Role of Cooperatives in Rural Development, the Case of South Nations Nationalities and People Region, Ethiopia

Abstract

For small land-holding, developing and agricultural based economic countries like Ethiopia, cooperative type of business is recommended as a solution to promote income distribution, reduce poverty and vulnerability, and improve quality of life and social welfare. Ethiopia is a second largest populace country in Africa and has nine regions and two city administrations. South Nations Nationalities and Peoples Region (SNNPR) state is third populace and most densely populated region in Ethiopia. Most of the farmers' in this region have small plot of lands for their living, farming and rearing animals. It is obvious that such smallholder farmers are characterized by producing small amount of produce. They might bring small portion of their product to market, and the earnings might goes to cover their routine expenditure and might save the remaining for next farming. Taking this clear fact in to consideration, Since 1960s, the government of Ethiopia is promoting the significance of cooperatives as an organization that could enhance the development of small scale-farmers and other communities. Unlike other regions, SNNPR is the pioneer for starting cooperatives type of business and cooperatives are still flourishing in the region. These cooperatives are expected to serve farmers in providing agricultural inputs, marketing service for their produce, and mobilizing savings and providing credit services to their members. The objective of this paper is to show role of cooperatives in rural development the case of South Nations Nationalities and Peoples Region. AS of June 2011, in South Nations Nationalities and Peoples Regional state there were about 8872 primary cooperatives, 44 Cooperative Unions and One Regional Farmers Cooperative federation established. These cooperatives have a membership of male 693,898 (77%) and female 209, 861 (23%) totally 903, 759. From the total households of the region 30.3% are member of cooperatives. Despite its age, cooperatives in Ethiopia as well as in this region didn't flourish as expected. The sector visage challenges across the districts in the region. 1 Introductions Agriculture in Ethiopia is the foundation of the country's economy, accounting over 41% of gross domestic product (GDP), 83.9% of exports, and 90% of total employment. Nearly 83% or (75.6 million) of the population is living in rural areas. Many other economic activities are rely on agriculture, including marketing, processing, and export of agricultural products. Since September 2010, the first time Ethiopia has publicly announced a five year Growth and Transformation Plan (GTP) 2010/11 to 2014/15. The principal development agenda of GTP is to sustain rapid and broad-based growth path witnessed during the past years and eventually end poverty. As determined by GTP, Agricultural sector will remain the main engine for its success and at the end of a plan year the industry sector is expected to take the leading position. Cooperative promotion is one of the target areas in agricultural and rural development strategy. In view of that, there are three major tasks that GTP clearly stated for cooperatives. First, provision of improved agricultural technologies to increase production and productivity, Second, improved agricultural marketing (output marketing) system; and third, financing (saving, credit and banking). Modern cooperative movement started 160 years ago in the world, about 60 and 50 years correspondingly in Africa and Ethiopia. According to Federal Cooperative Agency of Ethiopia, until 2011, 43,255 different types of primary cooperatives were established with a membership of male 5,153,271 and female 1,413,423 totally 6,566,694. These member households with their family's account about 32,833,470, i.e. almost 37% of the total population of a country is directly lean on cooperatives. Moreover 278 cooperative unions and 4 regional cooperative farmers' federations were established. The same as until 2011, in South Nations Nationalities and Peoples Regional state (SNNPR) there were about 8,872 primary cooperatives, 44 Cooperative Unions and One Regional Farmers Cooperative federation are established. These cooperatives have a membership of male 693,898 (77%) and female 209, 861 (23%) totally 903, 759. From the total households of the region 30.3% are member of cooperatives. Cooperatives, in a particular agricultural cooperatives, Rural Saving and Credit Cooperatives (RUSACCO), and Consumer cooperatives do played a major role in production, primary processing and marketing of agricultural products; mobilizing saving and providing credit; and provision of basic consumer