PAKISTAN IS one of the few developing countries who have not paid adequate attention to the development and support of cooperatives as an instrument of economic and social development, despite the fact that successive governments have been at pains to improve the country’s economic performance through various experiments, from banning trade unions, to across the board nationalization and back to unprecedented privatisation and half-baked notions of corporate farming.

At no time have our policy makers taken the organisation of cooperatives seriously, and today cooperatives are not our economic agenda at all.

During the last five years, there has been a renewed emphasis on cooperative development the world over. A perusal of the UN and the ILO documents on the subject shows that the government of Pakistan appears not even to have responded to the questionnaires sent by the international agencies to gauge the policy environment for cooperatives present in the country.

In Resolution 51/58 of 12th Dec 1996, the General Assembly called upon governments to ensure a supportive environment for cooperatives, enabling them to make a positive contribution to national goals of economic and social development. As a result of the ILO’s efforts during its 89th and 89th and 90th sessions, a document for the ‘promotion of cooperatives’ was issued to provide guidelines for governments who wished to bring about positive changes in their legislation to ensure sustainable cooperatives development in their respective countries.

The attitude of developed countries has been very positive towards cooperatives, and they have reviewed legislation, and amended, de-regularized and modernized it from 1978 onwards, to accommodate a new role of cooperatives in the changing market conditions. These steps have generally included empowerment and training of cooperative leaders, favourable tax treatment, facilitation for disadvantaged groups, and structured linkages to support their role in social development.

The countries in transition, such as from Eastern Europe, the Soviet Union and the China, have had to take extensive measures to change the perception as well as organization of cooperatives from being state-run institutions to relatively more autonomous, people oriented and administratively independent structures during the last decade.

In developing countries, the situation varies from country to country. From being extensions of public administration or simply social institutions as in some African countries, there are cooperatives that have brought in a specific economic change as in India during the eighties when cooperatives played a key role in the dairy-processing sector. There are some countries which view cooperatives with suspicion, while others have been more responsive and supported them with fiscal incentives, such as in Mauritius, where cooperatives are exempt from income tax, customs duty, licence fees, stamp duty, licence fees, stamp duty, registration dues and inscription fees. In addition, the Mauritius government has a regular budget allocation for the promotion and development of occupational cooperatives in the country.

Cooperative development policy and legislation are critical for autonomous and economically viable cooperative organisation. In Pakistan, the 1925 Act of Registration of Cooperatives is still prevalent via the West Pakistan Ordinance of 1965. In 1962, the government of West Pakistan issued an ordinance to set up a Cooperative Development Board for the promotion and development of cooperatives. This board was dissolved in 1966 through another ordinance. Subsequently, in the seventies, two Cooperatives. This Board was dissolved in 1966 through another ordinance. Subsequently, in the 70’s, two cooperative societies ‘reform orders’ were issued, followed by the Cooperative Farmers Act, 1976.

At present, there are about 60,000 cooperatives in Pakistan, many of which are building and housing societies. A large number of the these have also been scams, with the result that people in general tend to view cooperatives with suspicion, and are not clear about the role of cooperatives for viable production management and marketing facilities. Some farmers cooperatives are apparently being developed in the Multan region, but so far, they are addressing the problem of production only, and marketing services are not so far being run on cooperative lines.

As far as women are concerned, thrift societies and industrial cooperative societies are run by the Cooperatives Department, with a view to supplement family incomes and for affecting economy in household expenditures.” Thrift societies are small savings schemes, and the industrial centres concentrate on sewing and embroidery products. This is a far cry indeed from the modern concept of cooperatives as propagated by the international cooperative movement. In addition to the inadequacy of our present cooperatives structures and objectives, since the last few years the field staff for both these schemes is being gradually withdrawn by the Cooperative Department of the Punjab as a matter of policy.

It is then natural that the only real and sustained attempts to introduce cooperatives for economic development have been made by a few individuals and NGOs in Pakistan Dr. Akhtar Hameed Khan’s contribution to the development of cooperatives has gone almost unheeded by the government — at least it has not been replicated on the scale that its success would have warranted. What is the reason for this tepid attitude towards cooperatives by the government?

A cursory look at these institutions shows that there is no clear cut policy for support of disadvantaged groups, and the Cooperative Societies Act itself does not have a developmental aspect to it. While the rest of the world has gone ahead with making positive changes in their legislation to create a more conducive environment for cooperatives, in Pakistan, the few amendments that have been made have all been towards increasing government control over cooperatives and reducing their incentives.

To give an indication of the inadequacies of the present Act prevalent in Pakistan, a few Pakistan, a few of its features are discussed below:

The object of the Act is “to facilitate the formation and working of cooperative societies for the promotion of thrift, self-help and mutual aid among agriculturists and other persons with common economic needs so as to bring about better living, better business and better methods of production...” This is a limited and outdated definition that does not anticipate the changes that have taken place in the last fifteen years in regional and global economic structures. The present definition of cooperatives is that it is an association of persons who have voluntarily joined together to achieve a common goal through the formation of a democratically controlled organisation, with open membership, autonomy and objectives, providing education, training, technology and information, and cooperating with each other for better business objectives, with a strong concern for the community and disadvantaged groups, such as women and the disabled.

The powers of the Registrar under the Act are quite extensive, ranging from changing bye-laws of Societies, conducting inquiries, restricting borrowing, dividend payments and distribution of profits, to undertaking arbitration in case of disputes. In other countries, these matters are considered to be the prerogative of cooperatives themselves, whose members take independent economic decisions and follow stringent mechanisms to resolve their disputes. In spite of the fact that so many regulations are in place in Pakistan with so much power vested in the Registrar, liquidations and litigations abound and there are frequent cooperatives scandals in which unethical persons from the private as well as the public sector exploit members. It may in fact be correct to assume that if these controls were not there, the situation would be much better, because the present loopholes in the legal system, the complication of civil procedures, and involvement of vested interests make members more vulnerable than they would be if the procedures of cooperatives were simple and straightforward.

There is no mention of support institutions, training programmes, marketing linkages and incentives in the Act itself, whereas it has been emphasized by an overwhelming majority of individual member countries of the UN, that these aspects should be made part of the instrument defining and regulating cooperatives in all countries.

As far as disadvantaged groups are concerned, the Act does mention support, but it does not clarify what is meant by disadvantaged groups. Secondly, there are no incentives or concessions offered to such person by the government. In recent years, many countries acting on ILO guidelines have developed support measures to specifically benefit disadvantage groups, which include tax benefits, soft loans, access to public works programmes and facilitation of technology transfer and training programmes.

Cooperatives are supposed to fulfil a social and community role as well as generating income and employment. This role has to be encouraged according to the outcome desired by the social and public policies of a government. Cooperatives are perceived to be the agents of change at the community level, introducing not only employment and appropriate technology, but also a concern for self-help and mutual support vis a vis profitability and cost-effectiveness. The present legislation is silent on this issue, and also on quality assurance, health safety and labour standards, gender emphasis and women’s empowerment, to name only a few of the many social issues faced by the country. Finally, there is no promotional aspects to the Cooperatives Act. The role of the government should be to promote the fundamental principal of the right to work, create income opportunities for men and women, and strengthen participation and social dialogue within and between different communities.