As Uganda's NGO sector faces the fallout of the US foreign aid freeze, experts are warning of significant disruptions to vital programs.
While the country's position on the Financial Action Task Force's (FATF) gray list has garnered attention, the suspension is largely linked to political shifts within the US government rather than Uganda's anti-money laundering stance.
Announced by President Donald Trump and implemented by Secretary of State Marco Rubio, the freeze affects billions of dollars in funding from the US State Department and the US Agency for International Development (USAID).
The order, which applies globally, has immediate implications for programs in Uganda, where many NGOs rely heavily on US funding to support critical sectors such as healthcare, education, and development.
Robert Kirenga ,the Executive National Coalition of Human Rights Defenders Uganda (NCHRD-U), clarified that while Uganda's placement on the FATF gray list has drawn attention, the freeze is largely attributed to political decisions made by the US administration, not the country's stance on anti-money laundering laws.
"Funding to the NGO sector is dependent on many factors," Kirenga explained during a media briefing in Kampala on Monday.
"It is not just about anti-money laundering laws but also political dynamics and foreign government decisions. As of now, USAID has stopped all operations in Uganda for 90 days due to this shift in US policy."
The impact of the freeze, though not immediate, has sparked significant concern.
Experts predict delays or halts to key development projects that are vital to Uganda's socio-economic progress.
Kirenga expressed that while the uncertainty around funding poses risks, NGOs are focusing on strengthening local partnerships and seeking alternative sources of support to mitigate potential setbacks.
"This suspension will test the resilience of the sector," he said. "We will continue to collaborate with government agencies and other local stakeholders to maintain progress."
Meanwhile, the freeze comes at a time when Uganda has been working to address the concerns around terrorism financing.
Despite this, the freeze is seen more as part of a broader political shift by the United States rather than a direct consequence of Uganda's regulatory framework.
In response to the ongoing challenges facing NGOs, the Ugandan government has introduced a significant regulatory amendment.
On January 23, 2025, the Parliament passed an amendment to the Anti-Money Laundering Act, which removes NGOs and other non-profit organizations from the list of "accountable persons" under the law.
The move is a relief for many in the civil society sector, as it eases the compliance burden that had hindered their ability to operate effectively.
Peter Magelah, Executive Director of the Development Network of Indigenous Voluntary Associations (DENIVA), hailed the amendment as a much-needed change.
"For years, NGOs faced a long list of regulatory requirements that often proved financially and administratively burdensome," he said. "This new regulation will give NGOs greater flexibility to focus on their core missions."
Yona Wanjala, Executive Director of Civil Advisory HUB, also welcomed the amendment, noting that it marks a shift towards a more enabling environment for civil society organizations.
"The previous regulatory framework impeded NGOs' ability to contribute meaningfully to Uganda's development. This amendment is a positive step towards reducing unnecessary scrutiny," Wanjala said.
The new regulations will allow for a more targeted, risk-based approach to combating terrorism financing, focusing only on organizations identified as vulnerable through comprehensive risk assessments.
This change is seen as a balanced solution that mitigates risks while enabling NGOs to continue their vital work.
As the Ugandan NGO sector navigates these turbulent times, stakeholders hope that these regulatory adjustments, along with continued government-NGO collaboration, will foster a more conducive environment for sustainable development.