Row erupts over PDM cash transfer

A row has erupted over a surprise directive by the Ministry of Finance that Parish Development Model (PDM) cash be disbursed to beneficiaries on e-money app, Wendi, and not directly through bank accounts as originally planned.  

The order that technocrats say is based on a Cabinet decision has been called into question by different stakeholders following reported loss or abuse of the transfers by officials including of beneficiary Savings and Credit Societies (Saccos).

Our investigations reveal that since the introduction of the app, a Sacco leader in Kampala reportedly diverted Shs70m to start a hardware business, another in Kamuli District sprinted with Sacco money to Canada while in Kaliro District, a group’s Shs30m vanished in a loss linked to app glitch.

READ: Is PDM the right medicine to cure biting rural poverty?

In a statement last Wednesday, PostBank described the Kaliro incident as an “isolated one” and said investigations will determine the errors and possible remedy.

The government from late last month began releasing Shs50m per parish through the mobile wallet, stoking chaos and unease.

The e-money app, Wendi, which allows money savings, transfers, deposits, and withdrawals, was purportedly developed by the government-owned PostBank Uganda Ltd, one of the four successor companies of the defunct Uganda Posts and Telecommunications Corporation (UPTC).

Last Friday, the State House Anti-Corruption Unit (SHACU) and police arrested and arraigned before the Sironko Chief Magistrates Court one Eddy Magomu on charges of interception of computer services and theft.

The accused, SHACU said in a post on X (formerly Twitter) at the weekend, and others still at large, hacked a Wendi account of five PDM beneficiaries and withdrew Shs5m. It is alleged that the suspect, who was remanded until March 21, acquired the log-in Personal Identification Number (PIN) of the victims after which they hacked their Wendi mobile accounts to facilitate the withdraws.

Earlier this year in Sironko, a PDM Sacco representative with the mobile app vanished with Shs20m, and in another incident in Kaliro, a Parish chief moved Shs8m from the joint Sacco Wendi account to his mobile line and then to his bank.

There have been numerous cases of hacking or scamming through the app, albeit involving relatively small sums of monies in different parts of the country.

The Wendi mobile wallet downloadable from Google Play—a digital distribution service operated and developed by the American tech giant Google LLC— was first piloted in Bukedea and Kakumiro districts last year in July and August, respectively, before the official launch in November.

Upon downloading, installation, and registration, according to Google Play, the app allows various financial transactions such as peer-to-peer transfers, bank deposits, and withdrawals, savings as well as several payments of bills, goods and services.

While the mobile wallet was launched on November 1, the Ministry of Finance claims Cabinet first directed using the mobile app in July 2023, three months before it was launched.

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Two highly placed sources talked to for this story, however, expressed doubts about such a directive, which reverses the earlier arrangement of wiring the money directly to the SACCO bank accounts which was conceived to eliminate human contact/third-party contact with cash, being ever issued.
This, as speculation regarding the intellectual property of the Wendi app continues to swirl.

PostBank Uganda Ltd maintains it “fully developed and owns” the Wendi mobile wallet, while others say it was acquired externally: some sources link it to Chinese developers.

Of most concern to other banks being coerced to use it if they want to partake a pie of PDM cash, one official intimated, is that PostBank Uganda is yet to obtain the app’s full licenses including the source code which “makes it riskier in case of any slight modification as the money could just appear.”

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On February 6, the deputy national coordinator of the PDM secretariat in Ministry of Local Government, Ms Jovrine Kaliisa fired off a letter to several government offices raising grey areas “on the ownership of the Wendi intellectual property which possess accountability challenges in case of loss of funds or technical breakdown of the mobile application.

“All PDM participating banks are required to integrate Wendi, and the fact that once the Parish Revolving Funds (PRF) are transferred to the Wendi Mobile Wallet account, the PDM Sacco chairperson and/or representative, has the power to transfer the funds to selected beneficiaries with approval from the Sacco secretary and treasury, without mandatory supervision from the Parish Development Committee (PDC), Parish Chief, Chief Administrative Officer, and others,” Ms Kaliisa wrote.

She warned that the hurried disbursement of monies through the newly mobile wallet “will not only violate some of the country’s laws, and the PDM implementation guidelines but most importantly risks regressing” the gains so far made.

