How Uganda's new bill could backfire on its economy

President Ruto and President Yoweri Museveni during the launch of the Kisumu-Malaba SGR railway extension. [Michael Mute, Standard]

History demonstrates when power answers to no one, it will eventually attack and eat itself from within. Two developments this week offer a stark contrast. The tabling of Uganda’s Protection of Sovereignty Bill (2026) signals a state at war with its most active and productive citizens. The launch of Kenya’s PBO Regulations reflects a state choosing, despite its public unpopularity, to uphold the freedom of association.

On Wednesday, the Ugandan government tabled another draconian bill. The Protection of Sovereignty Bill seeks to severely limit foreign involvement in politics, civic space, and the economy. Should the law pass, millions of Ugandans and Ugandan political parties, civic and development agencies will be classified as “foreign agents” and face 20-year prison terms or USD 100,000 for receiving and using foreign funding.

The bill is both repressive and un-original. The bill rehashes several Foreign Agent laws introduced by several countries including Russia, Georgia, Kyrgystan and China over the last decade. Popular among authoritarian states in the 2010s, the laws triggered sharp external funding cuts, suffocated public interest criticism and closed thousands of development and governance organisations. By labelling individuals and organisations as “economic saboteurs” and criminalizing dissent, corruption, rights violations, a domestic culture of fear and international isolation has increased.
 
The Uganda bill seeks to go further, some argue. In classic authoritarian overkill, the bill turns its own citizens into “foreigners”. The Uganda diaspora risk being disenfranchised if they send remittances back to their families, contractors and local communities. Their beneficiaries risk something much more, their economic freedom and prosperity. Digital workers, service-providers and businesspeople in joint ventures with non-Ugandans can be criminalized for merely “receiving or being subsidized” by foreign funding.
 
The bill betrays a complete ignorance of the Ugandan economy. Diaspora remittances currently bring in USD 2.5 billion annually, about 3 per cent of GDP. Foreign investment contributes USD 3.6 billion. Development assistance has already fallen due to corruption, misgovernance and rights abuses including the Anti‑Homosexuality Act (2023). The Ugandan state now risks further repelling USD 2.2 billion in annual inflows at a time when health funding has fallen by 49 per cent.
 
700 kilometers away in Nairobi this week, the Interior Cabinet Secretary launched the Public Benefits Organisations Week and the newly published PBO Act Regulations. Following the most sector-wide intensive consultations in twelve years, the regulations formally recognize PBOs as a vibrant lawful expression of independent civil society. They recognize governance, human rights protection, anti-poverty services, gender, refugees and peace building as legitimate public benefits. All entities providing services or advocacy in the public interest must be registered and regulated by the Regulatory Authority. They have the right to participate in the PBO Federation. If their associational rights are infringed, PBOs have the right to be heard by an independent PBO Tribunal.
 
While civic space ultimately depends on implementation not legal text, Kenya’s PBO Act and Regulations are notable globally and timely domestically. According to the 2024/2025 PBO Sector Report, while only 67 per cent of registered PBOs (9,609 of 14,287) remain active, they attracted USD 1.9 billion (82 per cent from foreign sources) into Kenya. This is the same revenue, Uganda now seeks to shut out.

Domestic employment is up 13 per cent and the sector now employs 68,652 people. 98 per cent of those employed are Kenyans who are delivering major health (31 per cent), education (12 per cent), and anti‑poverty outcomes. Deepening governance and management localisation and downward accountability is more mainstream than in the past. This week’s Interior Minister’s warning against blanket de-registrations marked a welcome break from early Jubilee Administration‑era excesses. The model is working, don’t break it.
 
This week’s development leaves Kenya better placed to attract global development financing cuts. Regulatory certainty will allow the PBO sector to grow, attract funding, strengthen local governance, and remain independent. In contrast, Uganda drifts towards another episode of state‑engineered economic self‑harm. “Self-sabotage” would be a more accurate label than “sovereignty” for their new bill. The Ugandan Parliament should reject it, in its entirety.