UGANDA Trends and Developments Contributed by: Arnold Lule Sekiwano, Ritah Nakalema, Evelyn Maria Nakigudde and Collette Melvina Awano, Engoru, Mutebi Advocates
The Electricity Regulatory Authority (ERA) suspended the licensing of solar and wind projects with effect from 24 October 2025 until the conclusion of a grid stability study to determine future integration thresh - olds for variable renewable energy, reportedly affect - ing about USD230 million in planned investments across Uganda. Only hybrid projects are to be consid - ered until the ban is lifted, and ERA has encouraged investors to explore base-load generation technolo - gies, such as large hydro, geothermal and nuclear, which will support long-term renewable energy inte - gration without compromising grid performance. This creates an opportunity for undertakings to capitalise on innovative technologies that enhance long-term project viability. Diversification of energy systems Under Uganda’s renewable energy feed-in tariff (REFIT) framework (revised in 2024), licensed renew - able generators, including biomass, can connect to the grid and sell power subject to a power purchase agreement and licence conditions. ERA has licensed biomass projects and has strengthened its inter - nal capacity through targeted training and strategic collaboration with relevant agencies, particularly in preparation for nuclear energy licensing. Uganda’s geothermal potential is estimated at 1,500 MW, sig - nalling a growing pipeline of assets and creating M&A opportunities. Financial Sector The Bank of Uganda (BoU) in 2025 issued guidelines on domestic financial holding company structures. A Financial Holding Company (FHC) thereunder is defined as a holding company registered and dom - iciled in Uganda with at least 25% shareholding in one or more supervised financial institutions. Where an FHC owns subsidiaries outside Uganda, the BoU will enter a memorandum of understanding with the host regulator to facilitate joint supervision. While FHCs are restricted to holding equity in subsidiaries, they may provide shared services such as IT, strategy or marketing support with the prior written approval of the BoU, and are required to maintain a minimum paid-up capital as may be prescribed and invest it in liquid assets. Transactions involving financial groups with holding structures will thus need to assess group- wide regulatory risk. Financial institutions with this
structure are currently Stanbic Holdings, dfcu Group and Centenary Holding. The BoU also issued the National Payment Systems Oversight Policy Framework 2025, which provides more detailed supervisory guidance and operational standards that go beyond the National Payment Sys - tems Act, Cap 59. The Framework classifies systems and participants (banks, PSPs, fintechs, mobile mon - ey operators) and differentiates oversight levels based on systemic importance and risk, being Systemically Important Payment Systems (SIPS), Prominent Retail Payment Systems (PRPS) and Other Payment Sys- tems (OPS). For instance, all relevant principles of the Principles for Financial Market Infrastructures (PFMI) are applied to the SIPS, while only a subset of the PFMI is applied to the PRPS and OPS. Therefore, enti - ties must check that targets in relevant sectors are fully compliant and meet the BoU’s risk-based over - sight requirements. In 2022, the BoU announced a sixfold increase in the minimum absolute paid-up capital requirement for Tier 1 credit institution licences, raising the threshold from UGX25 billion to UGX150 billion, with institutions giv - en until 30 June 2024 to comply. This had significant implications for undercapitalised financial institutions, some of which – eg, ABC Capital Bank, Opportunity Bank and Guaranty Trust Bank – opted to downgrade their licences to Tier 2 credit institution licences with a lower capital requirement of UGX25 billion. As a result, M&A activity emerged as a strategic response, eg, Finance Trust Bank and Access Bank PLC’s signing of a definitive agreement for Access Bank’s equity investment into Finance Trust Bank in January 2024. Capital Markets Capital Markets Authority (Corporate Governance) Regulations 2025 The Capital Markets Authority (Corporate Governance) Regulations 2025 prescribe mandatory governance standards for listed companies and licensed capital markets intermediaries. They cover board composi - tion and independence, functioning audit, risk and remuneration committees, defined roles and responsi - bilities, robust risk management and internal controls, timely disclosure and reporting, active shareholder engagement and performance-linked remuneration.
1362 CHAMBERS.COM
Powered by FlippingBook