As it continues its work to analyse and improve co-operative law around the world, the International Cooperative Alliance (ICA) and its regional offices hosted a webinar last month with co-op experts from around the world.
The event launched the second phase of the Legal Framework Analysis (LFA) for Cooperatives, a harmonised research and analysis implemented across all ICA regions as part of an activity co-funded under the ICA–EU Partnership #coops4dev
Following the first phase of the LFA (2016-2021), which produced 79 national reports and four regional reports, the second phase further strengthens and systematises the mapping and analysis of co-operative legal environments across regions.
With Santosh Kumar, the ICA’s director of legislation, confirming to the session that more than 80 national legal frameworks have been identified, the research is a formidable task. Kumar told the webinar that the second phase of the LFA will centre on a harmonised questionnaire, he said, “which hinges on the raison d’etre of our movement – to practice promote and protect the co-operative identity”.
Related: Santosh Kumar on the Legal Framework Analysis
Presentations from the ICA regions followed, starting with Alphonce Mbuya from the Department of Law at Moshi Co-operative University in Tanzania, who is Chair of the ICA-Africa Cooperative Law Committee. He said his team gathered information from 18 countries, with common issues including the problem of overregulation. The issue here is finding the right balance between cooperative autonomy and necessary oversight, he said.
This is partly a colonial legacy, he added. “During colonial times, cooperative legislation vested enormous powers in state authorities … particularly affecting the autonomy and independence of cooperatives. That legacy has has lived on in post-colonial African cooperative legislations.”
When ethical issues arise within cooperatives, governments can use this to justify interference in their autonomy, he warned.
Upali Herath, Chair of the National Institute of Cooperative Development, Sri Lanka, gave an update on progress at ICA Asia-Pacific, where the picture is complex. On the one hand cooperation is becoming linked with the wider concept of the social and solidarity economy, he said, and on the other there is the colonial legacy of cooperatives following the British registrar system. This dynamic plays out against a backdrop of neoliberal economics which is diluting cooperative systems.
“We have to see if the law is adequate enough to handle these situations,” he added.
David Hiez, Professor of Civil Law at The University of University of Luxembourg and Member of the ICA Cooperative Law Committee, said cooperative law is too often reduced to two or three rules repeated ad nauseam, neglecting the fact that it is a very complex and technical body of law. “All the reports that have been produced do indeed help to improve this understanding,” he said.
The webinar also heard two case studies, including a presentation by Mbuya on the African Union Model Law. He said this has been adopted as “a continental guide for co-operative legislation”, which he says is a “milestone”.
This model law “clearly elaborated how co-operatives can contribute to achieving continental development objectives,” said Mbuya, “including agenda 2063 which calls for an Africa that is more integrated and more prosperous”. It “is now being discussed widely and critically”, he added, and this is bringing positives, particularly in terms of the relationship between governments and the co-operative movement, “and how that relationship should be for the betterment of both”.
This can assist reform, advocacy, and the adoption of new laws, he added, with reports that Morocco, Botswana and Malawi “have shown direct interest to reform the national legislation based on the model law”.
The model law is an “advocacy instrument” rather than a binding one, he added. “Its provisions can be adopted as they are or they can be adopted with some modifications in order to meet national realities and contexts.
The work leaned heavily on the findings of the LFA, said Mbuya, which demonstrated variations in legal frameworks and issues that required attention. For example, there are different taxation approaches in Ghana, in Tanzania, in Uganda, and there are different approaches between countries in the way laws are framed.
“There are countries with multiple legislation governing co-operatives in general,” said Mbuya, “and then at the same time, you have specific legislation on specific types of co-operatives, such as saccos [savings and credit co-operative organisations]. And that was seen to be a challenge because it fragments the movement, and sometimes it dilutes identity.
“We also came across a major challenge of regulatory overlaps or conflicts, particularly in the saccos sector, where some countries have passed have established specific authorities to regulate saccos.”
Such issues show the need continental standards, he argued, calling for “best practices that can be used to guide governments in crafting legislation that responds to the needs of the movement and that advances co-operative development.”
The goal is not uniformity, he added; it is a question of “harmonising the legal framework”.
Herath identified similar issues in his region. While co-operative principles, such as autonomy and independence, are embedded in law, there are challenges where registrars have the authority to override co-op general bodies. This has not been put to the test, he said, “because the general body is bound to be the final authority on their management of their society”.
The exception to this is where government funding is involved, which can bring other legal limitations or guidelines. “Of course, they are governed by the terms and conditions of such an agreement. It is not in keeping with the general laws on co-operatives.”
Where national governments take a federal model things are also complicated, said Herath, with different states having their own laws; India has circumvented this by developing its own model co-op law.
In Sri Lanka, on the other hand, there are “certain laws that are not in keeping with the co-operative principles”. Efforts are now being made to develop a co-operative policy to tackle the situation, to stop the “fragmentation” of the co-operative system.
The second case study looked at an alarming example of the importance of co-op law, seen last July in Ecuador, when the government passed reforms requiring certain co-ops to be privatised into banks. This was struck down in September after vociferous lobbying from the national and international co-op movements.
Veronica Morales, from Coop Riobamba, Ecuador, said the proposed reform “violates the rights, principles and legal nature of the co-op model” and gave profuse thanks the international movement for its solidarity, immediate response and “human support”.
She said: “We were the victims of a political confrontation”, adding that the case shows the importance of having international co-operative bodies to see that co-operative law is maintained.
But the problem is not over, warned Morales. On 8 October, a new reform opened the possibility that co-ops could convert to banks on a voluntary basis, “reviving the debate on the autonomy of the entity of the co-operative model”.
She said co-op leaders are “still worried about how to establish the guidelines for this change” – but insisted: “The true co-operatives will continue to be co-operatives.”
Closing remarks came from José Manuel Capitán, economist at the European Commission, and Professor Hagan Henry, Chair of the ICA Global Cooperative Law Committee.
Mr Capitán highlighted the importance of cooperatives to agendas such as sustainable development, the social economy and decent work.
He said the LFA “is really important because one of the things that cooperatives need to fulfill their mission is to have an adequate legal and regulatory environment.”
Prof Henry said knowledge of cooperative law had been diminished over the past 50 years. “This facilitated the alignment of the legal structural features of cooperatives … with those of capital-centred enterprises – disregarding that more than 1 billion cooperators around the world do not want to meet their economic, social and cultural needs in a way that they cannot identify with.”
The LFA will increase awareness of the role of adequate law in facilitating cooperative development he added, and help to bring co-op law closer to the cooperative identity. It will also help the ICA and its regional regional offices improve the support they offer to their members and other stakeholders, especially lawmakers.
