Graduate seminar eyob

Master of Arts in Cooperative Development & Leadership

Graduate Seminar Paper

ROLE OF INFORMAL COOPERATIVES FOR SUSTAINABLE LIVELIHOOD

DEVELOPMENT

[EYOB MUHDIN AHMED]

[COOPW/027/05]

Department of Cooperatives

College of Business & Economics

Hawassa University

[January, 2013]

Presented by Eyob Muhdin 2

1 Abstract In Ethiopia, Cooperatives play crucial roles in

sustainable livelihood development and informal cooperatives too.

As one part of the informal cooperatives, Self-help groups [SHGs] also play a pivotal role for sustainable livelihood Development in Ethiopia.

Hence, in this presentation, we are going to have a look at on the general role of informal cooperatives for sustainable livelihood development in Ethiopia.

With due focus up on SHGs, we will also look in one case study to show the role of community-based, self-help savings groups (CSSGs) established by Mary Joy Development Association, one the local NGO in Ethiopia in 12 towns of SNNPRs for Sustainable livelihood Development of its members.

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2. Introduction2.1. Theoretical frame work for Informal Cooperatives in Ethiopia

In Ethiopia, our mode of living is cooperative in style including; working in group (plowing, harvesting, trashing, house construction etc), habits of eating together (in holidays, festivals), and living together as extended families is common in Ethiopia .

Here with, there are different forms of cooperative organization

In Ethiopia, there are indigenous organizations which exist in diverse forms in different cultural, religious and socio-economic contexts and,

Informal cooperatives are one of the form which have long lasting impacts for centuries.

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3 Critical Literature Review3.1. How do informal cooperatives contribute to sustainable livelihoods?

The following are the major role for sustainable livelihood Development in Ethiopia: Informal cooperatives create livelihoods: It offers people

from lower social economic status the opportunity to create their own jobs through the self-help group cooperative model.

Informal cooperatives are a source of stability and resilience: The result of the long term membership focus has been resilience to economic and financial crisis over time as well as their higher survival rates in the start-up phase.

Informal cooperatives provide essential services including the extension of social protection: It contribute to sustainable livelihoods by providing essential goods and services which others do not due to low return on investment or do at better prices and quality.


3.1 How do informal cooperatives contribute to sustainable livelihoods?

Informal cooperatives provide essential services including the extension of social protection:

Informal cooperatives help so called “vulnerable groups” including persons with disabilities find self-employment or receive specific services to address their needs.

Informal cooperatives promote environmental sustainability: As a means, informal cooperatives have the ability to reach hundreds of people, providing education and promoting sustainable development.

Respect & Protect Rights and the cooperative values and principles: Informal cooperatives as people-centered organizations, it is not only respect, but actively promote these rights

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Having seen the general role of informal cooperatives for sustainable livelihood development, below we are going to see the case study of one of the informal cooperative sub set, SHGs…


4 Body

4.1 Methodologies[Type]

The aim of this seminal presentation is to review and present the role of informal cooperatives, specifically Self-help groups for sustainable livelihood Development in Ethiopia looking at the case of Community based self-help groups (CSSGs).

A case study was plan up on one of the informal cooperative form, CSSGs established by Mary Joy Development Association in 12 town of SNNPRs

In line to this, the method that was employed in this regard was qualitative method to some extent quantitative method.

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4 Body

4.1 Methodologies[Date gathering]

Qualitative data are so powerful because they are sensitive to the social and historical context in which the data are to be collected. (Best and Kahan, 2003).

Therefore the design applied to the study was descriptive case study which follows qualitative approach to identify the major roles of Self-help groups for sustainable Development of struggling households.

While reviewing the case, data was gathered from secondary source through desk reviewing methods. Hence, Performance reports, Market assessment reports, beneficiary profiles and other relevant documents reviewed herewith.

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4 Body

4.1 Methodologies[Analysis]

Data analysis is about giving meaning to the first notion and the final compilation.

Accordingly, the analysis was then made after all the data was integrated to case study or case records.

Therefore I employed simple descriptive method of data analysis to understand the role informal cooperatives’ in the community.

