CDSP Funding: Not a Bursary, but Business Support for South African Cooperatives

Understanding Cooperative Business Funding in South Africa

The South African government, through the Department of Small Business Development (DSBD), offers various programmes to boost economic growth and create jobs. One such important initiative is the Cooperative Development Support Programme (CDSP). This programme is designed to help cooperative businesses grow, become more sustainable, and ultimately contribute more to our country's economy.

While the word "support programme" might make you think of traditional bursaries for students, the CDSP actually works a bit differently. It's focused on empowering groups of people who have come together to form a business, known as a cooperative.

CDSP: Not a Traditional Student Bursary, but a Business Opportunity

It's common for South African students, parents, and young adults to actively search for bursary opportunities that can help fund tertiary education. If you landed here looking for a bursary to pay for your university or college fees, it's important to clarify: the Cooperative Development Support Programme (CDSP) is not a bursary for individual students pursuing academic qualifications. Instead, it's a dedicated funding and support initiative for registered cooperative enterprises in South Africa.

This means the financial assistance from CDSP goes directly to businesses that operate as cooperatives, helping them buy necessary equipment, fund operations, or get expert advice. While it doesn't cover individual tuition fees, it does contribute to skills development and training within these cooperatives, which can benefit their members. For instance, if a cooperative receives support, its members might get training in business management or specific technical skills, which is a form of capacity building.

What is the Cooperative Development Support Programme (CDSP)?

The CDSP is a key programme of the Department of Small Business Development (DSBD), often working with partners like the Small Enterprise Development Finance Agency (SEDFA) and the Small Enterprise Development Agency (SEDA). Its main goal is to offer both financial and non-financial assistance to cooperative enterprises to help them overcome challenges and grow. The programme is legally guided by the Co-operatives Act, No. 14 of 2005, and the Co-operatives Amended Act, No. 6 of 2013.

The core idea behind the CDSP is to help cooperatives:

• Achieve production efficiencies.
• Improve the quality of their products or services.
• Expand their operations and reach.
• Address common issues like lack of participation in the formal economy, limited managerial capacity, and difficulty accessing finance.

Who Can Benefit from CDSP? (It's for Co-operatives!)

The CDSP specifically targets compliant, South African-registered cooperatives that are already operating or are in the process of starting up in various economic sectors. There's a strong focus on cooperatives owned by black persons, especially those in rural, township, and peri-urban areas. The programme also prioritises cooperatives with majority participation from women, youth, and persons living with disabilities.

To be eligible, primary cooperatives must generally meet criteria such as:

• Being incorporated and registered in South Africa under the Co-operatives Act.
• Having a majority black membership.
• Adhering to cooperative principles.
• Demonstrating the potential to sustainably produce and supply goods or services to both public and private sectors.
• Providing proof of training in co-operative governance or business management for at least two members, often through SEDA or DSBD accredited institutions.

What Kind of Support Does CDSP Offer to Co-operatives?

The CDSP provides a range of support designed to address the specific needs of cooperative businesses:

Financial Support (Grants and Blended Finance)

The programme typically offers blended financing, which is a combination of a grant and a loan. In some iterations, it might be 100% grant funding, especially for smaller or startup cooperatives.

• Grant Funding: This is money that doesn't need to be paid back, up to a certain cap (e.g., R2.5 million for established cooperatives, or R1.5 million for startups, and up to R5 million for secondary/cluster cooperatives). Grants are typically used for:
  • Machinery and Equipment: For example, a farming cooperative might receive funding for a new tractor or irrigation system to increase their yield.
  • Infrastructure: Upgrades like boreholes or improved production facilities.
  • Commercial Vehicles: Vehicles essential for core business functions, like a delivery truck for a baking cooperative.
  • Raw Materials or Stock: Helping a craft cooperative purchase materials to fulfil orders.
  • Information and Communication Technology (ICT) Infrastructure: Essential for modern business operations.
  • Business Development Support (BDS): This can include expert advice to help the cooperative grow.
  • Working Capital: Funds for day-to-day operations and market entry.
• Loan Portion: Where blended finance is offered, a portion of the funding may be a loan, with favourable terms, often through partners like the Small Enterprise Finance Agency (SEFA).

