The Ugandan government is considering a draft Protection of Sovereignty Bill 2026 (the “Bill”), which proposes sweeping restrictions on foreign influence over domestic policy, governance and public affairs. While the stated aim, protecting national sovereignty from undue foreign interference, is a legitimate objective shared by many jurisdictions, the Bill goes far beyond comparable legislation in other countries. Its reach extends well beyond political lobbying and into the heart of ordinary commercial activity, foreign investment, development finance and the exercise of fundamental rights. This article summarises the key implications for businesses operating in Uganda, their foreign partners and shareholders and lenders to Ugandan enterprises.
Who is caught? The breadth of the definitions
The Bill’s impact on the private sector flows primarily from two extraordinarily broad definitions. An “agent of a foreigner” includes any person whose activities are “directly or indirectly supervised, directed, controlled, financed, or subsidised” by a foreigner. A “foreigner” includes not only non-citizens and foreign governments but also Ugandan citizens residing abroad, international organisations, and, critically, any person the Minister for Internal Affairs may designate as a foreigner by statutory instrument.
The practical consequence is stark. A Ugandan company with a foreign minority shareholder, a business operating under a foreign loan facility, a joint venture with an international partner, or an enterprise receiving supply-chain finance from a foreign bank or a law firm that is part of an international network could all be classified as agents of foreigners. The same applies to any organisation, including hospitals, schools, media houses, and research institutions, that receives even partial foreign funding or subsidy. Unlike the US Foreign Agents Registration Act (“FARA”), which requires a relationship of direction or control, the Ugandan Bill captures the mere receipt of financial support, regardless of whether the foreign funder exercises any influence over the recipient’s activities.
The funding cap and Ministerial gatekeeping
Clause 22 imposes a cap on foreign funding of approximately UGX 400 million, or USD 106,000, within any twelve-month period. Any funding above this threshold requires the prior written approval of the Minister responsible for internal affairs. For large-scale commercial transactions, project finance, development programmes or infrastructure investments, this threshold is exceptionally low. A single disbursement under a foreign loan facility, a capital injection from a foreign shareholder, say, in response to a capital adequacy requirement in the banking or insurance sector, or a grant to a development programme would routinely exceed it.
The requirement for Ministerial approval creates a significant bottleneck. There is no prescribed timeline for the Minister’s decision, no deemed-approval mechanism and no independent appeal body. Funds received without approval are liable to forfeiture to the State. Banks and financial institutions are required to verify that declarations and authorisations are in place before releasing funds and face civil penalties of up to approximately USD 1.06 million for non-compliance. The likely result is that Ugandan banks will de-risk by declining or delaying transactions involving agents of foreigners, further restricting access to financial services for affected businesses.
For international lenders, the implications are direct: loan disbursements to Ugandan borrowers who fall within the definition of “agent of a foreigner” will require prior Ministerial approval above the threshold, introducing regulatory risk, delay and uncertainty into lending arrangements. Lenders should also note the forfeiture provisions, which could make disbursed funds unrecoverable. Prior approval for business activities
The Bill goes beyond financial controls. Clauses 6, 7, and 8 require Cabinet approval before any person or agent of a foreigner may carry out activities in sectors for which the Government is responsible (including education, health, water and roads), engage in any activity related to the development of Government policy, or carry out activities related to the implementation of Government policy. Given that Government policy spans virtually every sector of the economy, these provisions could require Cabinet-level sign-off for a wide range of ordinary commercial operations, from a foreign-funded private hospital treating patients, to a consultancy advising on infrastructure procurement, to an agricultural enterprise operating under a Government-supported programme.
Private sector initiatives in policy or legislative reform, for instance, the current effort to reform the Mortgage Regulations of the Financial Sector Consumer Protection Regulations, would be rendered illegal without Ministerial approval.
This prior-approval regime has no equivalent in any comparable foreign agent legislation worldwide. It transforms what in other jurisdictions is a transparency and disclosure obligation into a licensing system under which the Government controls not only who may operate, but what they may do and when.
