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The process of capital accumulation in cooperatives is shaped, and to some extent constrained, by a unique set of principles that help define the cooperative’s identity and set it apart from other businesses. Its egalitarian rule of “one member-one vote” and anti-profiteering percept of “limited return on capital” make the cooperative form of business appealing to a broad audience but create genuine problems in mobilizing capital for business growth.

In many advanced countries, cooperatives have found innovative means both to mobilize capital from their members while maintaining some semblance of their cooperative identity and spirit. Unfortunately they have been less successful in developing countries where market conditions are less favourable. This particularly applies to agricultural service cooperatives. In the past, many agricultural cooperatives were established to meet certain nation-building goals of newly independent governments and were therefore able to rely on government support and subsidies.

But the new era into which these countries are entering of “downsized” government budgets and liberalised markets means that this source of finance is fast disappearing. If cooperatives are to grow and survive in an increasingly competitive business climate, they must learn to raise more capital from their members.

The aim of this booklet is to highlight some of the issues that cooperativists must confront in meeting this challenge and provide some answers on how that can be done.

Gustavo Gordillo de Andá
Rural Development Division

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