Bank of Uganda Warns Sovereignty Bill Risks Shilling Collapse and Diaspora Remittances

The Bank of Uganda has raised serious alarms over the proposed Protection of Sovereignty Bill, 2026, stating it could trigger a sharp depreciation of the Ugandan shilling, deplete foreign reserves, and violate the central bank’s constitutional autonomy.

Governor Michael Atingi-Ego presented these concerns to the joint parliamentary committees on Legal and Parliamentary Affairs and Defence and Internal Affairs on April 28, 2026. He highlighted the bill’s potential to restrict cross-border financial flows, including remittances, foreign investments, and portfolio capital, which are essential for covering Uganda’s trade deficit.

“A country without reserves is not sovereign,” Atingi-Ego emphasized, noting that reserves near $6 billion were built from steady inflows. Last year saw a $1.5 billion balance of payments surplus, but curbs could lead to reserve depletion and economic turmoil.

The governor warned that the bill’s broad definition of a “foreign agent” might ensnare diaspora remitters, foreign banks, and fintechs. With $1.5 billion in remittances last year and $3 billion in foreign-held government securities, restrictions could spike interest rates and shrink inflows.

Clause 13, criminalizing publications that undermine the economy, was flagged for eroding market confidence and inflating investor risk premiums. The bill also clashes with Article 162 of the Constitution and duplicates anti-money laundering laws, per the Financial Intelligence Authority.

Ugandans abroad voiced strong opposition via virtual submissions. Timothy Kangagwe from the US called out the bill’s portrayal of diaspora as foreigners, stressing family-driven remittances totaling $2.5 billion in 2025.

Experts like Brian Mushana Kwesiga and Gloria Nalule of the Uganda Global Forum urged amendments, citing policy contradictions and a 77% diaspora rejection rate from consultations across 31 countries.

Both the central bank and diaspora called for alignment with existing laws to safeguard economic stability.

Source: Parliament of Uganda