Document: The dti Co-operative Incentive Scheme: Guidelines

The Department of Trade and Industry (the dti) identified the promotion of co-operatives as one of its flagship projects for the year 2004/05. The brief for flagship projects also identified this project as an initiative to address the needs of the second economy. This is against a backdrop of realising the existence of a dual co-operative movement. There is a highly developed co-operative sector operating in what is conceptualised to be the first economy, and a weak, mostly black-owned movement operating in what is defined as the second economy. These two economies are distinguished in the South African Government’s Ten Year Review1 as follows:

 

“… the first is an advanced, sophisticated economy, based on skilled labour, which is becoming globally competitive. The second is a mainly informal, marginalised, unskilled economy, populated by the unemployed and those unemployable in the formal sector. Despite the impressive gains made in the First Economy, the benefits of growth have yet to reach the Second Economy, and with the enormity of the challenges arising from the social transition, the Second Economy risks falling further behind if there is no decisive government intervention.”

 

In President Mbeki’s words:

“We will implement a detailed programme to respond to the challenges of the Second Economy. In this regard, during the current financial year, we will finalise our strategy for the development and extension of financial and non-financial support to co-operative enterprises, as well as submit draft legislation on cooperatives to Parliament.”

 

Thus, the Co-operative Incentive Scheme (CIS) aims to reinforce the initiatives of government towards the development and promotion of co-operatives, as a viable form of enterprise in South Africa. The CIS is one of government’s support measures towards realising the 2004-2014 objectives presented in the Government’s Co-operatives Development Strategy.