Ethiopia’s parliament is reviewing a draft law that would allow cooperatives to raise capital from non-member investors and enter joint ventures with private-sector firms, marking a major shift in the sector’s legal framework, Addis Fortune reported.

The revised cooperative proclamation was tabled before lawmakers last week, nearly nine years after the current law was enacted. The amendment removes long-standing restrictions on selling shares to non-members and forming partnerships with private companies.

If approved, the legislation would expand cooperatives’ participation in sectors including agro-processing, energy, finance, tourism and infrastructure development.

The draft law allows cooperatives to raise equity from outside their membership under strict limits. Non-member investors would be permitted to hold up to 10 percent of total shares, granting dividend rights but excluding voting power and leadership eligibility. Regulators say the safeguards aim to preserve member control while easing chronic capital constraints.

Officials at the Ethiopian Cooperative Commission said the amendments are intended to modernise the sector’s institutional and financial structure and align it with the country’s wider economic reform agenda.

The proposal has drawn mixed reactions, with some cooperative managers warning that even limited non-member ownership could weaken cooperative principles and increase external influence.

The bill also removes legal barriers preventing cooperatives from forming joint ventures with private firms. Such partnerships would be established through formal contracts and regulatory oversight, with eligible sectors ranging from agriculture and manufacturing to transport, construction, energy, climate resilience and watershed development.

Another provision permits cooperatives operating in similar sectors to merge, a move aimed at reducing fragmentation across primary, union and federation levels. Officials say consolidation could lower administrative costs, strengthen financial capacity and improve access to larger projects.

The revised law further transfers audit responsibilities from the government to cooperatives themselves, requiring audits to be commissioned and financed through certified audit firms to improve accountability and timeliness.