Rural Cooperation: In The Cooperative Movement in Tanzania

7. The Re-establishment and Restructuring of Cooperatives

7 The Re-establishment and Restructuring of Cooperatives 80 Rural Cooperation: In The Cooperative Movement in Tanzania The re-introduction of cooperatives and the restructuring of the cooperative movement in1982 was an important cooperative movement in Tanzania. This chapter first analyzes problems posed by the village cooperative system that was regulated by the Villages and Ujamaa Villages Act, 1975. Second, the report of the Prime Minister’s Commission of Enquiry and its recommendations in re-introducing marketing cooperatives are analyzed.16 The chapter then examines the decision of the government to re-establish cooperatives and restructure the cooperative movement. Finally, the way forward for cooperatives is assessed. Government parastatals and village governments failed to perform the tasks formerly assigned to the marketing cooperatives. Thus, the cooperative market system collapsed, and the supply of farm inputs and credit was disrupted and even ceased in some villages. This was mainly because government parastatals and villages were inefficient and lacked the business administrative capacity to perform these tasks. Farmers suffered great hardships and the production of major cash and food crops declined substantially. This made it impossible for the country to attain its objectives of improving the economic conditions of farmers and the attainment of self-sufficiency in food production (Kimario, A.M. 1992). The crop authorities continued buying farm products but failed to collect them on time and they also could not provide timely price incentives and farm inputs to improve production. 7.1 Problems of the Village Cooperative System The abolition of primary cooperatives had negative effects on the economy. The policy makers learned that the village cooperative system was not working as smoothly as expected. Farmers expressed great dissatisfaction with the marketing crop authorities who handled their crops. The main reasons for farmers’ dissatisfaction were the reduction of prices paid for all crops handled by the crop authorities, and that crops were in some cases bought on credit and not with cash. That situation led to low crop production because farmers were less motivated to increase their production. For instance, according to a Marketing Development Bureau report, production of cotton dropped from 100% in 1974/1975 to 68% in 1980 while cashew nuts dropped from 100% in 1974/1975 to 16% in 1982 (Maghimbi in Foster P.G. and Sam Maghimbi (eds.) 1992). Although other factors such as shortage of rain could cause low production levels, the inefficiency of the crop authorities 16 The Prime Minister appointed a commission of Enquiry to study the problems facing Village Multi-purpose Cooperatives and recommend how to re-introduce cooperatives and restructure the Cooperative movement in Tanzania. Chapter Seven 81 contributed much to the situation. As a result, in November 1980 the Prime Minister appointed a committee of enquiry to find the most effective way to overcome the problems. The commission submitted its report in February 1981. The report revealed that the village cooperative system was ineffective because of the following problems: a) There were legal problems in the Villages Act, 1975. Villages were registered as villages which would function as multipurpose cooperatives,buttherewerenoreferencestocooperativeprinciples. This lead to serious problems in the villages’ cooperative system because villages could not operate under a cooperative identity. This led to other problems including the following: (i) Economic activities in villages were not carried out according to the cooperative principles that formed the cornerstone of cooperative business undertakings. Business ventures established by villages, such as farm projects and shops, were identified as village projects and not cooperative businesses; (ii) It happened that if more than one village wanted to establish a joint common business, the Villages Act 1975 did not specify how to go about it. This tended to discourage villages from undertaking business ventures which would involve more than one village; and (iii) The Villages Act, 1975 did not specify a cooperative body in the village structure which would guide the development of cooperative ventures. The ruling authority in the village council placed more emphasis on the council’s party and government responsibilities in the villages rather than on the promotion of cooperative business. b) There were administrative problems in numerous villages where the administration was purposely simplified in order to reduce costs. (i) Most of the villages depended on voluntary or part-time personnel to carry out administrative work. However, the administrative machinery did not have the capacity to cope with the development program as both the party and government anticipated; and (ii) Development...