COOPERATIVE IN THE SOCIO-ECONOMIC DEVELOPMENT IN THE

PHILIPPINES

What is cooperative?
Voluntarily joined together to achieved their social, economic and cultural needs and aspirations.
Accepting a fair share of the risks and benefits of the undertaking in accordance with universally
accepted cooperative principles.
What is Social Development?
Refers to the progressive improvements in the living conditions of quality of life enjoyed by
society and shared by its members.
The Copenhagen Social Summit, 1995 defined social development in terms of three basic
criteria: poverty eradication, employment and social harmony.

Definition of Socio-Economic Development

- Socio-economic development is a process that seeks to identify both the social and the
economic needs within a community and seek to create strategies that will address those needs
in ways that are practical and in the best interests of the community over the long run. The
general idea is to find ways to improve the standard of living within the area while also making
sure the local economy is healthy and capable of sustaining the population present in the area.
Socio-economic development occurs in neighborhoods in metropolitan areas, sections of
smaller cities and towns, and even in rural settings.

- Typically, socio-economic development involves making changes in current laws and regulations
in order to attract new growth and enhance the standard of living for local residents. Changes in
laws can make it easier for new industry to move into the area and offer employment at
equitable wages. This in turn can aid in motivating the creation of more services that citizens can
enjoy, allowing the area to prosper. With the right type of motivation and improvements to the
infrastructure, residents are not tempted to move away in order to earn a living or enjoy
desirable services, and there is a good chance more people will move into the area and provide
further stimulation for the local economy. While there is no one right way to pursue socio-
economic development, the process is essential to preventing decline and the eventual
extinction of a community.

How is the Philippines’ socio economic doing today?

- The Philippines has a mixed economy. The hindrances to the Philippines’ Economic
growth are corruption, poor education, poor internet connection, poor infrastructure —
and even poor people.
 - All these factors are huge barriers to progress, and it will take a long time and an even
longer journey before such barriers become hindrances no longer. According to the graph
Philippines’ economy state is far behind China and the United States. Although that’s the
case if we look at the news today, we can see that the economy is growing remarkably.
This growth is one of the fastest in the Asia-Pacific region.
- Economic Development in the Philippines is fueled by several sectors most outstandingly
BPO. The outsourcing sector proceeds to develop due to Filipino’s command over
youthful talent, and their desire to form the most of their capacities. Filipinos as a
community are inviting and cherishing individuals and its uncommon to discover
somebody who is unwilling to hold a conversation.
- Agricultural products constitute most of the exports. There is hardly any product where
the Philippines is the key provider to the ASEAN region let alone to the wider world.
- But since the Philippines hasn’t developed as much as its neighbors, due to rampant
corruption and wise individuals leaving the country to work for other nations, there’s
foreseeable good growth within a long time to come.

The cooperative has served as the government's main tool for implementing policies in boosting
economic growth and equality among society. The rule is reasonable stated in the enabling laws
of the 1987 Philippine Constitution around the beginning of the century by the Philippine
legislature.
The role of cooperatives in socio-economic development

Constitutional Provision (1987). The Constitution offers multiple benefits.

other people, an order to the legislature to create an agency that will make use of
Cooperatives as tools for economic growth and social fairness
(Section 15 of Article XII). Therefore, the fundamental law of the land envisions the
growth of cooperatives throughout a range of economic sectors
Its economic basis and the mobilization of the members of less fortunate people
to encourage society's participation in nation-building.
Enabling laws. As required by the Constitution, the Congress of
The Cooperative Code (Republic Act 6938) was passed by the Philippine (legislature).
 and the Cooperative Development Authority (CDA) Charter (RA 6939) on March 10, 1990.
The Cooperative Code emphasizes the basic concepts and principles, structure and registration,
membership, management, dissolution, capital, funds, funds recovery, audit, inquiry, and
members' rights to assess, distribute, and allocate net excess, as well as any special provisions
pertaining to cooperatives for agrarian reform, public cooperatives, and cooperative among
others, banks, cooperative credit unions, and cooperative insurance societies others.
Particular Roles of Cooperatives. Under Philippine Development Plan (2011-2016),
Cooperatives are expected to provide a significant contribution in the objectives of creating a)
rapid, inclusive and sustained economic growth, b) financial inclusion, and c) reduction of
poverty.
a) As a help-help organization, with proper monitoring and support of the government,
cooperatives can contribute to rapid economic growth because of the power of cooperatives
to mobilize savings and capital which can serve as inputs in the production of goods and
services of the less privileged members of the society.
 Power of Cooperatives to Mobilize Savings and Capital - Cooperative societies
encourage the habit of savings amongst members by linking other services such as access
to loans and credit to the savings obligation of the members.
b) Cooperatives which are engaged in deposit mobilization and capital formation have been
proven potent grassroots organizations in providing micro entrepreneurs, who are most often
denied by formal financial institutions, access to capital. The development of micro and
small entrepreneurs which accessed financial services from cooperatives create a rapid,
inclusive and sustained economic growth, particularly in rural and agricultural areas.
Economic growth in rural areas cannot be achieved without putting in place well-tailored
programs to address infrastructural inadequacies that will increase their access to financial
services.  Cooperatives have a critical role to play in ensuring that those who are hardest to
reach, and who are the most disadvantaged, are served.
 Deposit Mobilization is an integral part of financial institutions. It enables financial
institutions to improve their financial performance and contribute to the stabilization of
rural financial markets (Spio, Groenewald, & Coetzee, 1995). Promoting efficient savings
mobilization enables the poor to accumulate funds and significantly reduce the demand
for credit offered by donors and NGOs (Steel & Charitonenko, 2003).

