Recommendation concerning the Role of Co-operatives in the
Economic and Social Development of Developing Countries
Recommendation:R127
Place: Geneva
Session of the Conference:50
Date of adoption=21:06:1966
The General Conference of the International Labour
Organisation,
Having been convened at Geneva by the Governing Body of the
International Labour Office, and having met in its Fiftieth Session on 1 June
1966, and
Having decided upon the adoption of certain proposals with
regard to the role of co-operatives in the economic and social development of
developing countries, which is the fourth item on the agenda of the session, and
Having determined that these proposals shall take the form
of a Recommendation,
adopts this twenty-first day of June of the year one
thousand nine hundred and sixty-six, the following Recommendation, which may be
cited as the Co-operatives (Developing Countries) Recommendation, 1966:
This Recommendation applies to all categories of
co-operatives, including consumer co-operatives, land improvement co-operatives,
agricultural productive and processing co-operatives, rural supply
co-operatives, agricultural marketing co-operatives, fishery co-operatives,
service co-operatives, handicrafts co-operatives, workers' productive
co-operatives, labour contracting co-operatives, co-operative thrift and credit
societies and banks, housing co-operatives, transport co-operatives, insurance
co-operatives and health co-operatives.
The establishment and growth of co-operatives should be
regarded as one of the important instruments for economic, social and cultural
development as well as human advancement in developing countries.
In particular, co-operatives should be established and
developed as a means of:
improving the economic, social and cultural situation of
persons of limited resources and opportunities as well as encouraging their
spirit of initiative;
increasing personal and national capital resources by
the encouragement of thrift, by eliminating usury and by the sound use of
credit;
contributing to the economy an increased measure of
democratic control of economic activity and of equitable distribution of
surplus;
increasing national income, export revenues and
employment by a fuller utilisation of resources, for instance in the
implementation of systems of agrarian reform and of land settlement aimed at
bringing fresh areas into productive use and in the development of modern
industries, preferably scattered, processing local raw materials;
improving social conditions, and supplementing social
services in such fields as housing and, where appropriate, health, education and
communications;
helping to raise the level of general and technical
knowledge of their members.
Governments of developing countries should formulate and
carry out a policy under which co-operatives receive aid and encouragement, of
an economic, financial, technical, legislative or other character, without
effect on their independence.
In elaborating such a policy, regard should be had to
economic and social conditions, to available resources and to the role which
co-operatives can play in the development of the country concerned.
The policy should be integrated in development plans in
so far as this is consistent with the essential features of co-operatives.
The policy should be kept under review and adapted to
changes in social and economic needs and to technological progress.
Existing co-operatives should be associated with the
formulation and, where possible, application of the policy.
The co-operative movement should be encouraged to seek
the collaboration in the formulation and, where appropriate, application of the
policy, of organisations with common objectives.
The governments concerned should associate co-operatives
on the same basis as other undertakings with the formulation of national
economic plans and other general economic measures, at least whenever such plans
and measures are liable to affect their activities. Co-operatives should also be
associated with the application of such plans and measures in so far as this is
consistent with their essential characteristics.
For the purposes provided for in Paragraph 7 and
Paragraph 9, subparagraph (1), of this Recommendation, federations of
co-operatives should be empowered to represent their member societies at the
local, regional and national levels.
All appropriate measures, including the consultation of
existing co-operatives, should be taken:
to detect and eliminate provisions contained in laws and
regulations which may have the effect of unduly restricting the development of
co-operatives through discrimination, for instance in regard to taxation or the
allocation of licences and quotas, or through failure to take account of the
special character of co-operatives or of the particular rules of operation of
co-operatives;
to avoid the inclusion of such provisions in future laws
and regulations; (c) to adapt fiscal laws and regulations to the special
conditions of co-operatives.
There should be laws or regulations specifically
concerned with the establishment and functioning of co-operatives, and with the
protection of their right to operate on not less than equal terms with other
forms of enterprise. These laws or regulations should preferably be applicable
to all categories of co-operatives.
Such laws and regulations should in any case include
provisions on the following matters:
a definition or description of a co-operative bringing
out its essential characteristics, namely that it is an association of persons
who have voluntarily joined together to achieve a common end through the
formation of a democratically controlled organisation, making equitable
contributions to the capital required and accepting a fair share of the risks
and benefits of the undertaking in which the members actively participate;
a description of the objects of a co-operative, and
procedures for its establishment and registration, the amendment of its
statutes, and its dissolution;
the conditions of membership, such as the maximum amount
of each share and, where appropriate, the proportion of the share due at the
moment of subscription and the time allowed for full payment, as well as the
rights and duties of members, which would be laid down in greater detail in the
by-laws of co-operatives;
methods of administration, management and internal
audit, and procedures for the establishment and functioning of competent organs;
the protection of the name "co-operative";
machinery for the external audit and guidance of
co-operatives and for the enforcement of the laws and regulations.
The procedures provided for in such laws or regulations,
in particular the procedures for registration, should be as simple and practical
as possible, so as not to hinder the creation and development of co-operatives.
Laws and regulations concerning co-operatives should
authorise co-operatives to federate.
