Three Essential Steps for Cooperatives to Thrive in the Modern World

by Alief Dharmawan, M.A. Indira Prameswari

Indonesia is prioritizing cooperative transformation and modernization. During the MDPI webinar “Strengthening Cooperatives to Empower Coastal Community”, Indriastuti Saggaf from the South Sulawesi Cooperative and SME Office outlined three priority sectors for cooperative transformation : agriculture, livestock, and fisheries cooperatives.

Indriastuti emphasized that these priorities were set to build institutional capacity and alleviate extreme poverty. Through cooperatives, members are encouraged to develop an entrepreneurial spirit and high professionalism, making the cooperatives economically and socially productive.

To achieve this transformation, cooperatives are encouraged to practice and adapt to the changing times by implementing 3 transformative steps:

1. Commodity-based business

The first step towards transformation is shifting their focus to a commodity-based business model. Cooperatives need to highlight their flagship goods or services, and base their business model on products or services that are prominent or in high demand in the region.

For example, Bubula Ma Cahaya, a MDPI-assisted cooperative in Ternate, North Maluku, has started its business following this model. They focus on fishing equipment and supplies, specifically targeting local fishers. They also buy and sell catches from local fishers to be distributed to fish processing industries. By following this model, the cooperative can grow and effectively meet its members’ needs.

2. Strengthening institutional governance

MDPI explains cooperative institutional strengthening elements.

Transforming governance and enhancing the capabilities of members is crucial for cooperative success. Many cooperatives make no progress due to management and financial bookkeeping issues. This is because cooperative members, especially in micro scale, have never received management and bookkeeping training. Poor management and bookkeeping can lead to inactivity and institutional failure.

Many coastal community-managed cooperatives face these challenges. In the case of MDPI-assisted cooperatives, most of our beneficiaries have not finished school, but they possess strong entrepreneurial skills. After a few training and mentoring sessions, they are now able to efficiently implement their daily functions.

To overcome this, MDPI assists ten cooperatives with bookkeeping, data management, marketing, and entrepreneurial strategies. Our assisted cooperatives also collaborate with local governments and academics to receive business training, enabling them to become self-reliant.

3. Digitalization

A member of Kembali Muda Mandiri Cooperative uses a digital accounting mobile application to record real-time transactions.

Cooperatives should embrace the latest technology to remain relevant in the modern world. However, adapting can be challenging for members in coastal communities who may have limited information and technology skills. While the Internet is now easily accessible in Indonesia, not all users are digitally literate or equipped with the necessary skills and materials to operate the software effectively.

Training and practice can make a difference. For instance, Koperasi Kembali Muda Mandiri, a cooperative assisted by MDPI in Bone, South Sulawesi, adopted digital bookkeeping to record transactions efficiently. They were also involved in digital marketing training conducted by the local government.

During the webinar, Agung Subamia from SIDI Cooperative in Denpasar shared how these three steps have benefited his cooperative economically and socially. As of 2023, SIDI has established various retail businesses, adapted technologies, and contributed to social causes like the development of public facilities in Sanur Beach.

However, all these strategies will not be successful without the dedication of the members. As Nilam Ratna, Fisheries Community Organization Lead at MDPI, emphasized during the webinar, active participation from members is crucial to transform their cooperative. “Members have to be dedicated to organizing, building relationships with external businesses, and collaborating with the government,” she said.

By embracing these transformative steps and fostering active member involvement, cooperatives can achieve economic growth and contribute to improved livelihoods, shaping a brighter future for their communities.