The birth and death of co-operative unions
Workers inside a cotton ginnery. In early 19710s, cooperatives had a turnover of 440,000 cotton bales from 53 cotton ginneries. PHOTO COURTESY OF HENRY LUBEGA
With the introduction of cash crops such as coffee, cotton and tobacco in the early 1900’s came commercialised farming.
Though it is important to note that it was done forcefully, like growing of coffee in central region, hence the name kiboko (cane).
As the harvests grew, people of Asian and European origin cashed in as middle men. This, however, did not go well with the locals who wanted to have a say in the sale of their produce and not go through middlemen.
It was these voices that gave birth to the co-operative movement in Uganda in 1913.
At the time, coffee and cotton were the drivers of the new economy being built.
But this economy was being predominantly controlled by Asians and Europeans who dominated the trade, while Africans did the farming of the crops.
The co-operative movement was as a result of protests from the farmers who opposed the exploitation by the two races that dominated the trade and took the lion’s share of their produce.
When the farmers demanded to form cooperative societies, the colonial government saw them as subversive, hence banned them.
The ban forced their leaders to operate in hiding. With their existence being illegal and the leaders not being wealthy enough, the cooperative societies could not accesses the required funding.
In 1935, when a Bill to legalise co-operatives in the country was tabled in the Legislative Council, it was met with very strong opposition from those involved in the trade, and hence it was thrown out.
With the Bill thrown out, the cooperative societies continued to operate underground until 1946 when the Co-operative Societies Ordinance was enacted, giving them legality to operate in the country.
However, this official recognition was taken with a pinch of salt, with the co-operatives saying the government was looking for ways of controlling them. They thus refused to register with the register of co-operatives under the department of co-operatives development.
Despite being stringent, the government realised by 1950 that there was need to bring more Africans into business and hence a need for them to access credit facilities.
According to the Saben’s Commercial Directory and Handbook of Uganda, “Unfortunately, the commercial banks at the time would not extend credit to Africans because of the nature of their securities.”
The book goes on to say, “Under ordinance number 20 of 1950, the Uganda Credit and Saving Bank was created purposely to extend credit facilities to Africans with the aim of furthering agriculture and co-operative society purpose.”
Resistance and expansion
With the passing of the ordinance, government expected the co-operatives to legalise their operations and existence.
But this never happened until 1952 when governor Andrew Cohen devised ways of turning co-operatives from being protest organisations to collaborating societies.
In order to achieve this, in April 1952 he appointed R. Dreschfield to head a commission of inquiry to look into the reasons why many co-operatives were refusing to register under the ordinance.
In a report to government from Dreschfield’s commission, several demands from the co-operatives were made.
These included stopping government from interfering in the societies’ activities, giving the societies enough powers to make the registration acceptable and compulsory acquisition of a number of ginneries by the co-operative unions with government loans to facilitate the financing.
Others were the elimination of discriminatory pricing policies and offering private African access to Buganda coffee processing.
Instant impact
According to a report by Arian Shafiq in 1960, there was instant impact on the performance of the cooperatives following government’s implementation of the agreed issues from the commission of inquiry.
“The existing groups had 273 registered as co-operative societies by the end of 1959. At the end of 1961, there were 21 registered co-operative unions, including the Uganda Co-operative Alliance and 1,662 primary co-operative societies with a membership of 252,378,” the report says.
When the Coffee Industry Ordinance was enacted in 1952, it cleared way for the six coffee curing works by different co-operatives to come into effect.
As a result, by 1954 the Bugisu Co-operative Union came into being and took on the responsibility of collecting coffee in the region.
In a space of nine years, between 1951 and 1960, the tonnage of coffee and cotton production increased by more than 400 per cent from 14,302 tonnes in 1951 to 98,308 tonnes by 1960 with a turnover of £9 million per annum, about Shs180 million then. In 1960, the exchange rate was £1 to Shs20.
Even after independence, co-operative societies were looked at as a vehicle of rural development. The Milton Obote government put in place policies to reach its target.
To achieve this, the new government first repealed the 1953 ordinance and replaced it with the 1963 Co-operative Societies Act.