Efficient provision of loans and deposits services encourages members to be involved in

different businesses.

c) The Philippines missed by almost 50% the reduction of extreme poverty by 2015 the MDG
targets and commitments. The extreme poverty reduction was only from 33% (1991) to
 16% (2015). The target of eliminating extreme poverty by 2015 was missed. However, the
provision of technical, financial, and institutional development assistances to micro and small
cooperative, on which a large portion is composed of agriculture and agrarian reform
cooperatives, are projected to contribute to the creation of rural and agricultural enterprises
that will reduce extreme poverty in the rural and far-flung areas.

Millennium Development Goals (MDGs) - FAO focuses on poverty and hunger reduction
through: improving agricultural productivity and incomes and promoting better nutritional
practices at all levels and programs that enhance direct and immediate access to food by the
neediest.

Understanding the trends and drivers of efficiency, and detecting the source and amount of
inefficiency is essential for rural financial markets to take measures for improving their
efficiency. Measures that improve efficiency in rural financial markets are particularly beneficial
for the rural poor to foster income expansion and poverty reduction (Steel & Charitonenko,
2003).

Cooperatives have also been instrumental in promoting inclusive development in rural areas,
helping to both strengthen and diversify rural economies.

Financial cooperatives provide access to credit for members who might not typically have access
to the larger savings and commercial banks. This access to financial services often supports the
formation of small and micro businesses.

Cooperative have also been able to strengthen agricultural production and improve access of
poor farmers, especially through engaging in fair trade arrangements. Small farmers who
struggle to create and sustain businesses also to enter into high-value supply chains that they
would not be able to do their own.
 STATUS OF COOPERATIVES IN THE PHILIPPINES (2020-2022)

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 Contribution of cooperatives in sustainable development

