Uganda Softens Sovereignty Law After Central Bank Warns of Financial Fallout

Uganda’s parliament has passed a toned-down version of its controversial sovereignty legislation after warnings from the Bank of Uganda that the original draft could harm the country’s financial stability.

The bill, approved on Tuesday, is aimed at regulating foreign involvement in Uganda’s political and civic landscape. It now heads to President Yoweri Museveni for assent.

Earlier versions of the legislation had proposed sweeping controls, including a requirement for all individuals and organisations receiving foreign funding to register as foreign agents and disclose their financial activities. That provision raised alarm among policymakers and development partners.

Central bank governor Michael Atingi-Ego warned that such measures could disrupt remittance inflows and weaken foreign exchange reserves. Remittances remain a key source of hard currency for Uganda, supporting household incomes and macroeconomic stability. The bank cautioned that overly broad restrictions could deter inflows and create pressure on the currency.

In response, lawmakers narrowed the scope of the bill. The revised version limits the foreign agent requirement to individuals and entities involved in political activities linked to foreign interests, rather than applying it across the board.

Even with the changes, the legislation maintains strict enforcement measures. It introduces penalties of up to 10 years in prison for acting on behalf of foreign entities without government approval. It also criminalises activities deemed to promote foreign interests that conflict with national priorities.

Government officials argue the law is necessary to protect national sovereignty and reduce external influence in domestic affairs. Authorities have long accused some civil society organisations and political actors of advancing foreign agendas through external funding.

Critics say the revisions do not go far enough. Civil society groups and analysts warn that the law’s wording remains broad and could be used to limit dissent and restrict political participation. There are also concerns about how the provisions will be interpreted and enforced.

International partners had expressed unease during the drafting process. The World Bank warned that earlier proposals could expose routine development work to legal risk, including engagements that involve foreign funding or policy dialogue.

The final version reflects a compromise between economic caution and political control. While the amendments address immediate financial concerns raised by the central bank, questions remain about the law’s longer-term impact on investment, foreign inflows, and Uganda’s civic space.

Youssou N’Dour (Senegal)

Most Famous Song: “7 Seconds” (with Neneh Cherry)

Short Bio: Youssou N’Dour (born 1959) is a Senegalese singer, songwriter, and composer. He is a prominent figure in African music, known for his soulful voice and his role in developing “mbalax,” a popular Senegalese music genre that combines traditional griot percussion and praise singing with Afro-Cuban arrangements. He has also served as Senegal’s Minister of Tourism.

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