Measures should be taken to disseminate a knowledge of
the principles, methods, possibilities and limitations of co-operatives as
widely as possible among the peoples of developing countries.
Appropriate instruction on the subject should be given
not only in co-operative schools, colleges and other specialised centres but
also in educational institutions such as:
universities and centres of higher education;
teachers' training colleges;
agricultural schools and other vocational educational
establishments and workers' education centres;
secondary schools;
primary schools.
With a view to promoting practical experience in
co-operative principles and methods, the formation and operation of student
co-operatives in schools and colleges should be encouraged.
Similarly, workers' organisations and craftsmen's
associations should be encouraged and helped in the implementation of plans for
the promotion of co-operatives.
Steps should be taken, in the first place at the local
level, to familiarise the adult population with the principles, methods and
possibilities of co-operatives.
Full use should be made of such media of instruction as
text-books, lectures, seminars, study and discussion groups, mobile instructors,
guided tours of co-operative undertakings, the press, films, radio and
television and other media of mass communication. These should be adapted to the
particular conditions of each country.
Provision should be made both for appropriate technical
training and for training in co-operative principles and methods of persons who
will be, and, where necessary, of persons who are, office-bearers or members of
the staffs of co-operatives, as well as of their advisers and publicists.
Where existing facilities are inadequate, specialised
colleges or schools should be established to provide such training, which should
be given by specialised teachers or leaders of the co-operative movement with
teaching materials adapted to the requirements of the country; if such
specialised institutions cannot be established, special courses on co-operation
should be given either by correspondence or in such establishments as schools of
accountancy, schools of administration and schools of commerce.
The use of special programmes of practical training
should be one of the means of contributing to the education and basic and
further training of members of co-operatives; these programmes should take into
account local cultural conditions, and the need to disseminate literacy and
knowledge of elementary arithmetic.
Where necessary, financial aid from outside should be
given to co-operatives when they initiate their activities or encounter
financial obstacles to growth or transformation.
Such aid should not entail any obligations contrary to
the independence or interests of co-operatives, and should be designed to
encourage rather than replace the initiative and effort of the members of
co-operatives.
Such aid should take the form of loans or credit
guarantees.
Grants and reductions in or exemptions from taxes may
also be provided, in particular, to help finance:
publicity, promotional and educational campaigns;
certain clearly defined tasks in the public interest.
Where such aid cannot be provided by the co-operative
movement, it should preferably be given by the State or other public bodies,
although it may, if necessary, come from private institutions. Such aid should
be co-ordinated so as to avoid overlapping and dispersal of resources.
Grants and tax exemptions or reductions should be
subject to conditions prescribed by national laws or regulations and relating in
particular to the use to be made of the aid and the amount thereof; the
conditions of loans and credit guarantees may be determined in each case.
The competent authority should ensure that the use of
financial aid and, in the case of a loan, its repayment, are adequately
supervised.
Financial aid from public or semi-public sources should
be channelled through a national co-operative bank or, failing that, another
central co-operative institution capable of assuming responsibility for its use
and, where appropriate, repayment; pending the establishment of such
institutions the aid may be given directly to individual co-operatives.
Subject to the provisions of Paragraph 20, subparagraph
(2), of this Recommendation, financial aid from private institutions may be
given directly to individual co-operatives.
While it is essential that the management and
administration of a co-operative be, from the outset, the responsibility of the
members and persons elected by them, the competent authority should, in
appropriate cases and normally for an initial period only:
assist the co-operative in obtaining and remunerating
competent staff;
place at the disposal of the co-operative persons
competent to give guidance and advice.
Generally, co-operatives should be able to obtain
guidance and advice, which respect their autonomy and the responsibilities of
their members, their organs and their staff, on matters relating to management
and administration, as well as on technical matters.
Such guidance and advice should preferably be given by a
federation of co-operatives or by the competent authority.
Co-operatives should be subject to a form of supervision
designed to ensure that they carry on their activities in conformity with the
objects for which they were established and in accordance with the law.
Supervision should preferably be the responsibility of a
federation of co-operatives or of the competent authority.
Auditing of the accounts of co-operatives affiliated to
a federation of co-operatives should be the responsibility of that federation;
pending the establishment of such a federation, or where a federation is unable
to provide this service, the competent authority or a qualified independent body
should assume the task.
The measures referred to in Paragraphs 27 and 28 of this
Recommendation should be so planned and carried out as to:
ensure good management and administration of
co-operatives;
protect third parties;
provide an opportunity of completing the education and
training of the office-bearers and members of the staff of co-operatives through
practice and through critical examination of mistakes.
The functions of promoting co-operatives, providing for
education concerning co-operatives and for the training of office-bearers and
members of the staff of co-operatives, and giving aid in their organisation and
functioning, should preferably be performed by one central body so as to ensure
coherent action.
The performance of these functions should preferably be
the responsibility of a federation of co-operatives; pending the establishment
of such a body the competent authority or, where appropriate, other qualified
bodies, should assume the task.
The functions referred to in Paragraph 30 of this
Recommendation should, wherever possible, be discharged as full-time work.
