Co-operatives Bill: Department briefing

Meeting report

TRADE AND INDUSTRY PORTFOLIO COMMITTEE
9 February 2005
CO-OPERATIVES BILL: DEPARTMENT BRIEFING

Chairperson:

Mr B Martins (ANC)

Documents handed out:

Co-operatives Bill [B4 – 2005]
Department briefing on Co-operatives Bill 2005

SUMMARY
Department officials noted the shortcomings of the existing Co-operatives Act 91 of 1981, and then outlined the objectives and purposes of the new Act for which the DTI had taken over responsibility from the Department of Agriculture.

It was stressed that it was a new Act and not an amendment to the old one. Its scope was much wider to include at least nine different kinds of co-operatives in three forms: primary, secondary and tertiary.

Members were concerned about a possible lack of breadth and depth of stake-holder participation in consultation procedures. It was important and urgent that previously disadvantaged people be supported through the Act and its implementation. Traditional Leaders could be of assistance in rural communities.

MINUTES
The Chairperson regretted that not one opposition Member was at the meeting.

Mr Lionel October (Department of Trade and Industry: Deputy Director-General) reminded Members that in 2001 the issue of co-operatives was transferred to the Department of Trade and Industry (DTI) because it was realized that co-operatives were no longer a purely agricultural matter.

Ms Nweti Maluleke (Department of Trade and Industry: Director: Co-Operative Unit) conducted the briefing on the Bill (see document). Some points that she made were:
- The Co-operatives Bill dating from 1981 was considered to be cumbersome, paternalistic, had too much power vested in the directors and its language was difficult to follow.
- Its scope had been widened but at the same time it was shortened and some chapters deleted.
- Financial co-operatives like stokvels were to be included
- The requirement for the minimum number of Members was lowered.
- Members’ right to access to information was increased
- Winding up or deregistration was made simpler.
- Comprehensive consultation had been done.

The legislation was a step in tandem with the United Nations’ 2005 Year of Micro-finance and it was suggested that the DTI launch some kind of interaction.

Discussion
Mr S M Rasmeni (ANC) was pleased with the Bill but requested that previously disadvantaged communities be assisted, and enquired how the DTI planned to achieve this. The "massive consultation" mentioned by the presenter was unclear and not convincing. Consultation with entities like NEDLAC had limitations, as they were not able to reach out to the people they purported to represent.

Ms F Mohamed (ANC) said that the public was misled at the counter by officials who gave incorrect information such as the minimum number of Members required by the new legislation. A minimum of only two in the case of secondary and tertiary co-operatives was confusing.

Mr Rasmeni asked for clarification on which co-operative organisations qualified, for example, stokvels. The position with long-term and short-term insurance respectively was confusing.

Mr L Zita (ANC) asked if the Bill would provide for limitations on share-holding by and dividends to particular individuals, for tax incentives. He also asked if development agencies would lend support to co-ops.

Dr M Sefularo (ANC) asked for a less paternalistic, interventionist role for the state. He was concerned that traditional leadership was not given a role, as many co-operatives would be in rural areas under traditional leadership.

Mr October announced that the linkage with micro-credit organisations would be a focus of attention. Financing of enterprises including co-ops would commence in March 2005, initially by using existing structures until own ones were established. They were aiming at helping one hundred co-ops during 2005 with grants for initial capacity building and financing. For mass consultation they had had to work through chief stakeholders such as NEDLAC, trade unions, the South African Commuinst Party and the agricultural sector. They still needed active consultation with traditional leaders.

Ms Maluleke explained that Category 3 co-ops could be representative structures made up of only two or more primary or secondary co-ops for purposes such as for marketing. Financial co-ops could include stokvels and also others not listed, such as burial societies.

In response to these questions, Mr Johan Strydom (Department of Trade and Industry Legal Advisor) stressed that the Bill was not an amendment but a new law. Time constraints for proof reading were severe, but the final print was expected to be available not later than 14 February 2005. The final point in the Explanatory Memo on the Bill (Point 8.2) dealing with the necessity of reference of legislation to the National House of Traditional Leaders if it dealt with customary law and customs, had become standard for all new legislation. [The State Law Advisors held that this was not necessary with this Bill]. In the Bill, the provisions of Clause 88 and Item 9 of Schedule 2 were not inconsistent.

Ms Maluleke said that, due to lack of knowledge of the sector, tax incentives could only be considered in future. Any action had to be in accordance with the Income Tax Act. The situations in other countries were quite varied.

Mr Rasmeni asked who had attended the workshops, and whether support for co-ops was growing. In the fight against poverty and to create jobs, the envisaged financial assistance to only one hundred co-ops for 2005 as mentioned by the Deputy Director, was too few. There were many areas such as in Limpopo, North West Province, KwaZulu Natal and the Eastern Cape where intervention was urgently required. Was there an outreach unit? Up to that time no support from the DTI to assist workers who organised themselves to co-operate had been forthcoming.

Mr Zita enquired when the Act would be signed.

Ms Maluleke envisaged workshops in all the provinces with broad stake-holder participation, short courses to introduce public officials to the concepts, capacity building of co-ops and NGOs and work with the National Co-operative Association.

Mr October summed up the process as "From Policy to Act to Support Systems", and asked that names of specific co-ops be given so that they could be assisted. The Preferential Procurement Act had to include co-ops. Interim training manuals were available. They were being brought up to standard.

The Chairperson noted that a date for public hearings would be finalised shortly.

The meeting was adjourned.