Co-operatives: A better option to channel relief to war victims in Sri Lanka

Photo courtesy  Sampath Wijenayake

It is no secret that many members of the Tamil diaspora are actively involved in helping the victims of the war in Sri Lanka in some way or the other.  There are those who send assistance direct to known or identified victims. There are others who respond to calls from various organisations for funds to help them.  Such organisations are now available in abundance both in the United Kingdom and elsewhere.

However, only a few of such organisations would be able to render accounts to benefactors on how much they have collected and what amounts have been spent to provide relief and even on what kind of relief or assistance  have provided using their funds.   Occasionally we hear about  organisations that collected monies and  duped gullible sympathisers.   In any case in  most instances the victims are mere receivers of assistance and have no say whatsoever in  deciding the nature, the extent and the kind of assistance they need.  It is in the light of such situations that this suggestion is being made that co-operatives are a better option  to provide relief to uplift war victims in Sri Lanka and make them self reliant.

No talk or write-up on co-operatives will be complete without referring to the famous Rochdale Pioneers of England.  Though they commenced their co-operative activities in the middle of the 19th century, the principles they enunciated were officially adopted by the International Co-operative Alliance (ICA) in 1937 as the Rochdale Principles of Co-operation. These principles were adopted by the ICA in 1966 as  Co-operative Principles.  It is a known fact that after the  devastation of the second world war co-operative societies formed on the basis of these principles played a key role in Sri Lanka and other countries in easing the problems caused to the people following the devastation during the war and the economic  depression that followed the war.   It is in the light of the experience gained during that period that  one has to consider the benefits of co-operatives to help the victims  of the recent war in Sri Lanka.

It would be relevant at this point to mention that there are different  kinds of co-operatives in various parts of the world.  Sri Lanka has a three tier system of apex co-operatives, secondary co-operatives and primary co-operatives.    Primary co-operatives are grass root level societies which can band themselves together and form District Unions or District level societies which in term join and form apex co-operatives at a national level, often referred to as federations of co-operative societies. While the apex societies can link themselves with co-operatives in other countries,  the primary level societies link up persons at the village level who have a common interest.  There are agricultural co-ops, fishermans’ co-ops,  employee’s co-ops, dairy co-ops,  welfare co-ops, thrift and credit co-ops, etc.  These co-operatives are formed in Sri Lanka on the lines set down by the Co-operative Societies Law. The Department of Co-operative Development has the function, among other things, of ensuring that co-operative societies are registered and function according to the law  and their accounts are audited annually.  The Department has Assistant Commissioners in every district and they have a team of the Co-operative Inspectors through whom the Departments functions are carried out.

According to a report issued by the Office of the Governor Northern Province  there are 1359  thrift and credit co-operative societies are functioning in the North.[1]  They happen to be  the largest number of  primary co-operatives functioning in  the Northern Province of Sri Lanka.   Many more such societies which had been functioning before the war may  now be defunct.  Yet these thrift and credit co-operative societies (TCCS) are the best means available now at the grass root level, to channel assistance  to the victims of the war  in those areas. Many of them are already members of these societies.  There is nothing to prevent war victims becoming members of  the TCCS in their areas if they are already not members.  If none exist in their locality,  they could get together and form one.   A few words about the TCCSs, how to form one if there isn’t one nearby,  and,  on how they function,   would enable one to understand why they are considered a better option to channel assistance  to uplift  the victims of the war.

