___________________________________________________ This document has been made available in electronic format by the International Co-operative Alliance ICA ----------------------------------------------------- November 1995 ICA Studies and Reports Co-operatives in Eastern & Central Europe Bulgaria by Professor Dinonysos Mavrogiannis 3 Current Developments Following clarification of the co-operative identity and definition of the nature and role of the co-operative sector by Government policy and legislation, the task of restructuring the old co-operatives could be entered into whilst new co-operatives emerged in various areas of economic and social activity. 3.1 Intensification of co-operative restructuring It was left to the co-operatives themselves to carry out the in-depth restructuring and transformation proposed by the legislation. The changes may be divided into two main categories: co-operative property and organisational and developmental issues. 3.1.1 Co-operative property Questions related to co-operative property during the period of transition to the market economy, became crucial as far as the process was concerned, and were delicate from a political point of view. The whole problem had two facets. One was concerned with the distribution of accumulated co-operative property. The other was connected to the privatisation strategy, dismantling of State enterprises and restitution of confiscated properties. Among the latter, a considerable number of properties and small and medium sized industries were taken away from the co-operatives when the State decided to nationalize the means of production. The co-operatives most affected by this were consumer societies and workers' production co-operatives. As already mentioned, in compliance with additional clauses 2 and 3 of the Law on Co-operatives, consumer co-operative societies undertook thorough internal discussions and agreements adopted by decisions of their General Assemblies at all levels, from the apex CCU to the primary societies, to redistribute all of the property held by the CCU and the Unions. The volume of property distributed since 1991 was calculated by estimation of the share capital, transactions and profits realised in the past. The value of the redistributed property was approximately 25 million US dollars. The Unions and primary societies received their share of the co-operative property in the form of shares, which will enable them to increase their activities and also to take a higher percentage of the Unions' annual profits. On the other hand, since 1991 the consumers societies have begun to regain their properties, industries and agricultural land. According to additional clause 1 of the Law on Co-operatives, "the rights of existing and restored co-operatives over any property confiscated or nationalised after 10 September 1944, are reinstated". The procedure for such reinstatement was established by the Council of Ministers. Co-operative property should be returned within six months of the date on which the Co-operative Law was adopted. An extension to 18 months was awarded to co-operatives by Article 1 of Ordinance 192 of 1991, which laid down the rules for implementation. The procedure to be followed, and particularly evidence of previous co-operative ownership, were difficult and time-consuming. However, the co-operatives did not have to pay any stamp duty or expenses in respect of their claims. Article 29 of the 1991 Law on Land Reform states that "any title to any agricultural land seized from ... co-operatives or any other such organisations shall be restored at the request of the said ... co-operatives", unless the confiscated land was used for other non-agricultural purposes or allocated to landless citizens. In such a case, co-operatives can agree to receive other land from the State or municipality in the same, or another, part of the country, or financial compensation. In addition, by the end of 1993 a significant number of medium sized industries and factories had been returned to the consumer co-operatives. These consist of 36 dairies, 24 wine production plants, 24 canneries and a tobacco business representing 50% of the country's former State tobacco monopoly. The value of this property is estimated to be 12 billion levas (400 million US dollars at late 1993 exchange rates). As the restitution procedure is not yet complete, additional property is expected to be received as a result of the deadline's extension. Workers' production co-operatives also reclaimed property previously confiscated by the State and other bodies. Of 350 enterprises and workshops reclaimed they had received 170 by late 1993. Proof of ownership is particularly difficult. All co-operatives complain that the State and State officials are reluctant to return confiscated co-operative property. The redistribution of workers' production co-operatives' accumulated property is more radical, and more beneficial to the physical members. According to the 'personalization' plan, the co-operative property, which had until then been considered the collective and indivisible property of the system, is to be distributed as follows: 60% of it is distributed among members of the primary organisations according to criteria relating to shares held and labour invested in the co-operative concerned. The remaining 40% remains the indivisible property of the co-operative. 