Kabarole district officials launch the disbursement of PDM funds
By Dr Edward Katende
HABARI DAILY I Kampala, Uganda I Gaining financial freedom should be the dream of every Ugandan. My dream as a well-intentioned Ugandan is that one day each one of us will have the ability to live the life they want without worrying about money.
My prayer is for every countryman to have ample income, savings, and investments to be independent of a traditional job.
That’s why am appreciative of the Government of Uganda for undertaking one of the biggest social-economic initiatives in the history of this country. The Parish Development Model (PDM) is indeed a game changer for progressive Ugandans who have always dream t of accessing small sums which they would flip through hard work, and be able to change their lives.
Through the PDM, we stand a chance as a country to bring millions of countrymen into the money economy, through financial inclusion. One of its core values is that both individuals and businesses should gain access to appropriate, affordable, and timely financial products and services.
But lo and behold! Financial inclusion has been with us in word but not in deed.
Through Wendi, an application introduced by Post Bank and its partners, a channel which has enabled thousands of PDM beneficiaries obtain money through their mobile wallets, has cut out the bureaucracy which had led to loss of Government money.
Through PDM, the Government has been able to release up to sh2.4 trillion in the last two financial years, of which sh100m has gone to each of the10,585 parishes around the country.
This has positively impacted the lives of members of each benefiting household. In July 2025, the first recipients of the PDM cash will start repaying their loans.
Each one of the beneficiaries who received sh1m will have to return sh1.2m, sh200,000 being the interest that has accrued on the loan. This process will give us a chance to establish Uganda’s biggest bank with capitalization of up to sh3.5 trillion.
According to Bank of Uganda (BoU) requirements, a commercial bank needs capitalization of sh150 billion. This is because to set up any bank in Uganda, the minimum capital requirement is 150 billion. In case 70% of the loan recipients return the principle plus interest after 5 years, we will accumulate up to sh3.5 trillion.
But even if only 20% of the recipients return the money, we will get up to sh1 trillion, which is much more than the sh150 billion required to form a commercial bank.
The current capitalization of the Uganda Development Bank (UDB), which is our biggest bank is sh1 trillion.
On the other hand, the capitalization of PostBank, which is another government-owned bank which is doing wonders, is sh500 billion.
So this sh1 trillion will be twice the size of PostBank, big enough to allow Ugandans to own their own financial institution.
Paying back
PDM loans are fully digitalized, meaning every beneficiary can be tracked up to their village or ancestral place.
Data was captured on all of them. Every borrower is registered on a system called the Parish Development Model Information System (PDMIS).
This was meant to make Know Your Customer (KYC) and credit referencing easier. So, ultimately financial inclusion will be in a better place than it was ever before.
Concerning the tracking, they registered the home of every recipient with a GPS coordinate. They also procured a copy of every recipient’s national ID, telephone number, and the members of his/her household. But better still, every recipient of PDM money is also registered on the Financial Inclusion System (FIS).
Every borrower will have to pay back through Wendi a digitized mobile wallet, which is linked to PDMIS.
Wendi was licensed by BoU, meaning that who were previously unbanked are now banked.
We will also use government agencies like the Internal Security Organization, who are responsible for monitoring and tracking government programs, to locate the borrowers.
These have developed a system called Zaidi, on which they store all the names and particulars of borrowers. Officials from these agencies will be able to physically go to those locations and look for the would be defaulters.
If the relatives say that the recipient passed away they will be asked for the physical grave and death certificates witnessed by village leaders. died, you show us the grave. So the only wise thing for the PDM beneficiaries to do is to look for the principal amount plus the interest, pay up and be able to procure another loan from the PDM bank or revolving fund that will be created.
Dr Edward Katende is the Managing Director of Uganda Development Forum, the architects of the PDM
