Fighting poverty

Deutsche Welle: What is the main benefit of a cooperative?

Theresia Theurl: In general, the idea is to enable people to start a business that ensures their livelihoods or helps them realize their goals more easily than by trying to start a business by themselves. Also, people are trying to help themselves instead of demanding that the state do something. This idea of helping you to help yourself, I think, is very valuable: people are able to generate incomes, they don't work for anonymous investors, and they are close to where the decisions are made. They can really influence strategic decisions in their cooperatives - and people like this kind of participation.

The German Cooperative and Raiffeisen Confederation (DGRV) does not only operate in Germany, but also abroad. How can foreign cooperatives benefit from this support?

First of all, they can benefit from the extensive experience of DGRV. And this experience is passed on, so it's a transfer of knowledge - for instance when it comes to the question of how to set up a cooperative in the first place.

In addition, here in Germany, cooperatives are monitored by special auditors. That's also something that ought to be built up, because not all the people who found and head cooperatives are also business experts.

Can the German way of organizing cooperatives be copied exactly in other countries?

This very basic idea of cooperatives - "We're helping ourselves, we work together and thus we can realize something that can't be done otherwise" - is also an international idea; it's been done for more than 150 years. But of course cooperatives too have to adhere to legislation in their respective countries.

Can a state through its legislation impact the operation of cooperations?

Of course, that's always possible. On one hand, national states can place a burden on cooperatives through strict regulations. On the other hand, one could consider that the state would be helping cooperatives through particular rules in the legislation. But both end up being rather restrictive, since cooperatives are very much based on people's individual efforts.  And that means: people need some kind of a reliable framework, and then they should be able to take care of things themselves. But of course, a state has the possibilities to impact in both ways.

Does that mean that totalitarian regimes tend to not take cooperatives that well?

Well, if you think it through, it's simply a fact that cooperatives are fairly liberal and market-oriented. If a state wants to control everything, then it will also try to control this sector. It would tend to favor state-run businesses or enterprises where the state decides on management. And that does not fit with the idea of cooperatives.

Cooperatives need a stable framework, but the basic idea is people's initiative and the idea is to help people to help themselves.  

Is setting up cooperatives in developing countries a good means to fight poverty?

Yes, it is quite effective, since it's all about helping people to help themselves. You can start economic livelihoods which otherwise would not come about. So it's good for the people who work in cooperatives and become members and owners of them. It also means that new jobs and incomes are created. This way, a whole regional economic cycle can be established. It can impact a whole region positively - a town or a community - and it can also lead to positive changes in society. It creates a lot of momentum, which can also help fight poverty effectively while creating economic participation.

What is the added value of cooperatives in development aid?  

I think it is very positive that the idea of cooperatives, which is not as well known elsewhere as it is in Germany, is spread further. And it's also positive for the image of cooperatives here in Germany and in other industrialized countries if the idea continues to spread, because it has a positive feedback. And I also think that it is a very good concept in development aid.

Theresia Theurl is an expert on cooperatives and professor of economics at the University of Münster, Germany. She heads an institute which focuses on researching the cooperation between cooperatives and enterprises.

Interview: Sabine Hartert / ar
Editor: Michael Lawton