Espineli, Marisa

Capacity Development Towards Sustainable

Cooperatives:What Are We Missing?


by Marissa Espineli


Poverty today is a very complex phenomenon that is tied to unstable financial systems, increasing food insecurity, rapid climate change and increased environmental degradation. The cooperatives provide an economic enterprise model that is worth considering given this complexity.  Over the years, the cooperative sector has made significant contributions to the socio-economic development in developing countries. In recognition to their contributions to poverty reduction, employment generation and social integration, the United Nations has recognized the cooperative sector as an important element in the realization of the millennium development goals by 2015. In 2009, it declared 2012 as the International Year of Cooperatives.1 Prior to this declaration, FAO and the ILO have been regularly celebrating an international day for cooperatives since 1995.2 The World Bank recognizes the role of cooperatives in revitalizing the agricultural sector and the rural economy. With food demand doubling by 2030, it specifically suggested the need to encourage farmers to organize into cooperatives that engage in the production, processing and marketing of agricultural products. An IMF survey in 2007 showed that cooperative banks have become an important part of many financial systems. FAO, ILO, the UN, WB and IMF seem to agree on the important role of the cooperative sector in alleviating poverty.

Co-ops, as they are usually called, make substantial contribution to rural development because they engage people in community development, create employment and engage people in income generation by creating viable enterprises and businesses, empower women and give voice to the rural poor through representation in the development process. The co-ops provide the platform for addressing issues of poverty and income inequity, making them one of the pillars of people empowerment in many developing countries.3

All Philippine Presidents supported the Co-op movement in one way or the other. The 1987 Constitution provided for the promotion of growth and viability of cooperatives as instrument of equity, social justice and economic development under the principles of subsidiarity and self-help. The Philippine Development Plan 2011-2016 recognizes the role of cooperatives in development.4 It is seen as a means towards inclusive growth and promotes the pooling of resources for the welfare of all. The PDP supports the nurturing and promotion of savings and seeks to strengthen the cooperative in job creation and spreading wealth.

Despite the international recognition on the value of cooperatives and the national support that the Philippine government has provided to the establishment and development of cooperatives, many cooperatives do not last long. In 1985, there are only 1,646 registered cooperatives in the country compared to 3,095 in 1904. In 2009, the total number of cooperatives in the Philippines is 78,611. Of this number, only 23,836 are operating.5

In several studies that assessed the growth and development of cooperatives, the lack of education and training has been identified as the main reason for cooperative failures. Lack of education and training correlates with the following causes of coop failures: lack of capital, inadequate volume of business, lack of loyal membership support, vested interest and graft and corruption among coop leaders, weak leadership and mismanagement and lack of government support.5 Other causes include: lack of capital, inadequate business, lack of loyal membership support, graft and corruption among coop leaders, weak leadership and mismanagement and lack of government and support.  Other studies attribute the failure of cooperatives to incompetent management, lack of understanding of the principles, practices, true aims and purposes of cooperative associations, improper use of credits by the borrowers, defective securities, political interference, lack of compensation, inadequate character and moral responsibility in handling money, lack of adequate safeguard against unscrupulous officers, dominance of individualistic attitude instead of the spirit of cooperation, dependence on alien suppliers and distributors, ineffectiveness of the government and inadequate marketing facilities.6

Daman Prakash in his paper, “Capacity Development of Agricultural Cooperatives to Meet the Market and Human Resources Development Demands: A Step-by-Step Approach”, identified the following as capacity gaps: lack of communication with the basis members, lack of interaction with and support of the national/sectoral federations, lack of business linkages, inconsistent/restrictive government policies and rigid regulations,  lack of training infrastructure including trainers and training material, very low level of flow of market intelligence, low level of appreciation of value addition through agro-processing.

The experiences of similar societies in other countries point to the lack of proper understanding of the principles and true aims of cooperative associations and the non-adherence to them in actual operation as the fundamental cause of failure in cooperative enterprise. These cases point to the flawed basic economic or social premises for forming the cooperatives, especially those formed by government bureaucrats with a top-down vision of what a cooperative should be.

To improve the cooperatives’ business and management efficiency there is aneed to develop short-term training programmes for its managers and leaders. These managers and leaders are expected to serve as trainers for other managers and leaders of the future. In the Philippines, the National Association of Cooperative Education (NACE) was formed in 1996 to address the issue of education and training for cooperative members. Through NACE, regional, provincial, municipal and even barangay chapters were targeted to be organized in order to promote cooperative education and training at the provincial and grassroots levels. At the core of the NACE is the Cooperative Development Authority (CDA) and all its regional branches, all state colleges and universities, coop and NGO training centers, coop federations, councils and unions, LGU provincial/municipal coop development offices and the various government organizations and agencies like the Departments of Agriculture, Agrarian Reform, Trade and Industry, Education, Culture and Sports, Environment and Natural Resources, Science and Technology, National Economic and Development Authority (NEDA), Technical Education and Skills Development Authority (TESDA), Center for Higher Education and Development (CHED), National Housing Authority (NHA), Technology and Livelihood Resource Center (TLRC), PCUP and Government Funding institutions (GFIs) like the Land Bank of the Philippines, Government Service and Insurance System (GSIS), Social Security System (SSS), Philippine National Bank (PNB), etc.

In this context, there is a need to examine the current capacity development efforts and interventions provided by those mandated to provide education and training to cooperatives. The results of such a study may be able to propose a cosmic model for capacity development that applies to nurturing and sustaining cooperatives.



3  Sibal, Jorge V. N. D. “ A Century of the Philippine Cooperative Movement.” UP SOLAIR, Quezon City, Philippines. 

4 Paderanga, Cayetano.July 22, 2011, PICPAs Cooperative Day Keynote speech.


6 Sibal, Jorge.

7 Agricultural Cooperatives Development: A Manual for Trainers