South Africa outlines interventions to boost local cooperatives
These measures include increasing financial support, cutting red tape, improving access to markets, equipping cooperative members with essential business skills, and enhancing the bankability of cooperatives
CAPE TOWN, September 18, 2025 – With South Africa’s cooperatives still performing below expectations compared to global counterparts, the Minister of Small Business Development, Stella Ndabeni-Abrahams, has outlined a series of interventions aimed at enabling cooperatives to thrive.
These measures include increasing financial support, cutting red tape, improving access to markets, equipping cooperative members with essential business skills, and enhancing the bankability of cooperatives.
“We must cut the red tape for cooperatives, including within the Small Enterprise Development and Finance Agency [SEDFA], to reduce turnaround times for those applying for support,” said Ndabeni-Abrahams.
“This is something I’ve asked the board to prioritise. Digital systems and new forms of credit ratings will help enormously. Digital platforms will ease registration, ensure compliance, and improve access to a full range of financial and non-financial support across the ecosystem.”
She was speaking during the International Day of Cooperatives event held last month at Sun City Resort.
High barriers, limited Access
The Minister noted that South Africa’s economy remains highly concentrated, with steep barriers to entry for new participants.
“To address this, we’re working with both the public and private sectors to co-create markets for small enterprises, including cooperatives. We’ve observed that cooperatives are not fully benefiting from Enterprise Supplier Development programmes, nor are they tapping into localisation opportunities within corporate and government supply chains. Our exporter development programme must also be inclusive of cooperatives.”
The impending gazetting of regulations under the Public Procurement Act is expected to create new market opportunities. The Act, signed into law by President Cyril Ramaphosa in July 2024, establishes a unified framework for public procurement, including preferential procurement, and promotes the use of technology to enhance efficiency.
“We must ensure cooperatives are ready to serve these markets,” the Minister added. “This means equipping members with business acumen and practical skills to enable more cooperatives to succeed.”
She noted that over 120 incubators and digital hubs have been established through SEDFA, which must also serve the cooperative sector. In addition, government is rolling out various skills programmes through Sector Education and Training Authorities [SETAs], including bringing in commerce graduates to boost business capacity.
“Cooperative members must be business-savvy, innovative, and entrepreneurial. They are competing with private businesses and must produce high-quality goods and services at competitive prices,” she stressed.
Strengthening compliance and governance
Ndabeni-Abrahams also emphasised the need for cooperatives to become more “bankable”.
“One of the key weaknesses identified is poor compliance and governance. This must be urgently addressed. Our Cooperatives Development Support Programme now includes a strong business development component, in addition to providing financial support.”
As part of government’s financial support efforts, SEDFA will disburse R61.368 million to cooperatives during this financial year. The provincial allocations are as follows: Eastern Cape: R7,977,840; Free State: R7,364,160; Gauteng: R6,136,800; Limpopo: R8,591,520; Mpumalanga: R5,523,120; Northern Cape: R4,909,440; North West: R7,364,160; and Western Cape: R6,136,800
Development and commercial funding
Beyond the dedicated Cooperatives Development Support Fund, cooperatives may also apply for financial assistance under SEDFA’s Development Fund and Commercial Fund.
In 2025, the Development Fund is set to disburse R792 million, with R2.95 billion earmarked over the Medium-Term Expenditure Framework [MTEF]. This includes funding for the Township and Rural Entrepreneurship Programme [TREP], which will receive R843 million this year.
Under the Development Fund for 2025/26, the following allocations are planned: Eastern Cape and Limpopo: R118.8 million each; KwaZulu-Natal: R102.96 million; North West: R95.04 million; Mpumalanga and Northern Cape: R79.2 million each; Western Cape and Gauteng: R71.28 million each; and Free State: R55.44 million
Fund of funds and capital access
Through the Micro, Small, and Medium Enterprises [MSMEs] and Cooperatives Funding Policy, the Department of Small Business Development is advocating for the creation of a Fund of Funds.
The department is working closely with the Department of Trade, Industry and Competition [the dtic] on a R100 billion Transformation Fund, which will also support cooperatives.
“We must build a pipeline of capital-ready cooperatives to access this fund. We are also exploring the expansion of cooperative banking, particularly now that the Cooperative Banks Development Agency falls under SEDFA,” the Minister said.
She further emphasised the need for a movable asset registry and alternative credit rating systems to broaden financing options for cooperatives.
Source: SAnews.gov.za
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