Exhibition of Cooperatives Underway

Some 80 Iranian cooperative firms are showcasing their products and services in the three-day event, IRNA reported.

The share of cooperatives sector in Iran’s gross domestic product stands at around 6%.

Kalantari said 74 trillion rials ($755 million) were paid in loans to cooperatives last year to support their activities, according to Financial Tribune.

The parliament has tasked the government with increasing the share of cooperatives in gross domestic product to 25% by the end of the Sixth Five-Year Development Plan (March 2022). This share was also targeted by the Fifth Five-Year Development Plan (2011-16), which did not materialize. 

According to Bahman Abdollahi, the head of Iran Chamber of Cooperatives, Iranian cooperatives currently account for a meager 7% of Iran’s GDP.

 Fundamental Challenges

The cooperatives sector has undergone huge changes in the last few decades, thanks to new trends in business models and technologies, as well as global challenges, Alireza Qaragozlou, deputy for int’l affairs at Iran Chamber of Cooperatives, wrote in an article published in Financial Tribune last year.

Qaragozlou noted that the first challenge pertains to human resources in the cooperatives sector.

“First of all, we see a relative high median age in cooperatives. The other issue is that cooperatives suffer from low education levels in terms of computer sciences, English language and general knowledge,” he said.

“It is evident that this is common in all countries that have a high median age in the cooperatives sector and no inclination to update. This does not undervalue the elderly population in cooperatives, but its clear consequence is that cooperatives are unable to keep up with the new trends.”

The official referred to the cooperatives’ dependency on government support as another weakness in the way these enterprises run their affairs.

According to Qaragozlou, since the economy of cooperatives is people-oriented rather than equity-oriented and based on group cooperation, cooperatives have received more funds in comparison with private companies from governments and international organizations.

“Appraising the governments in terms of budget deficits and debts to pension funds and social security, it becomes clear that governments can’t play a sustainable role in providing cooperatives with resources. So the cooperatives’ dependency on the government is not valid anymore and the continuity of this dependency would allow the government to intervene further in the cooperatives sector,” he said.

Finally, Qaragozlou considered the cooperatives’ lack of responsiveness to IT trends as a major handicap.

“Cooperatives are new to electronic approaches in sales, distribution, customer relationship management, etc. and e-cooperative business models remain unknown. As private sector competitors follow up all trends and utilize new IT-based approaches to claim a bigger market share, the continuity of this challenge would irreparably damage the cooperatives movement across the world,” he said.