Forum focuses on cooperative sector and the northern economy
Friday, 22 November 2013 00:02
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In light of the deteriorating economic situation in the north, the Jaffna Managers Forum held a second public discussion to explore the role of the Northern Provincial Council (NPC) towards equitable and sustainable economic development.
The discussion titled ‘The Role of the Cooperative Sector in the Northern Economy’ was well attended with broad representation by retired and current officials from the producer and consumer co-operatives, retired provincial bureaucrats, professionals, academics and activists. NPC Chairman C.V.K. Sivagnanam attended the discussion and agreed to take up the issues.
Problem of economic development in the north
The three decade long war has devastated the northern economy. There has been physical destruction of capital including production and other facilities. Due to the lack of capital accumulation during the war period, investments to upgrade production facilities have been lagging. Human resources and institutions have deteriorated. Furthermore, societal values in relation to work, consumption and the culture of saving and investment have all suffered.
The post-war period has seen infrastructure build-out and restoration of war-torn facilities. However, in some remote areas facilities are yet to be rebuilt. While agriculture and fisheries, the mainstay of the northern economy was restarted, incomes in the north continue to be irregular and limited.
This situation has contributed to large number of youth migrating abroad for employment with steady incomes. Furthermore, the larger population is heavily indebted and women headed households in particular are in a very difficult situation.
Producers in the north are unable to face the economic changes and fluctuations in market prices after the war. In particular, they are unable to compete with the Southern corporate sector. Thus goods from the south and the global market are consumed through debt.
While infrastructure has been built and credit has expanded, employment creating businesses have rarely been initiated. Furthermore, efforts to encourage self-employment through bank loans have failed and only led to crippling indebtedness. In this context, rethinking the structure of the local economy, the characteristics of sustainable enterprises and the NPC’s role in rejuvenating the northern economy are timely.
Cooperatives and the Northern Provincial Council
The scale of the northern economy consisting just one million in population is conducive for smaller sized enterprises. Corporate businesses are lagging given the lack of a well-developed human resource base, dearth of productive investment and the absence of a large market in the north. On the other hand, self-employment schemes and production by individuals have also failed.
Here, the cooperative sector has advantages both in terms of scale and the ability to face market fluctuations, through the pooling of resources for production and distribution. The rich history of the cooperative sector, including institutional memory and social infrastructure are assets of the north. Indeed, some have characterised the co-operative sector as the “sleeping giant” in the northern economy.
For the rural and semi-urban economic geography of the Northern Province, cooperatives are suited for production and distribution in village conditions. Furthermore, small scale cooperative production can better use local natural resources and accommodate local labour, particularly women whose hours of work may be constrained by care work in the domestic sphere.
Indeed, workers in co-operatives can determine their working conditions ensuring dignity. Moreover, many of the benefits of cooperative production and distribution are non-monetary in character.
The state sector and corporate businesses will continue to impact the north. Therefore, the cooperative sector will have to work within the larger macroeconomic plans and strategy of the state, and will be shaped by investment, trade and financial policies. Hence coordination with the state structures at the centre will continue to be important.
The NPC can play a major role because co-operatives are a fully devolved subject under the 13th Amendment. While the NPC’s finances are limited for capital investment, including employment creation through state industries, it can provide leadership to reform and revive co-operatives to suit the post-war conditions in the north.
For the NPC, focusing on the co-operative sector is a viable strategy for utilisation of local resources, job creation and income generation. Furthermore, the NPC can engage the central government and international donors to secure additional funding to accelerate the development of cooperative production and distribution.
Revitalising the cooperative sector in the north
The priority for the co-operative sector in the north is the restoration of war-destroyed co-operative production and distribution facilities.
Second, there needs to be careful rethinking of the legal and organisational structure of the co-operatives. Legal reform by the NPC should ensure that co-operatives are not stifled by excessive control.
Third, awareness creation about the possibilities and potential for reviving the long tradition of cooperatives in the north is necessary. A vision of economic development and peoples’ participation to revitalise cooperatives is important. Cooperative education and training, particularly of women should be carried forward.
Fourth, the NPC and the centre have to play important roles in providing leadership, much needed capital and setting the macro conditions. The northern population has been devastated by the war, and any process of sustainable economic development, including through the revitalisation of the co-operative sector, will require a boost by state structures and finances.
