By Tubo Akpata
Themes: Enterprise, Economy, Black Lives Matter, Anti-Racism
A Business Conversion to Cooperatives (BCC) Model and a Comparative Resilience Proposal
In this article I explore how business conversion to cooperatives (BCC) (Vieta, 2020) and a comparative resilience model (Shuman, 2020) could be of benefit to Afro-Canadian businesses in the neighborhoods in Toronto hardest hit by COVID-19. Through examples of success stories of conversion to cooperatives in other countries, especially, Italy, I will illustrate how the adoption of cooperative models can be the right interventions for Afro-Canadian small to medium size businesses in the Toronto area. Likewise, a case for a diverse economy through accelerating localization of businesses will be made. I will conclude by making suggestions for fostering a more equitable and inclusive economic system.
Following the COVID-19 induced lockdown and social distancing; Toronto prepares to reopen for business and activities. How many Afro-Canadian owned businesses would be privileged to open their doors to customers? And how many of the workers employed by those Black-owned businesses would have a job to return to?
Toronto is Canada’s economic hub and the Afro-Canadian community represents 8.9% of its population. Despite this figure, recent events of COVID-19 indicate that the Black community has experienced much of the impacts of the pandemic and is at a highly disadvantaged position economically (CTV News, 2020). The Black Chamber of Commerce in Toronto recognizes this and have recently called on the Federal Government for a loan of $165 million to support Black-owned SME businesses impacted by COVID-19 that do not qualify for the government loan program. Similarly, Black MPs and Senators have called for the government to take action to support Black businesses and other social justice issues for Black Canadians and Indigenous people (CP24, 2020).
Afro-Canadian Businesses in Toronto
While the impacts of COVID-19 are being felt across businesses in Toronto, the Afro-Canadian community is being hit harder than others due to institutional racism, which particularly discriminates against Black people and creates systemic barriers for receiving loans and other business needs. Caroline Hossein, in her article “Banking While Black: The Business of Exclusion” reminds us of this. Afro-Canadian communities in the Toronto area are diverse, resilient, and creative, but Black-owned businesses struggle to get traction and are now faced with further burdens with the required business shutdowns as a result of COVID-19. As reported by the Black Chamber of Commerce, the fear of being put permanently out of business has been expressed by some Afro-Canadian entrepreneurs . Crieghtney, an Afro-Canadian business owner, for instance had to shut down his virtual reality business in the wake of COVID-19 and now worries that his business may never open again.
These issues have called for an alternative financial system that is inclusive of all people regardless of race. Afro-Canadian businesses in Toronto are predominantly business consulting, advertising, and legal services. Other troubled sectors for Black businesses are food services and administrative support.
Lack of sufficient data on the impacts of COVID-19 on Afro-Canadians in Toronto presented a challenge in identifying the exact statistics for this research. However, following decades of inequality and exclusion, which made it difficult for Afro-Canadian businesses to flourish, there is enough anecdotal evidence to worry about their struggle to survive COVID-19. When Afro-Canadians are ignored, the silence sends a message.
The Case for Cooperatives
By now it is obvious that capitalism and neoliberalism have failed. Inequalities and racial practices are exacerbating and Covid-19 impacts Afro-Canadians more because of inherent discriminations. This has activated the need for an alternative economy that will address the systemic exclusion of Afro-Canadians and mitigate the effect of the pandemic on their businesses.
While cooperatives have a significant history in Canada and other countries, Caroline Hossein, suggests that Black cooperatives, often formed by Black women primarily, is rooted in their African culture. The model of African cooperatives has been a support system for Afro-Canadian women in business. One of such support systems that is accessible to Afro-Canadian women in business is “The Banker Ladies,” which is an informal banking alternative that is premised on mutual contributions of funds by members. The funds are then made available on a rotational basis to members who need a loan. The Banker Ladies are part of Black women’s rotating savings and credit associations (ROSCAs), present in Canada and the Caribbean, where members self-organize for the purpose of building funds for lending. The Banker Ladies ROSCAs highlight the resourcefulness of Afro-Canadian businesswomen in Toronto and their dependence on local collective contribution system to fund a business. This revelation underscores the fact that Afro-Canadian women have always been great contributors to the Canadian economy in Toronto but their economic activities have gone unrecognized. Likewise, most Afro-Canadian women see business as a way to escape racism in the work place Hossein is right when she suggests that the way Black people engage in the social economy is rarely discussed (Hossein, 2019).