The sustainable Development Goals (SDGs), otherwise known as the Global Goals, are a
universal call to action to end poverty, protect the planet and ensure that all people enjoy peace
and prosperity.
a) No poverty;
b) Zero hunger;
c) good health and well-being;
d) Quality education;
e) Gender equality;
f) clean water and sanitation;
g) Affordable and clean energy;
h) Decent work and economic growth;
i) Industry, innovation, and infrastructure;
j) Reduced inequalities;
k) Sustained cities and communities;
l) Responsible consumption and production;
m) Climate action;
n) Life below water;
o) Peace, justice and strong institutions;
p) Partnership for the goals
These 17 goals build on the successes of the Millennium Development Goals, while including
new areas such as climate change, economic inequality, innovation, sustainable consumption,
peace and justice, among other priorities. The goals our interconnected often the key to success
on one will involve tackling issues more commonly associated with another. The community
development fund shall be used for projects or activities that will benefit the community where
the cooperative operates.
The cooperative movement in the Philippines is clearly manifesting its capacity to participate in
the achievement of the SDGs in seven areas, namely: eradication of poverty and hunger, decent
work and economic growth, responsive production and consumption, reduced inequalities,
climate action; peace, justice and strong institutions, and gender equality.
a) Eradication of poverty and hunger. The CDA is on its track to provide technical, financial
and institutional development assistances to micro and small cooperatives to transform them into
medium and large cooperatives, thus making them profitable, sustainable and competitive in the
market. The transformation of these cooperatives into viable and sustainable status is projected to
have an impact on creating a broad productive agricultural and rural enterprises, thus,
contributing to the eradication of poverty and hunger.
b) Quality education. The Philippines has recently started the K-12 education program which
has essentially added two (2) years of academic training in the secondary education to further
improve the quality of education in the Philippines. The CDA, in response to improving the
quality of education and training program in the country, expands its traditional accreditation of
training service providers as partners in the conduct of mandatory and optional training program
for cooperatives by recognizing the state and private colleges and universities to conduct the
training of trainers, to participate in developing research agenda, and to conduct research as a
strategy for expanding the capacity of the CDA to extend academic services to the cooperative
sector. The CDA is also looking forward to instituting a Cooperative College in partnership with
the state colleges and universities that will provide formal and non-formal education for
cooperatives, conduct research, and assist in developing a system of data warehousing, retrieval,
processing and dissemination that will provide readily available information useful for policy-
making, program implementation, academic studies and advocacy on cooperatives.
c) Decent work and economic growth. The institution of the labor service and workers
cooperatives and government policy of ending contractualization of labor are projected to
develop a vigorous 8 workers cooperative that will provide alternative employment to members
of workers cooperatives better than contractual arrangement under the present set-up. The
worker’s cooperative is projected to create better employment opportunities, wage, and income
than the present set-up and consequently will provide a decent work for members of workers
cooperatives and economic growth by creating an environment for workers not only to sell labor
but also to create goods/products.
d) Reduced inequalities. The promotion of cooperatives in various areas of business interest is a
direction towards promoting the social and economic status of the less privileged members of the
society and to enjoin them to participate in national social and economic activities. The
continuous education program for cooperatives is a strategy to build the technical expertise and
entrepreneurial capacities of cooperative members, thus improving their capacities to participate
in enterprise and business development. The continuous capital build-up and savings
mobilization programs for cooperative members facilitate the financial capacity of cooperatives
and their members to finance enterprises that will generate income and uplift their economic
status. The build-up of their human resource capacities and financial resources are strategies that
can immensely contribute to uplifting the social and economic status of the poor and close the
social and economic gaps between the rich and the poor.
e) Responsive production and consumption. The promotion of organic farming which
primarily promotes the avoidance of the use of harmful pesticide and inorganic fertilizer
encourages the production and consumption of healthy food, thus promoting a healthy life for
cooperative members as well as the general consumer. The production and consumption of
healthy food is envisioned to create healthy consumers, reduce the cost of health maintenance,
and increase the allocation of financial resources to productive activities.
f) Climate action. Cooperative members are already much aware of the change in weather and
climate and their impact on production, food consumption and human habitat. Cooperatives as
community organizations are potent institutions for inducing communities to adopt to climate
change by introducing production system and community ecology in harmony with climate
change.
g) Peace, justice and strong institutions. The Muslim Mindanao of Southern Philippines has
been an area of strife and conflict. The search for solutions for lasting peace has been costly in
terms of 9 resources, human lives and lost opportunities for better living. The idea of using
cooperatives as a solution to the conflicts and promotion of peace is being discussed and
explored. The diversion of energies and resources from arms to enterprise development of each
and every member of the community could be the solution for having lasting peace and
promoting the socio-economic well-being of community members.

h) Gender equality. The Philippines has a Gender and Development Program which mandates,
among others, every government agency to allocate 5% of its budget for Gender and
Development or GAD. The CDA has an issuance called “Guidelines on Mainstreaming GAD in
Cooperatives” that seeks to disseminate to the cooperative sector the GAD mandate of
government and to ensure the promotion of gender equality (GE), the institutionalization of GAD
policies, programs and activities in each and every cooperative, and to monitor the progress of
GAD programs and activities towards achieving GE.

Cooperative’s ways to improve economic growth in both rural and urban communities
- Cooperative economic growth is possible in any environment. From rural to
urban, big to small, or wealthy to impoverished, cooperative businesses can
operate successfully and flourish into a critical asset of the community. Since,
not all business models can accommodate the same level of versatility co-ops
offer. To better understand how co-ops work so well for their communities, we
need to understand how they can fit into any environment.
Here are some ways of co-ops to improve economic growth in both rural and
urban communities.
 Offer Flexibility - The flexible nature of cooperative businesses is the primary
reason they can adapt and thrive in any size or type of community. Co-ops can
tailor their products or services to the needs of the community and find a way to
make them both useful and affordable. While co-ops can exist in any industry,
they are most common and successful in agriculture, making them an ideal
option for rural communities. Rural communities typically have a shortage of
people and jobs, but rarely have a shortage of food and farmers. A co-op can
provide an excellent way to collect and sell produce and encourage the
producers to work together. When more producers become involved with a co-
op, they can get wholesale prices from their suppliers and keep costs low for
their customers.

In urban communities, the flexibility of co-ops allows them to customize their

services and products to whatever the community needs. Since co-ops can
operate in any industry, it makes it easy for the members to assess the
community and fill any gaps in the market.

 Circulate Money - Both rural and urban areas face issues with money circulation.
Since traditional, for-profit businesses dominate most communities, money
cannot circulate properly. With traditional businesses, the money goes from the
community to the pockets of whoever owns the company. With co-ops, the
money stays within the community because any profit goes back into the
business, which then uses the money for purposes that benefit the community —
like lowering prices and hiring new employees.

