Ecuador : private sector cooperatives and integrated rural development

A.I.D. assistance to the credit union movement can be claimed as an unequivocal success. Ecuadorean credit unions have 2.5 million members and provide major impetus for rural development, especially in the agricultural sector. A.I.D. assistance to agricultural cooperatives has had a less widespread, though still catalytic impact on rural development, an impact which is due mainly to the fact that co-op membership in Ecuador is associated with land acquisition and with the creation of new communities; in many cases, cooperatives were the first or main community organization, through which members expressed demands for health, education, and other services. Ironically, the Improved Rural Life (IRL) program, a small project add-on specifically aimed at helping co-op members acquire multisectoral services, had little effect on integrated rural development. The primary reason for this difference is that the cooperative approach, unlike the IRL, succeeded in rewarding community participation and initiative. However, of the five cooperative federations assisted by A.I.D. under the project, only the credit union federation attained financial viability. Several lessons pertinent to cooperative development can be learned: (1) financial viability is hard for agricultural cooperative federations to achieve, because in most cases there is no obvious service that they can provide more effectively than the private or governmental sectors; (2) credit programs for co-ops must be linked with skilled technical assistance; (3) technical agricultural skills must be conveyed to cooperative farmers at the outset; and (4) education in cooperative management is essential at all levels to alleviate problems like those facing Ecuadorean cooperatives today - infighting and lack of communication, corruption and poor financial management, lack of unified leadership, and the as yet unaddressed issue of how to replenish the leadership cadre in successful cooperatives, all of which are dominated by one to three leaders.