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6.1 Macro-Economic Policy
6.2 Agricultural Marketing
6.3 The Cooperative Strategy
6.4 Cooperative Concerns
6.5 Cooperative Disengagement Action
6.6 Sensitization and Collaboration

6.1 Macro-Economic Policy

The current situation in Zambia is characterized by a deep economic crisis. GDP fell by 2.8 percent in 1992, and inflation increased to 207 percent. The budget deficit was K13.8 billion, of which all but K2 billion was caused by the need to import maize following the crop failure due to the drought. An important element of the crisis is the external debt burden of the country, which at over US $7 billion is one of the highest in per capita terms among countries in the South. This debt is generally recognized to be unsustainable, particularly as almost 2/3 represents loans from multilateral creditors that cannot be rescheduled. Several bilateral donors have therefore provided assistance through the clearing of arrears, cancellation of debt, and balance of payment support.

At the macro-level the policy aims at creating an enabling environment for the development of a mixed economy, with an emphasis on market forces, including international trade. At the micro-level the focus is on increased production and efficiency through the freeing of prices and elimination of monopolies. These policies are being pursued against the background of the ongoing politically and economically motivated retrenchment of government activities. The government is committed to drastically reducing the huge budget deficit by decreasing the number of civil servants, redefining the role of the state in society, and privatizing state enterprises.

Agriculture is viewed as a key growth sector in the national economy. The agricultural exports are expected to increase rapidly, eventually replacing copper as the dominant export sector. Copper exports still represent over 90 percent of total exports, but the mines are rapidly being depleted and production costs are escalating.

The liberalization of the agricultural sector is conditioned on the removal of the exploitative price controls of the past, which have deprived the producers of sufficient incentives, hampered investments and resulted in an inefficient structure for agricultural marketing and input supply. Those controls are currently being gradually removed.

The objectives of the government for the agricultural sector is to increase food and cash crop production through appropriate technology for self-sufficiency and exports, for provision of industry raw materials, and for the pursuit of integrated rural development. The overall objective is to improve the living standards of the rural majority of the population.

The government is therefore committed to ensuring that agriculture as a priority sector will be adequately funded by receiving a substantial increase in budgetary allocations. It is expected that bilateral donor support, whether in the form of project assistance or balance of payment support, will also give direct or indirect support to the production, export marketing, and import requirements of the agricultural sector.

A process of formulating government long term policies has been undertaken, with the aim of providing a stable basis for agricultural planning and development to the year 2000 and beyond. The policy document, the Agricultural Sector Policy Framework (APF), acknowledges the need to give special attention to smallholders if they are to benefit fully from the new opportunities. It will therefore aim at facilitating increased employment and incomes for the rural population with a view to alleviating rural poverty.

On the basis of the APF the government is also in the process of formulating an Agricultural Sector Investment Programme (ASIP) for the purpose of coordinating the currently fragmented donor support. It is expected that support to small scale farmers and their organizations will become an important element of the private sector support component of the ASIP.

Zambia’s agricultural sector can be broadly divided into three sub-sectors namely the commercial sector, the traditional sector, and the semi-commercial sector. The commercial sector, until recent changes in policy, tended to mainly grow high value and export commodities while the semi-commercial and traditional sub-sectors grew almost 75 percent of the country’s staple food, maize. Although the intentions of the government from 1964 to 1990 was to develop the semi-commercial and traditional sectors, unfavorable pricing policies largely worked to the disadvantage of these sub-sectors.

Major crops grown in Zambia can be divided into three categories: the starch staple crops maize, sorghum, millet and cassava; the oilseed crops, groundnut, soybean and sunflower; and the non-edible cash crops cotton and tobacco. Maize in addition to being the main staple food crop is also the biggest cash crop. It is produced by all categories of farmers, female and male. Women contribute the largest proportion of labour in food crops production but also to a large extent in cash crop production. Also grown, mostly by women on a small scale for family consumption and local marketing, are vegetable crops such as sugar beans, pumpkins and a variety of other vegetables.

Until 1991 the price for maize, the single largest agricultural product, was fixed by the government. The producer price for maize declined in real terms by over 20 percent between 1983 and 1990, and by 40 percent between 1986, when it reached a peak, and 1990. In the early 1990’s the price has fluctuated considerably, increasing in 1992 and declining in 1993. The national policy is currently to peg the floor price at import parity level.

