Are cash handouts the answer to poverty?

What you need to know:

Cash handouts. As government sets aside Shs1 trillion in the 2022/2023 Budget under the Parish Development Model, economists are poking holes in the programme whose implementation is similar to previous projects that were not that successful. 

Parish Development Model (PDM), a brain child of President Yoweri Museveni, is now the buzzword in government.

Touted as the diagnosis to poverty and income inequality, the government, will in the 2022/2023 financial year budget inject slightly more than a trillion shillings into the PDM to be spread across a total of 10,694 parishes, each with a population size ranging from 450 to 30,000 people. 

Of the seven PDM pillars, President Museveni wants the ones involving production, storage and processing as well as marketing and financial inclusion to take precedent.

President Museveni alongside some of the country’s economic managers at ministry of finance foresee a shift in development that is ultimately owned and driven from bottom up.

“The assumption is that by getting citizens at the lowest administrative levels to identify and assign resources for their own social needs, development can tilt in favour of the poor.

 “The overall aim, according to the plan, is to deepen the decentralisation process, improve household incomes, and increase accountability at local levels,” reads an analysis of the PDM by Dr Madina Guloba, a development economist.

Old wine in a new bottle?

Do you remember the structural adjustment programmes? How about the poverty eradication action plan (PEAP)?

Did you also know that once upon a time there was the plan known as modernisation of agriculture? And then came the Northern Uganda social action plan and the post recovery development plan.

Therefore, PDM is not the first development plan or initiative to be implemented over the last three and half decades.

 However, the lesson drawn from all the previous development plans are not as encouraging.  Policy analysts, researchers and economists such as Dr Guloba and the Makerere University School of Economics lecturer Dr Fred Muhumuza are of the view that the previous development plans, particularly in the last 37 years leave a lot to be desired. In other words, all the development models “have not achieved much.”

According to the latest National Household Survey, poverty has been worsening, despite the aforementioned development initiatives. Uganda’s monetary poverty level (proportion of the population earning below $1.04 per day) has deteriorated in the last nine years, from about 20 per cent in 2012/13financial year to nearly 21.5 per cent in 2016/17 financial year.

The number of poor reached 8.7 million people in 2019/20, up from 6.6 million in 2012/13 despite economic growth averaging 4.7 per cent over the period. Additionally, the income inequality gap between the poor and the rich continues widening as the income of especially the poor stagnates.

Experts’ assessment

The issue is not the PDM, but the commitment in terms of walking the talk. 

“If well executed, the model could remedy Uganda’s ills,” Dr Guloba who is also a senior research fellow at Economic Policy Research Centre (EPRC) wrote.

 She continued: “But it remains to be seen whether the parish model will be implemented effectively. Uganda has a long history of conceiving good programmes but failing to implement them.”

Dr Guloba’s assessment is drawn from the previous plans among them the structural adjustment programmes, poverty eradication action plan, plan for modernisation of agriculture, Northern Uganda social action plan and the post recovery development plan—which have not achieved much.

She further argues that the same could also be said of the national development plans whose full-scale roll-out are often times done before piloting them for evaluation in a few districts. The same goes for the PDM, which should have been piloted in a few districts with a view to identify problems and where necessary adjust the model before the national roll-out.

She observes that although power has been brought to the people, the centre still remains in control, especially on decision making, budgeting and accountability for funds.

Despite the PDM addressing the five critical elements of livelihood enhancement: human, natural resources, social, finance and physical assets, researcher Guloba notes that the missing link is the sustainability aspect, advising that it must be built sequentially.

But Dr Guloba warns government against the rushed release of parish model implementation funds to groups. She says, “This is probably the reason for the failure of the likes of Emyooga—an enterprises funding initiative and Operation Wealth Creation— a farm input distribution drive.”

She said: “The critical element is to build a clear, functional database of all Ugandans irrespective of employment status or age. The database should have clear identifiers such as numbers assigned at birth and recorded into the system. This will ease intervention, monitoring and implementation.”

The database, she further notes, will also boost transparency and accountability for “value for money”, a key outcome of any model. This will ease short, medium and long-term planning for the country, both at local and national levels.

“That way, the parish model could be the silver bullet that Uganda is yearning for,” Dr Guloba concludes her analysis.

Former Finance Minister Ezra Suruma during the launch of book titled: Uganda an Indian Colony, said, “It a good model that breaks down the economy and finding solutions to our problem at micro level.”

In another interview with Prosper Magazine, Ms Brenda Ankunda, a policy analyst wondered how the objectives and the structure of the PDM is fundamentally different from all other previous under achieving development models.

“The parish development model is like other initiatives we have seen before such as the Operation Wealth Creation. However, these initiatives have not addressed the structural challenges that communities are facing in a wholesome way—the impact of these models has always been wanting,” Ms Ankunda told Prosper Magazine during an interview for this article last week. 

She continued: “Getting people out of poverty or boost household income cannot be sustained through cash handout as I am seeing in some of the PDM pillars.”

Similarly, Ms Joanita Nassuna, an expert in management and community mobilisation, is skeptical about the financial inclusion pillar which like Ms Akankunda argued, focuses on cash handouts whose challenges are evident in programmes such the Emyooga and the Youth Livelihood Fund among others.

For Ms Nassuna, unless the different pillars are aligned and properly supported by the ministries, departments and agencies of government the PDM will face challenges just like the previous development models.

Pertaining the cash handouts for each parish, Ms Nasuuna said: Through my experience in community management and mobilisation, I am struggling to figure out how these funds will really boost household incomes.  I can see lack of coordination of troops across the government levels and that is an early red flag already.”   

Market economy

When contacted, the Deputy Secretary to the Treasury, Mr Patrick Ocailap, described the PDM as an important segment of not just the budget but also the entire economy.

 He disclosed that the budget will raise the money needed for the PDM and without fail it will hit the ground in the next financial year in about month and half.

“Full implementation of PDM will start next financial year. It will help to bring people in the market economy. There will be one trillion shillings which we are giving under one of the PDM pillars to help farmers who have come together to buy inputs for increased production.  

“Once that takes place, then the market aspect kicks in. And this will be either as a raw material under the agro processing pillar which we are encouraging or accessing the market with additional value. The demand will be there and as a result, the earnings for our people will be good,” said Mr Ocailap.  

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