'Personalized' property remains in the co-operative in the form of shares which give holders the right to dividends on the realised annual profits. The plan is still in its initial stages of implementation: only 30 of the 287 old primary co-operatives have achieved it. In this respect, it should be understood that the technical problems which each co-operative must settle regarding the valuation of the property and of each member's labour are very difficult. Furthermore, settling them harmoniously and democratically by decision of the General Assemblies is a time-consuming process. In conclusion, it could be said that the restructuring and privatisation process has had a considerable economic and moral impact on co-operatives and co-operators. With the exception of the redistribution of consumer co-operatives' property, its implementation is not yet completed. Nevertheless, the redistribution of property, even in its initial stage, is already rendering social justice to the primary co-operatives and their members, who had felt repressed by the higher-level organisations and the State during the Socialist regime. It can rightly be said that the accumulated co-operative property now being redistributed was the product of their labour, which had been withheld from them for several decades. Furthermore, in the case of workers' co-operatives, tools and equipment belonging to the members were progressively confiscated by the Socialist co-operative system. From an economic point of view, the redistributed property will enhance the working and trading capacity of primary co-operatives by allowing workers and consumers to better participate in the distribution of the profits. With regard to the properties and enterprises returned to co-operatives since 1991: these are valuable assets, but in many cases they are a poisonous gift. Most of the equipment, premises and factories are old and un-productive, they need substantial capital for their renewal and reconstruction, and responsibility for the employees of the reinstated factories and enterprises is also transferred. A solu-tion must therefore be found to the labour problems of the restituted enterprises. This solution is unavoidably found at the expense of the receiving co-operatives. 3.1.2 Membership relations In the present co-operative movement membership relations are observed both as regards duties and obligations. The co-operative principles are followed and have been included in the 1991 Co-operative Law. Voluntary association and open membership This principle is laid down in Article 1 of the Law. The membership of a co-operator approved by the Managing Council has to be confirmed by the General Assembly. Any individual may be a member of several co-operatives. Democratic management and control The co-operative is managed and controlled by its members through legally and democratically elected bodies of management (the General Assembly, the Managing Council and the President) and of supervision (the Supervisory Board). All decisions are made in accordance with the co-operative principle "one member - one vote". Property rights Members are all co-proprietors. Non-profit character Co-operatives' main aim is the provision of economic, social and cultural services to their members. The profit from co-operative activities is given back in the form of a limited return on capital, i.e. a dividend (on share capital and on purchases). Political, racial and religious neutrality Any person, regardless of his or her political, racial or religious affiliation may belong to a co-operative. All co-operators enjoy equal rights and duties. Education A Co-operative Department has been established at the University of National and International Economy. There are also two big training centres attached to the CCU, and 14 training centres attached to the regional co-operative unions. Co-operation between co-operatives This principle is fully applied. As already mentioned, the CCU, the 37 regional co-operative unions and the inter-co-operative enterprises provide legal, advisory, organisational, financial and economic services to their associated co-operatives. Democratic control Democratic control takes several forms. Firstly, in the co-operatives themselves there are two types of control: management, which is responsible for the implementation of their resolutions and Supervisory Councils. The Supervisory Council has total control over the activities of a co-operative and its Managing Council. The second part of the system of control is through inspections, assistance in organisational, legal, financial and methodological matters, and inter-departmental control. On their part, the Supervisory Councils of the CCU and the co-operative unions provide methodological assistance to the Supervisory Boards of the co-operatives. The Law on Co-operatives provides all co-operative establishments (co-operatives, co-operative unions and inter-co-operative enterprises) with a common legal safeguard over all the resolutions and actions of their managerial and supervisory bodies. Members' property rights The property of the co-operative belongs to its members. However, this property can be distributed among the members only on the termination of a co-operative's activities and its declaration of "insolvency". Each co-operative member has the right to receive part of its assets, in proportion to his share capital. However, if a co-operative member leaves the co-operative he/she will receive only the sum of his or her share contribution and the appropriate dividend (annual profit). The heirs of a deceased co-operative member have a similar entitlement. In those cases where a co-operative member has contributed land to the co-operative he/she will retain rights over that land, and is entitled to receive rent (which may take the form of payment in kind) for its use. The share contributions of co-operative members are not subject to distrain and forced execution. Members' financial contribution Co-operative members make the following contributions to the co-operative: - a joining fee (not refundable), the amount of which is determined by the By-laws; - a share contribution, as determined by the By-laws. This is given back to the co-operative member (or to the heirs of a