The policy of the government aims at reversing the previous unfavorable pricing policies in the agricultural sector. It has embarked on a national structural adjustment program and introduced market reforms aimed at removing monopolistic and unnecessary government involvement in the agricultural sector. The intention is to liberalize the agricultural sector including production, marketing and input supply.

6.2 Agricultural Marketing

The free market in all crops except maize is now well established in Zambia. Price liberalization for maize has been decided in principle, and policy implementation is expected in 1993.

Export incentives have been improved through raising the foreign exchange retention to 100 percent for exporters. The reformation of the agricultural marketing system has however been negatively affected by the draught and the resulting food emergency situation that struck the country in the 1991-92 cropping season. Well over half of the one million ton maize requirements had to be imported during the 12-months period from May 1991.

The lack of a guaranteed market for maize with the removal of government regulations will create incentives for farmers to grow alternative high value crops and hence diversify their cropping strategy away from the virtual maize mono-culture that has so far prevailed. This will particularly be the case in areas distant from markets. Crop diversification will reduce crop failures and thus broaden food sources at local level, thereby improving the food security situation at local level, which is of special importance for small scale farmers, particularly women.

The price of maize is likely to differ during the year. When there are excess stocks farmers are likely to accept a lower price, while they will raise their selling price as stock levels start going down. This possibility for a high price at a later stage is likely to create incentives for improving on-farm storage.

Increased maize retention at local level, which also will be stimulated by increased maize meal prices as a result of reduced consumer subsidies, is likely to increase demand for local maize processing facilities. This should promote the development of small scale food processing bases and thus contribute to a stronger cooperative economy, thereby also reducing rural sector dependency on urban areas.

A liberalized agricultural production and marketing system gives cooperatives an opportunity to concentrate on providing better services to their members. In some respects the cash crop promotion activities of societies and unions have undermined small scale producers’ ability to ensure the food security of their households, which is traditionally the responsibility of women. With cooperatives concentrating on member service as a priority it is becoming possible to integrate all aspects of agricultural production and marketing, including activities carried out by women, and diversify to broaden the economic base of the cooperative movement.

6.3 The Cooperative Strategy

The ZCF, and the cooperative movement as a whole, is fully aware and supportive of the government policy of agricultural market liberalization, as well as its policy on fostering independent cooperatives. In both cases the cooperative movement, through ZCF, is also actively influencing the formulation of the policies and their implementation. At government request ZCF has prepared drafts for both a new Agricultural Marketing Act and a new Cooperative Societies Act.

ZCF is increasingly recognized by government and international donors as a reputable organization to consult with on a variety of matters regarding rural development in general and cooperative development in particular. It is consequently represented on most relevant bodies dealing with policy and other major matters of interest to small scale farmers.

The overall cooperative strategy of strengthening the cooperative farmers’ representation is viewed as being of utmost importance. ZCF is assigned the major but not exclusive responsibility in this area. To effectively carry out this role ZCF intends to continuously improve both its knowledge about and sensitivity to the needs of its farmer members and their primary cooperatives, as well as those of its own affiliates. ZCF has also in recent years strengthened its access to information and expertise as regards the political, economic and social environment, in order to improve its ability to effectively represent its members and the cooperative movement in all relevant fora.

Decision maker awareness of farmer and cooperative needs is being increased through lobbying directly with politicians and government officers. ZCF has developed publicity material, TV and radio commercials/programs, advertisements in the press, etc, to sensitize the general public. The lobbying activities are increasingly business oriented and related directly to the priority needs of the members and their agricultural marketing cooperatives.

The lack of autonomy among cooperative institutions in Africa, including Zambia, is largely a result of the social and economic policies African countries have pursued. Political authority has tended to be dictatorial while economic policies have been heavily centralized and controlled, making it difficult for democratic and economic organizations of mass membership such as cooperatives to develop. It has become increasingly clear that a necessary pro-requisite for development of autonomous and genuinely member controlled cooperatives is the existence of an enabling social economic environment characterized by market economic policies and a democratic government.

Immediately after ushering in a new democratically elected government and the putting in place of new open market economic policies, the cooperatives in Zambia took advantage of the situation and immediately engaged in active negotiations with the government to disengage cooperatives from state control. The process of disengagement has resulted in both confrontation and collaboration between the state and the cooperative movement.

