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History & Legal Framework of Co-operatives in Tanzania

This article delves into the rich history and legal foundations of cooperatives in Tanzania, exploring their evolution, key milestones, and government support through colonial and independence eras. Learn about the genesis of cooperatives, significant unions, challenges faced, and the impact on crop output and economic development.

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History & Legal Framework of Co-operatives in Tanzania

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  1. History & Legal Framework of Co-operatives in Tanzania Hamudi I. Majamba 20th June 2019

  2. Preliminaries No. of theories on evol. of coops – Main:- • Traditional; (modes of prod. - hunter gathers - agrarian – feudalism – socialism- capitalism) – traditional vs. State capture. • Colonial; & • Utopian - (oppressed masses forged alliances to effectively fight capitalist exploitation.)

  3. Preliminaries… • Genesis of Cooperatives as known today. • Europe – 1830: (UK – Rochdale Township – near Manchester) Millers (grain producers) pooled resources to purchase items from wholesaler. – challenges – over crediting ; • 1843 – Weavers experiencing similar problems like millers decided to pool their own resources to overcome challenges.

  4. Preliminaries… • Weavers (Rochdale) established their own stores with following characteristics/rules:- • (i) All members had contributed to purchase materials 4 store; • (ii) No credit – all payment strictly cash; • (iii) To purchase only from store (even if far!); • (iv) Profit to be distributed by purchase not on basis of contrib. of capital @ had invested.

  5. Preliminaries… • Above led to – “Rochdale Equitable Society” & Rochdale Principles of Cooperative Societies – amplified as follows: • Democratic Control – all equal voice in mgt; • Open membership (all joined in eq. terms); • Profit thru’ surplus; • No Credit; • Sell of pure goods (no adulteration);

  6. Preliminaries… 7. Educate @ other 8. Political & religious neutrality. • In 1845 (within a yr.) huge benefits, new members – grew tremendously influencing et al jurisdictions in Europe, Asia & Africa (with colonial tags in latter two); • EA – K (1908 – Dairy); U (1913- cotton); R (Belgians – before 1964)

  7. Tanzania: History • Colonial & independencegovernments of Tanganyika/Tanzania supported cooperatives as institutions for peasants. There were crop booms in the country from 1950s up to the early 1970s - mainly as a result of cooperatives which contributed to increase in crop output.

  8. Tz. History… • Peasants in Tanganyika (now Mainland Tanzania) started informal (unregistered) cooperatives in 1925; • 1st Cooperative Union in country was Kilimanjaro Native Cooperative Union (KNCU), registered with its 11 affiliated primary cooperatives in 1933.

  9. Tz. History… • The Ngoni-Matengo Cooperative Marketing Union & its 3 affiliated Primary Cooperatives were registered in 1936 in Songea region. Focused on tobacco - output rose to 120 tons in same year from one ton in 1930 & output reached 4 figure Nos. in 1950s.

  10. Tz. History… • In 1940s & 1950s et al important Coops & Unions formed & registered: • Bugufi Coffee Cooperative Society (Ngara); Mwakaleli Coffee Growers Association (Rungwe) - later Rungwe African Cooperative Union; • Bukoba Native Cooperative Union & Lake Province GrowersAssociation. L. Victoria area, later Victoria Federation of Cooperative Unions Limited (VFCU) – cotton production.

  11. Tz. History… Victoria Federation of Cooperative Unions Limited (VFCU) – grew tremendously, engaged in marketing & buildings – largest in Africa by 1960s. • 1968 Tanganyika had the largest cooperative movement in Africa & 3rd largest cooperative in the world in terms of % of market share of agricultural exports.

  12. Tz. History… • Altho’ agric marketing coops were dominant, govt. encouraged different types of coops. This led to introduction of consumer cooperatives, e.g. Cooperative Supply Association of Tanganyika (COSATA) & Moshi &District Consumer Cooperative Society. In transport sector, there emerged Co-cabs & Coast Region Transport Cooperative (CORETCO). Savings & Credit Coops also emerged e.g. Savings & Credit Union League of Tanganyika (SCCULT).

  13. Tz. History… • Cooperative Bank of Tanganyika was launched in 1962 & replaced by National Cooperative Bank (NCB) in 1964. NCB provided loans to cooperatives to purchase crops. Cooperatives held shares & maintained current & fixed deposit accounts in bank. • The NCB also received overdrafts from Central Bank of Tanzania. It was a success & landmark in history of cooperative movement in the country with backing of law in 1964.

  14. Tz. History… Mushrooming of coops after independencecame with challenges. - Formed in hurry with little preparation. - People associatedindependence with economic development & there was political expediency to open many cooperatives. - Complaints of mismanagement & corruption common. In 1966 President appointed a special Committee of Enquiry to look into the problem.

  15. Tz. History… Enquiry Team’s Report to government in same year listed basic problems of the cooperative movement: • • shortage of appropriate & skilled manpower. • • presence of uniformed membership. • • lack of democracy at Union level; & • • susceptibility of the cooperative movement to political interference.

