In a quick turn-around after public backlash and strong objection from the Bank of Uganda Governor , Michael Atingi-Ego, government through the Attorney General has now introduced major amendments to the controversial Sovereignity Bill exempting key stateholders and narrowing down on the broad proposed clauses with in the new law.
In the amendements, Ugandan citizens will not be broadly labeled as foreign agents. The amendment now defines foreign agent as individuals who act directly on behalf of foreign entities, under their control, and with financial backing from them. This narrowing appears designed to counter fears that the original bill could be used to target ordinary citizens or civil society actors.
The bill oulaws political engagement or actions perceived to advance foreign interests in ways that conflict with Uganda’s national priorities while exempting —key sectors of the economy and society.
The exempted sectors include Ffnancial institutions, media houses, professional bodies, health facilities, academic institutions, and religious organisations as long as their foreign funding supports legitimate, regulated activities..
Further government in the new amendments highlights that financial inflows such as foreign direct investment, remittances, trade financing, and humanitarian aid will not be restricted unless there is credible suspicion of wrongdoing. This provision if passed will allow and keep Uganda’s attractiveness to international partners and DFIs.
Authorities will now be required to prove deliberate intent to undermine national interests, marking a departure from earlier wording that critics warned was overly broad and open to abuse.
The amendments also tighten enforcement language, replacing vague references to “a person” with the more specific “agent of a foreigner,” thereby limiting who can be held liable.
In a spirited submission before a joint parliamentary committee sitting Governor Atingi-Ego had warned that the bill could force a substantial depreciation of the shilling as imports become relatively more expensive to balance reduced financial inflows against the current account. With fewer excess financial account flows, reserve accumulation would stall, leaving Uganda more vulnerable to external shocks. “A country without reserves is not sovereign,” he stated bluntly.
Uganda has liberalized its financial account since the 1990s, moving from a controlled regime to one that facilitated foreign direct investment (FDI), remittances, portfolio flows, and correspondent banking relationships. These inflows have helped finance imports, build foreign exchange reserves (recently near US$6 billion), and support balance of payments surpluses, such as the US$1.5 billion recorded in one recent year.
Non-residents currently hold approximately US$3 billion in Ugandan securities, representing about 12% of the total. This investor base provides a vital financing channel for the government’s fiscal deficit. Uganda’s public debt has grown significantly in recent years, with sustainability hinging on continued access to both domestic and external markets.
Specific red flags include the UGX 400 million foreign funding cap, far below tier-1 capital requirements for banks (UGX 150 billion), which could restrict capital injections, liquidity management, and correspondent banking.