6.4 Cooperative Concerns

1991 was a year of extraordinary changes in Zambia, and also for its cooperative movement. A wide range of issues that had been a cooperative concern for several years needed to be resolutely dealt with as a result of the changing political and economic situation in the country. After contentious discussions within the cooperative movement during the year, they were all included in the agenda of the 17th Annual General Meeting (AGM) of ZCF, held in December 1991. The AGM took some far reaching decisions in the form of resolutions aimed at disengaging the cooperative movement from government control and reasserting itself as a non-partisan and business oriented organization.

(a) The Cooperative Identity

The AGM restated the fact that all cooperatives in Zambia are registered under the Cooperative Societies Act, are owned and controlled by cooperative members in accordance with the provisions of the Act. It further stated that ZCF, the apex body, is member owned and controlled, and represents the interests of all cooperative members throughout the country. Its overall objective is to advance and coordinate cooperative development in order to improve the economic position and standard of living of the cooperative members.

Having stated the ownership, nature and objectives of the cooperatives the ZCF AGM resolved the following specific issues.

(b) Political affiliation

The AGM resolved that the cooperative movement should ensure that its full cooperative identity is restored. Though individual members are free to chose political membership to a party of their choice, the cooperative movement as a whole is non-partisan and politically neutral. The matter of affiliation to UNIP had become an increasingly contentious issue within the cooperative movement during 1991 and the matter was only resolved at the AGM, after the multi-party elections in October, 1991.

(c) Relations with government

The AGM noted that during the single party rule, the government’s activities in relation to cooperatives went beyond ensuring that government regulations and the provisions of the Cooperative Societies Act were adhered to, and amounted to a direct and regular interference in the operations of cooperatives. It was therefore resolved that the role of the government should be strictly limited to matters ensuring adherence to the Cooperative Societies Act, and that the Act itself needed to be amended to fully reflect this position.

The AGM also stated, however, that the cooperative movement would cooperate as a partner with the government in rural development projects, particularly those that concern the cooperative membership. It was also assumed that the government would be supportive of cooperative rural development programs through assisting in mobilizing local and external resources for primary cooperative society development.

The AGM noted that the overall cooperative policy of the government, as regards the role of the state in relation to cooperatives, appeared to coincide with that of the cooperative movement itself. The implementation of this policy, therefore, would require changes in the mandate and directives guiding the operations of its Department of Marketing and Cooperatives.

It was thus resolved that the AGM should recommend to the government that the functions of the Registrar of cooperatives should be merged with those of the Registrar of companies, with a view to rationalizing the registration function, and to emphasize that cooperatives are private business entities with activities not confined to any particular economic sector.

(d) Agricultural marketing

The AGM noted that the experience of cooperatives in agricultural marketing has been rather negative, largely due to inconsistent past government policies and the lack of appreciation of the nature of cooperatives. Cooperatives were made to carry out government agricultural marketing functions without adequate reimbursement from the government. The result had been the weakening of the cooperatives’ identity and an undermined economic base.

Their involvement in government regulated agricultural marketing had also given cooperatives a negative image, which they were determined to change in the Third Republic. This would be achieved through reorientation and restructuring in order for the cooperatives to become efficient commercial organizations, capable of responding to the needs of their members.

The AGM underlined its support for the liberalization of the agricultural marketing sector and stated that the movement’s participation in agricultural marketing would be purely on commercial grounds and primarily directed at serving the needs of its members. Cooperatives would not undertake government regulated activities in maize marketing and related services, except on the basis of commercially negotiated contracts.

The AGM therefore resolved that the cooperatives in the new environment should operate like any other private business. They would therefore not accept the responsibility for government regulated activities, such as serving as a buyer of last resort and maintaining the national strategic reserves. It was consequently also resolved that the Agricultural Marketing Act, 1989, should be amended to remove any compulsory cooperative responsibility.

(e) Cooperative Training

The Zambia Cooperative College Society (ZCCS) was formed in March 1991, thereby realizing the original intentions of the government and the donor (SIDA) that the College, when feasible, should be transferred to the cooperative movement. The underlying rationale was that the movement needed to be in charge of its own training and development functions to be truly independent, and further that only education and training activities developed within the movement itself could be optimally relevant and effective in achieving sustainable cooperative development.

Against this background the AGM resolved to recommend that the government should implement the early legal transfer of all Cooperative College assets to the ZCCS, and that the government should honor its commitment to maintain the same level of financial support in real terms, for the full period of three years.

