The Parish Development Model (PDM) is a strategy introduced by the Ugandan government in 2022 to promote wealth creation and improve service delivery at the household level. The PDM focuses on communities at the parish level, the smallest administrative unit of the government and the one closest to communities. This proximity ensures that goods, services and benefits from the PDM directly impact local communities.
The government aims to prioritize key commodities like coffee, tea and oils to create wealth-generation opportunities within PDM areas. The program operates through seven key pillars: production, processing and marketing, infrastructure and economic services, financial inclusion, social services and community data.
While the PDM aspires to reduce poverty and improve household incomes and quality of life, it is not Uganda’s first poverty reduction initiative. Many previous programs have failed, with some funds reportedly embezzled, as acknowledged by the President of Uganda. According to the World Bank, four out of 10 Ugandans currently live in poverty. The PDM is seen as a critical, last-ditch effort to reverse this trend and solve poverty within the country.
Objectives of the Parish Development Model
The primary goal of the PDM is to transition 39% of Uganda’s population or 16 million households, from subsistence farming to commercial farming, enabling them to participate in the money economy. The PDM also aims to improve service delivery efficiency at the parish level, offering hope to low-infrastructure communities. The government envisions the program as a key economic solution to alleviate poverty across various regions, setting a five-year timeline to achieve its objectives that started in 2022.
The World Bank predicted Uganda’s economic growth to reach 6.2% in 2025, up from 5.3% in 2023. During Uganda’s 62nd Independence Day celebrations, the President announced that 67% of the population is already engaged in the money economy. If implemented successfully, the PDM could increase this figure significantly. This initiative is also a critical component of Uganda’s Vision 2040, which aims to transform the country from a predominantly peasant-based economy to a modern and prosperous one.
Implementation of the Parish Development Model
The government first identified the right households through community research and vetting to implement the PDM and ensure that the most vulnerable communities benefited. It assessed key factors such as income, education, agriculture and savings to determine which households still relied on a subsistence economy.
The next step involved creating and funding trusts that would allocate the appropriate funds to the right areas. Enterprise groups were formed, consisting of members eligible under the PDM scheme. Savings and Credit Cooperatives (SACCOs) were established to support these groups, with one PDM SACCO designated for each enterprise group.
The PDM SACCOs are managed and controlled by enterprise group members, who make decisions regarding funds, programs and infrastructure plans. Members of the enterprise groups can request loans through the SACCOs, which are specifically aimed at fostering self-employment and supporting business ideas. PDM SACCOs provide loans to households at a 5% interest rate, with repayment terms set by the respective SACCOs.
The first phase of the PDM established 10,585 SACCOs. Further, it disbursed $239 million in loans to numerous households, effectively making the PDM SACCOs function like community banks for enterprise group members.
Challenges
The PDM faces several challenges, primarily due to the vast number of communities it needs to cover and its ambitious goal of transitioning 16 million households into the money economy. However, two key challenges requiring urgent attention include:
- Financial Constraints. The PDM adopts a “one size fits all” approach, which has resulted in unequal benefits across regions. Each beneficiary household received close to $270. Similarly, each parish gets $27,000. Nonetheless, regions like Acholi, Karamoja and Busoga, which still heavily rely on a subsistence economy, are so far disproportionately targeted in the disbursement of PDM funds.
- Inefficiencies. The average number of households per SACCO is between 75 and 109. However, in regions heavily dependent on subsistence farming, the number ranges from 400 to 600 households per SACCO. This places an overwhelming burden on SACCOs, leading to unequal distribution of funds and challenges in providing adequate oversight. Overburdened SACCOs struggle to monitor loan repayment and assess the progress of households effectively, limiting the program’s overall impact.
Outcome
As of 2024, the PDM has achieved several milestones and benefited numerous households. Out of the 10,585 households registered under the PDM project, 7,950 have actively borrowed and received funds from SACCOs fund. The households have invested in both agricultural and nonagricultural businesses. Notably, 53% of the households that have accessed SACCO funds are women. The PDM initiative offers loans at significantly lower interest rates at 6% compared to 18% charged by commercial banks. This reduced burden allows households to fully implement their business ideas and achieve more excellent financial stability.
The Ministry of ICT and National Guidance also developed an information system to collect and store data from various parishes. This system monitors loans disbursed, tracks loan repayments and oversees the distribution of funds to parishes from the central government. This step is crucial in achieving the PDM’s Pillar 3 objective of financial inclusion.
Conclusion
The PDM represents the Ugandan government’s ambitious and innovative strategy to tackle poverty. Furthermore, it promotes economic inclusion at the grassroots level. By prioritizing key commodities, promoting financial inclusion and providing affordable loans through SACCOs, the PDM has already demonstrated its potential to uplift vulnerable households and communities.
However, the program’s success hinges on addressing critical challenges, including financial constraints and inefficiencies in resource allocation. Tailoring solutions to meet the unique needs of different regions and improving oversight mechanisms will be essential for achieving the PDM’s full potential.
As Uganda moves closer to its Vision 2040 goals, the PDM stands as a cornerstone initiative, promising to transition millions from subsistence to a commercial economy. If implemented effectively and inclusively, it could serve as a model for other nations striving to eradicate poverty and create sustainable economic growth.
– Zacc Katusiime
Zacc is based in Kampala, Uganda and focuses on Business and New Markets for The Borgen Project.
Photo: Pixabay
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