  16. Tz. History… • Govt. accepted all BUT the one on political interference! • Commission of Enquiryrecommended formation of a Unified Cooperative Service Commission (UCSC), to be responsible 4 recruitment, discipline, terms of service & dismissal of all employees of registered cooperatives. • The UCSC was created & organized in almostsame way as Civil Service Commission. There was compromise of cooperative members’ autonomy & democratic rights to hire & fire people of their choice. A further blow to the movement was the dissolution of the National Cooperative Bank and the National Development Credit Agency in 1970.

  17. Tz. History… • 1976 all primary coops abolished by govt. Their crop marketing functions taken over by communal villages. Coop Unions also abolished & their functions taken over by Parastatal Crop Authorities – these had to buy crops directly from villages. • Abolished Coop Unions never bought crops directly from peasants, but thru’ Primary Coops. Et al services which were rendered by abolished coops e.g. wholesale & retail trade, were taken over by State owned Companies, e.g. Regional Trading Companies & District Development Corporations.

  18. Tz. History… • Crop authorities failed in buying peasant crops & provision of price incentives. They did badly in supply of farm inputs & credit. • Impact on crop output quickly felt as govt. faced shortage of foreign exchange due to decline in peasant production. • Treasury also lost potential of local revenue that would have resulted from increased crop production.

  19. Tz. History… • Govt. formally announced re-introduction of primary coops & coop unions in 1982. But damage already done. • Coops lost property & highly trained personnel during abolition. Impact felt today - not fully recovered. • Morale of members & potential members went down. Members became disenchanted with coops & mistrusted the sincerity of new efforts to them & the rhetoric that went with it.

  20. Tz. History… • Coops re-introduced in 1982 mainly due to negative impacts their abolition had. • Placed under TANU by law. Membership became almost compulsorydue to village control – most villages under TANU. • Coops did not fully recover, some went under liquidation & et al placed under receivership. • 1980’s saw emergence of Savings and Credits Coops (SACCOS) – these managed to survive but membership predominantly peasants.

  21. Legal Framework for Cooperatives. Colonial Era: Coops as formal institutions with defined legal structures & policy was introduced in EA in 1920’s by British colonial govt. Colonial admin valued role of coops & tried to maintain & manage them: Caution was exercised in expanding them beyond unmanageable proportions - dissolved any considered a burden or threat in meeting colonial administration’s objective.

  22. Legal Framework for Cooperatives… • Legislation: Colonial regime introduced to the Tanganyika coops laws modeled on Indian Cooperative Societies Act, 1904. • In 1931 Colonial administration contracted an expert from India to develop a cooperative policy to form the basis of the law envisaged.

  23. Legal Framework for Cooperatives… • Expert recommended introduction of cooperative legislation drawing experiences from cooperative legislation of Sri-Lanka, Burma, Jamaica, Queensland & Malaya. • Emergence of 1932 Cooperatives Societies Ordinance, Cap. 11 of 1932, Laws of Tanganyika.

  24. Legal Framework for Cooperatives… • Independence govt. adopted the 1932 Ordinance. (control by gvt. key) • 1932 Ordinance amended by Cooperative Societies Ordinance in 1963. (control by gvt. key) • 1932 Ordinance repealed by Cooperative Societies Act, No.27/1968. (control by gvt. Key/ Ujamaa villages) • Unified Cooperative Service Commission Act No. 44/1968 also introduced. (to address problems noted earlier above).

  25. Legal Framework for Cooperatives… • 1968 Act was repealed and replaced by the Cooperative Societies Act No. 14/1982. • Cooperatives Societies Act, No. 15/1991 – replaced the 1982 Act. • 1991 Act amended in 1997 by the Cooperative Societies (Amendment) Act, No. 5/1997. • 1997 amendment – gender equity, cooperatives to join with other private or public non-cooperative companies or firms with a view to establishing joint ventures.

  26. Legal Framework for Cooperatives… • 2002 - Govt. sought to address perennial problems - set up a Presidential Special Committee on Revival, Strengthening & Development of Cooperatives. • Led to new Cooperative Development Policy of 2002 & Cooperative Societies Act of 2003 (Act No. 20/2003). • 2013 – Cooperative Societies Act, No.6/2013 emerged – repeals 2003 Act.

  27. Legal Framework for Cooperatives… Cooperative Societies Act, No.6/2013: Overview • To provide for establishment of Tanzania Cooperative Development Commission; formation constitution, registration & operation of cooperative societies & promotion of cooperative development. • Came into force in 2014

  28. Legal Framework for Cooperatives… Cooperative Societies Act, No.6/2013: Overview • Underscores role of gvt. as one directed towards provision & creation of conducive social, economic & legal environment for development & prosperity of Co-operative societies. • Major change - establishment of Tz. Cooperative Development Commission as independent dept of govt.