(f) Cooperative interest representation

The AGM noted that almost 80 percent of the total primary cooperative membership was from primary societies based on agriculture and related activities. It was therefore decided that ZCF should concentrate its efforts on effectively representing the interests of this category of cooperative members.

In this regard it was also resolved that ZCF should make efforts to ensure that all farmer needs, those of both large and small farmers, were well articulated and represented. In order to carry out its mandate it was agreed that ZCF should forge close and lasting links for joint action with other farmer organizations, particularly the ZNFU.

(g) The cooperative structure

The AGM noted that the four tier structure of cooperatives in Zambia has largely resulted from government pressures and intervention in the Second Republic. The cooperators had in principle been in favor of DCUs as a means of bringing the secondary level of the movement closer to the members but the speedy implementation of this change was neither of their own choosing, nor economically feasible. The indications were that the secondary and tertiary level of the cooperative movement are not both justified, and can not both be sustained by the current farming and other economic activities of the members.

It was further noted that the rational distribution of functions among the different tiers in the movement has been negatively affected by the involvement of the cooperatives in the marketing of government regulated commodities in the Second Republic. The resulting under-financing of the cooperatives has led to haphazard competition and unhealthy business practices within the movement.

The AGM thus resolved that the cooperative structure should be re-examined through detailed studies for the purpose of identifying the most feasible set-up in each province. The aim should be to establish the most economically rational and democratically feasible cooperative structure in each province, without viewing uniformity between the provinces as an objective.

It was further resolved that the development of business activities within the movement, in the context of member requirements, should be based on the principle of subsidiarity. This meant that the primary societies should be engaged in what can most economically be done at that level, and this should not be infringed on by cooperatives at higher levels, and the same should apply in sequence to the district, provincial and the national levels.

(h) Cooperative business activities

The AGM agreed that, given the weak financial situation in roost cooperatives, ZCF and its affiliates should ensure that they concentrate on viable business activities in order to sustain the provision of development support to their members. However, these business activities should be carefully scrutinized to ensure that they were provided as part of cooperative member service.

It was resolved that ZCF should actively encourage and support the momentum towards business diversification, which has already started among cooperatives, through the provision of technical services and resource mobilization.

6.5 Cooperative Disengagement Action

(a) Disseminating the cooperative position

The 1991 AGM of ZCF marked the beginning of an activist ZCF public relations campaign, made necessary by the generally negative and even hostile environment for cooperatives. This was caused by a partial understanding and widespread mis-perceptions about the cooperative movement, among politicians, the media and general public. It was widely viewed as a social and semi-political organization that was heavily involved in, and inefficient in carrying out, the vitally important maize marketing operations.

Shortly after the AGM all the resolutions adopted were widely disseminated, including to the Head of State, government bodies and the press. Equipped with the AGM resolutions the management of ZCF launched a series of 13 television programs, each 45 minutes long, aimed at further propagating the resolutions and sensitize the nation to the importance of cooperatives in the national economy.

The programs covered subjects ranging from the structure of the cooperative movement, to the activities of ZCF and the role of cooperatives in the national economy. They created much interest from the public and appear to have been particularly helpful to the new government leaders, who at several meetings acknowledged the fact that the programs were useful in educating them on the nature and role of cooperatives.

By April 1992 the Board of Directors of ZCF had become concerned that the pace at which changes of importance to the cooperative movement were occurring was too slow. There was further an apparent lack of consistency in policy interpretations and implementation within the new government, as well as a perceived lack of interest in implementing the policy by the ministry responsible for cooperative affairs.

It was therefore decided to raise the critical cooperative issues in the new environment directly with the Head of State. The letter that was subsequently dispatched was also copied to all government relevant ministries, including those of Agriculture, Food and Fisheries (MAFF), Legal Affairs, and Finance. The following subjects, included below with supplementary information on follow-up action, were highlighted in the letter.

(b) Interpretation of government policy

The policy of the government includes an unequivocal commitment to the fostering of an enabling economic environment for the growth of the private business sector. This sector includes genuine cooperatives and the government recognizes that a necessary requirement is a policy of non-interference from the state and political parties in cooperative affairs. In the policy manifesto of the governing party it is stated that it:

“will insist that the spirit of the Cooperative Societies Act is implemented where the motivation for forming and managing cooperatives is from the individuals concerned and not forced from government.”12.
12 Party Manifesto of the Movement for Multiparty Democracy (MMD), 1991.
It is stated in both the Policy Framework Paper and the Public Investment Paper, the official government policy papers on the management of the economy, that the government policy is one of non-interference in private sector business operations.