Economic sabotage: A threat to market confidence
Clause 13 creates an offence of “economic sabotage,” criminalising the publication of information or participation in activities that “weaken or damage the economic system or viability of the country.” The offence applies to any person, not only agents of foreigners and carries a penalty of up to twenty years’ imprisonment. There is no requirement that the publisher intended to cause harm, no defence of truth, and no public interest defence.
The implications for market participants are severe. Credit rating agencies issuing sovereign or corporate risk assessments, financial analysts publishing investment research like a market or feasibility study, auditors flagging going-concern risks, journalists reporting on fiscal policy or corruption and even competitors engaging in ordinary market commentary could all fall within the scope of the offence. This provision creates a profound chilling effect on the free flow of commercial and financial information that is essential to functioning capital markets and informed investment decisions.
Human rights concerns
The Bill raises fundamental human rights concerns that compound the commercial risks. Multiple provisions are, in our assessment, inconsistent with our Constitution, the International Covenant on Civil and Political Rights, and the African Charter on Human and Peoples’ Rights.
The Bill expressly criminalises influencing the public to oppose Government policy and prohibits any person from hindering, frustrating, or disrupting Government policy, in each case punishable by up to twenty years’ imprisonment. It criminalises the development of policy without Cabinet approval and the promotion of any policy not adopted by Cabinet. These provisions extinguish the core content of the constitutional rights to freedom of expression, freedom of thought and academic freedom, freedom of assembly and petition, freedom of association, and the right to participate in governance and to influence Government policy through civic organisations.
The vague and undefined expressions in the criminal provisions of the Bill mean that they do not meet the required specificity to create a valid criminal offence. The large fines and long prison terms are also out of all proportion to the alleged offences.
For businesses, the human rights dimension is not merely academic. Companies subject to mandatory human rights due diligence obligations under the laws of their home jurisdictions, including under the EU Corporate Sustainability Due Diligence Directive, will need to assess whether continued operations in Uganda expose them to complicity risks. The Bill’s broad criminalisation of advocacy and civic engagement may also affect the operating environment for corporate social responsibility programmes, stakeholder engagement, and environmental and social governance reporting.
How does Uganda compare?
Uganda is not the first country to legislate against foreign influence, but its Bill is extraordinary by any standard. The maximum criminal penalty of twenty years’ imprisonment is four times the maximum under FARA or Australia’s Foreign Influence Transparency Scheme, and dwarfs the fines-only regime in Israel. The prior-approval requirement for activities, the low funding cap, the economic sabotage offence, and the treatment of diaspora citizens as “foreigners” are all without parallel in comparable legislation globally, including Russia’s widely criticised foreign agent law.
Prognosis
It is still early days for this Bill, and it is yet to be officially published. It would probably be among the first items of business for consideration of the new Parliament awaiting swearing in on * 2026. Is it likely to be passed in the present form? Yes! The new Parliament is dominated by the ruling party, the National Resistance Movement, and its members do not have a good track record of opposing the government’s desires. Will the courts intervene if approached? Yes! The ink isn’t dry on the recent annulment by the Constitutional Court of the Computer Misuse (Amendment) Act in robust terms, invoking the same constitutional rights and international conventions that would be at play against this law.
The fly in the ointment is that constitutional challenges of this sort take two to three years despite a legally required expedited hearing, the Government has a penchant for staying pronouncements of the Constitutional Court, and the court itself remains insistent in not giving retrospective effect to its decisions in spite of international precedent to the contrary. So if this Bill is passed into law, it would be two to three years before any challenge to it could be determined, and any damage done by then will be irreparable.
Recommended actions
Before making a call to clients to undertake risk assessments, the first call must go to the Government to exercise deep circumspection. The flaws in the Bill from a constitutional and human rights perspective are glaring, and the likely impact on legitimate private sector business is significant. Uganda solely needs a legal regime that supports the foreign capital inflows to help us achieve the targeted 10X GDP growth and fill our massive infrastructure funding gaps. This Bill can be redrafted to address the legitimate concerns.
We will continue to monitor developments and provide further updates as the legislative process advances.
