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3.1 The Pre-Independence Period
3.2 The Period 1964 to 1991
3.3 Current Cooperative Structure and Activities

3.1 The Pre-Independence Period

The first Cooperative in Zambia (North Rhodesia) was formed in 1914 by the European settler farmers as a means of marketing agricultural produce to the newly opened copper mines in the copperbelt of southern Zaire and northern Zambia. The earliest cooperatives were largely restricted to the Eastern and Southern provinces of Zambia.

Despite the colonial policy of trying to protect the interests of the settler community several cooperatives also emerged among small-scale African farmers. In 1947, the colonial government was forced to recognize cooperatives amongst indigenous Africans under a cooperative ordinance which was followed in 1948 by the formation of a government department, the Department of Marketing and Cooperatives, for the registration and regulation of cooperative enterprises.

This was despite the fact that the formation of agricultural cooperatives by Africans was not permissible as Africans were not legally recognized as farmers. Under the Farmers Licensing Ordinance Number 30 of 1946 a farmer was defined as any person other than:

(a) An African or;
(b) Any company or body of persons where the controlling interest was held by Africans.
With this background and the continued obstacles to the formation of cooperatives by Africans it was pot surprising that the Northern Rhodesia Farmers’ Union (NRFU) at Independence in 1964 was essentially a union for the European commercial farmers. It was recognized as the only representative organization for the farming community in the country.

In 1966 a new act abolished the colonial definition of a “farmer” and all assets, liabilities and obligations of the NRFU were transformed into the Commercial Farmers Bureau of Zambia (CFB). (In 1992 the CFB changed its name to the Zambia National Union of Farmers, ZNFU).

3.2 The Period 1964 to 1991

Immediately after independence the Zambian government embarked on the active promotion of cooperatives throughout the country, and for many types of economic and social ventures. Cooperatives at this time were largely viewed as a mechanism for stimulating rural development and not necessarily as institutions for meeting the economic and other needs of their members. This view of cooperatives was further reinforced by the policies of central planning which were actively pursued in Zambia in that period.

As a result the government sponsored initiatives, and often with donor support, primary societies were formed in all parts of the country. While many of those cooperatives were based on genuine grassroots mobilization, others were established mainly to take advantage of the assistance that was available. From a total of about 500 cooperative at independence the number approximately doubled in less than ten year to about 1000 in 1973. Secondary cooperatives, in the form of cooperative unions, some predating independence, were formed in the Southern, Central and Eastern Provinces.

As the number of primary and secondary cooperatives continued to increase, it became clear that there was a need to also create a national organization. This resulted in the formation in 1973 of the Zambia Cooperative Federation (ZCF), the cooperative apex organization, to coordinate the development, representative and business functions of the cooperative movement.

In 1983 cooperatives were declared a mass movement by Zambia’s sole political party, the United National Independence Party (UNIP). Through this measure, which included cooperative representation in the highest decision making body of UNIP, the cooperative movement became affiliated to the party.

Also in 1983, the Ministry of Cooperatives was formed and given the responsibility of cooperative policy formulation. The Ministry included the Department of Marketing and Cooperatives (DMC) and the Cooperative College, which had been established with donor funding in the early 1970’s.

In 1984 the government adopted as a deliberate policy the formation of provincial cooperative unions (PCUs) in all the nine provinces of Zambia. As a result six unions were formed in addition to the three already existing. The main function of the PCUs was agricultural marketing, initially as agents of the National Agricultural Marketing Board (Namboard).

The new provincial unions were thus primarily a result of external initiative, and they did not have strong backing from primary cooperative societies (PCSs), who however were obliged to buy shares in those PCUs. This process contributed to the erosion of cooperative autonomy and self-reliance. It was by then clear that UNIP and the government had assumed the undisputed lead role in the formulation of cooperative policy and the development of the cooperative structure.

In 1988 the government decided, partly as a result of lobbying from the cooperative movement, that all marketing functions were to be performed by cooperatives only, while Namboard would be responsible for importation of fertilizer and maintenance of strategic maize reserves. The following year, in 1989, Namboard was abolished and all its functions were transferred to the ZCF, which for some time had been actively advocating this course of action. The same year the government decided that district cooperative unions (DCUs) should be formed and within less than a year such unions were established in about half of Zambia’s over 50 districts.

The main reason for the process of increased cooperative dependence on government during this period was undoubtedly the gradually more important role that the cooperatives were given, and aspired to, in the national economy. Maize is the dominant crop and provides the national staple food, and its regulation and management was therefore a government high priority. The perception of cooperatives that has prevailed in the country, including partly the self-perception of the cooperative movement itself, was a contributing factor. Since independence, cooperatives were seen as potentially important contributors to overall rural mobilization and agricultural development rather than as member based business organizations.