The decision by the AGM of ZCF was therefore that the Cooperative Act must be revised in such a manner that provisions are removed that give authority to the government, the Registrar of cooperative societies in particular, to unnecessarily interfere in cooperative operations.

Subsequently ZCF, at the request of MAFF, which is the responsible ministry for cooperative affairs within the government drafted a new Agricultural Marketing Act in 1992. The draft was designed to ensure liberalization in terms of both actors and prices in agricultural marketing. Accordingly, the responsibility for all regulated agricultural marketing operations should be reassumed by the government, thereby paving the way for the development of a market oriented and competitive agricultural marketing system.

The draft was submitted to the government in January 1992 to facilitate its adoption by parliament prior to the 1992/93 marketing season. The matter, which appears to have been rather contentious within the government, has since not been resolved. There are indications that the draft legislation on the matter will be submitted to parliament during 1993, and that its contents will be broadly in line with the ZCF proposal.

One issue of crucial importance to ZCF in the revision of the Agricultural Marketing Act is the handling of the assets, liabilities and staff that were taken over from Namboard. The assets mainly include national storage facilities and staff houses. As a temporally measure pending the revision of the Act, ZCF has agreed to lease all storage facilities not used to the government, which in turn intends to sub-lease them to its appointed marketing agents. The tentatively agreed on procedure as regards staff houses is that they will be sold to ZCF as a part of a deal through which ZCF is compensated for the liabilities it has incurred in the course of administering the Act.

In June 1993 the government was finalizing its approval of the new Agricultural Marketing Act in preparation for its submission to parliament. In reviewing the final draft it was observed by ZCF that it included provisions for the retransfer of previous Namboard assets to the government, but that the corresponding transfer of liabilities had been omitted. It is expected that the subsequent quick intervention by ZCF to rectify this anomaly, which would have resulted in a serious economic weakening of the apex organization, will be successful.

Intensive contacts between ZCF and the government continued also on other matters. ZCF submitted its proposal for a new Cooperative Societies Act, in October 1992, after having been requested to do so by the Vice President on the Cooperative Day in early July. The draft was in line with the new government policy of fully accepting the cooperative movement as a group of independent private business organizations owned and controlled by their farmer members.

The proposal was prepared through a process of consultation both within ZCF and with representatives from its affiliates. Towards the end of this exercise the MAFF, under the lead of the DMC, also started the process of drafting a new Act. ZCF was asked to participate but declined as its own draft Act was almost completed and as it was thought unwise to delay its submission. By mid-1993 a new Cooperative Societies Act had, however, not yet been submitted to Parliament.

(c) Conflicts over policy implementation

While the overall policies of the government and ZCF appear to be identical as regards the nature and functions of cooperatives, the Board of ZCF, in its letter, expressed deep concern that the government’s Department of Marketing and Cooperatives did not appear to fully understand and appreciate those overall policies, and that DMC had treated the intentions of ZCF with a lot of undue suspicion.

On several occasions the DMC had argued that the role of drafting amendments of laws rested with the government. While this is basically correct the Board felt that the proposals for such amendments could also come from the public, particularly the various interest groups who have interest in that particular law. It stated that the citizens could be consulted in a democracy committed to openness and transparency. Further, that the two proposed Acts that ZCF had submitted, had been drafted at the specific request of the Vice President and government ministers.

The ZCF Board also complained that it had found most officials in MAFF to be unwilling to recognize and accept the changed environment. The appreciation of the new liberal economic policies still seemed to be largely misunderstood by the civil service. The DMC in particular appeared to believe that cooperatives were some kind of social clubs which always needed the government’s control and protection.

On the proposed transfer of the cooperative registration to the Ministry of Commerce so as to emphasize the commercial nature of cooperatives, the Board stated that the position of the AGM of ZCF had been treated with a lot of suspicion. DMC had characterized the proposal as immoral and suggested that it meant that cooperatives wanted to turn themselves into companies. This was contrasted with the spirit of the overall government policy, and exemplified by the speech of the Vice President on the Cooperative Day 1991, in which it was made clear that cooperatives were expected to function like any other business organization. It was underlined that to operate commercially does not mean that a cooperative ceases to have its cooperative structure and identity. Subsequently, in a separate interview, the responsible Minister gave his support to the proposal by the ZCF AGM, but no action has yet been taken.