Under this Act, the office of the registrar of co-operatives, which the local farmers had opposed during the colonial days, was reintroduced, though this time it was combined with that of the commissioner of co-operative development.
Besides the policy and administration, government went ahead in the same year, 1963, to set up a co-operative college in Bukalasa, Luweero District, which was later transferred to Kigumba in Masindi District to date.
A year later, in 1964, government went ahead to strengthen the movement with the creation of the Uganda Co-operative Bank (now defunct). The bank was aimed at mobilising savings and generate funds for co-operative development.
To further strengthen their financial muscle, government gave the co-operatives 100 per cent monopoly to gin cotton.
By 1965, as it expanded in numbers, the movement went beyond the two major crops of cotton and coffee. It went into other fields such as fishing, dairy and dairy products, and transport among others.
This kind of expansion was partly due to government’s commitment to enhancing rural areas and household incomes by supporting the co-operatives through direct assistance and subsidised services.
Growth breeds corruption
Government support saw the movement grow out of reach of the department of co-operatives’ ability to supervise its operations.
This was coupled with change in priorities of managers, some of them joining politics, leaving the monitoring of the movements to less knowledgeable people.
Also, there were increased economic pressures and political interests which invaded the co-operatives, leading to mismanagement, corruption and embezzlement.
What had started as a development avenue from the government’s side became an embarrassment as billions of shillings started disappearing in an abyss. As a result, government in August 1966 set up a commission headed by Member of Parliament Arian Shafiq, to look into the working of co-operatives.
However, the commission’s recommendations were far reaching that they gave the minister a lot of power to the extent that the minister alone could easily overrule some provisions of the Act which came into force after the commission of inquiry’s report.
By the 1971 coup of Idi Amin against president Obote, Uganda had more than 2,500 primary co-operative societies with more than 36 unions, four of which were national unions.
At that time the cooperatives had a turnover of 440,000 cotton bales from 53 cotton ginneries, 31 coffee factories with a production capacity of 147,000 metric tonnes of clean coffee. They had a financial turnover of Shs315m and Shs455m respectively.
The declaration of the economic war in 1972 saw the prices of the two main crops, whose prices were controlled by government, fall drastically. The main crops were the backbone of the cooperative societies.
Due to the fall, many farmers resorted to the non-traditional cash crops like maize, beans and groundnuts.
Second chance
During the Obote II regime, he tried to revive the cooperative societies as a tool of rural development.
The government went as far as importing Tata lorries for these cooperatives and they were clearly marked ‘promote co-operative marketing’.
However, this was also the time that the National Resistance Army guerrillas had risen against the government. This derailed the full scale revival of the movement.
In central region, the war was concentrated in areas where the biggest societies operated from. This was in the Luweero triangle, home to Wamala, East Mengo and West Mengo cooperative unions.
When the war moved to western Uganda, it affected Masaka Cooperative Union and Banyankore Kweterana, the biggest cooperative union in western Uganda.
With the fall of Obote and coming in of the NRM in 1986, the new government showed interest in the movement by supporting it to regain its powers through the 1991 Co-operative Societies Statute.
However, this was undone when government adopted to liberalise the economy. This opened up the cooperative unions to competition from private firms which the societies were not used to and could not cope with.
Also, along the way, the bank which was purposely opened to avail funding to these movements closed shop, leaving co-operative societies which persisted to compete with other firms which had easy securities.
Background
The co-operative movement was as a result of protests from the farmers who opposed the exploitation by the two races that dominated the trade and took the lion’s share of their produce.
When the farmers demanded to form cooperative societies, the colonial government saw them as subversive, hence banned them.
The ban forced their leaders to operate in hiding. With their existence being illegal and the leaders not being wealthy enough, the cooperative societies could not accesses the required funding.
In 1935, when a Bill to legalise co-operatives in the country was tabled in the Legislative Council, it was met with very strong opposition from those involved in the trade, and hence it was thrown out.
With the Bill thrown out, the cooperative societies continued to operate underground until 1946 when the Co-operative Societies Ordinance was enacted, giving them legality to operate in the country.