About ten persons  living in a particular area could get together for  the common objective of promoting thrift and savings among its members. They can  pool their meagre  savings into a fund to provide  micro-credit to its members  at  a nominal rate of interest, as decided by the members themselves,  when the need arises. This would make one ask the question, how could  a person who has hardly any income, save. The oft repeated example is that of saving a spoon of sugar or a fistful of rice per day which could be a substantial quantity at the end of a month.   They have to meet at regular intervals, pool what little they have saved,   discuss matters of common interest relating to the objective of the organisation, maintain minutes of the meeting and render accounts at every meeting on the monies collected and loans granted, if any.  Applications for  assistance or loans are considered by the members at their meetings and depending on the availability of resources or funds,  Such applications  are  considered by the members themselves and approved depending on availability of funds and the urgency of the request. Since at least two members should stand surety for any loan granted, it becomes the responsibility of the sureties to ensure that the loan is re-paid  without default as agreed.  For  such a society  to become  a legal body, it has to be registered with the Department of Co-operative Development where the Commissioner is also the Registrar of Co-operative Societies.  The society becomes eligible for registration only if  it  can be  proved that they  have been meeting regularly and have been carrying on the functions of the society informally, at least for a few months,   systematically.   The Department would verify these matters through its officials known as co-operative inspectors.   The request for registration should be based on a motion approved by the members who have also to agree to abide by the by-laws, models of which are available at  the Department.  Additions could be made to the by-laws  if  two thirds of the members so desire.  They could also add to the objectives of the society matters like for what purpose loans could be given and  how they should be recovered in the event of default.  Since only loans are given for specific purposes and no out right grants are given, the capital of the society does not melt away but keeps multiplying as days go by from the savings of its members and any donations they receive.   Once an application for registration is accepted by the department, the society becomes a legal body entitled to own properties, including land, open a bank account with a state bank and take such other measures as may be necessary to secure the funds of its members.  Usually State Banks are obliged to provide loans to such societies at the rate of approximately 20 times the amount  of savings of its members, lying with the bank.   The important point to be noted is that  these societies being legal bodies, they are entitled to receive bigger amounts as deposits by its members or  other amounts that could be donated to the society by well wishers for the uplift of its members.  They function as  mini banks at the grass root level just like the famous Grameen Banks of Bangaladesh.

It should be noted that since 1359 thrift and credit societies are already available  anyone desirous of helping  its members could deal with them straight away.  The necessity to create new societies  may not be an immediate need.

This  provides an opening for  members of the Diaspora to make donations to these societies  with a condition that such funds be used exclusively to grant loans to  members who may have been victims of the war and  who may be in need of assistance to start life afresh by indulging in some income generation  activity or the other.  Since the applications for loans are going to be considered by the members of the society who are living amongst them, they would know better about the feasibility of the venture concerned and the capability of the applicant to indulge in such a venture.  Thus the responsibility for the proper disbursement of the funds rests with their own brethren and not with any higher authority.    As stated earlier, it  is a widely known fact that  many in the diaspora are now involved in providing funds to help war victims.  But often these monies  get expended in projects identified by the  donor or implementing agencies. When  such funds reach a TCCS,  the membership would be held responsible for  the proper management of the funds as they themselves would be  deciding  who should be granted loans (not donations)  for  which income generation activity and whether the applicant’s venture would be feasible.    Once the recovery  commences, fresh loans could be given to others in the waiting list from the amounts that get collected every month.   In other words, a donation provided to the TCCS rotates and assists several  persons instead of getting expended on one person.  While the  management  of the funds are supervised by the membership as a whole and the Co-operative Inspector is obliged to supervise its activities and regularly check the books of these societies to ensure that funds are used only for the approved purposes  and whether  the figures tally with the bank statements.  That way misuse of the funds is minimised and the monitoring of the funds disbursed is done systematically. It should be noted when donations of bigger amounts are made to societies, it is customary for such money to be granted to  a Union of these societies at the District level with a condition that  the donations should be  made available for specified purposes only.  A  memorandum of understanding could be  signed between the organisation that is donating such funds and the District Union concerned .  This would perhaps suffice for the time being to understand how secure the funds  provided to a TCCS to help war victims, could be.   Every district in the North and the East have District Unions of TCCS which are equipped to handle and disburse large amounts of monies to its member societies. Non-governmental organisations are using them for similar purposes.   The Department of Co-operative Development is closely involved in supervising and providing technical assistance to  the District Unions by way of auditing  their accounts regularly and conducting training programmes to members on related topics such as leadership, accounting,  and the management of  societies according to co-operative principles.

A few words on what these co-operative principles are, would be appropriate at this stage. They  are guidelines by which co-operatives should operate and put their values into practice.[2]

  1. Voluntary and Open Membership –  Co-operatives are voluntary organisations, open to all persons able to use their services and willing to accept the responsibilities of membership, without gender, social, racial, political or religious discrimination
  2. Democratic Control -  Co-operatives are democratic organisations controlled by their members, who actively participate in setting their policies and making decisions. Men and women serving as elected representatives are accountable to the membership. In primary co-operatives members have equal voting rights (one member, one vote) and co-operatives at other levels are also organised in a democratic manner.
  3. Members economic participation – Members contribute equitably to, and democratically control, the capital of their co-operative. At least part of that capital is usually the common property of the co-operative.
  4. Autonomy and independence – Co-operatives are autonomous, self-help organisations controlled by their members. If they enter to agreements with other organisations, including governments, or raise capital from external sources, they do so on terms that ensure democratic control by their members and maintain their co-operative autonomy.
  5. Education and Training -  Co-operatives provide education and training for their members, elected representatives, managers, and employees so they can contribute effectively to the development of their co-operatives.
  6. Co-operation among co-operatives  -  Co-operatives serve their members most effectively and strengthen the co-operative movement by working together through local, national, regional and international structures.
  7. Concern for the community  -  Co-operatives work for the sustainable development of their communities through policies approved by their members.