This view of cooperatives also led to their incorporation in national development plans that were drawn up by the government with cooperative participation. As a result they came to be used by the government, backed in many cases by external donors, as instruments for general social and economic development in rural areas, with only part of their services confined to their members. This undermined their cooperative identity and resulted in their being perceived, by the general public and to some extent also by their members, as part of the government sector.

It is against the background of this official policy and practice that the controlling role of government in cooperative affairs should be seen. The government, particularly through the DMC, set the economic parameters for the cooperatives, involved itself in the financial and other operations of the cooperatives at all levels, and intervened and made organizational and personnel changes.

The resulting unsatisfactory situation as regards cooperative management, economic performance and democratic control by the members must be seen in that perspective.

3.3 Current Cooperative Structure and Activities

With the formation of the District Cooperative Unions (DCUs), the co-operative movement currently has a four tier structure, starting with primary cooperative societies at local level. The PCSs are generally affiliated to either a DCU, or if none has been formed in a given district, to a PCU. The DCUs, in turn, are affiliated the PCU in each province. All nine PCUs, finally, are affiliates of ZCF, the apex organization for the entire cooperative movement. As a result, and in accordance with general cooperative practice, each lower level in the cooperative structure owns the next higher level through affiliation and shareholding.

The economic viability and sustainability of this four tier system is questionable and a process of review has been initiated. The structure is also unwieldy from the point of view of democratic control from the members. Below is a more detailed discussion of the functions of different cooperative levels in the cooperative structure.

The PCSs, formed by a minimum of 10 people, each contributing a share towards the capital of the society, constitute the organizational basis of the cooperative movement. There are currently over 1,300 registered primary societies with a membership of about 400,000. Slightly more than two thirds of this membership belongs to some 800 multipurpose agricultural PCSs. Of the approximately 0.8 million primary society members 25 percent are women. About 700 of the PCSs are affiliated district or provincial cooperative unions.

The major activity carried out by the PCSs is to assist members with agricultural marketing and input supply. In addition a typical PCS can offer its members services through a retail shop, a grinding mill for processing of members maize or other income generating activities.

With the formation of DCUs, the role of the PCUs has gradually changed towards agricultural processing, leaving an increasing role in marketing activities to the DCUs and PCSs. There are currently 34 established DCUs, covering more than half of the existing districts.

The national apex organization, ZCF, has 15 affiliates. Besides the nine PCUs, one for each province, the following organizations are affiliates: Credit Union and Savings Association of Zambia (CUSA Zambia), National Marketers Cooperative Union, Zambia Agricultural Trading Cooperative, Zambia Army Multi-purpose Cooperative Society, Zambia Farmers Cooperative Society and Zambia National Farmers Union (ZNFU).

Two specialized national cooperative apex organizations, the Cooperative Bank of Zambia (COBZ) and the Zambia Cooperative College Society Ltd (ZCCS) are closely related to ZCF but not formal affiliates.

In addition to being a spokesman for the cooperative movement ZCF serves as a coordinator of foreign aid and development programs for cooperatives. National level cooperative business activities are also carried out through ZCF and its subsidiary companies. ZCF Finance Services (ZCF FS) provides mainly short and medium term agricultural input loans; ZCF Professional Services (ZCF PS) renders computer, audit and accounting services; the newly established ZCF Insurance Services (ZCF IS) is already a major actor in the insurance market, and ZCF Properties administers ZCF’s real estate.

ZCF also operates the following autonomous divisions: ZCF Commercial Services for agricultural inputs and implements, as well as consumer goods; ZCF Transport and Engineering Division operating a sizeable fleet of trucks for transporting mostly of agricultural commodities; ZCF Agri-Business Division, currently primarily involved in national maize storage operations; and ZCF Development Services Division with a focus on the development of PCSs in the rural areas.

Established through funding from SIDA in 1979 the Cooperative College, situated in Lusaka and owned by the Government, is the major institution carrying out cooperative education and training. The only other institution, which is involved on a much smaller scale, is the government owned President Citizenship College. The Cooperative College runs residential, correspondence and field training courses. The training is aimed at educating cooperative members, elected cooperative leaders, and cooperative staff in the areas of cooperative organization, leadership and management.

In 1990 the government agreed to transfer the Cooperative College to the cooperative movement, in line with the original intention of the donor. In 1991 the ZCCS was established with PCSs, cooperative unions and national level cooperatives as members.

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