Adding external board members to a union board is an innovative way of thinking for many Ethiopian board members and government officials. Are the external experts able to truly act in the farmers’ interest? How do you ensure member-control when we include external experts in the union’s governance structure? These and other issues were all discussed during the first lively awareness trainings in August and mid-December. An implementation pilot with 4 unions has just started.
In Ethiopia the number of cooperatives has been increasing and developing rapidly during the past two decades. They have played a vital role in agricultural input provision and enhanced the members’ social and economic conditions, and they are becoming even more important. This requires another way of thinking when looking at governance.
Currently, the ownership and governance of the cooperative unions in Ethiopia is based on internationally accepted cooperative principles in general, and an Ethiopian proclamation in particular, used for the organisation and promotion of all types of cooperatives in the country. This means that all board members are also member of the cooperatives, and thus are smallholder farmers. However, this structure does not seem to fit some of the bigger unions anymore, as they need a better management and decision system. That is why Agriterra initiated an awareness workshop regarding a new concept which works well in the Netherlands: adding external board members, specialists who have certain expertise in an area which is missing in the current board.
Why adding external board members?
Business advisors in Ethiopia Habtamu Mekonnen and Hailat Berhane aim with this project to slowly introduce this new concept and implement it throughout the country. But it takes time to get this idea into the heads of people and get them on board. “It is very important to make sure it is in the interest of the members”, Agripool expert Jack Goossens, Chairman of Royal FloraHolland, says, “if you implement this idea in a top-down manner, it has little chance of success”.
Adding external board members has several advantages: specialists in technical areas that know much about the union, sometimes lack knowledge in general areas like HR, finance, etc. External board members can fill that gap, so that the union becomes stronger, without losing the main focus of the union. Also, being a fully independent and autonomous cooperative who does not need intervention of the government in decision making anymore, is better able to provide benefits for the farmers.
Online training with Agripool experts
During the online workshop, Habtamu, Jack and Stan Steeghs from NCR provided both theoretical and practical presentations to a varied group of government officials, union board members, researchers, and other representatives of the sector.
“The board of FloraHolland does not only look at diversity in expertise, but also age, character, etc.”, says Jack Goossens, “I presented our experience in expanding the board, and I hope the Ethiopian sector is inspired to translate this to the local situation”. The difference between the Ethiopian and Dutch system can cause some challenges according to Jack: “Ethiopian regulation is rule-based, whereas the Dutch system is principle-based, meaning unions have much more freedom in their decision making and have fewer rules they have to abide by”. It is therefore important that also government officials are included in the process, as regulation concerning board of directors needs to be changed.
Plans for the future
The participants of the workshop were very positive about the innovative ideas presented. There are however a few practical challenges that need to be overcome. Board membership in Ethiopia is a voluntary service, and asking external experts to volunteer does not seem logical. A different remuneration for board members and external experts could be a risk for the motivation of the board members.
Also, questions were asked on how this structure is supposed to be implemented: either mix the external experts in the board and being a full-fledged board member (so having decision-making right and accountability for decisions), or act as a separate organ. “My advice is to mix the board with the external experts, to optimize the collaboration between all the board members”, says Jack.
Pilot external experts
In the second workshop mid-December, members wanted more clarity on the process of innovating the governance structure. It was also the start of a pilot that started at 4 unions. A guideline is made, including required profiles, selection criteria for hiring the experts, remuneration, etc. In March the unions will start hiring of external experts in their board.
There are still several barriers which remain, but all interested parties are very interested in the concept and are working together to make the pilot a success.