Reflecting on my childhood in Sub-Saharan Africa, I can recall seeing my mother participate in the form of local cooperation described by Hossein. We called it “Esusu” in Nigeria. I have memories of the treasurer who always came knocking on the door at a particular date of each month to pick up my mother’s contributions. The Esusu model is based on trust among the women in the community and each one took turns to access the fund to set up a small business or enhance the capacity of a business. It empowered the women to be self-reliant while contributing to the local economy. The practice is still on going among Nigerian women. This system shares the core principles of modern cooperatives – democratic structure, self-help, equality, solidarity, self-responsibility, not profit-motivated, and community needs – although African forms of cooperation are rarely discussed in scholarly literature on cooperatives.
Why Cooperative Business Model Interventions?
Fostered by employee takeovers or through the conversion of an existing business to cooperatives (BCC), cooperatives are well positioned to respond to the economic situation in the country post COVID-19, because of their democratic values (Vieta, 2020). When cooperatives are owned by members – and worker cooperatives are co-owned by worker-members – they offer a powerful solution to current and future economic, social, and environmental needs (Webb and Cheney, 2013). Marcelo Vieta’s research work into conversion to cooperatives has demonstrated how cooperatives show resilience to an economic crisis, charting path forward in the recovery process for post COVID-19 (Vieta, 2020).
What are cooperatives? Drawing on Vieta & Duguid (2020): “Co-operatives are businesses co-owned by interested members rather than disconnected shareholders, rooting capital in local communities. Rather than prioritizing profit above all, co-operatives tend to focus on member and community needs first”. Cooperatives are centered on community care as against profit. They foster strong bonds and build trust among community members as evident in the “Esusu” cooperatives of Nigeria, the cooperation of Toronto’s Banker Ladies and ROSCAs, and Canada’s 8,000 co-ops. Ontario itself has over 1500 cooperatives and employs more than 57,000 people.
Canada’s co-ops have also stepped up to meet the challenges of COVID-19. An example is a Montreal based Co-op Couturieres Pop that has been able to respond to some of the needs arising from COVID-19 by switching its production to hospital garments and face masks shortly after the pandemic broke out in Canada. Vieta M (2020, May 25) class lecture. Cooperatives respond effectively to crisis and highlight strategies that can be synthesized to produce alternative ways of business governance (Webb and Cheney, 2014). Cooperatives cuts across different sectors of the economy – service, retail, healthcare, skills trade, manufacturing and engineering technology, education, media, and agriculture (Webb and Cheney, 2014). Examples of cooperatives are worker cooperatives, consumer cooperatives, producer/marketing cooperatives, and financial (credit union, insurance) cooperatives.
Worker cooperatives. Here, I would like to focus on worker cooperatives. The essence of worker cooperatives is that membership is based on the common work contribution of each member. In worker cooperatives, labour hires capital, rather than the other way around as in conventional capitalist firms (Vieta, 2020). Worker cooperatives encourage workplace autonomy and nurture both employee productivity and innovation. The reality of worker-owners guarantees security as workers control capital and work is the contribution of each member as against money (Webb & Cheney, 2014).
One way that worker cooperatives are created is by workers buying out or at times even taking over employer-run and -owned businesses in the face of business adversity or succession issues. Workplace takeovers by workers, who then convert the firm into worker cooperative, mostly occur in places with favourable cooperative conditions but with broader unemployment issues following an economic crisis. These scenarios fostered waves of new worker-recuperated worker cooperatives in Argentina, Uruguay, Brazil, Italy, France, and Spain over the past 30 years, and some of these types of BCCs have also emerged in the US and Canada. In these situations, workers form a cooperative to save the business and their jobs (Vieta, 2020). Similarly, worker cooperatives can be created where a small business owner lacks a succession plan after retirement. In these less conflictual scenarios, employees pool resources and buy out the firm from the retiring owner (Vieta, 2020).
