Abstract:
There is much hope that cooperatives can help in economic growth and poverty reduction. Malawi Development and Growth Strategy (MDGS) pointed out that cooperatives would help to transform economic rural poor masses. Paradoxically, the number of active cooperatives was dwindling in Blantyre Agricultural Development Division (ADD). One contributing factor to the dwindling number of active cooperatives is poor governance. This study aimed at assessing whether agricultural cooperatives in Blantyre ADD comply with good corporate governance principles and whether this had an effect on the volume of sales and membership growth. Fourteen cooperatives in six different commodity groups were sampled from five districts. The commodity groups comprised dairy, poultry, farm produce, honey processing, and skins and hides. Both primary and secondary data were collected covering a period of five years from 2004 to 2008. A semi structured questionnaire was used in focus group discussions to capture primary data. Data was analyzed to provide for descriptive statistics. The results showed that level of compliance with good corporate governance principles of agriculture cooperatives in Blantyre ADD was only 5.5% which is far from the minimum score of 50%. Four cooperatives registered no sales, and 10 cooperatives had almost constant sales volume. It was also evident that cooperative members were not only attracted by volumes of sales that the cooperatives transact but also other social benefits. The study also revealed that there was generally inadequate knowledge on management of cooperatives. The study recommends that government should put stricter scrutiny of cooperatives before registration. In addition, government should also put up institutions for cooperative management training. Further research would be required on effects of compliance with good corporate governance on both financial and non financial performance indicators.
