Assessment of Cooperatives in the Poultry Industry - 2013.pdf - Seda

Research Report: Addressing the Needs, Opportunities and Challenges of Cooperatives
and Collectively Owned Enterprises in the Poultry and Related Industries
Financial awareness may also be assessed by determining the use of banking systems. A financially
aware business will have a bank account that is able to service their transaction needs and that they
use on a regular basis. However, where a cooperative is located in a very rural area, this may be
slightly more difficult. Approximately 89% of cooperatives confirmed that they have a bank account.
This is a positive indicator, especially given the high proportion of rural cooperatives. However,
when asked whether they used the account, only 71% of those cooperatives that have accounts
confirmed that they make regular use of the account.
It is important to understand the reasons behind why some cooperatives do not have bank accounts.
Half of the cooperatives without accounts stated that when money is received it is spent on inputs
and/or distributed, so revenues are not deposited into the bank account. This illustrates the short
turnover time in their business and the lack of reserves. If they encounter a situation in which money
is not coming in, they will simply not have any funds to purchase more inputs. The remaining 50%
either stated that there were not sufficient funds to bank or that a bank account would be more
expensive. In the increasingly competitive banking environment there are many banks that offer
14% of cooperatives
have applied for loans;
only half of these have
received loans
specialised packages for small businesses. The response that a bank
account is too expensive is likely due to a lack of information or
due to a lack of diversity in the banking options in their area. For
example, if there is only one bank in the rural community and they
do not offer accounts for small businesses, then it may be the case
that an account is relatively expensive for the developing farmers.
Small business loans offer an alternative to cooperatives relying on government agencies to provide
the money and equipment to start their business and also create accountability. However, when
asked whether they had applied for loans, 86% of cooperatives said that they had not applied for a
loan. Some 14% responded stated that they had applied for loans in the past and of these only half
had actually received loans.
Many cooperatives are unable to apply for loans due to a lack
of formal documentation and record keeping. While
government agencies may provide grants after conducting
their own inspection amongst private financial institutions,
cooperatives need to take the first steps in ensuring that they
are credit worthy.
Many are running hand-tomouth
businesses and not
planning for the long term
While a large number of cooperatives maintain some form of financial record keeping in their
89% of
cooperatives
surveyed have a
bank account for
their business
business, the survey has shown that most cooperatives would benefit
from greater financial training. Cooperatives also indicated the desire to
attain greater financial training. The inconsistent responses concerning
profit and low numbers reinvesting into their cooperatives illustrate that
many are running a hand to mouth business and not planning for the longterm
financial success of their businesses.
53 | P a g e U r b a n - E c o n : D e v e l o p m e n t E c o n o m i s t s