  29. Legal Framework for Cooperatives… • ‘Cooperative Society’ – society registered under Act – includes primary, & secondary societies, Apex & Federation; • S. 27 – Types of Societies – agricultural, financial, mining etc.. • Objectives of Cooperative Societies: - Part II (promote ec. & soc. interest of members, by common undertaking based on mutual aid & following coop. principles…

  30. Legal Framework for Cooperatives… • Coop Principles – S. 3 (2) – 8 Principles – see also Section 134 & Item 3 of 2nd Schedule on Code of Conduct for Coop (International Cooperative Alliance (ICA) – [NGO Coop Federation] Coop Principles) – voluntary assoc, democratic gov. et al

  31. Legal Framework for Cooperatives… Cooperative Societies Act, No.6/2013: Overview • Commissioners role – regulatory & promotional.(Chair appointed by President/et al by Minister); • Functions: registration /deregistration of Co-operative societies, inspection/supervision/keep and maintain the register of all Co-operative societies/ensure names of societies (registered or de-registered) published in Gazette.

  32. Legal Framework for Cooperatives… Cooperative Societies Act, No.6/2013: Overview • Functions…(contd.) – Dispute settlement/ • Promotional: Commission required to supervise, co-ordinate & collaborate with sector Ministries, Local government authorities & et al stakeholders. • Education/training

  33. Legal Framework for Cooperatives… Cooperative Societies Act, No.6/2013: Overview • Office of Registrar under Commission. Registrar - appointee of President (URT) - CEO of Commission & overall in-charge of operations of Commission - administration & management of affairs of Co-operative societies, management of funds, property & business of Commission.

  34. Legal Framework for Cooperatives… • Powers of Registrar: Part 10 – inspection of affairs of Coops, regulating voluntary amalgamation of coops, canceling same for public interest, regulation of amendments to coops by-laws etc…. • More detailed regulatory powers over coops autonomy provided for in subsidiary legislation.

  35. Subsidiary Legislation • Cooperative Societies Regulations, 2015 - GN 272/2015; (s. 141/Act – Min power to make) • Savings & Credit Cooperative Societies Regulations (SACCOS) Regulations, 2016 - GN. Nos. 496/2014 & GN. No. 450/2015; • Cooperatives Societies Rules, 2004 GN No. 280 of 2004; - Made by Commission – s.142/Act • By-Laws of Cooperative Societies (Ss.52 – 54 & 59 of Act)

  36. Conclusions • History of legislative framework of cooperative societies reveals some fundamental contradictions; - Left on own coops have sometimes operated against well known cooperative principles (e.g. Zanzibar - 1965 coops operated along racial lines – vs. principle of voluntary & open membership. Gvt. intervened – banned them.

  37. Conclusions… • Governance issues - Some cooperatives had serious issues of management – corruption, abuse of positions etc. • Potential of operating along political lines – need for intervention. By who? Gvt.? • Change in law (repeal/amendments) has ensured gvt. control – autonomy not granted.

  38. Conclusions… • Challenges • Powers of Commission & Registrar in to regulate Coops in some cases amount to usurpation of autonomy. • Registration – possibility of cancellation. • Control over say in use of funds & property. • Powers of inspection & dispute settlement. • Freedom to amalgamate restricted.

  39. Conclusions • Challenges…contd. • Language of law – Act, Regulations, By-laws limits comprehension, engagement & ownership of coops by members; • Fees & charges required – no or limited consultation. • Political interference – appointees - Commission & Registrar not really independent.

  40. Conclusions…contd. • Prospects • Left of own, possibility of corruption & mismanagement – back to base! • Possibility of use of political space to demand space, to avoid abuse of power by Commission & Registrar. • Lobby for autonomy & non-interference at International Coop Alliance (ICA) meetings. (ICA Regional Office in Africa exists)

  41. Conclusions… contd. • Prospects • Use et al international forum – e.g. world cooperatives day (1st Sat of @ July) & labor day (ILO) to raise voices for change. • @ Local level, use Tanzania Federation of Cooperatives 4 training & lobbying 4 change in law & translation of laws into Kiswahili. (Guidelines in place in Kiswahili).

  42. Conclusions…contd. • Prospects • Cooperatives have a central role in implementing Government’s Vision 2025 et al policies & strategies focusing on industrialization, education, employment & improved livelihoods/reduction of poverty. • Existence of a wide range of social media outlets an opportunity to lobby for change.

  43. Conclusions… • Cooperative Societies should be accountable to the members not the State. • Over-regulation by State removes the essence of Cooperatives – Autonomy & Democratic Control of Members. • The General Meeting of Members (who have been sensitized) should be Supreme Authority of Cooperatives.

  44. Conclusions • Govt. role as regulator should be limited to support and development- NOT control of cooperatives – “State capture.” • Govt. support & dev. role should take the form of “hands off – eyes on” approach. (Tech/R&D)

  45. Thank You… Asanteni sana…..Tuendelee kujadiliana hmajamba@gmail.com

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