30 April 2024 | A new draft law governing cooperatives in Rwanda, awaiting parliamentary deliberation and adoption, seeks to address various issues identified under the current legislation enacted in 2021. Approved by the Lower House on April 26, the draft law introduces several significant changes aimed at enhancing the effectiveness and governance of cooperatives. One key change is aimed at protecting members from the persistent and burdensome collection of contributions. The new bill specifies the types of contributions that members can provide, which must be approved by the General Assembly or, in extraordinary cases, authorized by the national agency in charge of cooperative development. This change is intended to alleviate financial strain on cooperative members.
Regarding profit distribution, the draft law mandates that net surplus profits be distributed to members by March 31 each year, with at least 70 percent allocated as dividends to enhance members' socio-economic wellbeing.
To comply with international standards on transparency and prevent tax evasion, the law includes provisions on beneficial ownership, requiring cooperatives to maintain updated internal registers and report changes to the national agency.
Finally, to address the financial burdens associated with forming federations of cooperatives, the bill stipulates that applications for forming federations must be reviewed and approved by the national agency, ensuring that only viable and effective federations are established. Overall, the proposed changes aim to strengthen cooperative governance, enhance financial transparency and accountability, and improve the socio-economic benefits for cooperative members, thereby promoting more sustainable and effective operations within Rwanda's cooperative sector.
