The cooperative movement plays a significant role in promoting socio-economic development and empowering communities. In the context of Sri Lanka, cooperative organizations have a rich history and have contributed to the well-being of its citizens. This article provides a comprehensive overview of the cooperative movement in Sri Lanka, exploring its legislative framework, historical background, and recommendations for improvement.

Table of Contents

1. Introduction

2. Historical Background

3. Legislative Framework

4. Cooperative Friendliness

5. Recommendations for Improvement

6. Conclusion

7. Frequently Asked Questions (FAQs)

 

1. Introduction

The cooperative movement in Sri Lanka emerged in the early 20th century with the aim of fulfilling the economic needs of the rural farming community. These cooperative societies were established to provide loans and support to farmers, empowering them to improve their livelihoods. Over time, the cooperative movement expanded its scope to include various sectors of the economy, such as agriculture, finance, and consumer goods.

 

2. Historical Background

The cooperative societies system in Sri Lanka dates back to 1906, during the period of British rule. The government enacted the Co-operative Societies Ordinance No.7 of 1911 to provide guidance and observation for the growing number of cooperative societies. The Department of Cooperative Development was established in 1930, emphasizing the government's involvement in promoting and coordinating cooperative activities. Since then, cooperative societies have played a crucial role in facilitating economic stability and community development.

 

3. Legislative Framework

The legislative framework governing cooperative organizations in Sri Lanka consists of several acts of parliament. The main laws relevant to cooperatives at the central level include the Cooperative Societies Act No. 5 of 1972, Cooperative Societies (Amendment) Act No. 32 of 1983, and Cooperative Societies (Amendment) Act No. 11 of 1992. These acts provide the legal framework for the registration, functioning, and regulation of cooperative societies.

It is important to note that since the 13th Amendment of the constitution in 1987, provincial councils have the authority to introduce their own cooperative legislation. However, currently, only four out of the nine provincial councils in Sri Lanka have their own cooperative legislation, while the remaining provinces operate under the central government's legislation. This disparity highlights the need for a more unified legislative approach to cooperative development in the country.

 

4. Cooperative Friendliness

The cooperative legal environment in Sri Lanka is considered "only limitedly friendly" to cooperative development. One of the barriers faced by cooperatives is the requirement to obtain approval from the Registrar of Cooperative Societies (RCS) for diversification or decision-making regarding business direction. This approval process is based on outdated legislation from 1972, which was formulated during a time when the country had a closed socialist economy. However, with the transition to a neo-liberal economy, this legislation has become outdated and hinders cooperative growth.

Furthermore, there is a lack of special government funding for the promotion of cooperatives in Sri Lanka. This absence of dedicated financial support has impacted the ability to promote cooperatives among the younger generation and hindered their potential for growth and innovation.

 

5. Recommendations for Improvement

To enhance the cooperative movement in Sri Lanka, several key recommendations have been identified. Firstly, there is a pressing need for legislative reform. A comprehensive and feasible common law for all types of cooperatives should be established, while allowing for certain special provisions based on cooperative type within the same legislation. This approach would ensure a balanced legal framework that caters to the diverse needs of cooperative organizations.

Additionally, it is essential to respect the independence of provincial councils in developing their own cooperative legislation while coordinating with the central government to regulate inter-province cooperatives and national federations. This cooperative governance structure would enable effective coordination and collaboration between different levels of government, fostering a supportive environment for cooperative development.

 

6. Conclusion

The cooperative movement in Sri Lanka has a rich history and has contributed to the economic and social development of the country. While there are certain limitations and barriers to cooperative growth, there is a growing recognition of the need for legislative reforms and supportive policies. By implementing the recommended improvements, Sri Lanka can create a more conducive environment for cooperative organizations, enabling them to thrive and make a positive impact on the nation's socio-economic landscape.

 

7. Frequently Asked Questions (FAQs)

 

Q1: Are cooperative societies limited to a specific sector in Sri Lanka?

A1: No, cooperative societies in Sri Lanka operate across various sectors, including agriculture, finance, and consumer goods.

 

Q2: How are cooperative societies regulated at the central level in Sri Lanka?

A2: Cooperative societies at the central level are governed by acts of parliament, such as the Cooperative Societies Act No. 5 of 1972, Cooperative Societies (Amendment) Act No. 32 of 1983, and Cooperative Societies (Amendment) Act No. 11 of 1992.

 

Q3: What is the cooperative legal environment like in Sri Lanka?

A3: The cooperative legal environment in Sri Lanka is considered "only limitedly friendly" to cooperative development. Tight regulations, outdated legislation, and a lack of dedicated government funding are some of the barriers faced by cooperatives.

 

Q4: How can the cooperative movement be improved in Sri Lanka?

A4: Key recommendations for improvement include legislative reform, the establishment of a common law for all types of cooperatives with special provisions, and coordination between the central government and provincial councils for effective governance and regulation.

 

Q5: What is the role of the Department of Cooperative Development in Sri Lanka?

A5: The Department of Cooperative Development, under the central government, plays a crucial role in coordinating cooperative activities, implementing national development programs, and providing policy guidance for cooperative-related initiatives.