Michael Atingi-Ego, Governor, Bank of Uganda
Michael Atingi-Ego, Governor, Bank of Uganda
The Bank of Uganda (BoU) has revealed that passing the Protection of Sovereignty Bill 2026 will have far reaching consequences on Uganda’s economy, thus calling for Parliament to reject it in its current form.
While appearing before Parliament’s Joint Committee of Defence and Internal Affairs and the Legal and Parliamentary Affairs Committee on 28th April 2026, to present the Central Bank’s views on the controversial Bill, Michael Atingi-Ego, Governor, Bank of Uganda, said The Bill’s potential to destabilise Uganda’s Balance of Payments (BoP) is a primary concern as it affects cross border transactions.
“Chairman, a country without reserves is not sovereign. The potential of this Bill to destabilize Uganda’s balance of payments is our primary concern as a central bank. For example, last financial year the overall balance of payment surplus was USD 1.5 billion. That’s how we were able to increase our reserve coverage by USD 1.5 billion. Today as we speak our reserves are close to USD 6 billion. Why? Because these inflows have been coming in. The moment you tamper with these inflows here, we risk running down our reserves, and that is economic disaster for a country,” Atingi-Ego said.
He explained that the overall BoP surplus of USD 1.5 billion in FY 2024/25 was driven by a financial account surplus of USD 4.6 billion, including Foreign Direct Investment (FDI): USD 3.4 billion and Portfolio investment: USD 2.1 billion.
He added that in 2025, workers’ remittances totalled USD 1.5 billion, and support to non-governmental organisations (NGOs) stood at USD 420.8 million.
“Clause 1’s definition of a “foreigner” includes Ugandan citizens residing abroad, meaning remittance recipients who support household consumption, education, and micro-investments could be classified as “agents of foreigners.” Clause 14’s registration requirement and Clause 22’s funding cap may disrupt these inflows, reducing foreign-exchange liquidity and pressuring the Ugandan Shilling (UGX),” he said.
He added that offshore investors currently hold 12% of government securities (2025).
“Clause 22’s ministerial approval threshold acts as a capital control; experience shows such controls lead to the immediate exit of offshore investors, put pressure on the Shilling, and force interest rates up,” he warned.
He further said since the 1990s, Uganda’s successful and sustained economic recovery has been built on policy predictability.
“The Bill introduces time and policy inconsistency that threatens the Tenfold Growth Strategy (target: USD 500 billion economy by 2040),” he said, adding that achieving the USD 500 billion economy requires annual FDI to rise to USD 50 billion and domestic savings to surge to 40% of GDP.
He said the overly restrictive regulation drives actors into informal channels like hawala systems or unregulated cryptocurrency, eroding the tax base and undermining the Bill’s stated goal of transparency.
Atingi-Ego also said Uganda’s digital economy, with 36.3 million active mobile money accounts and 27 million transactions per day (late 2025), relies on real-time APIs which the Bill contradicts.
“The manual ministerial reporting and approval processes (Clauses 25 and 26) are technically incompatible with the velocity of digital finance,” he said.
He noted that most Ugandan FinTechs rely on foreign venture capital and international cloud infrastructure.
“Under Clause 1, these dependencies would classify them as “agents of foreigners,” halting innovation and capital deployment,” he said.
BoU further says Parliamentary records indicate that approximately UGX 5 trillion in external funding and between 20,000 and 50,000 Ugandan jobs are tied to organisations currently at risk under the Bill’s definitions:
“The Bill could disrupt NGO operations by constraining funding flows, increasing administrative burdens, and creating uncertainty around compliance. This raises the risk of downsizing or exit by NGOs, with attendant job losses, particularly in sectors such as health, education, and social protection,” Atingi-Ego said.
He also explained that BoU is established to protect national sovereignty from genuine foreign interference as enshrined in Part VI of the Bank of Uganda Act, which further buttresses the Bank’s relationship as advisor to the Government on all financial matters under its mandate, with a further protection enshrined for the Bank to retain the prerogative on all monetary policy matters for Uganda.
“However, while protecting national sovereignty is a paramount constitutional objective, the financial system’s technical architecture must remain shielded from regulatory fragmentation. This assessment argues that the Bill, in its current form, risks introducing regulatory fragmentation and “voluntary shocks” into the economy, potentially undermining the very economic strength upon which true national sovereignty is built,” he said.
He added: “To ensure that the bill is consistent with Uganda’s long-term stability, the Bank of Uganda recommends the following refinements. One, affirmation of regulatory primacy confirmed that the Bank of Uganda retains exclusive authority for the regulation and supervision of the financial sector supported by financial intelligence authority for anti-money laundering and combating financing of terrorism matters. These institutions already are operating effectively under well-established statutory mandates and reaffirming the primacy would preserve the regulatory coherence and accountability, avoid dual licencing and inspection, maintain operational independence, and ensure international compliance, and then also retain government oversight on foreign funding for political parties under the political parties organisation act as amended which already excludes remittances, legitimate financial transactions, and other cross-border transactions between Ugandan citizens and regulated entities.”
He also asked Parliament to categorically exclude financial institutions licenced under the financial institutions act, the national payment systems act, supervised by the Capital Markets Authority from definition of agent of a foreigner.
“Such institutions are already subject to rigorous financial oversight and governance requirements, making additional classification unnecessary and counterproductive. This aligns with the Parties Organisation Act and then the revision of the funding thresholds. Maybe replace approval threshold with disclosure only requirements for transactions undertaken in the normal course of banking and then also exempt interbank transactions, shareholding arrangements, credit lines, and FDI touching supervised financial institutions as exempted under the Political Parties Organisations Act,” he said.
He noted that true national sovereignty is built on economic strength and financial independence.
“While the goal of protecting national interests is legitimate, The Protection of The Sovereign Bill 2026 as currently drafted risks reversing three decades of successful financial development through liberalisation that has sustained economic growth. By adopting these technical refinements, we believe that parliament can safeguard the nation without compromising the world-class financial architecture essential for Uganda’s journey to achieve the 500 billion economy,” he said.
WOW