The Board also underlined that ZCF had taken several initiatives to rid itself of the shackles of the Second Republic, and thereby facilitate for the government to implement its policies of state non-interference in cooperatives and enabling the cooperatives to freely compete with other actors in liberalized agricultural markets. It was regretted, however, that no constructive action had been taken by MAFF, particularly the DMC, in relation to these ZCF initiatives to facilitate the implementation of the governments own policies.

The Board’s perception was that there were instead clear indications that the ministry, through the DMC, planned to further consolidate the government’s grip over cooperative operations. The habit of using cooperatives as a convenient tool for the pursuance of activities that are not compatible with the sustained development of a genuine cooperative movement were seen as continuing.

It was further stated that the DMC appeared to try to alienate the cooperative movement from ZCF. It was emphasized that the Board of ZCF is drawn from all its affiliates, and that it also included a government appointed special board member from the DMC itself, and each of its affiliates sends at least 10 delegates to its AGM. It was therefore stated that the decisions of ZCF represented the views of the cooperative movement. The apparent efforts to isolate ZCF by strengthening the direct links between DMC and the affiliates of ZCF, was therefore seen as divide and rule tactics that would not succeed.

The position of the DMC on the issue of cooperative independence, expressed on several occasions, is that it is in principle in favor of independent cooperatives but that the implementation of this policy had to be gradual over a long period of time. It voiced criticism over attempts to copy the cooperative models of industrialized countries, and attacked expatriate experts with the cooperative movement, for their advice to that effect. The situation in Zambia was seen as being vastly different, not least because of widespread illiteracy among the cooperative members. Close government supervision would therefore be needed during the foreseeable future to protect the members from being exploited by their own cooperative leaders, and to ensure that the cooperatives were economically viable.

Another justification for government monitoring and supervision and advice by DMC, is the fact that the cooperative movement has been operating on the basis of resources and funds donated or lent by government, and ultimately mostly by foreign donors. This includes both the assets taken over from Namboard and the soft loans provided to the ZCF group for agricultural credit and crop purchases.

The dominant view in the cooperative movement, on the other hand, is that the best long term guarantee against corrupt leaders and unsound business practices is to give the members a sense of genuine ownership, control and responsibility for their cooperatives. Government control, supervision and interference has proven to be unable to propel the cooperative movement in that direction. It has instead perpetuated an unhealthy dependency syndrome on the part of both the members and the cooperative staff.

The cooperative view is also that the control of cooperative finances, e.g. through the widespread compulsory co-signing by government officials of cooperative checks, has also led to corruption and exploitation of the cooperatives and their members. As regards the holding of government assets and resources by the cooperative movement, ZCF is actively pursuing the policy of the retransfer to the government of all assets and liabilities, and henceforth all economic and financial relations between the two parties should be in the form of freely negotiated contracts.

(d) Cooperative structure and operations

In its Policy Framework paper the government had indicated that the District Cooperative Unions, the secondary level of organizations in the cooperative movement, were to serve as focal points for development in the districts, including government activities such as agricultural extension.

The ZCF Board stated in its letter that it had no objection, of course, to the government establishing a government development centre at the district level. It strongly emphasized, however, that any involvement of private organizations, such as the DCUs, could take place only after consultations and mutual agreement. The activities of the DCUs must be determined solely by their owners, which are the affiliated primary cooperative societies and their members. It was therefore felt that the blanket government statement on the role of the DCUs was contradictory to the government’s own overall policy.

The view of the Board was also that any government development centre at the district level must be clearly separated physically, and in terms of operations and control, from the DCUs. It was subsequently learnt from government officials that this policy element had been only one of several options, and that it had not been adopted.

In early 1992 ZCF received a letter from the Minister of MAFF that he had decided to take direct control over the ZCF Agri-Business Division. The rationale for this move was to improve the agricultural marketing operations, particularly as the country faced a big shortage of maize as a result of the drought. ZCF took swift action to counter this move, through challenging the legality of the decision. A letter to this effect was sent to the Minister and circulated to other relevant ministries. A meeting was subsequently arranged with the Ministers of Legal Affairs, and MAFF, after which the latter withdrew his decision.

