The initial draft of the bill was extensive and provided for strict regulation of foreign financing, mandatory registration of «foreign agents» and the assignment of supervision to the Ministry of Internal Affairs. It even categorized members of the Ugandan diaspora as foreigners and offered harsh punishments, including fines of up to 4 billion shillings and 20 years in prison.
This project has met with widespread resistance. The World Bank has expressed concern that its staff may face legal risks during routine development work, which would jeopardize its $4.5 billion portfolio in the country. In addition, the head of the Bank of Uganda, Michael Atindji-Ego, warned that the legislation could lead to an «economic catastrophe».
In response to the negative reaction, the version adopted by Parliament was significantly reduced. It now explicitly excludes commercial financing, humanitarian aid, climate change financing, and foreign direct investment, while limiting the provision on «foreign agent» to financing related to political activities. The bill is currently awaiting the signature of President Yoweri Museveni.
Despite these amendments, concerns remain. Legal scholar Howard Mwesigwa noted that the bill is still aimed at civil society and political figures, especially when funding is considered to influence government policy. During the parliamentary debate, the Attorney General explained that although Ugandans can independently oppose government projects such as the construction of the East African Oil Pipeline, the law will apply if they receive foreign funding for this. This difference poses serious challenges for environmental and climate advocacy groups that rely on international support.
Arshad Bholim, a tax partner at Crowe Uganda, noted that the bill has already caused a «deterrent effect». He noted that the main problem was not only the limitations, but also the uncertainty created by the initial, vaguely formulated draft. Even with the current amendments, the lack of clarity about what constitutes a violation has led banks and investors to exercise caution. Ultimately, the legislation serves as a signal that regulatory rules in Uganda can change rapidly, and this factor remains a constant risk factor for those who work abroad.
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