The Governor of the Bank of Uganda, Michael Atingi-Ego, has issued a sharp warning over the proposed Protection of Sovereignty Bill 2026, cautioning Parliament that the legislation could trigger capital flight, disrupt financial stability, and undermine Uganda’s long-term economic ambitions.
In a technical submission to the Joint Committee on Defence and Internal Affairs, Atingi-Ego said that while protecting national interests is a legitimate state objective, the Bill in its current form introduces “radical uncertainty” that risks reversing three decades of economic gains.
“The financial system’s technical architecture must remain shielded from regulatory fragmentation,” he stated. “The Bill, in its current form, risks undermining the very economic strength upon which true national sovereignty is built.”
A central concern raised by the Governor is the Bill’s broad definition of “agents of foreigners.” Under the proposed law, any individual or entity receiving foreign funding would be required to register with the Ministry of Internal Affairs—a provision he warned could unintentionally capture millions of Ugandans in the diaspora.
With remittances estimated at about USD 1.5 billion in 2025, Atingi-Ego cautioned that classifying such inflows as “foreign agency” could disrupt household incomes and weaken foreign exchange liquidity, placing pressure on the shilling.
“Clause 1’s definition of a ‘foreigner’ includes Ugandan citizens residing abroad,” he noted. “Restricting these inflows risks exchange-rate volatility and import cost spikes.”
The Governor also raised concerns about Clause 22, which proposes a UGX 400 million (approximately USD 106,000) cap on foreign financial support without ministerial approval. He argued that the restriction is incompatible with the operational realities of modern banking and investment flows.
“This cap would severely restrict capital injections, intercompany and shareholder loans, and correspondent banking facilities—all essential for liquidity management,” the assessment reads.
He further warned that international correspondent banks could sever ties with Ugandan financial institutions to avoid regulatory risk, potentially isolating the country from global payment systems and constraining trade finance.
Another major point of contention is Clause 13, which criminalises the publication of information deemed to “weaken or damage the economic system,” with penalties of up to 20 years in prison. Atingi-Ego warned that this could have a chilling effect on economic research and central bank transparency.
“If the Bank of Uganda or its officers publish a report showing rising inflation or currency depreciation, could that be interpreted as economic sabotage?” he asked. “By criminalising economic research that identifies fiscal instability, the Bill destroys price discovery, forcing investors to demand an uncertainty premium that increases the national debt burden.”
He urged Parliament to exempt regulated financial institutions from the Bill and remove what he described as intrusive provisions, including requirements to assess the physical and mental health of bank directors.
Atingi-Ego concluded by cautioning lawmakers that Uganda’s “Tenfold Growth” strategy—targeting a USD 500 billion economy by 2040—depends heavily on policy predictability and continued access to global capital.
“True national sovereignty is built on economic strength and financial independence,” he said. “Parliament can safeguard the nation without compromising the world-class financial infrastructure essential for Uganda’s economic journey.”