Cooperatives work together to change the socio-economic condition of AMCOs

Cooperatives work together to change the socio-economic condition of AMCOs

Till date, co-operatives remain to be crucial in helping people exercise control over their economic and social lives in an ever more competitive economy. In the current environment where market access is poor and market information is inadequate, individual small farmers are left in a weak position. However, cooperatives provide solution for this. If well managed, co-operatives in rural areas have great potential to build local development and boost performance of the agricultural sector. These days, co-operatives represent a strong, vibrant and viable economic alternative where people can meet their common needs. In Tanzanian agriculture sector, agricultural marketing co-operatives (AMCOS) unite smallholder farmers where they can access inputs and other services including storage, processing and marketing of their produce to improve their lives through increased income.

However, the AMCOS also face numerous challenges affecting their effectiveness in serving members. In their operations to serve members’ interests, they have been struggling to offer various services to members so as to promote their socio-economic conditions and even contributing to larger community development. The AMCOS are also forced to borrow from banks to get funds to pay for members’ produce before selling them; hence they face limitation to raise internal capital. As a way to fulfil members’ interests, some AMCOS have opted to initiate other business so as to create internal capital and extend services to members e.g. input supply, transport and retail business for domestic goods.

The increase in climate change accompanied with aging membership, low youth participation, unstable prices and decrease in farming and outputs harm the sustainability of the AMCOS. Members’ dissatisfaction will keep increasing if alternative commodities and business will not be included in the AMCOS. However, changes in by-laws and intensive education are needed as AMCOS transform into new business model accompanied with external equity and partnership or delivery rights system to enhance members’ supply commitment and regain AMCOS’ market strengths. New model can help to regain individual members’ benefits and hence commitment due to economic value to be created.

Another challenge for AMCOS include poor system of keeping records and handling financial information. Records are not properly kept in the AMCOS and transactions are still handled manually. This is mainly attributed by the presence of few skilled staff with competence of accounting issues e.g. accountants, managers and others.  Inadequate competence and supportive environment for staff to operate creates a risk of poor financial management and accounting capacity, especially when existing co-operative business expands or if diversifications happen. Further, there is a challenge of performance reports and audited accounts not being presented regularly or timely in co-operative’s Annual General Meetings.

Tanzania Federation of Cooperatives (TFC) in collaboration with Wakandi Tanzania has launched a programme for building capacity among leaders of Agricultural Marketing Co-operative Societies (AMCOS). Wakandi will provide education on the importance of using a modern digital system that simplifies financial management and information to facilitate the establishment of SACCOS in each AMCOS. This is expected to increase the opportunities for access to commercial funds and benefit farmers who are members of such associations in areas where access to bank services is a challenge. During the implementation, the Wakandi, a digital financial management company, will offer management solutions for SACCOS with their Credit Association Management System (CAMS) that will benefit the programme. CAMS is a financial system that helps one manage loans, keep transaction records, add or remove members, and other operations that have a great impact on the success of a savings group.

 

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