Expert on Cooperatives, Financial Inclusion and Renewable Energy Investment
KAMPALA – Parish Development model (PDM) is a strategy for organizing and delivering public and private sector interventions for wealth creation and employment generation at the parish level as the lowest economic planning unit. The Parish Development Model is made up of seven pillars: Production, processing and marketing (value chain development), Infrastructure and Economic services, financial inclusion, Social services Community data (Community information system). In order to transform the 68.9% of Ugandans in subsistence farming, NRM in its 2021-2026 manifesto adopted a science-led parish model to reach homesteads that are still in the moneyless economy. The Parish Development Model (PDM) is the last mile strategy for service delivery by Government of Uganda for improving incomes and welfare of all Ugandans at the household level as envisaged under NDPIII. In order to operationalize the PDM and to progressively capitalize a Parish Revolving Fund in each Parish, PDM SACCOs were born to lend money to member owned enterprises that are engaged in production, storage, value addition, processing and marketing of agricultural enterprises. The PDM SACCO was created as a ‘’special type of a cooperative’’ and registered by the Registrar of Cooperatives. MTIC prepared guidelines for establishing the PDM SACCOs Special byelaws. According to the finance ministry 2024, a total of 10,594 savings and credit co-operatives (SACCOs) have received shillings 100 million apiece to function and participate in the money economy. The International Cooperative Alliance (ICA) defines ‘A cooperative as an autonomous association of persons united voluntarily to meet their common economic, social and cultural needs and aspirations through a jointly owned and democratically controlled enterprise. Cooperatives around the world generally operate according to the same core principles and values, adopted by the International Co-operative Alliance in 1995. Today, cooperatives around the world share several founding base principles and values adopted by the ICA in 1995 and Cooperatives are comprised of autonomous individuals and created based on the guiding standards of volunteerism, democracy, and a set of common cultural, social and economic needs. Cooperatives are based on the values of self-help, self-responsibility, democracy, equality, equity, and solidarity and in the tradition of their founders, cooperative members believe in the ethical values of honesty, openness, social responsibility and caring for others. The cooperative Principles have been refined, adapted, and reinterpreted over time, the seven principles used by the International Cooperative Alliance today are generally accepted by cooperatives worldwide; Voluntary and Open Membership, Democratic Member Control, Member Economic Participation, Autonomy and Independence, Education, Training and Information, Cooperation among Cooperatives and Concern for Community.
The controversy lies in the nature of PDM SACCOs and their capitalization. The word SACCO is an acronym which stands for a Savings and Credit Cooperative Organization or Society, it is a form of a financial Cooperative but however many Ugandans are not aware that a SACCOs is a form of a financial Cooperative. By and large, PDM SACCOs must be operationalized in conformity with the international cooperative Principles and values. In PDM SACCOs, members do not save and thus the principle of economic members participation and self-help is undermined as members expect donation from government inform of a revolving fund to administer credit. Additionally, PDM SACCOs were given special status during registration process and this was an instruction by government to the registrar of Cooperatives and the registered PDM SACCOs did not meet basic requirements which had been put as a pre -condition to promote the International Cooperative Principles of Voluntary and Open membership and thus government has no mandate to override a cooperative principle(s) that has been Universally accepted. Since PDM SACCOs formation process was controlled by government, corrupt officials used this opportunity and created fake PDM SACCOs to divert funds Auditors Generals Report 2023. Still the PDM SACCOs initial shares of the members have been and shall be paid for from the Parish Revolving Fund and this is the main initial source of financing for the SACCOs and shall be ONLY used for lending to members. This process further contravened the principle of economic member Participation and Value of self-help as members in a cooperative must have an economic obligation to contribute the initial share capital and however small it would be and this share capital contributed by members would be supplemented by a revolving fund from government. Share capital gives Cooperative members a sense of ownership and control and it is important to note that there were regular discussions in cabinet regarding PDM SACCO and for members to buy shares of at least 10,000 UGX before they can join but the government’s political wing insisted that the people of Uganda were poor and thus, they should become members by mere registration. It defeats understanding of any Cooperative expert if poor people who cannot own a cooperative by contribution only 10,000 Ugx can economically control a revolving fund of 100m Ugx received every year for the next five years.
The Operation of PDM SACCOs disfranchises members of their rights in decision making process and accordingly, the Chief Administrative Officer (CAO) must authorise payment for the capitalisation of the registered PDM SACCOs and will as such transfer the PRF funds to the PDM SACCO Bank Account. The CAO shall capitalise the PDM SACCOs up to the appropriated amount per Parish. This process contravenes the principle of Autonomy and Independence as government dictated in which commercial Bank must PDM SACCOs and members open accounts as these accounts came with high operational costs. PDM SACCOs and their members had no choice since the donor which is government independently made decisions without consulting members. Many PDM SACCO members preferred to open accounts with their community SACCOs which understand their needs and have affordable account operational costs as compared to Commercial Banks. For decades Commercial Banks have considered the local population as un bankable and thus receiving their funds has been costly. In another related development, government issued instructions that PDM funds should not be used for the SACCO operational costs despite of an increasing costs in regard to loan process between the loan applicant, the signatories, the district and the Bank. The SACCO leadership should have independence to decide on how members must finance their cooperative to meet their obligations. Another scaring scenario is about an online PDM platform which is desk top based as it cannot be used or supported on mobile telephone /tablet and it requires fulltime internet connectivity which is costly and this has caused un necessary delays in service deliverable and remember the current PDM SACCO income is too narrow as members take loans at 6% per annum with a grace period of three years payable in 12 months and the income from such business is not sufficient enough to support the growing costs due to growing membership. The Principle of Education, Training and Information is crucial in creating good governance systems and skills transfer but however the aspect of training and capacity building has not been given attention and members are required to give their enterprise funding proposals in English and yet some members cannot comprehend the provided information in English language. The available material on PDM SACCO management has not been translated into local languages and therefore information gap between implementers and beneficiaries prevails and it will cause severe Governance and operational consequences.
In Conclusion, the PDM SACCOs underly the spirit of harmonization of Government interventions focusing on; delivering services closer to the people; and measurable results at the Parish level in order to ensure transformation of the subsistence Households into the money economy and this transformation requires organized, integrated, well-coordinated and results-based efforts and therefore PDM SACCOs must uphold, the international Cooperative Principles and values as crucial determinants to cooperative sustainable growth and resilience. The cabinet must reconsider redefining PDM SACCO frame work to allow members become shareholders and participate in independent decision-making process as they invest in their SACCOs through purchase of shares, regular savings contributions, deciding on the amount of loan disbursement and the loan grace period based on the enterprise investment cycle, opening their operational accounts with community based SACCOs and Commercial Banks of their choice, translating PDM SACCO information into various local languages and having an appropriate budget allocation to training and capacity building. A Cooperative is member owned , member used , member controlled and the benefit of all members.
Denis Tukahikaho Ph.D. is a Ph.D. Student in Islamic Banking Philosophy and he holds a Ph.D. in Environmental Management & Economics, Master of Oil & Gas Law-Energy & Policy, Executive MBA-SME, BBA -Banking and Finance and Diploma in quantitative Economics with 17 years of consulting Expertise in Banking, Microfinance, Cooperatives and Environmental & Social Governance.
