Rwandan government introduces new law on co-ops

The law is aimed at stamping out corruption and improving financial performance for members, say officials

Rwanda has brought in a new law governing co-operatives, which it says will improve transparency in decision making and improve their performance.

The law – replacing the co-op law enacted in 2007 – will also regulate the pay of co-operative executive committee members to prevent embezzlement, say officials. It also provides guidance on the contributions and distribution of dividends to members.

Prof. Jean-Bosco Harelimana, director general of the Rwanda Cooperative Agency (RCA), told national paper New Times that “the aim of these changes is to build strong co-operatives, which are professionally managed, create jobs, and improve the socio-economic development of the members.”

Other changes brought in under the new law include speeding the process to grant the certificate of legal personality to a co-operative from 35 days to two.

RCA will be able to provisionally suspend leaders and employees of a co-operative in mismanagement cases – and if all members are suspended, will appoint a member or employee of the co-operative to manage its interests.

All leaders and employees convicted of mismanagement of co-operative assets will be barred from acting as leaders or managers.

The new law also required co-ops to pay dividends on share capital to members, and to pay half of any net surplus to members. Up to 10% of any net surplus must go into an education and training fund, and the remainder of the surplus goes into general reserves of the co-operative or is paid as bonuses.

In a bid to stamp out corruption, members who fraudulently use or sell the property of a co-operative faces between two and five years in prison.

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