Paraguay

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Paraguay

Description

It aims to evaluate whether the national legislation in place supports or hampers the development of cooperatives, and is therefore “cooperative friendly” or not, and the degree to which it may be considered so, also in comparison to the legislation in force in other countries of the ICA region, or at the supranational level.

In addition, the research aims to provide recommendations for eventual renewal of the legal frameworks in place in order to understand what changes in the current legislation would be necessary to improve its degree of “cooperative friendliness”, which is to say, to make the legislation more favourable to cooperatives, also in consideration of their specific identity. This webpage presents a snapshot of the legal framework analysis results for Paraguay.

Legal framework

Paraguay's Cooperative Legislation is based on Article 113 of the National Constitution, which reads: "The promotion of cooperatives. The State will promote the cooperative enterprise and other associative forms of production of goods and services, based on solidarity and social profitability, to which it will guarantee its free organization and autonomy. The principles of the cooperative movement, as an instrument of national economic development, will be distributed through the education system."

Law No. 438/94 on Cooperatives regulates the constitution, organization and operation of Cooperatives. It was enacted and published in 1994.

 

Cooperative Friendliness

In general, there are no provisions contrary to the development of the cooperative movement, except in the cases of the Banking Law and the Insurance Law which establish that both banks and insurance companies must be created under the figure of "Companies" which indirectly excludes cooperatives from the possibility of carrying out such activities.

That is to say, a National Law, rather than promoting the cooperative movement, causes harm to cooperatives and also to their associates.

 

Key recommendations for improvement

First, the contradiction between Articles 51 and 59 of Law No. 5.501/15 must be eliminated, installing a system that allows cooperatives to organize freely, as provided for in Article 113 of the National Constitution, agreeing and establishing in their social statutes the democratic mechanism of election they deem convenient.

Another issue that should be enhanced is the promotion of cooperative education and the creation of new cooperatives, through a public institution responsible for managing, through plants and federations in coordination with confederations, projects for new cooperatives, through feasibility or viability studies, training not only in matters related to the cooperative movement, but also in the arts, trades and professions that allow future associates to have the tools of knowledge necessary for their performance. This cannot be fully developed by INCOOP, since by its very nature, it is a control body.

 

Conclusions

In conclusion, it can be argued that legislation is more in favor of cooperatives than against them, but support could be even greater, by achieving clear and precise laws that encourage and protect cooperatives, like for example labor cooperatives, and allow some type of benefit or incentive that motivates individuals and public institutions to engage with cooperatives, whether for private activities or for tenders for services and public works. 

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