To mitigate the collapse of businesses in Afro-Canadian communities, the worker cooperatives model can be adapted as a powerful tool. Workers in these companies could be supported by government grants or accessible loans to form cooperatives to buy the companies from the owners. Worker cooperatives have been successfully applied in other countries to address an economic crisis. The Mondragon Corporation Ch. 5, Worker-Owned-and-Governed Co-operatives and the Wider Co-operative Movement: Challenges and Opportunities Within and Beyond the Global Economic Crisis in Spain is one important example of the largest worker cooperative network in the world that emerged out of socio-economic crisis in the late 1950s and where, today, a large portion of the town of Mondragon in the Baque region of Spain is devoted to cooperatives. Other examples of worker co-ops started by and serving marginalized communities include the NYC Worker Cooperatives, Quebec’s cooperative movement, Ch. 5, Worker-Owned-and-Governed Co-operatives and the Wider Co-operative Movement: Challenges and Opportunities Within and Beyond the Global Economic Crisis and Italy’s Legge Marcora cooperatives.
An international case that best articulates the effectiveness of a cooperative is the “Legge Marcora Framework” in Italy, documented by Marcelo Vieta and associates These are worker cooperatives that form from workers buyout in time of crisis. Several decades old, this method of developing worker cooperatives came into being in a time of market failure in the 1980s and has provided sustainability for economic recovery in Italy ever since. Supported by the piece of legislation known as Legge Marcora (Marcora Law), workers are able to buy out a business by activating future employment benefits, with a right to refusal for buying insolvent businesses. The framework is fostered and embedded in systematic policies – labour policies, funding policy, and a supportive environment to accelerate workers and employment cooperative initiatives. The “Legge Marcora Framework” is a representation of how businesses could be successfully converted to cooperatives with the right polices. I believe a replication of this model could be applied to rescue Afro-Canadian businesses in Toronto.
The Case for Comparative Resilience Proposals
Michael Shuman’s comparative resilience proposal couldn’t have come at a better time with the challenges experienced in the wake of COVID-19 (Schuman, 2020). Particularly, with the dependence on a global goods distribution system that hamstrung the Canadian health sector. Evident by the lack of PPE (personal protective equipment) for healthcare frontline workers that endangered the lives of our elderly in the long-term care facilities. Supporting local businesses to produce goods needed at home is one way to move towards a diversified economy post-pandemic “Resilience requires creating a network of independent, self-reliant nodes so that the failure of one node does not imperil the entire system,” Shuman recently wrote (Schuman, 2020, para. 4). Black businesses in Toronto are a part of this diversity. An increase in local ownership of business would facilitate a higher rebuilding of local businesses.
An increase in local ownership of business value chains would facilitate the sustainability and rebuilding of businesses. For instance, empower local farmers as against reliance on a global food system. Afro-Canadians can be empowered to produce more food as against reliance on a global food system that encourages mass food production in environmentally unjust ways that are profit-driven by capitalism. And local manufacturers can be supported to produce equipment needed for healthcare.
Recommendations
Funding Business Conversion to Coopertives. Following the example of the Legge Marcora Framework in Italy, business conversion to cooperatives (BCCs) can be promoted by assisting employee buyouts of companies through Government's intervention in financing. The Government of Canada can formulate policies that would support the lump sum payment of future employment benefits (EI) to workers as capital towards the cooperative venture. African-Canadians stand to benefit tremendously from this initiative. Employees can also use their savings where applicable or turn to a community cooperative initiative like community bonds or a refurbished Tenacity Works of the Canadian Worker Co-operative Federation, or the Canadian Co-operative Investment Fund. The Conversion to Co-operatives Project’s website in which Prof. Marcelo Vieta is project lead provides a list of funding sources for co-operatives in addition to useful information and assistance for conversion of businesses into co-operatives
Diversification of Economy. Afro-Canadians should be supported to diversify their businesses to best serve their local economy by introducing agricultural cooperatives. Acquiring farmland is expensive; supporting farmer’s cooperatives amongst Afro-Canadians would stimulate the growth of culturally appropriate food, thus, less dependence on the importation of such foods from thousands of miles away. The cooperatives should be funded via government payment of future employment benefits. Or other community initiatives such as cooperative credit unions could become local hubs for incentivized funding to such initiatives via government transfers or favourable loan programs. This will contribute to building community wealth and help local farmers remain competitive against large corporations. I believe that collective self-reliance and agriculture are rooted in African culture and most indigenous communities as reflected in their historical lived experience.