They should be performed by persons who have received
training specifically directed towards the exercise of such functions; such
training should be provided by specialised institutions or, wherever suitable,
through specialised courses in schools and colleges referred to in Paragraph 19
of this Recommendation.
The competent authority should collect and publish at
least once a year a report and statistics relating to the operations and growth
of co-operatives in the national economy.
Where the services of federations of co-operatives or of
other existing institutions cannot adequately meet the need for research,
exchanges of experience and publications, special institutions, serving the
entire country or several regions, should, if possible, be established.
Members should, to the greatest extent possible,
collaborate in providing aid and encouragement to co-operatives in developing
countries.
Such collaboration should be envisaged:
between developing countries;
between countries of a particular region, especially
within the framework of regional organisations, where such exist; and
between countries with an old-established co-operative
movement and developing countries.
As appropriate, the help of national co-operative
organisations should be enlisted for such collaboration, and use should be made,
particularly with a view to the co-ordination of international effort, of
international co-operative organisations and other interested international
bodies.
The collaboration should extend to such measures as:
the increased provision of technical assistance to the
co-operative movement of developing countries, wherever possible in the form of
co-ordinated programmes involving different agencies, both inter-governmental
and non-governmental;
the preparation and supply of information, textbooks,
audio-visual aids and analogous material to assist in the drafting of
legislation, in instruction on co-operation and in the training of
office-bearers and qualified staffs of co-operatives;
the exchange of qualified personnel;
the grant of fellowships;
the organisation of international seminars and
discussion groups;
the inter-co-operative exchange of goods and services;
the initiation of systematic research into the
structure, working methods and problems of co-operative movements in developing
countries.
It should be recognised that co-operatives may, in
certain circumstances, have a special role to play in dealing with particular
problems of developing countries.
Suggestions illustrating the use which may be made of
various forms of co-operatives in the successful implementation of agrarian
reform and in the improvement in the level of living of the beneficiaries are
set forth in the Annex to this Recommendation.
In view of their importance as a means of promoting
general economic and social progress and as a means of directly associating the
rural population with the development process, as well as in view of their
educational and cultural value, co-operatives should be considered as having a
vital role to play in programmes of agrarian reform.
Co-operatives should be used as a means of assessing the
problems and interests of the rural population in the planning and preparation
of agrarian reform measures. They should also serve for channeling information
among agriculturists and making the purposes, principles and methods of such
reforms understood.
Particular attention should be paid to the development of
appropriate forms of co-operatives adapted to the various patterns and phases of
agrarian reform. They should enable cultivators to operate holdings efficiently
and productively and allow for the greatest possible initiative and
participation of the membership.
Where appropriate, suitable voluntary forms of
co-operative land use should be encouraged. These forms may range from the
organisation of certain services and farming operations in common to the
complete pooling of land, labour and equipment.
Wherever appropriate the voluntary consolidation of
fragmentary holdings through co-operatives should be encouraged.
In cases where measures are being envisaged for the
transfer of ownership or division of large estates, due consideration should be
given to the organisation by the beneficiaries of co-operative systems of
holding or cultivation.
The establishment of co-operatives should also be
considered in connection with land settlement schemes, especially as regards
land reclamation and improvement measures and the organisation of joint services
and joint farming operations for settlers.
Development of co-operative thrift and credit societies
and co-operative banks should be encouraged among the beneficiaries of agrarian
reforms as well as among other small farmers for the purpose of:
providing loans to cultivators for the purchase of
equipment and other farm requisites;
encouraging and assisting cultivators to save and
accumulate capital;
advancing loans to, and promoting thrift among,
agricultural families, including those of hired workers, who normally would not
have access to established sources of credit;
facilitating the implementation of special governmental
credit schemes through an efficient channelling of loans to beneficiaries and
appropriate supervision of the use made of such loans and of their timely
reimbursement.
The development of supply, marketing or multi-purpose
co-operatives should be encouraged for the purpose of:
the joint purchase and supply of farm requisites of good
quality on favourable terms;
the supply of basic domestic requirements for all
categories of agricultural workers;
the joint conditioning, processing and marketing of
agricultural products.
Encouragement should be given to the development of
co-operatives providing farmers with other services such as the joint use of
farm machinery, electrification, livestock breeding, the provision of veterinary
and pest control services, facilities for irrigation, and crop and livestock
insurance.
With a view to improving employment opportunities,
working conditions and income, landless agricultural workers should be assisted,
where appropriate, to organise themselves voluntarily into labour contracting
co-operatives.
Agricultural co-operatives of different localities in
areas in which agrarian reforms are being implemented should be encouraged to
combine their activities where this is economically advantageous.
Due consideration should also be given to the
encouragement and development of other types of co-operative activities
providing full- or part-time non-agricultural employment for members of farmers'
families (for instance, crafts, home or cottage industries) adequate
distribution of consumer goods, and social services which the State may not
always be in a position to provide (for instance, health, education, culture,
recreation or transport).
The interchange and dissemination of information on the
methods, possibilities and limitations of co-operatives in relation to agrarian
reform should be encouraged by all possible means so that the experience
acquired may be made available to the largest possible number of countries.