Non-Financial Support

Beyond money, CDSP also focuses on building the skills and knowledge within cooperatives:

• Training and Capacity Building: This includes training for members in areas like cooperative governance, business management, financial management, and technical skills specific to their industry. For example, a youth cooperative might receive training on how to manage their finances effectively or market their products.
• Mentorship and Business Linkages: Connecting cooperatives with experienced mentors and helping them access new markets.

It's important to note that the programme typically does not fund non-productive assets, personal vehicles, or activities related to liquor, cigarettes, or gambling.

How Co-operatives Apply for CDSP Funding

The application process for the CDSP typically involves submitting a detailed application form along with a range of supporting documents. While deadlines can vary, it's crucial for interested cooperatives to prepare thoroughly.

Here's a general guide on how a cooperative would apply, including where you can download the application form:

1. Understand Eligibility: First, ensure your cooperative meets all the mandatory requirements, such as being registered under the Co-operatives Act, having majority black membership, and adhering to cooperative principles.
2. Gather Required Documents: The list is quite comprehensive and ensures due diligence. You will typically need:
   • Cooperative Registration Documents: CIPC registration and your cooperative's constitution (CR-10).
   • Tax Compliance: A valid SARS tax compliance certificate.
   • Financial Records: Latest bank statements (e.g., three months), and either latest annual financial statements (for existing cooperatives) or projected financial statements and cash flow projections (for new cooperatives).
   • Business Plan: A detailed business plan or funding proposal outlining your cooperative's activities, goals, and how the funding will be used.
   • Quotations: At least three comparable quotations from CSD-registered suppliers for any machinery, equipment, or services you plan to purchase with the funding.
   • Identification and CVs: Certified ID copies and CVs of all directors or founding members.
   • Proof of Address: FICA documents, such as municipal accounts or a letter from a traditional authority, for the cooperative and its members.
   • Authorisation: Minutes of a meeting authorising the application.
   • Training Proof: Proof of training from SEDA/DSBD or accredited institutions for members in cooperative governance.
   • Affidavits: A sworn affidavit regarding any other state support received in the past five years to prevent "double-dipping".
3. Download the Application Form: You can download the application form here: https://tr.ee/z7KkSc
4. Complete the Form Accurately: Fill out all sections of the application form carefully and truthfully. Any inaccurate or deceptive information can lead to disqualification.
5. Submission: Applications are usually submitted to the relevant provincial email address or through SEDA branch offices. For general enquiries, SEDA can be contacted at 012 441 1000 or info@seda.org.za.

Why Co-operatives Matter for South Africa's Economy

Cooperatives play a vital role in building a more inclusive and equitable economy in South Africa. They offer a way for communities, especially those in disadvantaged areas, to pool resources, share risks and rewards, and participate meaningfully in economic activities. By supporting cooperatives through programmes like the CDSP, the government aims to:

• Create jobs, especially in rural and township areas.
• Foster local industrialisation and economic activity.
• Improve living standards and reduce poverty.
• Empower historically marginalised groups like women, youth, and people with disabilities.

Practical Steps for Aspiring Cooperatives

If you are a member of a cooperative or are thinking of forming one, and believe the CDSP could be beneficial, here are some actionable steps:

1. Form Your Cooperative: Ensure your group is formally registered under the Co-operatives Act.
2. Develop a Strong Business Plan: A well-thought-out plan is essential to demonstrate viability and potential.
3. Undergo Training: Seek out training in cooperative governance and business management for your members. SEDA often provides such training and support.
4. Gather All Documents: Start collecting all the necessary paperwork mentioned above well in advance. Pay close attention to details like certified copies and recent statements.
5. Utilise the Application Form: Download the official CDSP application form using the link provided: https://tr.ee/z7KkSc.
6. Seek Guidance: Don't hesitate to contact SEDA or the Department of Small Business Development for clarity on the application process or eligibility criteria.