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New law to cure ailing co-operatives

coopsBilly Ntaote

MASERU — The Parliament is working on a draft amendment bill intended to improve the performance of Lesotho’s ailing cooperatives. The amendment bill seeks to bring changes to the Co-operatives Societies Act No.6 of 2000 by first reducing the old law’s three-tier structure of governing cooperative societies to a two-tier structure. The second improvement brought by the Co-operatives Societies Bill 2013 to the Co-operatives Act 2000 is the inclusion of student cooperatives.

The bill also seeks to reduce risks by prohibiting co-operatives from providing loans or credit to non-members and also maintaining professionalism on their audit services. The amendment bill was tabled before the National Assembly of Lesotho by the then Minister of Trade and Industry, Cooperatives and Marketing Temeki Tšolo before the house on April 17 and would next week be discussed in the august house.

Following the tabling of the draft amendment law, the portfolio committee on the economic and development cluster scrutinised the bill after it was referred to the committee and this week the committee’s report was tabled in the National Assembly. During the bill’s discussion in the economic and development cluster, Tšolo, was engaged in a briefing session on the policy context, financial implications, contents and effects of the bill.

The economic cluster also engaged stakeholders to the co-operatives business for inputs on the amendment bill. On the restrictions on loans, the draft amendment law amends the principal law to indicate “a society shall not make a loan or allow any credit to any person other than a member.” The bill also indicates an apex organisation shall establish a fund to further the objectives of its members and such a fund shall be used exclusively for the benefit of the members of the apex organization.

When contacted for a comment Lesotho Cooperatives Credit Union league (LCCUL) Treasurer and board member Leoalatsa Ramoshabe said the amendment was a welcome initiative which would bring growth to co-operatives. The LCCUL, financial co-operatives societies’ umbrella organisation focused on savings and credit provision would now be turned into an apex organisation when the amendment bill is turned into law from being a secondary society.

Ramoshabe said in the past Co-op Lesotho has always been the only apex organisation in the country and now things would change for specialisation to exist in co-operatives. “The amendment brings very welcome changes as all sectors would now have their own apex organisations that would be focused on their primary societies’ sector development,” he said.

Ramoshabe indicated that when the new draft bill receives royal ascend it would allow “financial, youth, handicrafts, poultry, co-op Lesotho and other sectors to have their own apex co-operatives bodies.” He said specialisation brings together co-operatives with a common idea and it helps speed up the work as opposed to a situation where all sectors answer to Co-op Lesotho.

“In the past, Co-op Lesotho ended up neglecting or being overburdened and failed to cater for all the co-operatives sectors,” Ramoshabe said. Ramoshabe said Lesotho influenced the development of co-operatives in many African countries as they began in Lesotho with the proclamation of 1948 but today countries like Swaziland and Botswana are way ahead of Lesotho in co-operatives. Speaking on behalf of the Co-op Lesotho, the apex co-operatives organisation that would soon be stripped off powers over certain sectors, Senior Co-operatives Officer Malineo Mosoeunyane agreed the bill would relieve the burden Co-op Lesotho faces.

She said there are going to be many apex organisations and as Co-op Lesotho was intended for farmers, specifically crop farmers; it would now focus closely on crop farmers. “Our main challenge in the past was that we tended to focus on agriculture and other sectors were suffering,” Mosoeunyane said.

She explained the bill also brings changes in the ways co-operatives like Boliba Savings and Credit that provide loans to members and non-members as it would now be restricting provision of loans by co-operatives to be to members only. Mosoeunyane showed the change does not imply Boliba Savings and Credit was operating unlawfully in the past but was operating legally and the decision to give loans to non-members was not restricted by the principal law.

Talking about the introduction of mandatory auditing of co-operatives books and accounts, Mosoeunyane said it was a welcome development as it would bring accountability and transparency to co-operatives members. For his part, the Lesotho Chamber of Commerce and Industry President Ntaote Seboka said his organisation welcomes the bill adding it will bring improvement among co-operatives.

He however indicated that there is need for law makers to ensure that all relevant ministries and stakeholders are always engaged in the drafting of a law to cater  for all the needs of the business environment. Seboka said it has come to their realisation that there is no proper coordination among government ministries regarding business industry requirements as co-operatives are business too.

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