KAMPALA – The Uganda Bankers Association (UBA) has formally petitioned the Attorney General over concerns surrounding the proposed Protection of Sovereignty Bill, 2026, warning that its provisions could significantly disrupt the country’s financial sector and investment climate.
In a letter dated April 13, UBA Executive Director Wilbrod Humphreys Owor cautioned that the Bill’s sweeping restrictions on foreign funding and financial flows risk undermining efforts to expand private sector credit and attract capital into the economy.
The proposed law, currently before Parliament of Uganda, seeks to regulate interactions between Ugandans and foreign entities, including funding, partnerships, and financial transactions. It introduces strict thresholds requiring government approval for foreign financial support exceeding approximately Shs400 million annually.
UBA argues that this threshold is too low relative to typical banking operations, noting that common financial instruments such as syndicated loans, Eurobonds, and credit lines often far exceed that amount.
“The Bill works directly against the banking industry’s response plan to mobilise funding and expand private sector credit,” the association said, warning of potential delays in remittances, reduced lending, and diminished investor confidence.
A key concern raised by bankers is the Bill’s broad definition of an “agent of a foreigner,” which could extend to individuals, businesses, and financial institutions engaged in transactions involving foreign capital. According to UBA, this could inadvertently capture legitimate banking relationships, including correspondent banking and development finance flows.
The Protection of Sovereignty Bill, tabled earlier this month, proposes severe penalties for non-compliance, including fines of up to Shs2 billion and prison sentences of up to 20 years.
Government has defended the legislation as necessary to safeguard national sovereignty and guard against undue foreign influence in domestic affairs. The Bill seeks to introduce tighter oversight on individuals and organisations deemed to be acting on behalf of foreign interests.
However, critics—including sections of the financial sector and civil society—warn that the law could have unintended consequences. Analysts say it may affect diaspora remittances, business financing, and operations of non-governmental organisations, potentially constraining economic activity.
The bankers’ intervention adds to growing scrutiny of the Bill, which has sparked national debate over the balance between protecting sovereignty and maintaining an open, investment-friendly economy.
Parliament is expected to continue reviewing the legislation through its committees before it is debated and potentially passed into law.