deceased co-operative member), together with his or her share of the dividend, upon leaving the co-operative or in case of its liquidation; - additional contributions (earmarked for a particular purpose) by resolution of the General Assembly. These are to be returned after a term set by the General Assembly, and are not reflected in the share contribution of the co-operative; - money in the form of a loan, as determined by the General Assembly, which also decides upon the terms of its repayment and the interest rate payable. Such money is not reflected in the share contribution of the co-operative. Division of power in making resolutions The General Assembly, Managing Council, President and Supervisory Council have separate and different powers. They are reflected in the Co-operative Law and each co-operative, in accordance with its specific activity, records these in its By-laws. The General Assembly usually has the widest and greatest powers as regards all the matters concerning the co-operative, including the cancellation of any resolutions and actions which are in opposition to the Law or By-laws. It is the exclusive power of the General Assembly to make resolutions on the following issues: election of the President, Managing Council and Supervisory Council; elaborating, changing and supplementing the By-laws; remission, deferment and extended payment of money due to the co-operative; disposal of the co-operative's real estate; dismissal of members; financial reorganisation of the co-operative; reconstruction and liquidation of the co-operative, or the declaration of its insolvency. The Managing Council carries out the resolutions of the General Assembly and directs the activities of the co-operative, for which it is responsible to the General Assembly. The President of the co-operative is also the President of the Managing Council. He represents the co-operative, supervises the performance of the General Assembly and Managing Council's resolutions and manages the everyday activities of the co-operative. The Supervisory Council inspects the activities of the co-operative and is accountable to the General Assembly. It is empowered to convene the General Assembly when it finds significant infringements of the Co-operative Law or By-laws. - the responsibility of the directors, presidents and elected officials is determined by Bulgarian legislation. When such officials have been elected they are fully responsible under the Law on Co-operatives, i.e. for any infringement of their obligations as members. Members have the following advantages not available to employees or users who are not members of the co-operatives: - a dividend on share contribution; - a consumer dividend (paid on purchases from co-operative retail outlets); - dividends for economic participation (provision or processing of produce, participation in other areas of the co-operative's economic life); - the opportunity to purchase some goods at reduced prices; - co-operative education and training as well as some social, health and other services are reserved only to members and employees. 3.1.3 Organisational changes and developmental trends Since the adoption of the Co-operative Law of 1991, both consumer societies and workers' co-operatives have embarked upon the reshaping of their respective structures, and planned to develop the volume and types of their activities. 188.8.131.52 Consumer co-operatives Consumer co-operatives adopted new bylaws, adapted to the new co-operative policy, values, principles and practices laid down by the law of 1991. The election of new managing boards and supervisory councils also took place at all levels, without any interference from the State. The number of administrative personnel working at the CCU was then radically reduced with a view to decreasing costs. Its 538 employees were reduced to 277 in 1989, then cut to their present level of 121. Redundant staff are entitled to receive redundancy payments as prescribed by the Labour Code of 1992, and also to retain membership of the consumer societies. In contrast, an effort is under way to restructure the regional unions and upgrade their role and activities as intermediate organisations by maintaining links with the apex organisation and primary co-operatives. Currently there are 36 regional unions engaged in mixed activities, and one union which specialises in the production of soft drinks. The General Assemblies of the unions are composed of delegates proposed by, and representing, the member societies. The adoption of new bylaws was an occasion for consumer organisations to increase the value of the share from 100 to 1,000 levas. Members who refused to subscribe to the new shares, left the co-operatives, or were dismissed by the General Assemblies. As a consequence, the amount of share capital was increased whilst the number of members decreased, both considerably. The number of primary co-operatives was also subject to fluctuations. Division of the old and large primary societies, as well as the emergence of new ones, has increased their number. Table 8 indicates the organisational situation of the consumer societies at three levels. On the top, a strong apex organisation to which are affiliated the co-operative organisations and co-operative enterprises. The CCU also undertakes its own economic and social activities. In the middle are regional unions, which have their own production networks, trading points and educational/training schemes. At the bottom of the structure there are around 1,000 primary societies, 22 of which specialise in the production of carbonated soft drinks. Primary co-operatives also own their production enterprises. Membership is currently reduced to some 859,000 individuals, 30% of whom are women. Some 120,000 persons are employed by the consumer societies. Most of them are