The ingredients of good governance in cooperatives

In the recent past, cooperatives, especially financial cooperatives, have come under scrutiny. At the centre of this is how cooperatives are governed and whether entrusted leaders have been good stewards.

Good governance must be promoted and nurtured by all cooperatives if they are to thrive, and benefit members. Cooperatives attract membership from across the social and economic spectrum, level the playground for self-determination and help create communities where each member is accorded a chance to their livelihoods.

For the poor and people in remote locations, cooperatives present viable pathways out of poverty. But can these be achieved when good governance is placed on the back burner? To cause meaningful change, cooperatives must adopt and adapt principles of good governance, four of which are: accountability; transparency; fairness; and integrity.

The hallmark of successful entities lies in the intertwined accountable and transparent processes. Being accountable connotes that leaders carry responsibility for their actions, behaviours, performance and decisions. Accountable leadership is what cooperatives require to thrive. Transparency is key to accountability. Transparency implies an open, clear and honest process in how leaders manage the affairs of cooperatives, ensuring all stakeholders are on board. Transparency helps the cooperative to build beneficial relationships with stakeholders.

Cooperative Principle #2 calls for democratic member control. In primary cooperatives, members have equal voting rights (one member, one vote), while cooperatives at other levels are organised to guarantee these democratic principles. Principle #2 is central to fair practice. However, for effective member control, leaders should not manipulate members in operationalising the principle. Alas! Too often this is the playground for manipulation and election of tainted leaders.

Leaders must emulate Caesar’s wife and be above reproach. As noted in an EACC 2021 report, “the need to uphold integrity in the management of resources entrusted to cooperatives” is paramount. Leaders must be accountable, transparent, fair and act with integrity, and be true to it like the compass needle is to the North Pole. To these four, add efficiency and effectiveness and your cooperative becomes the envy of many.

Efficiency and effectiveness don’t mean the same thing. Efficiency is a measure of performance that focuses on achieving maximum output from minimal inputs. That is getting more for less. Effectiveness measures how efficiently the right things are done desirably.

Successful organisations infuse a culture, aided by appropriate technology, that delivers efficiency and effectiveness. Cooperatives should consider performance contracting with well-defined and measurable targets for Boards. Cooperatives are the crucibles out of which members engage in economic development and growth, hence they must inculcate and nurture principles of good governance where leaders act fairly, transparently, with integrity and accountably. They must be ethical, and efficiently and effectively manage resources entrusted by members. There is, simply, no two ways about it.

Prof Nyamongo is the deputy VC at the CUK. [email protected]; @Prof_IKNyamongo