There still remains confusion over Cooperatives in Africa. Many well-meaning efforts have gone in to bringing together smallholders in order to scale up production; the most recent in South Africa with the land reform efforts.
Throughout history, production co-operatives have very seldom succeeded. And Africa is no exception. This is because costs and benefits of effort are seldom directly linked making the transaction costs very high. To succeed you need a small, very cohesive group with strong social sanctions for any diversion. There have to be very stringent norms in place with closely shared values and very clear lines of accountability and transparency. Few people are able to sustain this level of conformity to the group.
Marketing co-operatives on the other hand have far more promise and have a successful history in helping smallholders actively participate in the broader economy. As Tim points out they are still relevant even with the much wider access to information available through modern technology. And as Tim indicates, there are many advantages including bulking produce, sharing transport, establishing shared "fair trade" or other labels, of contracts with large buyers in addition to the better prices and service when purchasing inputs and sharing the expensive equipment often needed in processing or for production. HOWEVER they only work if the membership are fully conversant with their roles and both the benefits and costs of membership and more importantly that there are very transparent systems in place with accountability for actions and leaders who are trusted.
Rwakakakamba makes a very timely input on the fact that co-operatives have a history of being political footballs. They can become a channel for influence and corruption and in this form they will inevitably fail. If governments are serious about agricultural growth and reducing poverty, then they will provide access to training and to the computer software systems that allow for much greater transparency and accountability -- provided effective communication channels are used to ensure that all members are made aware of the business opportunities and decisions made by the Co-op. This training, information and communication technology will reduce the opportunity for gaining political rents but it will have very positive effects on rural development!
Is there the will out there to reduce the political role played by co-ops and to make them rather engines for growth?