also members and are, therefore, entitled to receive both wages for their labour and dividends on their share capital. Table 8: Vertical Structure of Consumer Societies Central Co-operative Union (CCU) Apex Organisation Regional Co-operative Unions (37) Primary Societies (about 1,000) Members (859,000 physical persons 30% of whom are women) Employees and Workers (120,000) Consumer societies undertake most of the economic activities and retail trade. The corresponding turnover is significant according to the various areas of activity as shown in Table 9. Table 9: Co-operative participation in national production and sales for the years 1990 and 1991 Categories 1990 (%) 1991 (%) - retail shops 27.00 26.60 - catering 34.48 31.48 - confection _ 57.00 - sugar products _ 10.00 - bakery _ 52.00 - soft drinks _ 95.00 Inflation and lack of credit have worsened the current conditions for production and trade within consumer societies. This is why the consumer system introduced saving and credit services (more than 500 such schemes now operate at the level of the consumer organisations). Deposits received by these societies (300 million levas of deposits from 100,000 depositors) led the consumer co-operative system to decide to promote a separate Co-operative Bank in 1991. Table 10 explains the fluctuations of turnover within co-operative retail trade between 1970 and September 1993, as compared with the national retail trade. Table 10: Turnover of consumer societies' retail trade (% of national turnover) Years % of retail turnover increase/decrease over previous year 1970 35.7 -- 1982 30.4 - 5.3 1987 28.4 - 2.0 1989 27.8 - 0.6 1990 28.2 + 0.4 1991 26.6 - 1.6 1992 22.3 - 4.3 1993 20.0 - 2.3 Source : Central Co-operative Union 184.108.40.206 Workers' production co-operatives .c.These have also undertaken structural changes, adjustments and improvements since 1990. New bylaws were adopted by General Assemblies at all levels. New elected bodies (managing boards and supervisory councils) took responsibility for the destiny of workers' organisations with the objective of achieving independence from the State and municipal councils, and further restructuring them so as to be ready for the conditions of the market economy. Table 11 reproduces the organisational chart of the apex organisation (the Central Union of Workers' Production Co-operatives) set-up following the last Congress. Some 612 delegates, representing both regional unions and primary organisations, constitute the General Assembly of the Central Union. They elect the Board of Directors (31 members) plus the Supervisory Council (11 members). There is a small technical and administrative staff of 29. Table 11: Organisational Chart of Workers' Productive Co-operatives (The Central Union) Central Union General Assembly (612 delegates) (Representing Regional Unions (10) and Primary Co-operatives (306)) Board of Directors (31) Supervisory Council (11) President President of the of the Union Supervisory Council Vice-President Vice-President Accountancy (3) Legal advice (3) Marketing (7) Personnel (2) Organisation Financial Bylaws (1) Control (8) International Administration (3) Collaboration (2) Total: 42 elected persons 29 employees At the local level, there are 306 co-operatives, half of which were created after 1989. The membership of each primary co-operative ranges from seven to 1,500 physical persons. Members specialise in one type of work, and many of them are involved in large production operations. For the time being, ten reshaped regional unions function in the middle of the vertical structure. These support primary co-operatives. The Central Union plays a leading role not only in the process of restructuring, but also, and primarily, in the various fields of economic and social activity. In this respect it attempts to attract foreign investments for joint ventures with partners from neighbouring counties (mostly from Greece, Germany and the Russian Federation at present). Low labour costs favour the production and export of clothing. The most crucial problem currently facing workers' co-operatives are: low productivity due mainly to the insufficient qualification of member-workers; lack of external markets lost during recent dismantling of the centrally-planned economies of the countries in the region; the burden, in some cases, of the size of the administrative staff; and the most important in the long run, bad employment conditions and wages. Some of the administrative staff are relocated in other areas of work, and others leave. Only a few have to be made redundant, and these receive redundancy pay as prescribed by the Labour Code of 1992. For the time being, the restructuring of labour has not affected the members-workers. They have, however, begun to be subject to a reduction in wages and profits, due partially to the lack of favourable working conditions. The wages of many members are decided according to the country's minimum salary level, and others have to be laid off. In case of lay-off, no wages are paid to the members concerned, but they continue to receive the social benefits recognised by the Labour Code. Adverse conditions of employment and rising prices force workers' co-operatives to resist any reduction of labour, acting, for the time being, in favour of group solidarity rather than improved productivity. Members' wages are fixed according to the quality and quantity of work performed by individuals or teams, following consultations between the boards of directors and the working members. The workers' co-operative system has another important objective related to the social services for its members. In the past, a large number of health, cultural, sporting and educational properties and establishments financed by both State and co-operatives, provided basic services to co-operators. These have now been reclaimed by workers' co-operatives. One such establishment (the Co-operative Polyclinic in the city of Pleven) was visited by the author of this Report in late September 1993. Producers' co-operatives of handicapped persons affiliate themselves to local units, which are in turn affiliated to their own Central Union. These co-operatives were separated from the Workers' production co-operatives in 1991. They continue to operate according to their rules and capacity. Their activities aim to supplement their members' incomes, so as to ensure for them a decent standard of living. 