The status of the Cooperative College has remained a controversial issue for several years. The ZCCS suffered from a weak financial base, and in particular an unsettled leadership situation from the outset. The key problems identified by the ZCF Board, in its letter, were the continued DMC control despite the existence of the ZCCS Board, the reduction in the pledged transitional contribution for operational costs from the government, and the non-transfer of the fixed College assets to the ZCCS. The College also experienced a gradually reduced operational capacity in the key area of extension training, resulting from the transfer of some of its most experienced staff.

There has since been no progress on the transfer of the assets, and on the issue of DMC control of the College, including the seconding of government staff to the ZCCS, in order to create a clear leadership structure. Despite repeated assurances from the Permanent Secretary of MAFF, no implementing action has been taken. Instead, steps were taken in late 1992 to de-register the ZCCS on the basis of a claim that it was unviable and not adequately supported by the cooperative movement. This despite the fact that the College made a surplus of K2.4 million during its first year of operation, and despite pledges of over K15 million by ZCF, provided that the leadership situation was resolved.

The two active parties in the conflict over the status of the Cooperative College has been DMC, which wants the College to revert completely to the government sector, and ZCF, with support from the ZCCS Board, pushing for the implementation of the original decision to transfer the College to the cooperative movement. Towards the end of 1992 it was decided by the Minister of Agriculture to resolve the issue by appointing a consultancy team to study and recommend on the ownership, structure and economic viability of the Cooperative College.

The study, carried out during a period of two weeks by a US consultant, was completed in draft form in June 1993. Its recommendations, reflecting the US experience of linking cooperative training institutions with suitable universities, was that the Cooperative College becomes a largely self-financed unit within the University of Zambia. The institutional and economic feasibility of this approach in the Zambian environment was not discussed, however, and neither did it consider the urgent and primarily non-academic training needs of the cooperative movement. The study, which was intended to be carried out by a team of consultants including some with familiarity with cooperatives in Africa, does not provide a sufficient basis for a decision on the future of the College.

(e) Cooperatives and external donor support

The ZCF Board, in its letter, urged the MAFF, particularly the DMC, not to assume an anti-cooperative attitude in formulating national economic policies, and in its relations with foreign donors, as this would be tantamount to negating government’s own policy platform of swiftly introducing a liberal market economy and promoting independent member based and business oriented cooperatives.

In one case, which was highlighted, the DMC had recommended that the government should review its existing agreement with SIDA on cooperative “movement to movement support” between ZCF and SCC, clearly with a view of taking direct control. The Board expressed its surprise that such a recommendation should come from DMC, which is supposed to promote cooperative principles. One of those principles emphasizes cooperation among cooperatives, and this is what the two governments have recognized and allowed to take place.

In 1992 ZCF, in collaboration with SCC, prepared and obtained funding from SIDA’s non-governmental bureau for a drought relief project (DRP) for small scale farmers who were also cooperative members. A total of 11,000 smallholders were the beneficiaries of this project, whose main component was the distribution of seeds and fertilizer on favorable terms.

A certain controversy over the DRP subsequently erupted. The Minister of MAFF sent a letter to the Swedish Embassy questioning the project. One major reason for this was the suspicion that parts of the project represented concealed subsidies to ZCF, which was later refuted and clarified by ZCF. Another main underlying reason for the criticism of the DRP appears to have been that it was felt that the funds should have been provided to MAFF, which was responsible for coordinating drought relief efforts, and not to ZCF.

In response ZCF and SCC explained that these funds were earmarked for NGO activities, and that Zambia would not have been able to benefit from them had it not been for the cooperative initiative. This affair was yet another example of continued controlling attitudes by government officials towards the cooperative movement, although several high ranking officials in MAFF supported ZCF in this particular case. The relief project has subsequently been successfully implemented as originally envisaged.

(f) Government policy and small scale farmers

The development of the agricultural sector and the stabilization of food supplies in Zambia has been achieved largely through the efforts of small producers. At the time when the prices and the general agricultural policies were very disadvantageous to agricultural producers, large scale farmers drastically reduced the production of food crops for domestic consumption and concentrated on export products.

For the last 10 years the average contribution of small farmers has been around 70 percent of the total maize production. Small farmers, over the same period, also produced over 50 percent of oil seeds such as soybean, groundnut and sunflower in addition to other crops such as cassava, sorghum and millet.

The MAFF appeared to be clearly biased towards commercial farmers and not paying much attention to the needs of small farmers. The steps taken included the encouragement of the formation of associations of large scale farmers, and the provision of financial support to them for engaging in agricultural marketing. This despite the unequivocal statement of recognition by the Minister of MAFF of the key role played by the smallholder agricultural sector.