This circulation is beneficial to any type of community, but it is especially

helpful to communities that lack a strong cash flow. When members of a
community don’t have much money, they don’t have a lot to spend. When they
don’t have a lot to spend, the entire community’s cash flow is weaker, resulting
in a weaker economy. Co-ops combat this problem by inserting more cash into
circulation.

 Create Jobs - In almost every community, an increase in job opportunities is a

positive thing. Even though unemployment rates in the United States are
steadily decreasing  in both rural and urban areas, they could go back up at any
time. There is a wide range of co-op variations, but each offers a different and
effective way of creating new jobs.
Worker’s co-ops are a great way to create job security and living wages since
each employee gets a vote in every decision the co-op makes. Alternatively,
producer co-ops help create better jobs and job security because it allows all the
producers to work together, share resources and buy in bulk.
  Strengthen the Community - The main purpose of a cooperative business is to serve
the community. Co-ops provide jobs, products, services and wealth distribution,
and they also strengthen the community as a whole. Co-ops teach the members
of the communities in which they operate invaluable leadership and professional
skills that will help them in all aspects of their lives. They also encourage
people to further the cooperative movement by creating and supporting other co-
ops, hoping that the economic benefits will continue to spread.

Cooperatives are a powerful force for social development. They can help to improve the lives of
people in a number of ways, including by providing economic empowerment, social inclusion,
environmental sustainability, and community development. For example, in the Philippines, a
cooperative called the Sari-Sari Women's Multipurpose Cooperative has helped to improve the
lives of women in rural areas by providing them with access to credit, training, and marketing
opportunities. 

Here is the importance of cooperatives in social development:

The role and importance of cooperatives in promoting equity, social justice and economic
development is well-articulated in the Philippine Constitution of 1987, and in the enabling laws
on cooperatives such as Cooperative Code (RA 6938 as amended by RA 9520) and the Charter
of CDA (RA 6939).

So much is expected of cooperative to contribute to the socio-economic development of the

country and in nation-building. Cooperatives after 100 years of nurturing are flourishing in the
fields of banking, insurance, credit and savings, agriculture, agrarian reform, labor, housing,
transport, energy (electricity), water (potable) service, to mention a few. But much is still to be
desired regarding the progress of cooperatives. As of December 2015, 54% of the reporting
cooperatives are micro cooperatives (with assets of PhP3 Million and below) while the large
cooperatives with assets of PhP100 million and above comprised 4% of the total reporting
cooperatives controls 72% of the total assets of whole cooperatives movement. The combine
volume of business of cooperatives has reached PhP322,697.5 million and directly employing
463,789 employees as of December, 2015.

The transformation of micro and small cooperatives into medium and large cooperatives is the
biggest hope to create significant contribution of cooperatives in promoting a just society and in
building a nation with a broad economic base.

The cooperatives are envisioned to contribute in the achievement of SDGs in the areas of
eradication of poverty and hunger, quality education, decent work and economic growth, reduced
inequities, responsive production and consumption, climate action; peace, justice and strong
institution; and gender equality.

The coordination between the government and the cooperative sector in cooperative
development is clearly stipulated in the enabling laws on cooperatives and are operationalized
through the issuance of EO 95. It is the objective of the government to harmoniously and
effectively deliver available government services to cooperative through the creation of NCC
composed of all government agencies with programs on cooperatives under the coordination of
CDA, and the creation of consultative mechanism in the cooperative sector that will interact with
the government in the delivery of services.

Economic empowerment:  Cooperatives can help to reduce poverty by providing members with
access to jobs, income, and financial services. For example, a study by the International Labor
Organization found that workers in cooperatives in developing countries earn an average of 20%
more than workers in non-cooperatives.

Social inclusion: Cooperatives can help to reduce social exclusion by providing opportunities for
people from all backgrounds to participate in the economy. For example, a study by the World
Bank found that cooperatives in Latin America have helped to reduce poverty and inequality by
providing opportunities for women, youth, and people with disabilities.

Environmental sustainability: Cooperatives can help to promote environmental sustainability

by using natural resources more efficiently and by reducing waste. For example, a study by the
United Nations Environment Programmed found that cooperatives in the agricultural sector are
more likely to use sustainable farming practices than non-cooperatives.

Community development: Cooperatives can help to build strong and vibrant communities by
providing a space for people to come together and work for the common good. For example, a
study by the University of California, Davis found that cooperatives in rural areas have helped to
improve the quality of life by providing access to education, healthcare, and other essential
services.

Overall, cooperatives are a powerful force for social development. They can help to improve the
lives of people in a number of ways, including by providing economic empowerment, social
inclusion, environmental sustainability, and community development. In an era when many
people feel powerless to change their lives, cooperatives represent a strong, vibrant, and viable
economic alternative.
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