Inspired by Jessica Gordon Nembhard’s historical account of Black cooperative economics in the US, Black communities are motivated to create cooperatives because of their exclusion from the mainstream and also because of the consciousness to do something for themselves by creating an alternative economy to address needs like food security. Blacks have always engaged in these alternative economies without realizing it because of their culture of collective responsibility and self-sustenance. Nembhard and Hossein share the same sentiments on African historical connection to cooperatives.
Conclusion
Embracing worker cooperatives means encouraging social innovations that can foster equity and inclusivity regardless of race, gender, and ethnicity. The COVID-19 crisis presents the opportunity to rethink and articulate a new economy that is more inclusive and participatory at all levels to meet all of our needs.
We need to visibilize, name, and celebrate the inititatives of Black communities. I found little information or research when embarking on writing this article. This echoes the argument of Caroline Hossein when she writes: “The way Black people engage in the social economy is rarely discussed or highlighted” (Hossein, 2019, p.3). Beverly Bain, a Professor in Women and Gender Studies at the University of Toronto, agrees and adds: “We are invisibilized in the discourses of protection and safety but hyper-visibilized in punitive discourses and practices invested in Black death”. The city of Toronto, Province of Ontario, and Government of Canada can act as a catalyst to articulate the inclusivity and representation of Afro-Canadians in businesses via some of the ideas proposed in this article. An economic democracy perspective opens up the space for this conversation.
Other contacts for Tubo Akpata: https://www.linkedin.com/in/tubo-funmi-akpata-08238240/
Resources
Black-led businesses in Toronto (n.d). Black-led businesses in Toronto: Building opportunities for Growth and Prosperity. Black Business and Professionals Council Advisory Body of the City of Toronto. https://www.toronto.ca/wp-content/uploads/2017/11/8ff2-EDC-Black-led-Businesses-Toronto.pdf
Community-Wealth Interview (2015, September). An online resource of Shuman’s
interviews on some topics ranging from the local economy solution and the pollinator
business model. https://community-wealth.org/content/michael-shuman.
Conversion to Cooperative Project. (n.d). https://www.coopconvert.ca/copy-of-about
CTV News (2020, June 16). Canadian Black Chamber of Commerce requests $165M from feds to support business hurt by COVID-19. https://toronto.ctvnews.ca/canadian-black-chamber-of-commerce-requests-165m-from-feds-to-support-business-hurt-by-covid-19-1.4987262
Halifax Examiner. (2020, April 3). “Black people already struggle to breathe in Canada. Ignoring us during this COVID-19 will only make it worse”
Hossein, C. S. (2019). A Black Epistemology for the Social and Solidarity Economy: The Black
Social Economy. Vol. 46(3) 209-229. p.3
Hossein, C. (2018, May 7). Banking While Black: The Business of Exclusion
Nembhard, J. G (2014, n.d). Cooperative Economics and Civil Rights. GRIT tv interview video
Shuman, M (2020). Comparative Resilience: 8 Principles for Post-COVID Reconstruction.
Tapestry Community Capital (n.d). Financing your dream project shouldn’t be so hard.
Vieta, M. (2017). The Italian Road To Recuperating Enterprises and The Legge Marcora
Framework: Italy’s Worker Buyouts in Times of Crisis. https://www.euricse.eu/wp-content/uploads/2017/03/15_17-Rapporto-Vieta-Depedri-Carrano-1.pdf
Vieta, M. (2020). The Emergence of the Social and Solidarity Economy. In Workers’ Self-Management in Argentina: Contesting Neo-liberalism by Occupying
Companies, Creating Cooperatives, and Recuperating Autogestión. Leiden: Brill
(pp. 339-347).
Vieta. M and Duguid. F. (2020, April 19). Canada’s co-operatives: Helping communities during and after the coronavirus. https://theconversation.com/canadas-co-operatives-helping-
Webb, T. & Cheney, G. (2014). Ch. 5, Worker-Owned-and-Governed Co-operatives and
Beyond the Global Economic Crisis. In M. Parker, G. Cheney, V. Fournier, & C.
Land (Eds.), The Routledge Companion to Alternative Organization. London:
Routledge. pp. 64-88.