Cooperatives can help overcome some of the barriers to poor people’s access to markets by generating economies of scale; opening up access to information through better market networks; pooling resources and improving individual bargaining power through collective action. They promote social as well as economic goals, have been used to educate local citizens about health issues, and are widely viewed as beneficial for conflict resolution, peacebuilding and social cohesion (e.g. where they bring together people of different religions and ethnic groups). But cooperatives face real challenges in the form of over-control and regulation by government; limited access to credit; inability to scale up their activities; and inability to penetrate markets.
The following factors are commonly associated with the success or failure of cooperatives:
- Access to credit
- A market-driven approach that allows them to compete
- Assistance from the Fair Trade Movement to gain access to markets
- Autonomy and freedom from government control
- Local ownership
- Reaching scale and emerging from dependency
- Effective governance
- Measures for increasing women’s participation
- An enabling legal environment
- Collaboration with other cooperatives
International guidelines on supporting cooperatives emphasise much of the above. Other factors include the need for a strong education and training component, a focus on developing the capacity of cooperatives for self-governance, and long-term working relations between donors and cooperatives. Overall, there is broad consensus that support to cooperative development that creates dependency undermines the mutual self-reliance that is central to cooperation.
