COOPERATIVE unions, together with the government, private sector, and development partners, are urged to join forces in a transformative initiative aimed at revolutionizing agricultural collective schemes into vibrant agribusiness entities.

For far too long, these unions have been confined to merely offering basic agricultural value chain services. The moment for bold, decisive action is now—an opportunity to reshape the future of agriculture and unlock its true potential! 

In a recent interview, Dr. Cyril Komba, Senior Lecturer and Dean of the Faculty of Cooperative and Community Development at Moshi Cooperative University (MoCU), emphasized that achieving Sustainable Development Goal No. 2—ending hunger, ensuring food security, improving nutrition, and promoting sustainable agriculture—requires cooperative unions to invest in large-scale, economically productive projects. 

Dr. Komba believes that cooperative unions should diversify their investments into a range of profitable ventures. This strategy will not only provide additional income for members but also create revenue streams beyond the seasonal sales of agricultural products.  

He argues that the moment has arrived for cooperative unions to make significant investments, empowering their members by exploring corporate shares, T-Bills, T-Bonds, and other sustainable projects across various economic sectors. By doing so, they can secure a more prosperous future for all involved. 

“It has reached a critical juncture where cooperatives must transition to commercialized operations that facilitate the generation of substantial profits—investments that will enable cooperatives to deliver significant dividends to their members and improve lives for the better,” said Dr. Komba. 

He noted that cooperative unions investing in large-scale economic projects possess the potential to contribute up to 45 percent of the national income from the agricultural value chain, a notable increase from the current 29.1 percent, which encompasses the entire agricultural sector, including fisheries and livestock. 

“The agricultural sector presents ample opportunities to inject foreign currency into the country’s economy, especially through cooperatives.  

The top priority now is to strengthen the financial capacity of these unions, enabling them to raise capital for large, sustainable projects in alignment with the Sustainable Development Goals,” he recommended. 

Dr. Komba further stated that cooperative unions have consistently demonstrated their sustainability and contributions during periods of social and economic crises by continuing to provide essential services to their members. 

Ress Mashurano, Chairperson of the Kagera Cooperative Union (KCU), shared that in its efforts to transform cooperatives for commercial investment, KCU has invested in the Mbinga Coffee Curing Co. Ltd. 

"The union holds a 63 percent stake in Tanganyika Instant Coffee Public Limited Company (TANICA Plc) and has also invested in conference halls," he said. 

Mashurano explained that the union has already established a Savings and Credit Cooperative Society (SACCOS) with a working capital of 1.164 billion shillings, has formed a board of directors, and is now operating with a Grade B license. 

He stated that a notification letter has already been submitted to the Tanzania Co-operative Development Commission (TCDC) seeking approval for the hiring of SACCOS staff. 

Anastazia Mkinga, Inspector of Prisons and board member of TPS SACCOS Limited, noted that the SACCOS has 11,000 members and a portfolio of 41 billion shillings, which it has invested in various economic projects within the agriculture and construction sectors. 

She emphasized that these investments directly benefit the community as part of the SACCOS' effort to commercialize operations and generate reasonable profits for its members. 

Monica Fidelis, an Extension Officer and member of Magunga AMCOS in the Korogwe district of the Tanga region, shared that in 2020, the AMCOS borrowed 380 million shillings from NMB Bank Plc to secure modern agricultural tools and transform its operations into a commercialized model. 

She stated that the loan was fully repaid as of June last year, and the bank issued a total of 1.15 billion shillings to five AMCOS in Korogwe district involved in the sisal cash crop value chain. 

"Investing in economic projects is the smartest strategy to empower cooperative unions to make significant contributions to the national economy. Members of Magunga AMCOS are at the forefront of implementing this vision," said Monica. 

This journalist has learned that, according to recent reports on the state of investment in the industrial sector by the Ministry of Industry and Trade for 2023, cooperative unions own 328 factories that process members' agricultural products and engage in various technical activities. 

According to the current report by the Tanzania Cooperative Development Commission (TCDC), as of April 2024, Tanzania mainland has 7,522 cooperative unions involved in diverse economic activities serving 8,358,325 active members. 

The report by the National Food Reserve Agency (NFRA) for the fourth quarter of 2023 indicates that 80 percent of food crop production comes from farmers who are members of cooperative unions, thereby significantly contributing to the reduction of hunger risk at the household level. 

The report indicates that during the 2022/23 harvest season, cooperative union members were able to sell their produce through AMCOS and earned 1.56 trillion shillings. 

However, the report also shows that cooperative unions created 153,982 direct jobs and an estimated 500,000 indirect jobs in the period ending December 2023. 

Despite facing a severe shortage of farm inputs due to the impacts of climate change during the 2022/23 season, cooperative unions successfully coordinated the acquisition of farm inputs worth 4.5 billion shillings, which were distributed to both members and non-member farmers. 

This journalist has learned that investment in cooperative unions is categorized into four areas based on the type of investment involved. 

According to Article 74 (1) of the Cooperative Societies Act No. 6 of 2013, these investment areas include: (i) deposits that earn interest at cooperative financial institutions or other financial institutions approved by the Cooperative Commission; (ii) shares in any other registered union; (iii) government bonds and other securities; and (iv) other investments as advised by the Registrar, with approval from the Cooperative Commission and publication in the government gazette. 

The same section of the Act also mandates cooperative unions to declare their approved investments, which may include factories, buildings, farms, livestock, fishing, transportation, and other investments as directed by the Cooperatives Registrar. 

According to Rule 50 (2) of the Microfinance (Saving and Credit Co-operative Societies) Regulations 2019, Savings and Credit Cooperative Societies (SACCOS) can invest in the following areas: interest-bearing deposits in banks or financial institutions, government securities, other financial unions, non-earning assets, and other investment areas as approved by the Central Bank and the Cooperative Societies Registrar. 

The regulations specify that sources of capital for investment in cooperative societies include: (i) members' shares; (ii) the legal units of the relevant union in accordance with Rule 67 (d) (iii) of the rules governing cooperative societies; (iii) loans from financial institutions based on the debt limit approved by the Registrar of Cooperative Societies; (iv) support from stakeholders; and (v) any source approved by the general meeting of the cooperative union in accordance with Rule 67 (d) (vi) of the prevailing regulations. 

To enable cooperative unions to make large, sustainable investments, the Tanzania Cooperative Development Commission (TCDC) prepared and released an investment guide manual in 2022. 

The primary objective of this manual is to provide instructions, procedures, and steps that cooperative societies should consider before and after making an investment. This guidance aims to facilitate productive investments and help avoid potential consequences of non-compliance with the policies, laws, and regulations governing cooperative societies. 

Additionally, the manual outlines directives that cooperative society leaders, particularly the investment committees and members, must follow in implementing all investment activities.  

To be continued.