A few more  questions relating to this matter need to be answered.

a)  One may ask why  it is better to provide assistance to war victims  through TCCSs and not through other co-operatives.  You would have seen that this is one kind of society  which functions at the grassroot level where the members have full control of its activities.  When it is a industrial cooperative, as for instance a fishermen’s society or a  farmer’s society there is always a possibility of larger numbers of members  being involved  and political interference creeping in. With political comes in possibilities of state funds being channelled in.  Along with it comes the taking away of the rights of its members especially on  who should be its beneficiaries and who should have control over the funds. The government has formed an organisation called the   CLCMS Centre for Livelihood Credit Management Services (CLCMS)    which  acts as  viable institution to implement the Government and Provincial Council Policies through accomplishing its mission. [3]    Any society that has received financial assistance from the state  comes within the purview of the CLCMS  which ensures that the policies of the Government are accomplished – and not that of the members of the co-operatives which could be different.  Since the TCCSs have not solicited or opted to receive such funds, they are still free to act independently.

b)  The other question that could arise is how does one reach the war victims through  TCCS.  While there is nothing to prevent a benefactor identifying a TCCS which has a number of war victims in its membership and donating directly to such society,  it would be desirable  for such benefactors in the diaspora  to  find out which of the organisations in their own country are working with  TCCSs in Sri Lanka and provide the fund to that organisation with a specific request to  make the monies available to war victims through TCCSs.   At least two such organisations are known to be working in the North and East by linking up with the District Unions in these regions and channelling funds to their member societies.

c)  The other question that may be asked is,  how safe are the funds so provided. TCCS are expected to conduct all their financial transactions through their bank. So funds should be provided  directly to the bank account of the TCCS concerned after  signing a memorandum of understanding with the society concerned with a condition that copies of the  financial statement of the society  certified by the co-operative department should be provided to the benefactor regularly.  It is a requirement that at every meeting of a TCCS  its financial statement should  presented to the members.  At the end of the year the Auditors of the  Department  of Co-operative Department are obliged to prepare an audit report of the organisation.  So this does not involve extra work and the benefactor could demand a copy ot these statements be sent to them regularly to enable them to  keep track of what is happening to the funds they provide.

d)  The other option benefactors have is to form co-operatives of their own in the respective countries where they reside with the objective of providing help to their brethren back home in Sri Lanka.   Once such a body is formed and is registered under the co-operative laws of their respective countries,  they could avail of the internationally accepted principle of  co-operation between cooperatives and directly link up and work with the co-operatives in Sri Lanka. Besides such a co-operative could be a non-controversial means by which the already divided factions among the Tamils in the diaspora  could be brought together for the common and undisputed objective of helping the victims of the war back home in Sri Lanka.  That would eventually become the best and the most viable means of helping the war victims without any political bias as they would be recognised as a legal,  non-political co-operative institution  in their respective countries.   They would also be able to interact with the other co-operative institutions of different countries too and help to share information on the plight of the people for whose benefit they have formed the co-operative.

Thus it could be seen that helping war victims in Sri Lanka through their TCCSs  is the best option available to ensure that funds provided by interested persons or organisations in the diaspora  could be efficiently and effectively channelled to such victims.  The best thing that could happen to make the diaspora  play a key role in the uplift of the war victims is for them to form co-operatives of their own in their own countries and liaise with the cooperatives in Sri Lanka.

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The author was formerly an Assistant Commissioner in the Department of Co-operative Development in Sri Lanka.


[1]    A Report on Co-operatives in the North , News Desk – Media Unit – Office of Governor ,Northern Province, Sri Lanka   – http://www.np.gov.lk/pdf/cooperatives.pdf

[2] Vide  http://www.ica.coop/coop/principles.html   from  a statement issued by the International Co-operative Alliance.

[3] This is a statement extracted from the website of the Governor , Northern Province- vide  http://www.np.gov.lk/pdf/cooperatives.pdf