Officials in the Ministry of Finance and 49 districts involved in the implementation of the Parish Development Model (PDM) are facing questions about accountability after it was revealed that they gave Shs30 billion to a total of 3,214 unregistered or ghost saccos.
This violates PDM Secretariat and Ministry of Finance guidelines, which state that funds should only be sent to registered Saccos that have signed Parish Revolving Fund (PRF) Financing Agreements.
The disclosure in the Auditor General’s (AG) report came as Parliament adopted and began debating sub-regional oversight reports on the PDM. The reports were written after lawmakers took a two-week break in February to assess the project’s progress in their respective constituencies.
During yesterday’s plenary session, Deputy Speaker Thomas Tayebwa stated that the majority of the issues were cross-cutting for all regions. Some of the outstanding issues raised by MPs include disproportionate allocations, in which parishes with different populations are allotted the same amount of funds, Saccos’ delayed access to funds, and ever-changing guidelines.
The MPs also stated that it is difficult to identify the intended beneficiaries, who account for 39 per cent of the subsistence economy.
“It’s hard to tell who is poor among the poor,” said Mr Bernard Onen, Youth MP for the Eastern region.
While accounting officers explained that 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, stated in his most recent report to Parliament that “this led to the funding of ineligible Saccos, which negatively affected the objective of wealth creation and employment generation.”
Wakiso, Bududa, Sironko, Namisindwa, Bulambuli, Manafwa, Kasese, and Kyenjojo are among the districts that have spent more than Shs1 billion on ineligible Saccos.
The Auditor General’s report, which covers the fiscal year ending June 2022, uncovers numerous irregularities in the government’s two-year-old poverty alleviation initiative, including underfunding, contradictory guidelines, inaccurate data, and fund diversion. Released funds are also sitting idle on accounts, frustrating beneficiaries.
An audit of 169 Local Governments, for example, found Shs600 million unaccounted for, Shs358 million diverted from the revolving fund, and Shs79.2 billion that did not go directly to Saccos. A total of 1,502 registered Saccos in 70 LGs received no funding, while others received as little as Shs2m, compared to the Shs17m budgeted. The number of releases fell short by 38%.
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 all funds were sent through local governments during the fiscal year under review.
“When accountability issues were raised, the government decided to change strategy and send money directly from the Treasury to the Saccos,” he explained.
The AG notes that the government was not well prepared to launch the initiative due to irregularities. This is not the first time that such poverty-relief vehicles have been tainted by irregularities such as corruption and fund diversion.
However, Mr Raphael Magyezi, Minister of Local Government, explained that despite the challenges, the PDM had achieved successes such as the recruitment of parish chiefs and the formation of Saccos.
“It is true that there are some difficulties. A large scheme like this one, sending money to every parish in the country, has never happened before. That is difficult. But keep in mind that all of this was accomplished in a single year, and people should be proud of what they have accomplished. “PDM will succeed,” he predicted.
In the fiscal year 2021/22, the government launched its latest poverty-relief initiative, which aims to transition 39% of households from subsistence to commercial production.
The findings of the forensic audit have been supported by reports from legislators who, following a two-week oversight tour in their respective constituencies in February, decried the irregularities in the PDM.
Mr Jim Mugunga, a Finance spokesperson, explained that the system has since been tightened, with Chief Administrative Officers and District Development Officers required to sign an attestation form confirming the existence and registration of a Sacco before funds are released from the treasury. Saccos must also show a certificate of registration from the registrar.
President Museveni, who recently embarked on a regional tour to popularise the PDM, has also encountered difficulties.
“I heard many negative things directly from Wanainchi (ordinary citizens).” “In the town, in one of the wards, people told me about this group where someone called a (district) commercial officer called a secret meeting of a few people to form the leadership for the parish model because they want to find a way to steal the money,” he told Members of Parliament last month, just before vowing to “mess up” bureaucrats who interfere with the initiative.
The release of funds without guidance on how they should be used was one of the causes of the irregularities, according to the AG. And they were contradictory when they were finally issued near the end of the fiscal year. Many irregularities arose as a result of this.
“For example, while the PDM Secretariat advised that funds be transferred directly to PDM Sacco accounts in commercial banks, the PS/ST advised that funds be transferred to the entity general fund account.” While the PDM Secretariat required LGs to obtain gadgets and tools by the PPDA guidelines, the PSST advised that funds for gadgets and tools be redirected to the parish revolving fund,” the AG stated.
A total of 1,502 registered Saccos in 70 LGs received no funding, while others received as little as shs2 million.
Each parish was to receive Shs17m for the financial inclusion pillar for the fiscal year under audit. Mr Magyezi stated yesterday that only about half of the funds had been released.
According to the most recent AG report, 169 LGs had a total approved budget of Shs175 billion for PDM activities, of which the entities received only Shs108 billion, resulting in a 38 per cent shortfall. The funding shortfalls and variations were caused by a lack of accurate data on the number of parishes as well as release shortfalls.
The current fiscal year budgeted Shs100m for each parish, but with two months to go, only a quarter of this has been released.
Mr Ggoobi stated that they are working hard to get the balances to the “ready” Saccos.