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4.2 Analysis The involvement of NGOs in sustainable

livelihood development program through establishment and strengthening both formal and informal cooperatives in Ethiopia is of great value, as the Government’s financial and administrative capacity is limited.

They also engage in capacity building activities through short-term training, especially for cooperative management in different themes, including: business planning; marketing; financial management; cooperative management; and production Techniques.

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4.2 Analysis In line to this, one of the involvements of

NGOs in sustainable livelihood development in Ethiopia is the wide and intense utilization of establishing and strengthening of the SHG as an approach.

Hence, this Analysis will focus on the role of SHGs, as informal cooperatives, established by Mary Joy Development Association, one of the local NGO in Ethiopia for sustainable livelihood development to the members.

As a result, this will help us to infer the role of informal cooperatives for sustainable livelihood development in Ethiopia as a whole.

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Mary Joy Development Association, an Ethiopian resident charity, is established in 1994 with the vision of seeing poverty free, empowered and healthy society.

Currently Mary Joy operates in Addis Ababa and Southern Nation, Nationalities People Regional States (SNNPRS).

In Addis Ababa, MJDA operates in 3 Sub Cities namely Kolfe Keraniyo, Gullelie and Yeka Sub Cities and 14 Kebeles.

In SNNPRs, it operates in Hawassa Town, Shebedino, Yirgalem, Aletawondo and Tulla, Dilla, Bulie, Wonago, Yigacheefe, Fissehagenet and Chelelektu and Halaba Kulito Town in Halaba special woreda.

4.2.1.1 Overview of the case study

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Since 2009/10 Mary Joy Development Association (MJDA) in conjunction with Pact Ethiopia has launched a project named as “Yekokeb Berhan HVC program” in Gedeo and Sidama Zone and Hallaba especial Woreda.

The project was being implemented in 12 woredas namely Hallaba Especial Woreda, Hawassa town, Tula, Shebedino, Yirgalem, Aleta Wondo and Gedeo zone in Woredas of Dilla, Bullie, Wonago, Yergachefe, Fisseha Genet and Cheleleketu .

The project was planned to address 22,239 HVC and 12,706 care givers.

4.2.1.2 Profile of community based self-help saving and credit groups

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In the project, Food and nutrition, shelter and care, psychosocial support, legal protection, Education support, health care and economic strengthening were the 7 major components that was planned to be provided for those target groups.

Among the 7 service components due attention was given economic strengthening component as a livelihood enhancement, formation of community based self-help saving and credit group ( CSSG) so as to bring sustainable livelihood development among struggling care givers and meaningful change in the target’s life.

Accordingly, MJDA has allotted up to 20-37% of program delivery budget to this component.

4.2.1.2 Profile of community based self-help saving and credit groups

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4.2.1.3 General findings Since from “Yekokeb Birihan” Project

implementation started in 2009/10, the organization Established 263 CSSGs over its project sites and 6,756 (2,178 males and 4,578 females) HVC’s households are members of the groups.

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4.2.1.3 General findings

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Hallaba5% Hawassa

14%

Tula-subcity3%

Shebedino8%

Yirgalem8%

Aletawondo8%Dilla

28%

Wonago7%

Bulie3%

Yirgacheffe8%

Fisiha genet

4%Chelekitu

5%

% Share & number of SHGs categorized by town



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Hallab

a

Hawass

a

Tula-

subcit

y

Sheb

edino

Yirga

lem

Aletaw

ondo

Sidam

a Zone t

otal Dilla

Wonag

oBulie

Yirga

cheff

e

Fisiha g

enet

Chelekit

u

Gedio Zo

ne total

Grand To

tal0

1000

2000

3000

4000

5000

6000

7000

8000

Members Profile

No.SHGsMembers MMembers FMembers T


4.2.1.3 General findings The members have been saving 15 ETB per week

per individual on average

Also the group members have gotten loan access ranges from 2500 to 6,000 ETB and engaged on petty trade business;

As a result their livelihoods are now being changed because of the intervention.