The ZCF Board, therefore, expressed its disappointment that small farmers should run the risk of becoming marginalized as a result of the implementation of the government’s policy. The same concern was raised as regards the position of the cooperative movement that remains the largest organized structure of small scale farmers.

The Board stated that the restrictive and controlling cooperative policies of the previous government if allowed to continue would not liberate the cooperative movement but consolidate its current handicaps. The nation would then be deprived of the crucial contribution to agricultural and national development that a business organization owned by, and serving the interests of small scale farmers could make.

6.6 Sensitization and Collaboration

(a) High level support for cooperatives

Through ZCF’s TV presentations and other initiatives, the government has begun to appreciate the importance of cooperatives in the national economy. It has therefore, particularly at the highest level, started to actively consult the cooperative movement, through ZCF, on important policy issues.

This phase of more active and constructive relationship was initiated with the speech of the Vice President of Zambia at the 70th ICA International Cooperative Day, on 7th July 1992. The Vice President was the guest of honor and delivered the official speech, which had received inputs from ZCF. The speech reflected a higher level of awareness and appreciation of the position of the cooperative movement on major issues as expressed in the resolutions of the ZCF AGM, the letter the Board of ZCF to the President, and in mass media.

The following quotes highlight the main issues covered in the Vice President’s address:

“A lot of people both among civil servants in government and outside government have expressed anxiety over the future of cooperatives in Zambia in the Third Republic. Will there or will there not be cooperatives in the Third Republic? Mr Chairman I would like to categorically state that the MMD government fully supports and recognizes the role of cooperatives in the economic development efforts of our nation.
The running of cooperative institutions should be left to members who like in the other private sector of the economy will be guided by the relevant government legislature governing operations of such organizations. Promotion of cooperative development and training should not be government responsibility.

We as a government can only assist and supplement your efforts in exactly the same way as we assist the other private sector export promotion efforts, for example. It is with this in mind that I foresee an urgent need to restructure the government’s involvement in cooperative development and training activities. The current government involvement is too heavy and needs to be scaled down or even removed.

Under the economic structural adjustment programme the government expects the cooperatives, through its apex organization ZCF, to undertake its own promotional, development and training activities and only minimally to be supported by government. The role of the government should merely be to ensure that the law is been followed. This should not, however, be understood to mean that the government should now operate as a police force for cooperatives”.

This speech indicated that the second highest office in the nation was clear on the policy of the government regarding cooperatives. However the policy of cooperative disengagement does still not seem to enjoy the same support in the civil service, particularly from DMC. A major reason for that appears to be its prevailing view of cooperatives and the role of government in cooperative affairs, as summarized above. (Section 6.5 c). Another reason could be that a reduced government role would mean a reduction in staff through transfers and redundancies.

(b) Cooperative participation in policy reform

During the last year ZCF has become an active participant in national policy formulation in key areas of concern to the cooperative movement. Senior executives of ZCF have thus been invited to contribute to and participate in three major policy reform exercises initiated by the government.

The first is the national task force to reform agricultural policy, which started its work in late 1992. The objective of this task force was to formulate policies for agricultural planning and development up to the year 2000 and beyond. The resulting Agricultural Policy Framework (APF) has been adopted by the government cabinet and it is being used as the authoritative document for agricultural planning and for determining donor support. The policy acknowledges the need to give special attention to smallholders.

On the basis of the APF the government has been pursuing a process of formulating an Agricultural Sector Investment Programme (ASIP) with a view to coordinating the currently fragmented donor support. Representatives from the cooperative movement, in particular ZCF, have played an active role in this process. It is expected that support to small scale farmers and their organizations will become an important element of ASIP.

One of the major issues addressed by the task force is the need to promote a conducive environment for development of farmer organizations, including cooperatives. One result of this exercise is proposed amendments of existing laws to facilitate the creation of such an enabling environment. The task force has, so far, proposed changes in the Agricultural Marketing Act and the Credit Act.

(c) National economic policy reform

In May 1993 the President of Zambia announced the formation of the National Economic Advisory Council. Both the Secretary General and the Deputy Secretary General of ZCF were invited and accepted to become members of the Council. Its main objective is to monitor the implementation of the new economic policies and to ensure their further development with a view to creating a conducive environment for the development of the private sector.

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