Africa-Press – Uganda. The Uganda Bankers Association (UBA) has issued a stark warning to government, asserting that the proposed Protection of Sovereignty Bill, 2026, could cripple the country’s investment climate and derail the ambitious ATMS strategy aimed at expanding the economy tenfold to $500 billion by 2040.
In a formal memorandum addressed to the Attorney General, the banking industry expressed “grave concerns” over provisions that classify financial institutions as “agents of foreigners” and impose strict caps on foreign funding.
The bankers argue that the bill, in its current form, poses an existential risk to the sector by criminalizing standard financial operations and introducing a “parallel regulatory regime” under the Ministry of Internal Affairs.
The crux of the bankers’ concern lies in the Bill’s broad definitions. Under the draft law, any entity “financed or subsidized” by a foreigner is labeled an “agent of a foreigner.”
This would potentially include all foreign-owned banks operating in Uganda, as well as any local institutions that rely on international correspondent banking lines.
“The threshold for foreign funding is extremely low—approximately shs 400 million (about $107,000) relative to typical bank transactions,” said Wilbrod Humphreys Owor, Executive Director of the UBA.
“Virtually all foreign capital inflows to banks would require prior ministerial approval, introducing bureaucratic costs and uncertainty.”
The bill further provides that funds received without written ministerial consent must be forfeited to the State. The UBA warns that this would create a chilling effect on the Foreign Direct Investment (FDI) required to meet the Bank of Uganda’s minimum capital requirements.
Financial leaders are particularly alarmed by Clause 25, which requires banks to verify ministerial authorization before processing payments for any “agent of a foreigner.” Failure to comply could result in a fine of up to shs 4 billion.
UBA argues that this provision bypasses the existing authority of the Financial Intelligence Authority (FIA) and the Bank of Uganda.
“This Bill creates a parallel, potentially conflicting regime,” the memorandum reads. “The obligation to verify ministerial authorization before processing payments creates operational delays and exposes institutions to liability for processing errors.”
Furthermore, the “Economic Sabotage” clause—which criminalizes acts deemed to weaken the economic system—has raised concerns that routine analyst reports or investor briefings highlighting sovereign risk could be interpreted as criminal conduct.
To safeguard the economy, the banking industry has proposed urgent amendments, including an explicit carve-out for all financial institutions licensed by the Central Bank and the Capital Markets Authority.
UBA recommends affirming that the Bank of Uganda remains the sole regulatory authority for the banking sector, significantly raising limits for foreign funding or granting exemptions for regulated banking activities, and aligning the framework with the existing Anti-Money Laundering (AML) regime instead of introducing overlapping reporting obligations under the Ministry of Internal Affairs.
The bankers’ association noted that without these changes, the law could inadvertently sever Uganda’s correspondent banking relationships with the global financial system, ultimately constraining private sector credit expansion and undermining the country’s 2040 vision.
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