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As it has been seen from the figure below, they could be able to save a total amount of 10,521,920.00 ETB.

0

2000000

4000000

6000000

8000000

10000000

12000000

Total Amount saved by the members currently

Total Amount saved



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From the above described amount of saved money by the groups

5,909,726.00 ETB given as a loan to 985 members of the CSSGs of which 201 members finished their repayment of loan amounted 1,206,183.00 ETB.

Hallab

a

Hawass

a

Tula-

subcit

y

Sheb

edino

Yirga

lem

Aletaw

ondo

Sidam

a Zone t

otal Dilla

Wonag

oBulie

Yirga

cheff

e

Fisiha g

enet

Chelekit

u

Gedio Zo

ne total

Grand To

tal0

1000000

2000000

3000000

4000000

5000000

6000000

7000000

Total loan given AmountTotal loan repaid Amount



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Currently, the groups have a total net capital of 5,818,377.11 ETB for their further sustainable livelihood development intervention.

Hallab

a

Hawass

a

Tula-

subcit

y

Sheb

edino

Yirga

lem

Aletaw

ondo

Sidam

a Zone t

otal Dilla

Wonag

oBulie

Yirga

cheff

e

Fisiha g

enet

Chelekit

u

Gedio Zo

ne total

Grand To

tal0

1000000

2000000

3000000

4000000

5000000

6000000

7000000

Total Current Capital owned by town

Total Current Capital owned



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3% 2% 1%3% 2% 3%

9%

7%

5%

1%

7%2%

1%

22%

35%

Share of total Current Capital owned by town Hallaba Hawassa Tula-subcity Shebedino Yirgalem Aletawondo Sidama Zone totalDilla Wonago Bulie Yirgacheffe Fisiha genet Chelekitu Gedio Zone total Grand Total



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Most of the members engage with the following business type: Pepper trade (raw pepper),

Baltena,

Tea and coffee preparation,

Fruit and vegetable,

Petty trade,

Small kiwoks,

local bread Backery (Defo Dabo),

Injera bakery, Cultural foods preparation,

Raw Qocho trade,

Local coffee trade,

Bee keeping and

National beverage (Tela, Shameta etc) .



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4.2.1.4 Impact of the intervention

The most observable impact of these Community Based Self-help Savings Groups are:

Improved self-esteem, vision of the future, members’ engagement in different business and willingness to participate in society.

Members are happier, and their social networks have been strengthened.

The savings allow members to retire debt, pay for basic needs, support OVCs, and invest in productive activities.

Most of the savings are being used by members; either for investment or for income smoothing.


5 Summary, Conclusion & Recommendations

5.1 Summary & Conclusion

Informal cooperatives can lever their distinct identity as a business advantage.

The values, principles and mandates that they espouse are suited for the delivery of financial inclusion, sustainable livelihood, inclusive development and social protection.

The importance of informal cooperatives for social and economic development in Ethiopia has been recognized by the government of Ethiopia and different NGOs.

As a result, the Government and NGOs have been committed to the promotion of informal cooperative development.

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5.2 General recommendations

Based on the review and understanding, I would like to forward the following recommendation for further promotion of informal cooperatives as a whole below:

Strong support is needed for the formation and operation of informal cooperatives at grass root level.

An in-depth study to understand the contributions of the different stakeholders and the economic and social contribution of informal cooperatives is necessary.

The FCA should broadcast the “Voice of informal Cooperative” in multiple languages to reach a larger proportion of the Ethiopian population

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5.3 Specific recommendations

In addition to the above overall recommendations forwarded I also put some recommendation for the case under studied herewith:

Devote more financial resources to savings groups as a matching by GOs/NGOs so that the group will get more feasible loan access for existing business.

Promote linkages between savings groups and business training and markets.

Promote selective, individual linkages to external financing by the less vulnerable.

Important funding priorities include providing additional business and financial literacy training to savings group members, evaluating impact and beneficiary satisfaction, linking savings groups to other inputs

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28

Presented by Eyob Muhdin

04/15/2023

Graduate seminar eyob

Economy & Finance

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