In another internal brief titled “Report on the Application of Wendi Mobile Wallet in Implementation of PDM”, a copy seen by this newspaper, the PDM Secretariat detailed that while during a January 31 meeting between PostBank Uganda and Ministry of Finance, they were told that the former developed the app, the bank later “disowned this position” insisting that they are “simply partnering with the Wendi app developers to facilitate/power hosting the app.”

This, the report reads in part, “means that the intellectual property owners of Wendi who should be held accountable in case of loss of funds or technical breakdown of the payments of this platform remain unknown.”

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Software applications installed especially on smart [mobile] phones are fast becoming part of human interaction and are increasingly easing everything around us, from shopping, banking, navigation, to finding love, name it.  However, the rule of thumb is such that whoever writes the software [source] code of the app retains proprietary rights and authorship (of the code) is protected by copyright.

In an email to Monitor, PostBank Uganda Ltd defended that it “fully owns and developed” the Wendi mobile wallet.

“Our partnership is with the other government banks to use Wendi to increase financial inclusion. To emphasise, Wendi was not developed by the Chinese. It was developed in-house by PostBank staff,” the bank management said.

The Ministry of Finance first notified all chief administrative officers and town clerks of the shift from banks to the Wendi app—saying it was a Cabinet directive— in a January 8 circular signed off by Mr Moses Kaggwa, the director of Economic Affairs, on behalf of Permanent Secretary Ramathan Ggoobi.

Mr Kaggwa further guided that all PDM Saccos and enterprise groups be on-boarded onto the e-money platform and supported to “expeditiously generate the requisite resolutions naming three members of the Sacco executive responsible to approve payments on the mobile wallet”.

In another February 7 circular, the ministry premised the adoption of the mobile app on, among others, transparency; that “it provides full visibility and traceability of all funds up to the last mile beneficiary”.

Weeks later, the unfolding cases of scamming countrywide have left many of the intended beneficiaries in distress.

Besides the PDM secretariat, which was established to oversee the government’s latest poverty alleviation programme, crying foul about being sidelined, the unit also flagged cases of local government and PDM Sacco leaders being “coerced” to hastily ditch banks for the mobile money wallet.

PDM secretariat has red-flagged that the adoption of Wendi pay platform contradicts the stipulated guidelines for implementing the poverty alleviation programme. 

The programme’s blueprint provides for centralised mandate to generate, vet and approve the list of beneficiaries to the PDM SACCO executive supervised by the Parish Development Committee and money disbursement based on greenlight by the chief administrative officer.

The new mobile wallet system rests powers to distribute Shs100m per parish in the hands of an individual—holder of the app—or their representative.

“The risks of these chairpersons manipulating the PDM beneficiaries list to transfer funds to ineligible persons or worse still, outright embezzling of the disbursed funds without a trace remains high without clear mitigation measures,” the brief reads in part.

Moving parts
Another concern is the safety of the cash in the event the smartphone of a SACCO leader traversing a village in a mobile wallet on it, is stolen. 

Once the money is on the wallet it can be withdrawn like mobile money services offered by telecommunication companies, but in many upcountry locations, agents cannot raise money—float—of a certain threshold.

Insiders interviewed for this article say this handicap imposes on would-be PDM beneficiaries the burden of moving long distances to withdraw programme money.

PDM is the government’s latest poverty antidote through fostering inclusive growth and wealth creation, preceded by a dozen similar programmes which folded with mixed results.

The scheme involves giving Shs100m to the 10, 594 parishes, to be given to SACCOs and enterprise groups for onward lending to subsistence households based on pre-approved enterprises. The overall goal: hook peasant households into the money economy. 

According to the Ministry of Finance, some 10,585 eligible SACCOs were capitalised during 2022/2023 financial year in addition to the Shs72.1b disbursed during the preceding FY2021/22 when the programme commenced.

To date, the ministry says, the poverty alleviation programme has touched 1 million beneficiaries countrywide. 

In the January 8 circular, Finance ministry’s Kaggwa indicated that Parliament had appropriated Shs100m for each of the 10,594 parishes.

Shs50m per parish was wired at the end of January when the Treasury released Shs4 trillion for quarter three of the financial year, while the remaining Shs50m will be wired in quarter four running from April to the end of June.

