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How 3,200 ghost Saccos shared Shs30b PDM funds
Members of Parliament during a plenary session chaired by Deputy Speaker Thomas Tayebwa on April 4, 2023. PHOTO/DAVID LUBOWA
What you need to know:
- This is contrary to guidelines issued by the PDM Secretariat and the Ministry of Finance.
Officials in the Ministry of Finance and 49 districts in the implementation of the Parish Development Model (PDM) face accountability queries after it emerged that they dished out about Shs30 billion to a total of 3,214 unregistered or ghost saccos.
This is contrary to guidelines issued by the PDM Secretariat and the Ministry of Finance, directing monies be sent only to registered Saccos that signed Parish Revolving Fund (PRF) Financing Agreements.
The revelation in the Auditor General (AG) report came as Parliament adopted and opened debate on sub-regional oversight reports on the PDM. The reports were drafted after lawmakers took a two-week period to assess the progress of the project in their respective constituencies in February.
Deputy Speaker Thomas Tayebwa, during yesterday’s plenary sitting, said most of the issues were cross cutting for all the regions. Some of the outstanding challenges raised by the MPs include disproportionate allocations where parishes with different populations are allocated the same amount of funds, delayed access to funds by Saccos, ever changing guidelines.
The MPs also said it is difficult to determine intended beneficiaries who make up the 39 percent in subsistence economy
“It is difficult to tell who is poor among the poor,” Mr Bernard Onen, the Youth MP for Eastern region, said.
While the accounting officers explained that the non-existent or unregistered saccos received PDM cash to avoid the sweep back of funds to the consolidated account, the Auditor General, Mr John Muwanga, noted in his latest report to Parliament that “This led to funding of ineligible Saccos, which negatively affected the objective of wealth creation and employment generation.”
Implicated districts
Some of the implicated districts include Wakiso, Bududa, Sironko, Namisindwa, Bulambuli, Manafwa, Kasese and Kyenjojo, all of which spent above Shs1billion on ineligible Saccos.
The Auditor General’s report that covers the year that ended June 2022, further unearths multiple irregularities in the government two- year-old poverty alleviation initiative, including underfunding, contradicting guidelines, inaccurate data and diversion of funds. Released funds are also lying idle on accounts, leaving beneficiaries frustrated.
For example, an audit of 169 Local Governments shows Shs600 unaccounted for, Shs358 million diverted from the revolving fund, while Shs79.2b didn’t go directly to Saccos. A total of 1,502 registered Saccos in 70 LGs did not receive any funding, while others received as low as Shs2m, compared to the budgeted Shs17m. Releases fell short by 38 percent.
Mr Ramathan Ggoobi, the PS at the Ministry of Finance, Planning and Economic Development, which is in charge of the financial inclusion pillar, explained that in the year under review, all monies were sent through local governments.
“When accountability challenges were reported, the government took a decision to change strategy to directly sending money from the Treasury to the Saccos,” he said.
Due to the irregularities, the AG notes that the government was not well prepared to launch the initiative. This is not the first time such poverty alleviation vehicles have been muddled by irregularities, including corruption and diversion of funds.
In defence
But Minister for Local Government, Mr Raphael Magyezi, explained that despite the challenges, the PDM registered achievements, including recruitment of parish chiefs, and formation of Saccos.
“It is true that there are some challenges. A big scheme like this one, sending money to all parishes in the country, which has not happened before. That is challenging. But remember this has been done in one year, people should appreciate what has been achieved. PDM will succeed,” he said.
Government in the 2021/22 financial year rolled out its latest poverty alleviation initiative that aims to lift 39 per cent of households from subsistence economy to commercial production.
The forensic audit findings have been reinforced by reports by legislators who after a two-week oversight tour in their respective constituencies in February decried the irregularities in the PDM.
Mr Jim Mugunga, the spokesperson at Finance, explained that the system has since been tightened, where Chief Administrative Officers and District Development Officers are required to sign an attestation form, confirming the existence and registration of a Sacco before money is released from the treasury. Saccos are also required to present a certificate of registration from the registrar.
President Museveni, who recently embarked on a regional tour to popularize the PDM, has also come face to face with the troubles.
“I heard directly from the wanainchi (ordinary citizens) many bad things. In the town in one of the wards, people told me about this group where somebody called a (district) commercial officer called a meeting secretly of few people to form the leadership for the parish model because they want to find a way of stealing the money,” he told Members of Parliament during an address last month, just before vowing to “mess up” bureaucrats who interfere with the initiative.
One of the causes of the irregularities, the AG noted, was the release of funds without guidance on how they should be utilised. And when they were finally issued towards the end of the financial year, they were contradictory. This birthed many of the irregularities.
“For instance, while the PDM Secretariat guided that funds should go direct to PDM Sacco accounts in commercial banks, the PS/ST guided that the funds should be sent to the entity general fund account. While the PDM Secretariat required that LGs procure gadgets and tools following the PPDA guidelines, PSST guided that funds for gadgets and tools be repurposed to the parish revolving fund,” the AG noted.
Underfunding
A total of 1,502 registered Saccos in 70 LGs did not receive any funding, while others received as low as shs2m.
For the financial year under audit, each parish was to receive Shs17m for the financial inclusion pillar. Mr Magyezi yesterday said only about half of the funds were released.
According to the latest AG report, 169 LGs had an approved total budget of Shs175b for PDM activities, out of which, the entities received only Shs108b, leading to 38 percent shortfall. The funding shortfalls and variations were due to lack of accurate data on the number of parishes and shortfalls in releases.
In the current financial year, Shs100m was budgeted for each parish, but with two months to its end, only a quarter of this has been released.
Mr Ggoobi said they are racing to send the balances to the “ready” Saccos.
