‘Hybridization of cooperatives’: Challenges and Prospects of Managing Corporate Bodies owned by Co-operatives in Tanzania

Abstract

Hybrid cooperatives (HBCs) refer to cooperative business organizations formed out of combining cooperative and company characteristics or elements in their establishment. They differ from ordinary or traditional cooperatives in that, while traditional cooperatives give more emphasis on member participation through patronage and less on share acquisition and management, HBCs give emphasis on both patronage and shareholding. The main objective of this paper is to create an understanding of the concept of hybrid cooperatives, their ownership and management challenges when run in the context of traditional cooperative approach, and prospects of the solutions found in adopting new cooperative models. The paper highlights the challenges faced by members of Tanzanian hybrid cooperatives which are based on a traditional model. It also considers prospects of using new models, namely proportional investment cooperatives (PICs) and new generation cooperatives (NGCs) as a solution to the challenges. The argument advanced is that Tanzanian hybrid cooperatives should adopt new models in order to address their current ownership and management problems. Using a study of selected hybrid cooperative companies from Tanzania the paper observes that their economic performance deteriorated because of, inter-alia, decline in member patronization due to non involvement of members in ownership and management. The paper reckons that in a quest to exploit recent government industrialization plans, it is likely that more HBCs will be established in the country, if their ownership and management challenges are resolved. It therefore recommends that Tanzania cooperative policy and legislation should adopt Proportional Investment Cooperatives (PIC) and New Generation Cooperatives (NGC) models as one of the solutions to the challenges faced by the HBCs.