative legislation would regulate the sector, setting standards for governance models, the incorporation process, legal obligations, voting rights, board composition and functions, and contributions to local communities.
Lastly, as many cooperatives aim to be socially responsible, it would be vital for governments to partner with them on a philanthropic agenda that channels their contributions in the most-needed portfolios and areas.
The cooperative movement can deliver invaluable economic and social value to the region. It is not too late to embrace it.
Published in Arab News.
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