Amid scepticism from small business developers on the ground, the government has stuck a very tentative toe into the murky waters of co-operative development.
The Small Enterprise Development Agency (Seda) has embarked on a pilot project aimed at supporting 600 co-operatives throughout South Africa, and the department of trade and industry (dti) is now handing out grants of up to R300 000 under the co-operative incentive scheme.
This follows years of hesitation on the part of government to develop a policy of promoting co-operatives as a form of economic development. In the first few years after 1994, co-operatives featured nowhere in the dti's small business development strategy.
Then the governance of co-operatives was taken away from the department of agriculture and given to the dti, which established a co-operative development unit. Last year the Co-operatives Act was passed, and although not functional yet, the new law broadened South Africa's co-operative focus from the apartheid government's almost state-controlled agricultural co-operatives to include all industries, and to establish the autonomy of co-operatives as self-managed entities.
The shift in government policy is clearly reflected in the number of co-operatives officially registered at the dti's Companies and Intellectual Properties Registration Office (Cipro). In 1994, 23 new co-operatives were registered. This financial year, Cipro expects that almost 5 000 will be registered.
It is a huge increase, but still pales in comparison to the boom in new close corporations and companies registered, estimated at a record 250 000 and 50 000, respectively, for the year.
Some observers say that the co-operative policy is a way of appeasing the tripartite alliance's left-wing partners, which have been very critical of the government's overwhelmingly big business economic development model. With its skimpy budget, and thrown together with the other orphan of the current development model, small business, the almost certain failure of a co-operatives support programme will be contained.
There may be a bit of truth in such a cynical view, but it is likely that the trend is also an attempt by the government to formalise and create order among the thousands of income-generation projects launched by municipalities and provincial governments since 1994. "They used to be called 'community projects'. We've now branded them co-operatives. It's the same thing," says Abbey Booth of Seda's Tshwane branch.
Cipro official Elma Pinkham concurs that many of the new co-operatives originate as province-backed income-generation programmes, especially in KwaZulu-Natal.
The government is not throwing pots of money at the idea. The co-operative incentive scheme taps into a fund of about R24 million, mostly EU donor money, together with R3.9 million from the national treasury, says Nomvula Masango-Makgotlho, the director of co-operatives incentives and local economic development support at the dti.
Seda, faced with the almost impossible task of setting up an effective support structure for the whole range of South Africa's millions of small businesses - from survivalist street traders to sophisticated small exporters - has a budget of about R120 million a year, though many of its programmes are co-sponsored by provincial governments.
Seda chief executive Wawa Damane says the organisation will spend up to half of its resources on co-operatives in certain provinces.
Whatever the enthusiasm for the promotion of co-operatives among government officials, there seems to be a lot of quiet shaking of heads among small business developers on the ground. While they are used to a high small business failure rate, they expect an even higher one for co-operatives.
Over and above the normal challenges faced by small businesses, co-operatives are very often ruined by debilitating group dynamics and infighting. Sometimes the egalitarian ethos of a co-operative leads to a situation where no one wants to take responsibility. In other cases, jockeying for positions and accusations of mismanagement lead to collapse.
Business consultant Patrick Ellis points to a co-operative consisting of 21 people near Klerksdorp, into which the Matlosane district municipality sunk R3.75 million. "We were approached to do a turnaround, and when we got there, all the people involved in the community project were sitting on the stoep - nobody working."
Resentment had built up among members that their individual work was benefiting everyone, including the more lazy members. Collectively owned cattle and chickens had disappeared and the cultivation tunnels had gone to waste. Attempts to get comment from the Matlosane municipality were unsuccessful.
Development officials warn that the inherent weakness of infighting is worsened by the way in which communities are being encouraged to set up co-operatives.
David de Jong, the managing director of the Savings and Credit Co-operative League of SA, says a co-operative has a better chance of surviving if the coming together is voluntary. In contrast, government-driven co-operative creation through incentives, grants and tenders leads to artificial, opportunistic groupings that don't hold together well.
De Jong stresses the need for training, especially in poor communities where educational levels are low, and questions whether the support and training programmes developed by the government are well enough adapted to the special nature of co-operatives.
Others believe that it is better to identify the natural entrepreneurs in a community and support them so that they can build their own businesses that create employment for others. The inequality thus engendered is offset by a higher success rate and more sustainable jobs.
But even these sceptics would agree that a co-operative, if approached correctly, can be a powerful tool to strengthen weak players in a cruel economy.
Says Tobias Doyer of the Agricultural Business Chamber: "A bunch of guys together achieve a lot more than one guy on his own."
He says in the "classical agricultural model" co-operatives work best when the members don't see the co-operative as an income-generating mechanism, but as a way of pooling resources to deliver a cheaper or better service to each of the members' own business.
But Damane insists that the future direction rests on the outcome of the pilot support to 600 co-operatives. The Tshwane branch, which chose 10 out of 55 co-operatives passed on to them by the dti, seems to have taken the project furthest. "We've assisted in formalising them, assessed them and have come up with action plans," says Booth.
But she has no illusions about the difficulty of making them work. She expects a 30 percent success rate.
In the world of small business development, that's good. For co-operatives, it will be fantastic.