As such, Ministry of Finance officials told the PDM secretariat during the January 31 meeting that all banks wishing to partake of the PDM cash pie “should be integrated to Wendi.” 

The Finance honchos further detailed that other government banks, Housing Finance and Pride Micro Finance, had already integrated the mobile app into their systems.

All banks have (had) plug-in into the PDM-IS, a system built under the supervision of the Ministry of ICT and hosted at the National Data Centre, that keeps track of all verified Saccos and enterprise groups in all parishes, and disbursements in real-time.

However, as the Ministry of Finance enforces disbursement of PDM cash via the mobile app—on argument that it would have wider reach than banks—its integration with the PDM-IS is merely in works.

Asked about any probable risks now that both integration with PDM-IS is incomplete and app’s intellectual property is suspect, the Ministry of ICT’s Permanent Secretary, Dr Aminah Zawedde, told Monitor that integration of Wendi and PDM-IS “is still ongoing and the ministry’s technical team will evaluate the risks, if any, before completion and migration to the live system environment”.
“The ministry does not have any relationship with Wendi mobile wallet. The Wendi mobile wallet is a service owned entirely by PostBank Uganda,” Dr Zawedde said.

The latest development, multiple sources told Monitor, follows months of elbowing by several parties over PDM cash.

Ministry of Finance insiders say some banks fond of hoarding PDM cash meant for poverty alleviation are sour-graping, and the introduction of Wendi is “merely for streamlining.”

Similarly, in the January 8 circular, Mr Kaggwa noted the numerous requests by the PDM SACCOs to change bank accounts “due to unsatisfactory services offered by some banks”. 
On the other hand, the banks and other sources intimated that the new system—hardly test run for long— is teetering in treacherous waters. 

It is, according to some accounts, predisposed to breaches which have put banks, the telecom and financial sectors on tenterhooks in recent months after a spate of hacks.

Shifting goal posts
For the banks, this is yet another shifting of goalposts by the Treasury. About a dozen financial institutions were initially engaged to disburse the Shs100m PDM cash per parish nationwide.

Then out of the blue, sources said, Finance ministry invoked a reported March 2022 Cabinet directive that government banks—PostBank, Housing Finance Bank, and Pride Micro Finance—be given preferential consideration.

Mr Jim Mugunga, the Ministry of Finance spokesperson, defended that the mobile wallet has been tried and tested and “people out there are embracing it”.

“It is true the structure initially was ensuring that less hands touch money to ensure that it reaches its intended beneficiaries,” he said, “But along the way, there were challenges with some banks having a small reach.”

“In this case the Wendi would have a far reach. The app is not taking away past efforts, but rather its spirit is to ease access.”

Even with the special consideration of PostBank, Housing Finance Bank, and Pride Micro Finance, Centenary Bank had the widest coverage—with at least Shs110b disbursed—as at the end of December 2023, followed by Stanbic. 

PostBank on the other hand has 32 branches and 148 agents in the 146 districts and cities in the country.

However, it is the latest goal shifting over the Wendi mobile wallet that has sparked more consternation and confusion alike.

During a hastily-convened meeting by the Minister of Local Government, Mr Raphael Magyezi, on the morning of February 16, representatives of ministries of Finance and Trade, and Operation Wealth Creation (OWC)—a loose outfit formed a decade ago to support national socio-economic transformation—were a no-show.

The meeting was attended by, among others, representatives from Kampala Capital City Authority (KCCA), State House Anti-Corruption Unit, Internal Security Organisation (ISO), Opportunity Bank, and district local governments, heard that turmoil was unfolding across the country over usage of the mobile wallet which is also susceptible to hackers and scammers.

The meeting, sources intimated, heard more accounts of scams.

Another source of consternation for stakeholders is the rationalise of coercing commercial banks, which have their own mobile banking apps, to use Wendi, which charges Shs3,750 per transaction, if they are to remain in the PDM equation. 

During the February 16 meeting at Workers’ House in Kampala, representatives from Opportunity Bank, which charges about Shs1,500 to transact PDM cash to the beneficiaries, reportedly briefed members present that it had invested substantially in their own internal systems and training staff around the country.

Since its launch last November, PostBank said the e-money platform on-boarded more than 430,000 subscribers and over 2,000 agents countrywide through which Shs200b had been disbursed to 200,000 PDM beneficiaries.