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Uganda Opens the Taps on Grassroots Finance as Debt Warnings Grow

  • Writer: Triplet 59
    Triplet 59
  • 5 days ago
  • 4 min read

The money arrived first as a text message.


In a parish on the edge of eastern Uganda, the chair of a small savings and credit cooperative opened her phone on Wednesday morning to see a balance she had never imagined: 50 million shillings – roughly US$13,700 – wired straight into the group’s new account. It was the first tangible sign that Kampala’s latest push to attack poverty from the bottom up is finally hitting the ground.


This week, the Ministry of Finance confirmed it has released an initial UGX 529 billion (US$145 million) under the Parish Development Model (PDM), money earmarked for more than 10,589 village-level cooperatives across the country. Each cooperative is set to receive UGX 50 million, disbursed in two semi-annual tranches to fund small businesses, farm inputs and other income-generating projects.


Launched in 2022, PDM is designed to move public spending closer to the household, after years in which national growth figures masked deep regional disparities. World Bank data show that Uganda’s overall poverty rate reached 26.4% in 2023/24, with rural areas far worse off at just over 30%; the highest rates are in the east and north of the country. Government officials say more than UGX 3.2 trillion has now been transferred to parish cooperatives since the programme began, turning them into a key test of whether growth can be made more inclusive.


The macro picture, on paper at least, looks increasingly bright. A new World Bank Economic Update reports that real GDP growth accelerated from 6.1% to 6.8% between July 2024 and March 2025, powered by agriculture, manufacturing and construction. Both the Bank and the IMF expect growth above 6% in 2025, with projections rising towards 7–7.5% as the long-delayed oil sector comes on stream in 2026/27.


At the same time, inflation – once a thorn in the side of the poor – has slipped back within target. The Bank of Uganda left its Central Bank Rate unchanged at 9.75% at its November meeting, citing confidence in the outlook after headline inflation fell to 3.4% in October, the lowest in more than a year. Core inflation is now forecast to average 4.0–4.5% in FY2025/26, below the BoU’s 5% medium-term target.


But not everything is moving in the right direction. In a Post-Financing Assessment released last week, the IMF praised Uganda’s strong growth and low inflation but delivered a blunt warning on the public finances. Interest payments, it noted, are now consuming almost a third of domestic revenues, after a jump in current spending in FY2024/25. The Fund judged Uganda’s capacity to repay its IMF loans as “adequate” – especially with oil revenues on the horizon – but urged the authorities to tighten fiscal policy and protect social and development spending.


That tension – between expansive grassroots programmes like PDM and the hard arithmetic of debt service – is now central to Uganda’s story. The latest PDM disbursement targets precisely the parts of the country that were left out of earlier booms. Ecofin Agency’s breakdown shows poverty running at 39.2% in eastern Uganda and 34.3% in the north, compared with just 12.8% in the central region around Kampala. If the parish cooperatives can translate their new seed capital into real businesses, the government argues, they could begin to bend those numbers without permanently inflating the budget.




Where Veri-style infrastructure fits in

As billions of shillings start to move through thousands of small accounts, the challenge is no longer just how much money is spent, but how well it is tracked and deployed.


Regional investment and administration platforms such as Verī Platform are being built precisely for that kind of complexity: connecting local banks, SACCOs and micro-finance institutions to a broader financial ecosystem while keeping regulators and auditors in full view. In an environment like Uganda’s – strong growth, tighter fiscal space, and a renewed focus on local capital formation – the ability to consolidate parish-level activity, pension assets and cross-border investments onto a single, transparent infrastructure is increasingly valuable for banks, asset managers and policymakers alike.


Back in the parish SACCO, none of that is visible yet. Members are debating whether to buy a maize mill, a motorcycle for deliveries, or a solar-powered irrigation pump. For them, the PDM windfall is less about macroeconomics than about the next harvest and the next school term.


For Kampala – and for the IMF – the stakes are larger. If Uganda can convert today’s cheap financing and tomorrow’s oil revenues into productive local investment, while keeping debt service under control, it may yet justify its label as one of the world’s fastest-growing economies.


If it fails, the text messages announcing the arrival of parish funds could come to feel less like a doorway out of poverty – and more like another promise that proved too expensive to keep.

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