Mr Speaker, it gives me great pleasure to introduce to this House the Cooperatives Amendment Bill.
The Bill broadly aims to achieve the following objectives:
- To strengthen cooperative governance, accountability and transparency and provide for a differential dispensation for cooperatives to reduce the regulatory burden for cooperatives;
- Strengthen the cooperative structure to allow for organic growth informed by cooperatives own needs and requirements;
- Enhance compliance with legislative requirements; coordination amongst development support for cooperatives at national, provincial and local level as well as to improve the administration, good governance and sustainability of cooperatives; and
- Establish cooperative institutions in order to streamline support for co-operatives and to assist with conflict resolution.
The Bill fully embraces the internationally accepted seven principles for cooperatives. These principles emphasize the unique characteristics of cooperatives and their full compliance assist to improve the sustainability of cooperatives. Various international studies showed that in countries where these principles are fully applied, cooperatives are sustainable and are much more resilient against financial and economic crisis particularly when compared with shareholder based forms of enterprises. Not only are these cooperatives sustainable, but they also invariably contribute economically towards socially uplifting the local communities within which they are located and operating. In the final analysis they play an effective role towards economic development.
These principles are as follows:
(i) Voluntary and Open Membership
(ii) Democratic Member Control
(iii) Member Economic Participation
(iv) Autonomy and Independence
(v) Education, Training and Information
(vi) Cooperation among Co-operatives
(vii) Concern for the community
Mr Speaker, the structure for cooperatives has been strengthened in order to improve the sustainability and the organic growth of cooperatives as informed by their own needs and requirements. Apart from primary, secondary and tertiary co-operatives, the Bill also allows fir the formation of a fourth tier structure that will be known as the National Apex Cooperative for South Africa. The National Apex Cooperative will unite cooperatives, across off provinces and provide advocacy on behalf of cooperatives as a unified cooperative movement.
The National Apex Cooperative can be established by a minimum of three National Sectorial Tertiary Cooperatives and five Multi Sectorial Cooperatives representing co-operatives at a provincial, district or local level. The National Apex Cooperative will represent South African cooperatives at national and international level in organisations such as the International Cooperative Alliance Africa and International Cooperative Alliance (ICA).
The Bill also calls for the establishment of principles of good governance for cooperatives that will assist cooperatives to improve their good governance, which will enhance good practice and the sustainability of cooperative enterprises.
The Bill has been refined in order to strengthen governance and accountability within the cooperatives. A code of good practice for cooperatives will be developed to assist cooperative in complying with the principles of good governance. The code will ensure clarity on the corporate identity of cooperatives and assist and direct cooperatives to ensure compliance with requirements stipulated in their constitutions as well as legislative requirements. The code should guide cooperatives to develop their own operational policies and practices that will reinforce the principles of good governance based on cooperative values and principles.
The Bill furthermore mandates cooperatives to submit to the Registrar of cooperatives the annual financial, social and management decision reports. This refinement will enhance accountability and transparency by the board and management of cooperatives towards its members. It will also strengthen the democratic decision making within cooperatives and thus reduce conflict within cooperatives and improve their sustainability.
The Bill provides for the categorisation of primary cooperatives into three categories in order to allow for a differential dispensation with regard to auditing, accounting activities and exemptions. Category A primary cooperatives who are survivalist to small cooperatives will be expected to comply with a far reduced compliance requirement in tandem with their economic level. This will be in the form of exemption and support by the state to ensure compliance; Category B primary cooperatives, who are small to medium scale co-operatives, will be expected to comply with the requirement in tandem with its economic level. Similarly, category C primary cooperatives, who are medium to large cooperatives, will be expected to comply with the requirement in tandem with its economic level. The policy rationale here is to reduce the regulatory burden, especially for micro to small scale survivalist and medium scale cooperatives.
With respect to voting rights, the Bill recognises that there are cooperatives that have structured their voting proportionately. However, special provision is made to prevent and mitigate against the risk of dominance by minority vote in large scale commercial primary, secondary and tertiary cooperatives as well as the national apex cooperative. The principle of one member one vote will apply for small scale cooperatives, particularly those formed after the promulgation of the Amendment Act.
The Bill seeks to address the abuse of worker cooperatives exemption from labour law by stipulating that all worker cooperatives must comply with Labour legislation. The Bill allows cooperatives to be exempted on application provided that they fulfil certain conditions, which conditions will be expressed in detail within the forthcoming regulations.
