The Protection Of Sovereignty Bill 2026: Implications For Uganda's Tourism Sector

Tourism is a cornerstone to Uganda's economic ambitions. In 2024, the country welcomed 1.37 million international visitors earning UGX 4.8 trillion (approximately USD 1.28 billion) in foreign exchange, a 26 per cent increase on the prior year. Leisure visitors spent an average of USD 2,114 per trip (a 43 per cent increase from 2023), with average stays lengthening to 8.7 nights. The sector accounts for 5.7 per cent of GDP and 803,691 direct jobs (7.2 per cent of total national employment), spanning passenger transport, food and beverage services, accommodation and travel agencies. Government targets aim for USD 50 billion in tourism earnings by 2040, with an interim goal of USD 4 billion annually by 2029/30. *The Tourism Development Programme Annual Performance Report FY 2024-25

Achieving these ambitions requires sustained foreign capital flows, international commercial partnerships, and open engagement with global markets. The draft Protection of Sovereignty Bill, 2026 (the "Bill") threatens each of these prerequisites. This alert analyses the specific risks the Bill poses to Uganda's tourism industry and sets out practical considerations for operators, investors, and lenders.

Scope of the Bill and key definitions

The Bill rests on two foundational definitions “agent of a foreigner” and “foreigner” whose scope is exceptionally broad (see our previous article.) In essence, an “agent of a foreigner” includes any person acting under the direction, control, or financial support of a “foreigner.” The term “foreigner” extends beyond non-Ugandan citizens to include Ugandans residing abroad, foreign governments, international organisations, and any entity the Minister for Internal Affairs designates.

For the tourism industry, these definitions have significant implications:

• International hotel chains: Uganda hosts eight international hotel chains, with negotiations ongoing to attract additional brands. Any property receiving equity investment, foreign capitalization, management or operational fees from an overseas parent fall within scope.
• Tour and travel operators: Of the 662 licensed operators in Uganda, a significant proportion keep booking partnerships, revenue-sharing arrangements, or joint ventures with overseas agents. A single Expedia campaign generated USD 3 million in gross bookings, 1,315 room nights, and 1,020 air tickets. Ugandan entities with foreign based control receiving such commercial flows could be classified as agents of foreigners.
• Wildlife concessions: Uganda Wildlife Authority has recently awarded twelve concessions to private investors across national parks, generating 1,314 rooms within protected areas. Many concessions involve foreign equity and foreign control and copuld be affected by the Bill.

Foreign funding restrictions: The funding ceiling

Clause 22 provides that no person or agent of a foreigner may obtain, solicit, or receive any financial support, donation, loan, or other assistance from a foreigner whether in cash or in kind (approximately UGX 400 million or USD 106,000) within any twelve-month period without prior written approval from the Minister responsible for internal affairs. Any funds received in breach of this threshold are subject to forfeiture to the State by court order.

This threshold is modest compared to the foreign investment that sustains the sector. International hotel chains, development finance institutions, and foreign private equity funds routinely commit capital well more than USD 106,000 to Ugandan tourism ventures. For instance, foreign-backed hospitality projects, eco-tourism lodges with international investors, and cross-border tour operators often require financing tranches that would each exceed this cap. The Memorandum of Understanding with the Sharjah Chamber of Commerce & Industry for Kidepo International Airport illustrates the scale of foreign engagement that tourism development attracts. Under the Bill, any such foreign-sourced funding in he provate sector would require prior Ministerial approval, creating significant uncertainty for investors accustomed to predictable regulatory frameworks.

The procedural framework raises additional concerns. The Bill provides no deadline for Ministerial decisions, sets up no deemed approval mechanism if silence. Separately, supervised financial institutions must obtain proof of Ministerial authorisation before releasing funds to an agent of a foreigner, with non-compliance attracting a penalty of UGX Four Billion Banks are therefore likely to refuse or delay disbursements lacking clear documentation, restricting the capital flow on which tourism enterprises depend.

Prior approval requirements for tourism activities

The Bill extends considerably beyond financial regulation. Clauses 6 - 8, require Cabinet approval for agents of foreigners to engage in policy related activities. A narrow exception applies to those who hold a valid license, permit, or other authorization issued by a government licensing or regulatory body.

Tourism is a strategic priority in Uganda's national planning framework. It is a named Programme under the Third and Fourth National Development Plans, with dedicated implementation action plans, monitoring indicators, and budgetary allocations. The Programme's stated mission is to “promote the development of sustainable tourism, wildlife and cultural heritage resources in order to significantly contribute towards the socio-economic transformation of Uganda." On a plain reading of Clauses 7 and 8, each of the following could be considered “carrying out activities related to the implementation of Government policy”: a foreign-funded tour operator marketing gorilla trekking packages; an international hotel brand training local hospitality staff; or a development partner funding wildlife conservation effort.

