By Vanessa Velasco
(published in the February 2006 issue of Enterprise Magazine)
For years, cooperatives have played an important part in the country’s development. It is the sector that finances the small businesses of the masa and gives purchasing power to the poor. It is through these organizations that wealth is created on the lower levels of society – particularly those who cannot afford to loan in banks or invest in stocks or bonds.
A cooperative – more popularly known as the co-op – is an enterprise that gathers people to pool in their resources as capital. The most common of cooperatives is the credit cooperative, which has the basic functions of a bank, except that its services are limited only to its members. Its primary function is micro-finance where members can loan an amount as low as P2,000 and settle it on easy payment terms. Other cooperatives pool in the agricultural products of their members, which are sold to the community or to traders and exporters. Any income earned by the cooperative is given back as dividends to its members.
In a way, a cooperative is like a business enterprise on another level – where the stockholders are the masses; where even the poor and marginalized can be empowered to make business and investment decisions. At present, there are around 64,000 of these organizations all over the country – and their numbers are continually increasing.
A GROWING SECTOR
The growing number of cooperatives has prompted the National Confederation of Cooperatives (NATCCO) to work on professionalizing the sector. NATCCO is one of the biggest networks of cooperatives in the country, with over 1,200 member co-ops. They play the role of intermediary among their members, as well as an enabler for the cooperatives to achieve a level of competency and productivity.
Cris Paez, chief executive officer of NATCCO, relates how he wants to see the cooperatives in the future: “We want to turn them into world-class institutions,” he says, “so that the officers and staff are competent in handling the transactions and the cooperatives have their own business centers to keep them connected with the rest of the world.”
Under his leadership, NATCCO has provided training and consultancy services to the officers and staff of the cooperatives, enabling them to acquire skills to manage their co-ops well. After the training programs, NATCCO goes a step further by providing technical assistance in setting up the systems of the cooperatives.
“We go with them to the communities to help them set up their business centers,” says Paez, “through this, the cooperatives are connected to the world through facilities that gives them access to telephone and the internet.”
STANDARDIZING THE SYSTEMS
As part of NATCCO’s efforts to inter-connect the cooperatives, a more standardized system is being developed to unify the software applications being used by its members.
Wilfredo Dimamay, chairman of the Mindanao State University – Iligan Institute of Technology (MSU-IIT) Multi-Purpose Cooperative, is helping NATCCO establish its information technology systems. “We are creating inter-cooperative business by unifying their savings and credit applications software so that all co-ops will be inter-connected,” he says, explaining that this move will allow ATM-connectivity among the cooperatives and facilitate more money transfers and inter-cooperative lending.
The new standardized system will also allow efficient retrieval of records, financial ratios analysis and resources management. Eventually, a central cooperative bank will be established to enable members to make transactions through ATM machines in any of NATCCO’s banks.
The technology of the commercial banks is being used to achieve this inter-connectivity. Dimamay says that eventually, the systems of the cooperatives should be like that of the banks. “The only difference is,” he points out, “whatever profits these cooperatives earn are distributed to the masses.”
EQUIPPING THE LEADERS
With the growing number of cooperatives and standardizing of systems comes the need to continually equip the leaders on how to manage their organizations. “Cooperatives are growing and there is a need to train and equip the leaders to handle the expanding organization,” says Romeo Villamin, chief executive officer of the Institute of Cooperative Excellence (ICE), an organization established as a response to NATCCO’s mandate to equip its leaders and officers.
Now, formal education on Cooperative Management has been made available to directors and officers of NATCCO’s member cooperatives. The Ateneo Business School has now offered Cooperative Management as an elective in its MBA program. Other schools all over the country are being invited to follow suit, and include the elective in their business courses.
Soon, the program will be developed into one whole course that can be offered in colleges and universities. Villamin, optimistic about the response of schools to the program, says he hopes to see the course moving beyond a mere elective to a whole college degree. “Like an MBA major in Cooperative Management,” he muses.
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