Legal frameworks play a key role in enabling co-operative development.
Acknowledging their importance, in 2004 the US Overseas Cooperative Development Council (OCDC) and its members launched the Cooperative Law and Regulation Initiative (Clarity).
Funded by the US Agency for International Development (Usaid), the project has now been implemented in nearly 20 countries, with projects including co-operative legal reform, analysis of existing co-op law to identify areas in need of reform, education of policymakers, development of advocacy strategies, and organising education campaigns in countries including Mongolia, Tanzania, Mozambique, Kenya, Dominican Republic, Peru, Ecuador and Madagascar.
More recently the OCDC’s International Cooperative Research Group partnered with the National Co-operative Business Association (NCBA Clusa) to review Clarity’s components and processes. This led to the creation of the Clarity 2.0 Global Working Group, a group of 17 co-operative law experts from around the world who identified new and emerging legal issues and evaluated current resources.
The working group drew up a report with a revised version, Clarity 2.0, successfully implemented and tested in the Dominican Republic last year.
The results were presented during a webinar held by NCBA and OCDC on 2 August. Dr Willy Tadjudje, who led the review process along with Edward Potter, told the session how Clarity 2.0 aims to understand national co-op legislative and regulatory environments, draw up recommendations for reform, and develop communication and advocacy strategies for change. The methodology uses a scorecard to identity and prioritise issues for reform, and assess the adequacy of existing legislation.
Clarity uses “a bottom-up approach to empower co-op leaders” who must then take the lead on the reform process, said Tadjudje.
One of the countries where Clarity 20 was used, Guatemala, is home to 1,273 active co-ops. Dr Claudia Lucrecia Paredes Castañeda, titular magistrate judge at the national Court of Appeals, said it enabled the co-op movement to analyse and understand the country’s legal framework and highlight priorities for legislative reform.
Dating back to 1978, the country’s general co-op law fails to meet the current needs of the sector, said Paredes. Simply registering a co-op can take up to a year – compared to two to five days for other forms of enterprise.
Around 80% of co-ops in Guatemala are not associated to a federation, leaving them vulnerable and lacking the training and advice they need to develop. Bringing different co-ops together to come up with reform proposals was challenging, especially with the process beginning during the pandemic.
But the initiative saw the co-ops take a number of steps: they prioritised areas for reform, conducted analysis and discussion, proposed solutions to problems – and then, to win state support for their reform plans, they held meetings between co-ops, local authorities and government officials.
The final proposal was agreed in November 2021 and the following year presented it to Guatemala’s national Congress in 2022, where it has passed its third reading and is close to becoming law.
Over the past five years, NCBA Clusa has used Clarity to support legal reform in six countries through its Creating an Environment for Cooperative Expansion project, funded by USAID’s Cooperative Development Program (CDP), and through its US Department of Agriculture (USDA)-funded Progana project.
One of these countries was Madagascar, where NCBA Clusa reviewed the national co-op law and in 2017 established a national co-op development strategy. After five years of work, bringing together a range of stakeholders and government ministries, the country passed a new Finance Law which for the first time ever includes stipulations for co-ops.
A panel chaired by Santosh Kumar, director of legislation at the International Co-operative Alliance, also explored issues faced in the implementation of Clarity.
Co-operative law “is as international a law as it is local”, said Kumar, highlighting the role of the statement on the cooperative identity adopted in 1995 by the ICA, which is enshrined in many co-op laws around the world. He praised Clarity methodology for giving co-op movements the tools to enact legal reform.
Carlos Alonso Naranjo, professor of popular and solidarity economics and the Finance Master’s Program at Universidad Andina Simón Bolívar, presented Clarity’s analysis of co-op law in Ecuador. There are many challenges – including problems forming and registering co-ops, co-op supervision, conflict resolution and dissolution and mergers. But the Clarity report gave the co-op movement the impetus to make changes, he said.
Deivinson Jiménez Heredia, Clarity lawyer and specialist in organisational strengthening, said the methodology had helped unite the co-op movement n the Dominican Republic, so that it made a joint proposal; in the past the movement had produced many different proposals.
This lack of unity was also an issue in Kenya: with 14 million co-op members, it was difficult for the movement to speak with a single voice. Devolution was another issue, with different local governments implementing their own laws.
Steps have been taken to deal with this, said Olga Oyier, team lead for Kenya team and policy and legislative affairs specialist at Global Communities’ USAID Clear Program. The rollout of training on Clarity tools, the staging of information forums and engagement with an intergovernmental committee all helped to move things forward.
Clarity 2.0 will be launched in September. In the meantime, OCDC is encouraging those interested in the tool to visit the ocdc.coop/clarity website to access the initiative’s existing tools and reports. Those with specific questions can contact Dr Judith A. Hermanson, director, International Cooperative Research Group, OCDC, at [email protected]
Over the past five years, NCBA Clusa has used Clarity to support legal reform in six countries through itfunded by USAID’s Cooperative Development Program (CDP), and through its US Department of Agriculture (USDA)-funded Progana project.
