He made the remarks on Thursday to the 46-member International Contact Group on Somalia which is currently meeting in Kampala, according to the New Vision newspaper.
Museveni proposed a one-year extension of Somalia's transitional federal institutions, which is set to expire on August 23.
The expiry would lead to a pullout of the African Union Mission to Somalia (Amisom) peacekeeping mission, and enable militants in Somalia to regroup, according to Museveni.
"Certainly for Uganda, we cannot be in that kind of situation. The consequences of an Amisom withdrawal are so serious to think about. The consequences of Amisom withdrawal will be grave, leaving Somalia in anarchy," Museveni said.
According to the report, Somali President Sheikh Sharif Sheikh Ahmed supported Museveni's proposal.
Somalia has not had a functional government in two decades, with militants from the Islamist al-Shabaab and other groups with links to the al-Qaeda terrorist network holding control of areas in the south and centre of the country.
Last July, Somali militants carried out suicide bombings in the Ugandan capital Kampala that claimed more than 70 lives.
Soldiers from Uganda and Burundi make up the Amisom force which is supporting 9 000 African Union troops in Somalia.