The sanctions for non-compliance are severe. Legal entities face fines of up to two hundred thousand currency points. Individuals face fines of up to one hundred thousand currency points, imprisonment for up to twenty years, or both.

The "Economic Sabotage" offence: Restrictions on market-related information

Clause 13 criminalises any person who "publishes information or participates in any act or activity that weakens or damages the economic system or viability of the country, causing economic disruption, insecurity or instability." This offence applies universally not only to agents of foreigners and carries a maximum penalty of twenty years' imprisonment.

The offence does not require intent or foresight of economic harm. There is no defence of truth, no public-interest exception, and no requirement that the information be false or misleading. The provision is broad and vaguely worded.

For the tourism sector, this raises specific concerns:

• Negative travel advisories: The Ministry of Tourism has identified negative advisories from foreign governments as a key impediment to destination marketing. Under the Bill, disseminating such advisories within Uganda for example, referencing political instability or health risks could constitute economic sabotage.

This provision risks undermining the evidence-based policymaking upon which Uganda’s tourism development framework depends.

Diaspora Ugandans reclassified as "Foreigners"

The Bill's classification of Ugandan citizens residing abroad as "foreigners" has significant implications for the tourism sector. Visiting Friends and Relatives (VFR) is the largest category of travel to Uganda, accounting for 29.3 per cent of all arrivals in 2024 exceeding leisure, business, and MICE tourism. Diaspora Ugandans also invest in hotels, lodges, and tourism enterprises, with remittances providing a substantial source of capital. Under the Bill, such transactions could be classified as foreign funding, potentially triggering the approval requirements and funding caps under Clause 22. Fundraising and political activities by Ugandans abroad in support of local organisations may also become prosecutable.

The Macroeconomic backdrop

These legislative proposals come at a time when Uganda’s economy is performing well. Economic growth is strong, inflation is low, the shilling has strengthened, and business confidence remains high. Export earnings have increased significantly, driven mainly by tourism, agriculture and mineral products.

Uganda’s fiscal position is more complicated. A significant part of the national budget depends on external financing, including loans and budget support. Private sector players also earn and rely a lot on foreign capital and investment. This creates a risk in adopting legislation that could discourage the foreign capital the country relies on. Existing laws such as those enforced by the Financial Intelligence Authority under the Anti‑Money Laundering Act already provide mechanisms to check and regulate foreign funds, raising questions about whether this Bill is necessary.

Considerations for tourism and hospitality stakeholders

If the Bill is passed in its current form, it is likely to face legal challenge for being unconstitutional in several respects.

To avoid unnecessary disruption to investment and business confidence, a measured and coordinated approach by both the legislature and the private sector would be advisable before publication.

Measures for the Legislature and policy‑makers

• Clarify scope and intent early: Refine the definitions of “foreigner” and “agent of a foreigner” to avoid capturing routine commercial arrangements, diaspora investment, or ordinary service-provider relationships in the tourism sector.
• Align with existing regulatory frameworks: Ensure the Bill complements, rather than duplicates, existing oversight under the Anti‑Money Laundering Act and the Financial Intelligence Authority, to avoid regulatory overlap and confusion.
• Consult affected sectors before enactment; Structured consultations with tourism, financial services, and diaspora investment stakeholders would help temper unintended consequences before the Bill is finalised.
• Raise or tier the funding approval threshold: Consider increasing the USD 106,000 ceiling or introducing sector‑specific thresholds that reflect commercial realities, particularly for capital‑intensive sectors such as tourism and hospitality.
• Introduce procedural safeguards: Provide clear timelines for Ministerial decisions, a deemed‑approval mechanism where no response is given,.

Rather than taking defensive positions at this stage, the tourism sector players may consider:

1. Engaging with industry bodies including the Uganda Tourism Board, Uganda Tourism Association, Association of Uganda Tour Operators, and Uganda Wildlife Authority to contribute to the policy debate as the Bill progresses through Parliament.
2. Monitor the legislative process and seek targeted legal advice where necessary, focusing on preparedness rather than restructuring or public repositioning at this stage.

This alert is provided for general guidance only and should not be treated as legal advice. Stakeholders with specific concerns are encouraged to seek advice tailored to their particular circumstances.

Procedural update: The Protection of Sovereignty Bill is scheduled to receive its first reading in Parliament on Wednesday, 15 April 2026. Following the first reading, the Bill will be referred to a Parliamentary committee for consideration, including the receipt of public submissions. We shall continue to monitor the progress of the Bill as it advances through the legislative process.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.