Legal Frameworks to Protect Savings Deposits and Establish Sustainable Cooperative Institutions

This document presents the Développement international Desjardins (DID) policy statement, on legal frameworks for savings and credit cooperatives (SACCOs) and their apex institutions. It contains detailed description of the following assertions:

• All institutions engaged in microfinance or community finance should operate under an enabling legal framework;
• SACCOs should be governed by specific legislation;
• SACCOs operations, supervision and control should be governed by the authority in charge of overseeing existing financial and banking system;
• SACCOs should subscribe to principles outlined by the International Cooperative Alliance;
• Voting rights of all members should be the same;
• General reserves constitute a group asset that is inalienable;
• All users should be members;
• Powers of the decision-making body are enshrined in provisions of applicable legal framework;
• Lending activities must be managed professionally, within a strict framework.

DID favors obligatory affiliation with an apex organization, and a strong integration within a network. The legal framework must take into account the needs of women as well as those of men. Finally, legislation for SACCOs should focus on fostering their development and allowing them to fulfill their role as financial intermediaries.