Bank of Uganda Warns Sovereignty Bill Risks Shilling and Reserves, Diaspora Demands Changes

The Bank of Uganda has raised serious alarms over the proposed Protection of Sovereignty Bill, 2026, stating it could harm the economy if enacted without changes. Governor Michael Atingi-Ego presented these concerns to parliamentary committees on Legal and Parliamentary Affairs and Defence and Internal Affairs on April 28, 2026.

Atingi-Ego highlighted risks to cross-border financial flows, including remittances, foreign investment, and portfolio capital, which cover Uganda’s trade deficit. He warned that curbs could widen the deficit, pressure the shilling, and erode reserves currently near $6 billion.

“A country without reserves is not sovereign,” the governor stated, noting last year’s $1.5 billion balance of payments surplus enabled reserve growth. Restrictions might lead to currency depreciation and economic fallout.

The bill could also clash with Article 162 of the Constitution, which safeguards the central bank’s independence. Provisions for ministerial oversight and a broad “agent of a foreigner” definition might affect foreign banks, fintechs, and diaspora senders.

Uganda received $1.5 billion in remittances last year, and larger transfers requiring registration could deter them. Foreign investors hold $3 billion in government securities, and capital controls risk sudden exits, forcing higher borrowing costs.

Clause 13, criminalizing publications weakening the economy, could undermine market confidence by limiting information vital for pricing.

The Financial Intelligence Authority echoed worries, pointing to overlaps with anti-money laundering laws, parallel reporting, and risks of pushing transactions underground.

Meanwhile, Ugandans in the diaspora urged Parliament to exempt family remittances and stop labeling them as foreigners. Timothy Kangagwe from the US called it a statement on their identity, emphasizing remittances totaling $2.5 billion in 2025 for basic needs.

Experts like Brian Mushana Kwesiga and Gloria Nalule of the Uganda Global Forum highlighted policy contradictions and survey data showing 77% opposition from diaspora across 31 countries.

Both the Bank of Uganda and Financial Intelligence Authority recommended aligning the bill with existing laws.

Source: Parliament of Uganda