A proposed Ugandan law, the Protection of Sovereignty Bill 2026, could significantly reduce foreign exchange inflows and trigger inflationary pressures, according to the country’s central bank governor.
The legislation, currently undergoing public hearings in parliament after being introduced on April 15, seeks to regulate external financial influence in domestic politics. It would require any Ugandan receiving foreign funding to register as a foreign agent, obtain government certification, and disclose all incoming funds.
Governor of the Bank of Uganda, Michael Atingi-Ego, warned that the bill could undermine the country’s balance of payments by reducing capital inflows.
“The moment you tamper with these inflows, we risk running down our reserves, and that is economic disaster for a country,” he said in comments posted on the bank’s official X account.
He further cautioned that reduced inflows could weaken the Ugandan shilling, leading to inflation driven by currency depreciation and higher import costs.
The proposed law has also drawn international attention, with the World Bank Group raising concerns that it could expose a wide range of development activities to legal risk, including policy dialogue sessions and civil society engagements.
Under the bill, individuals and organisations receiving foreign support would face strict disclosure requirements and oversight, a move that has sparked criticism from rights groups, charities, commercial banks, and opposition politicians.
Critics argue that the legislation could restrict civic space and discourage foreign investment and development assistance, while the government maintains that the measures are necessary to protect national sovereignty and reduce external interference in domestic politics.
Despite the pushback, parliamentary deliberations on the bill are ongoing, with stakeholders divided over its potential economic and political implications.
If passed, analysts say the law could reshape Uganda’s relationship with foreign donors and development partners, while introducing new challenges for financial stability and inflation management.
