CO-OPERATIVES POLICY AND BILL Mr Lionel October Deputy Director-General Enterprise and Industry Development 13 October 2004

TABLE OF CONTENTS Problem statement The Co-operatives Policy The Co-operatives Bill Policy instruments to support objectives Some of the key deliverables in progress

PROBLEM STATEMENT Co-operative development and promotion has for a long time focused in the agricultural sector Development progressed rapidly due to the 1981 Co-operatives Act support and government subsidies The support enjoyed resulted in the development of a large commercial agricultural co-operative sector

PROBLEM STATEMENT Co-existence of a dual co-operative sector with highly developed white-owned co-operatives and weak black-owned co-operatives The 1981 Co-operatives Act still caters for registration of Agricultural co-operatives Agricultural sector still provided with formal support and other incentives Emerging, majority blacks lacks formal support, operate outside of the Act

PROBLEM STATEMENT Review 1981 Co-operatives Act due to a need to: Provide an enabling environment for all co-operative enterprises in all sectors of the economy to flourish Diversify growth of all enterprise types to contribute to economic growth Provide simpler registration processes Ensure accessibility to the grassroots through decentralization of registration

PROBLEM STATEMENT Co-operatives as effective vehicles for broad-based empowerment Emerging black cooperative enterprises compete successfully on a national and global scale

THE NEW CO-OPERATIVES POLICY New policy outlines government’s broad guideline to develop and support co-operatives Outlines the government’s approach to defining the co-operative enterprises as well as the policy instruments that will be utilized to achieve the objectives Policy statement deals with an important variant of economic enterprise, namely co-operatives

THE NEW CO-OPERATIVES POLICY Promotes the development of economic enterprises and diversifies the ownership, size and geographic location of those enterprises A self-sustaining co-operative movement that can play a major role in the economic, social and cultural development of South Africa Policy statement should be read in conjunction with those on Small, Medium and Micro-enterprises and the Strategy on Broad Based Black Economic Empowerment

CONSULTATIVE PROCESS Policy document resulted through an intense consultation process, initiated in 1997 with the establishment of a Co-operative Policy Task Team The Policy Task Team consisted of the main stakeholders in South Africa’s co-operative movement at the time Nine regional workshops and one national co-operative conference was organized to discuss main policy issues

CONSULTATIVE PROCESS Cabinet recommended to move the function to the dti A National Co-operatives Workshop was held last year March for input from all stakeholders Consultation continued at NEDLAC to discuss both policy and Bill Report will be adopted by Co-operatives Task Team and taken through other relevant structures

Policy Objectives and Purpose Create an enabling environment for co-operative enterprises which reduces the disparities between urban and rural businesses, and is conducive to entrepreneurship Encourage persons and groups who subscribe to values of self-reliance and self-help to formalise Enable such co-operative enterprises to register and acquire a legal status/legal persona separate from their members Promote greater participation by black persons, especially those in rural areas, women, persons with disability and youth in the formation and management of co-operatives Establish a legislative framework that will preserve the co-operative as a distinct legal entity

DEFINITIONS, VALUES AND CORE PRINCIPLES OF CO-OPERATION Policy provides definitions of: Primary Secondary Tertiary For purposes of registration their functions are different A (primary) co-operative is an autonomous association of persons united voluntarily to meet their common economic, social and cultural needs and aspirations through a jointly owned and democratically controlled enterprise

OTHER KINDS OF CO-OPERATIVES Other kinds and types of co-operatives include: housing co-operative workers’ co-operative social co-operative agricultural co-operative financial services co-operative consumer co-operative  marketing and supply co-operative transport co-operatives/ services

CHARACTERISTICS Two characteristics distinguish co-operatives from other types of enterprises:    they are associations of people who agree to be the owners, the makers of democratic decisions and users of their joint enterprise their main purpose as an economic unit is to promote their members by rendering services, rather than to maximize profits

SCOPE OF POLICY FOR SUPPORT PURPOSES Applies to established co-operatives but the emphasis is on supporting emerging co-operative enterprises: Emerging co-operatives: These co-operatives have been identified as struggling for survival and lacking training, skills, markets. Established co-operatives: These are co-operatives that are mainly operating in agriculture and controlled by the white minority, although they do exist even in other sectors.

THE CO-OPERATIVES BILL Core principles of co-operation: Voluntary and open membership Democratic member control Member economic participation Autonomy and independence Education, training and information Co-operation among co-operatives Concern for community

POLICY INSTRUMENTS TO SUPPORT CO-OPERATIVE ENTERPRISES Legislation Establishing a Co-operatives Development Fund for technical assistance and capacity building. Special incentives and support measures for Co-operatives enterprises (the dti) NEF designed a special product for co-operatives

POLICY INSTRUMENTS TO SUPPORT CO-OPERATIVE ENTERPRISES Alignment by all COTTI programmes and other dti programmes to support co-operatives New Small Enterprise Development Agency APEX FUND Partnerships

POLICY INSTRUMENTS TO SUPPORT CO-OPERATIVE ENTERPRISES Availing access to infrastructure through incubation programmes Acess to SMME tax incentives as businesses Preferential procurement Institutional support and the Co-operative Advisory Board

FUNCTIONS OF THE CO-OPERATIVES ADVISORY BOARD The functions of the Advisory Board are to advise the Minister generally, and to make recommendations, with regard to –   (a)           co-operative development policy in the Republic; (b)         the application of any of the provisions of this Act or any other law on matters affecting co-operatives; (c)           the publication of any regulations in terms of this Act that may be necessary or desirable; (d)      the provision of support programmes targeting co-operatives that create employment, benefit disadvantaged groups or lead to greater participation in the economy by women and black people;

FUNCTIONS OF THE CO-OPERATIVES ADVISORY BOARD (e)         the establishment of guidelines for co-operative audits; (f)     any matter referred to the Advisory Board that relates to promoting the development of co-operatives; and   (g)       any decision the Minister is required to take in terms of this Act, on the request of the Minister.

THE CO-OPERATIVES BILL 2004 To provide for the formation and registration of co-operatives, the establishment of a Co-operatives Advisory Board, the winding up of co-operatives and to provide for matters connected therewith The dti as the central department Registrar to move to CIPRO Establishment of a Unit in the dti/role of the dti Accommodate other co-operatives kinds and type provisions Onerous sections removed

SOME KEY DELIVERABLES IN PROGRESS Strategy consultations – nationally and provincially finalised and incorporated into the draft strategy Study tours to Italy, Kenya, Japan and Spain – being finalised to incorporate best-practice into the strategy Strategy to be tabled at EXBO early November 2004 National Co-operatives Conference to be held on 12 and 13 November 2004

THANK YOU