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Poverty Reduction through Self-help
Rediscovering the Cooperative Advantage
Johnston Birchall, International Labour Organisation, 2003
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Summary
This study examines the role and potential of cooperatives in reducing
poverty. It includes an analysis of what we understand by the terms poverty
and cooperatives and discusses the poverty reduction policies of
international organisations and how cooperatives could help achieve their
objectives. The historical record of cooperatives in poverty reduction and
eleven case studies from different fields of current cooperative activity
are presented. A key conclusion of the study is that self-help organisations
by the poor is a pre-condition for successful anti-poverty work and that
cooperatives can play an important role in this struggle.
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A History of Self-help and Cooperative Action
The purpose of this study is to explore the relationship between the
cooperative from of organisation and the reduction of poverty. There are
good reasons for thinking that cooperatives might have an important role in
the global effort, led by the United Nations, to halve the level of poverty
by 2015. After all, it was poor people who originally invented cooperatives
as a form of economic association that would help them to climb out of
poverty. The history of cooperatives is full of evidence of their ability to
increase their members' incomes, decrease the risks they run, and enable
them to become full participants in civic society. The principles on which
cooperatives are based, and on which they are distinguished from other forms
of business organisation, point to a concern with democratic control by the
members, the equitable return of economic surpluses, and a desire to share
these benefits with other people in similar circumstances. However, their
history also provides evidence of the limitations of cooperatives. They have
a tendency, once established, to appeal more to people on low to middle
incomes than to the very poor. In the developed world, they have had a
tendency to grow and to rely more and more on professional management, which
has meant their being distanced from their members and becoming more like
conventional businesses. In the developing world, they have often been used
as tools of development by governments that have not allowed them to become
fully autonomous, member-owned businesses.
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What is the Cooperative contribution to Poverty Reduction?
What potential does the cooperative form have in practice to reduce poverty?
The question is an important one. It is part of a wider question, about what
forms of economic and social organisation the poor need in order to help
themselves out of poverty. This is part of an even wider question about what
techniques should be used by international development agencies,
non-governmental organisations, national and local governments to achieve
sustainable development that is targeted on the poor. The question is also
an urgent one. The United Nations is co-ordinating a huge, global effort to
reduce poverty and all the other disadvantages and deprivations that keep
people poor. If the cooperative form is good at reducing poverty and is
overlooked, then the Millennium Development Goals may be harder to achieve.
If its potential is overestimated, development effort may be wasted. We need
to have a wide-ranging debate about just what cooperative businesses can
contribute to the reduction of poverty. This study aims to help stimulate
and contribute to such a debate.
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Study Contents
In Chapter One the study defines what is meant by poverty, and cooperatives
and other self-help organisations in relation to cooperative principles. It
then explores the historical record of cooperatives, briefly evaluating
their past contribution to poverty reduction, and asks how relevant they are
to current needs and priorities. The conclusion is that cooperatives have
great potential, but as part of a wider set of more or less formal self-help
organisations. In practice, this form of member-owned business should only
be used if the poor themselves see its potential.
In Chapter Two the policies of international organisations that have
responsibility for achieving the Millennium Development Goals are examined,
and the question is posed as to what the contribution of cooperatives and
self-help organisations might be. A particular focus is on the international
financial institutions - the IMF and World Bank - and their Poverty
Reduction Strategies and the Decent Work Strategy of the International
Labour Organisation (ILO). The conclusion is that cooperatives have the
potential to contribute to the Poverty Reduction Strategies of a wide range
of international organisations and countries, but that this potential could
be much better recognised.
In Chapter Three, eleven case studies are presented that illustrate how
various types of cooperative, in a wide variety of situations, in developed
and developing countries, are in practice lifting their members out of
poverty. The study asks what they have achieved, what setbacks they have
experienced, whether their experience has wider significance, and how
replicable they are. The conclusion is that cooperatives and similar
member-owned businesses are an extremely flexible form that can be adapted
successfully to solve a variety of economic problems. However, their
successful application requires a great deal of promotional effort,
attention to detail, and investment in human capital.
Finally, in Chapter Four the study examines the relationship between
cooperative development and the more general process of participatory
development. The conclusions are that the development of cooperatives and
similar self-help organisations is a vital aspect of participatory
development, and that without some form of self-organisation by the poor
wider development would not be sustainable. The poor must be involved in the
ownership of the development process, through their own local,
democratically controlled economic organisations. If the cooperative form
did not exist, it would have to be invented. The study ends with some
recommendations to strengthen the work of the ILO and other international
organisations in making a cooperative contribution to poverty reduction.
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To obtain a copy of the study:
Rediscovering the cooperative advantage: Poverty reduction through self-help
Johnston Birchall
International Labour Organisation, Geneva, 2003
ISBN 92-2-113603-5
Copies can be obtained from the
International Labour Organisation
4, route des Morillons,
CH-1211 Geneva 22,
Switzerland
or e-mail: pubvente@ilo.org
For further information on the International Labour Organisation's
activities in support of cooperatives contact:
Cooperative Branch
Job Creation and Enterprise Development Department
E-mail: coop@ilo.org
Web: http://www.ilo.org/coop
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