To enhance coordination amongst development support for cooperatives the Bill provides for the strengthening of intergovernmental structures at all three spheres of government, i.e. national, provincial and local levels. This specifically refers to the department, provincial government departments responsible for economic development, municipalities, provincial public entities, municipal public entities, the Cooperatives Tribunal and the Cooperatives Development Agency. The structures established to strengthen this coordination around cooperatives development and support must comply with the principles of cooperative governance and intergovernmental relations referred to in section 41 (1) of the Constitution, the provisions in the Intergovernmental Relations Framework Act, 2005 as well as national and the applicable transversal provincial policies and other regulating intergovernmental relations.
The functions of these structures, inter alia, are to promote cooperative governance; ensure coordination on planning, budgeting, provisioning of services and support to and monitoring and evaluation in respect of cooperatives.
The Inter-Provincial Coordinating Committee will, for example, meet on a quarterly basis and coordinate all cooperative development programmes developed at provincial level and discuss matters of mutual interest whilst the provincial interdepartmental and municipal coordinating structure will coordinate cooperative development programmes at a provincial level amongst provincial departments as well as municipalities.
The Bill provides for the development of a framework to ensure the establishment of mechanisms, processes, procedures and indicators required to report on, monitor, evaluate, assess and determine the impact of the exercise of powers, the performance of functions, the execution of duties and the operational efficiency of such structures and cooperatives. This will assist to ensure accurate and current information not only on all structures established or recognised in accordance with this Bill but also (a) the status of the cooperatives movement; (b) the various levels of cooperatives as well as categories of primary cooperatives contemplated in this Bill.
Speaker, the 2012 Cooperatives Amendment Bill provides legal support for the establishment of the following proposed institutional mechanisms aimed at enhancing the development of cooperatives within our economy, as well as, strengthen good governance, i.e. The Cooperatives Development Agency; and The Cooperatives Tribunal.
(a) The establishment of the Cooperatives Development Agency:
The Cooperative Development Agency will be established as a government component to perform its powers and functions in accordance with legislative provisions in terms of the Cooperatives Amendment Act 2012 as well as any other relevant legislation. The Cooperative Development Agency will, after consultation with the relevant authorities in provinces, districts or local governments, be able to establish satellite branches in all provinces and districts.
The objective is not to duplicate but to co-locate and ensure the delivery of tailor made support services to cooperatives organised around the principle of One Stop Shop as well as bringing support services closer geographically where co-operatives are. We must remember that the majority of cooperatives formed in our country are from the far flung rural areas of our economy. Through the establishment of regionalised offices offering tailor made support to cooperatives in all provinces, development support will be at the doorstep of cooperatives in rural areas.
The objectives of the Cooperatives Development Agency will, inter alia, include the following:
- Support, promote and assist with the development of cooperatives;
- Provide financial and non-financial support to cooperatives;
- Provide business support services to cooperatives;
- Assist, especially small scale survivalist cooperatives to ensure compliance with legislative requirements;
- Provide access to information;
- Facilitate access to markets, both locally and internationally, etc.
The functions of the Cooperatives Development Agency will, inter alia, include
- Financial support services;
- Non-financial support services;
- Education and training;
- Support and extension services;
- Market intelligence and development;
- Monitoring and evaluation; etc.
(b) The establishment of a Co-operatives Tribunal:
The Cooperative Tribunal will ensure compliance with legislative requirements; assist with judicial management, winding-up, deregistration as well as conflict resolution and liquidation. The tribunal will have full time as well as part time personnel and will be mobile in operation, (i.e. will be able to adjudicate in different areas of the country as required) in order to reduce cost while being effective in fulfilling its mandate. Although the head office will be based in Pretoria the fact that it will be mobile in its operation will ensure accessibility to cooperatives in all provinces, especially cooperatives in the far flung rural areas of the country where the majority of cooperatives are located.
The functions of the Cooperatives Tribunal will, inter alia, include
- Adjudicate on any application made in terms of the Act and to make appropriate recommendations;
- Assist with conflict resolution;
- Assist with Judicial Management
- Assist with requested dissolution, winding-up and liquidation;
- Assist with the investigation and enforcement of compliance with the provision of the Act, etc.
The regulations required in terms of the Amendment Bill to enable the operationalisation of the legislation is in the process of being updated and will be published in the Government Gazette for public comment.
The Bill has organisational and personnel implications as it creates new structures to support cooperatives. The creation of the new structures will entail that personnel and existing products currently supporting cooperatives through other government institutions will be transferred to the newly proposed institutions to ensure streamlining of support for cooperatives. The transfer of staff will be carried out in accordance with Section 197 of the Labour Relations Act, 1995 and any collective agreement reached between the state and the trade union parties.