3.2 Emergence of new co-operative institutions Three main factors explain the emergence of new co-operatives and co-operative institutions: the impact of the privatisation of land, the enormous need of the population and the desire of established co-operatives to prepare the market conditions for the co-operative sector. 3.2.1 Agricultural co-operatives of primary farmers An important section of the population, estimated at 900,000, is entitled to claim for private land ownership and start farming and cattle breeding. This is a result of the dismantling of collective farms and agro-industrial complexes. Private farming would have been almost impossible without the organisation of group action and common services for production, processing and marketing activities. Co-operatives have also been seen as a possible solution to the problem of privatised farming. Article 8 of the 1991 Law on Land Reform enshrined the right of individual farmers to unite within co-operatives for the joint cultivation of land. Conditions regarding the constitution and functioning of such co-operatives are established in the Co-operative Law of 1991. The creation of new agricultural co-operatives began in 1989. The first 15 participated in the Congress of Collective Farms organised in Plovdiv in 1990. However, the situation had changed by the Congress of 1991. 650 new co-operatives decided upon the establishment of the National Union of Agricultural Co-operatives, based on private land ownership. An extraordinary General Assembly of the Union held in Sofia in June 1993 was only attended by 450 new primary co-operatives affiliated to the Union (i.e. no collective farms). The reduction in their number is explained by the fact that one third of the new co-operatives created since 1989 were disbanded or liquidated as a result of the restructuring imposed by transitional clauses 7 to 9 of the Co-operative Law. The object of such restructuring was the new registration of recent co-operatives and the arrangement, by decision of their General Assemblies, of all matters related to members', employees' and non-members' rights to receive shares, rent and dividends for land used by the co-operatives. Between the apex organisation and the primary co-operatives are four local and 18 regional unions at the district level. It is planned that such regional unions should be established in all 28 districts of the country. Model bylaws have been adopted by organisations at all levels. On an experimental basis, the EU PHARE project and the USA organisation, Volunteers in Overseas Co-operative Assistance (VOCA), are providing support for setting up the organisation of the young movement and consolidation of the co-operatives as self-managed organisations of individual land owners. Details of the objectives of, and problems currently experienced by, these emerging co-operatives are to be found in the Basic Guidelines adopted by the National Union in June 1993, and in the Reports of Bulgarian specialists to a recent Seminar of the FAO. The Union's first concern is related to the splitting-up of the collectivised land into many tiny individual plots: it hopes to create various types of agricultural co-operatives aiming to represent the interests of their members. Such co-operatives should respect both the basic co-operative principles and the existing co-operative and general legislation as well. Co-operatives are, therefore, a key alternative for agricultural development. The Union claims all means of production (land, plant, other material resources) collectivised or confiscated in the past for return to the members of the new co-operatives without excessive formalities. The management and administration of co-operatives' internal affairs should be the exclusive responsibility of their General Assemblies and other elected bodies. This implies separation from the State and State bodies. However, it was felt that during the transition to the market economy, the State should assume functions beneficial to co-operative development, such as minimum prices for the purchase of agricultural produce; the granting of loans at preferential rates of interest for production and investment purposes; taxes not exceeding 20% of their income, but varying between zero and 40% according to each household's revenue. Those earning less than the "social minimum" should be exempt from taxation, and loans granted to new farming organisations should be interest-free for an initial period of five years; extension services, plant protection and modernisation of the existing infrastructure; a special insurance fund against natural disasters; assistance with export and protection against imported agricultural products. Proposed guidelines insist on co-operatives' engaging in further collaboration with the State, the Ministry of Agriculture and the regional and local authorities during the initial organisational period. During his visit to the region of Pleven, in October 1993, representatives of primary agricultural co-operatives expressed similar views and concerns to the author. New co-operatives should function separately from the State, but should still be assisted by the latter. Co-operatives should accept as members all those