PDM: Working capital as a flagship product puts the cart before the horse

In its first year, the government introduced the Third Pillar of Financial Inclusion (revolving fund) as the flagship of the PDM and then invested 17 million shillings for each parish as a revolving fund. While this is commendable, it is putting the cart before the horse. This has caused a misperception among the Ugandan people that the whole model is about the revolving fund. For this reason, the financial inclusion pillar has effectively eclipsed the other six pillars.

There is a disjointed understanding, appreciation and interpretation of the model, with some viewing it as a project and others as a program. This discrepancy will probably cause problems in its implementation. The PDM has been conceptualized as a last mile strategy for service delivery and improving the incomes and well-being of all Ugandans at the household level. Ideally, the government should first invest in popularizing PDM to ensure that there is a common understanding of the model across different spheres.

There is also another challenge related to the limited information required for the successful implementation of the model. The PDM approach involves, for example, the creation of data systems that continuously feed the whole of government with real-time information regarding various parish-level interventions. Data is needed to improve understanding of the different and unique characteristics of households across the country and, therefore, provide the basis for the delivery of targeted interventions. Unfortunately, there is hardly any such information available for all parishes in the country, which begs the question of; what modalities would be used to identify groups with viable businesses to support with working capital.

Since the early 1990s, the government has implemented several poverty eradication programs like the Poverty Eradication Action Plan (PEAP), Prosperity for All, Entandiikwa and others – with a revolving fund underpinning all these programs – but with minimal results. Prioritizing the same in the MSP therefore relegates to the background, as has been the case in other previous interventions, the role of the collective mindset in sustainable development.

Undoubtedly, capital is a factor of production, but knowledge maximizes production, as noted by the United Nations Industrial Development Organization (UNIDO). If a person has knowledge on the best way to organize the production, the production is greater. For PDM to succeed, there should therefore be a deliberate effort to train the population to increase productivity under the pillar of mindset change.

To maximize the impact of the money invested per parish under the PDM, it is important that the intended beneficiaries have the right mindset and skills. Therefore, deliberate efforts should have been made to massively mobilize citizens for the increase of agricultural production and transformation, define parameters to measure the economic viability of different groups and decide to select the beneficiaries of the fund. Citizens must be equipped with specific skills for poverty reduction before they are granted credit.

There will likely be a mad dash for money within the community. Citizens, including those with no productive businesses, will rush for cash and the PDM will become another cash boon, causing it to crumble, just like other interventions before.

As Abraham Lincoln said, “If I had eight hours to chop down a tree, I’d spend six sharpening my axe. the government needed to spend a little more time preparing citizens for the par model; popularize the PDM, develop parish information and create the right collective state of mind.

Walter Akena, Project Manager, Local Government Council Scorecard Initiative, ACODE. [email protected]