From Prosperity for All (PFA) to Prosperity for Few (PFF): Political SACCOS and Their Impact on Rural Development in Uganda

Abstract

Prior to 2007, Uganda pursued a centralized strategy for economic growth and poverty reduction that placed greater emphasis on agricultural development as a means for empowering citizens in the rural sector where 80% of the population lives and derives livelihood through various forms of subsistence farming. The rural sector accounted for 94% of people who live below the poverty line, and subsistence agricultural farming employed 73% of the population, contributing 20% of the GDP. Since coming to power in 1986, the National Resistance Movement (NRM) Government has pursued various policies such as the Poverty Eradication Action Plan (PEAP), the Plan for Modernization of Agriculture (PMA), and the Rural Development Strategy (RDS) to increase rural people’s productive capacity, generate additional value, and provide market access for farmers and small business entrepreneurs. In the same period, microfinance institutions burgeoned. Credit and savings
facilities were more accessible to rural farmers through various institutions and people had choices to select between formal financial institutions, semi-formal institutions, and informal credit and savings institutions. Overall, it is estimated that 5% of all Ugandan households receive some form of credit or microfinance service. Empirical evidence regarding the effectiveness of rural microfinance in poverty reduction is mixed. However, on the whole, there is a consistent agreement among scholars and development practitioners that credit and savings services that are extended to rural farmers outside state-regulated frameworks have the potential of building community social capital, and empowering especially women, to make important decisions about food security and their
household reproductive roles.