involved in farming and in production, processing and merchandising activities. On the other hand, co-operatives should be allowed to participate in the privatisation of agricultural and food enterprises. A number of the businesses, therefore, should be handed over to the agricultural co-operatives (which produce their raw materials) under favourable conditions, e.g. long-term, low-rate bank loans. In other words, the conditions should be equal to those arranged for industrial workers wishing to bid in the auction of State enterprises (Article 31 of the 1992 Law on the Transformation and Privatisation of State and municipally-owned enterprises). If this was accepted by the Government, the co-operatives' members could undertake to provide those enterprises with the necessary raw agricultural materials. In this connection, co-operatives should also proceed with the creation of their own industrial networks. The Union Guidelines emphasise the importance of collaboration with scientific and educational institutions in order to support productivity and to enhance the managerial skills and professional qualifications of managers and technicians. It is planned that links with international organisations such as the ICA will be established, as well as working relations and the exchange of information and experiences with other co-operative organisations, at home and abroad. Reports from Bulgarian specialists on rural development highlighted most of the current problems experienced in the process of land reform and the perspectives of the agriculture to be organised in new privatised forms, including co-operatives. According to the information collected during the on the spot investigation of late 1993, in June 1993 1,205 new agricultural co-operatives were formed with a membership of 329,000 and 750,000 hectares of cultivated land. Applications from another 695 with 95,000 members and 290,000 hectares of land are awaiting registration. These co-operatives, of which 450 are affiliated to the Union, cultivate 20.45% of the nation's land, while another 1.53% of the country's arable land is cultivated by 10,489 individual farmers. The land cultivated by new co-operatives and individual farmers is equal to the amount of land returned to the previous owners by June 1993 (less than 25% of the collectivised land). On the other hand, the reported data about significant increases of productivity within the privatised farming sector by the end of 1992, in comparison with the national output in this field, are conclusive. This constitutes an early proof of the capacity of the privatised farming system, both co-operative and individual, to maximise the productivity of the agricultural sector despite the lack of inputs and weakness of the existing technical infrastructure. Agricultural co-operatives in the process of creation and organisation are a promising wide economic and social experiment. Their success depends on farmer-co-operators adhering to a genuine co-operative constitution, and functioning according to the well-established co-operative principles and democratic practices. Any reproduction of the collective system of farming crushed by a heavy administration and members who are not personally and directly involved in the land's cultivation should be avoided. Beyond this, support from the State and assistance from the national and international co-operative movements will determine the successful implementation of the current co-operative endeavour. 3.2.2 The Central Co-operative Bank Resumption of the country's long tradition in the field of rural credit co-operatives and urban popular banks, as well as the current financial and monetary situation of Bulgaria, have precipitated the establishment of an independent co-operative banking institution. The Central Co-operative Bank was created and registered at the Sofia Court in April 1991 as a shareholding limited company foreseen by the banking legislation in force since 1991 (Law on Banking and Credit). This law applies only to Banks owned by companies or co-operatives. Its original founders were various individuals and consumer societies. The social capital in 1991 was 220 million levas. In 1992 the Bank was transformed into a joint-stock company, and increased its capital to 500 million levas. Some (20%) shares, at a value of 1,000 levas each, were issued as 'bearer shares' and sold directly to the public over the Bank's counters or on the stock exchange. The remaining 80% of shares were issued in the name of the member-co-operative societies. The second category of shares gives members the right to vote (one share-one vote), while the first does not. For the time being, members take up around 12% of the loans granted annually by the Bank, the other 88% going to various firms, organisations and individuals. At the end of 1993, 17 Branch Offices were in existence in the larger urban centres of the country. It is planned that other Branch Offices will open throughout the country in order to bring the services of the institution closer to the members and to the public. The Central Co-operative Bank network develops its activities, as do all other privatised commercial banks, in the internal financial and monetary market. However, it also provides for all kinds of operations concerning foreign exchange. The Bank hopes to create a working relationship with foreign banks and to facilitate Bulgarian trade activities abroad. For this purpose it looks forward to entering the international financial market and establishing working relations through co-operation and collaboration with other co-operatives. The staff of the Bank is well qualified, drawing its experience from the State banks and using fourth generation IBM computers. Relationships have been established and exchanges of visits and consultations have already