PDM Boosts Financial Inclusion in Uganda, But Growth Funding Lags Behind

In bustling markets like Nakawa, vegetable traders are using PDM loans to pay rent arrears, restock goods, and keep operations running smoothly. This access to credit through PDM, SACCOs, and other channels is transforming lives for those long shut out of formal banking.

Across Uganda, such stories highlight a key achievement: broader financial inclusion in a nation where capital shortages have stifled opportunities for millions.

Yet, a critical challenge emerges. While loans help households stabilize—covering school fees, medical bills, or old debts—they rarely fuel expansion, hiring, or productivity gains. Businesses often remain at the same scale six months later, with unchanged products and margins.

Short repayment periods push borrowers toward quick, low-risk trades like small-scale vending, rather than bold investments. Group lending and strict monitoring prioritize repayment over innovation, trapping many in survival mode.

PDM funds, being public money, need to multiply through growth to sustain the program. Without collateral built from small loans, beneficiaries struggle to access commercial banks for larger sums.

Joshua Mazune, Managing Director of Maru Credit, argues for a ‘second tier’ of financing: revolving funds for proven businesses, offering bigger, longer-term capital tied to performance.

Uganda has nailed inclusion. Now, bridging the ‘missing middle’ is essential to turn participants into scalable enterprises.

Source: Daily Monitor (Uganda)