taken place with European banking institutions. In 1993 the Bank was accepted as a corresponding member of the Association of Co-operative Banks of the European Union. Exchange visits for organisational purposes have also been inaugurated with the co-operative credit system of France, while English institutions provide expertise for improving the managerial qualifications of the Bank's key workers through the Plunkett Foundation. Rabobank (Netherlands) is also sought for assistance in organising training courses for the bank's managers. Currently, the rate of interest paid on the 'bearer shares' is higher than that paid on the members' nominal shares (by 45% on average). The rate of interest received by the Bank for loans granted ranges from 52% to 54% for members and from 56% to 58% for the non-members. With respect to loans given to farmers, two thirds of the interest is paid by the State. According to the rules governing the National Bank, a percentage of the Co-operative Bank's deposits has to be transferred to the National Bank without interest. The Co-operative Bank, however, is entitled to take out loans from the National Bank at an affordable rate of interest. The repayment of loans is considered to be satisfactory, since the interest rate it is kept below 15%. It has been reported that the annual turnover of the Bank represents more than 50% of the total turnover realised annually by the private banks. A visit paid by the author to the Pleven Branch Office, 180 kilometres North-East of Sofia, allowed him to become acquainted with the various operations at the regional level. The daily receipts of the member-co-operatives and other users, amounting to between three and five million levas, are collected by a special itinerant service of the branch office. Three types of loans are granted: short (up to one year), medium (between one and five years) and long-term. A commission of between 3% and 12% is levied by the Bank for its operations. In the case of member-societies the above percentage is reduced to 5%-6%. The annual turnover of the Pleven Branch Office was reported to be 800 million levas. Of this, 1.6 million is paid out in salaries, 22 million are net profits and 65% of these are paid to the State budget in taxes. An amount of ten million levas is distributed among members. In addition to agreements signed by the borrowers, loans are secured against goods and real estate (land is exempt), thus protecting the Bank against losses. Disputes and recovery problems are reduced due to the flexible conditions for the allocation and repayment of loans. The overall system is much better than that operated by other private banks, especially when the users are member-co-operatives. The Central Co-operative Bank is governed by the Board of Directors. Its President is Ms Katarina Zarkova, assisted by two Deputy-Directors and members of the Board of Directors. The Deputies are responsible for the domestic market and the Board for the international affairs. At the regional level of Pleven, the Branch Office is governed by a Director appointed by the Central Co-operative Bank. He is assisted by a Credit Committee of five specialists. 3.2.3 Department of Co-operative Management and Business During the academic year 1990/1991 the University of National and International Economy in Sofia, created a specialised Department of Co-operative Management and Business. Students are able to avail themselves of full-time basic economic education for a period of four years, including curricula on co-operative economy, management, finance, history and law. Distance learning is also possible by means of a five-year correspondence course. Entrance to the Department is by examination. Enrolment levels (50% boys, 50% girls) for the first four years have been as follows: - 1990/91: 68 students - 1991/92: 32 students - 1992/93: 14 students - 1993/94: 29 students Students receive maintenance grants and free tuition. For the time being, all expenses related to their education are paid by the Central Co-operative Union, which also guarantees employment for the graduates. To this end, binding contracts are drawn up between the CCU, which finances the educational programmes, the student beneficiaries, and the co-operative organisation which is to employ the graduate. The students acquire practical experience through regular periods of work within the consumer society which will eventually employ them. During the academic year 1991/92 a Co-operative College was also created in Sofia under the auspices of the above Department. Education provided by the College is full-time. Correspondence courses are also provided by four other Sections of the College, operating in four urban centres: Plovdiv, Pleven, Berkovitsa and Haskovo. Existing CCU Training Centres located in these cities receive students for examinations. Usually, such students are employees who are periodically given time of study leave. They continue to receive their salary during this period. Both the Department and College of Co-operative Management and Business were set-up at an early stage, with the object of reproducing, improving and developing the human resources needed by the old and new private co-operatives. This major educational attempt was mainly planned by and realised thanks to the contribution of the Central Co-operative Union of consumer societies in close collaboration with University professors and highly-educated Bulgarian personalities. The CCU, by sponsoring this social and educational endeavour, has achieved a major goal at which all co-operative movements around the world are looking: the integration of a basic curriculum of co-operative economy, theory, law and history into the national educational system with a view to reproducing human resources for future co-operative membership and management.