Uganda is preparing to issue its first sovereign sukuk, which will partly address the African country’s financing requirements for the construction of a standard gauge railway (SGR) linking capital Kampala with the Kenyan border town of Malaba.
Uganda’s Ministry of Finance will use the proceeds from the sukuk issuance to finance 15% of the estimated 2.7-billion-euro (USD 3.16 billion) cost of the SGR. Export credit agencies are expected to provide 60% of the project financing, while development finance institutions would contribute the remaining 25%.
To make its entry into the Islamic lending market a memorable one, Deputy Treasury Secretary Patrick Ocailap recently launched a regional investor roadshow across East African Community (EAC) member states, including Kenya and Tanzania, ahead of the sukuk issuance. However, not many details have emerged about the size or launch date of the sukuk.
Ocailap said the roadshow was intended to “test the market, determine pricing and build investor relationships to ensure the success of the operation”.
“The delegation included representatives from Yusra Sukuk, the lead arranger for the transaction, as well as representatives from Stanbic Bank Uganda and the Bank of Uganda,” reported the Ecofin agency.
While the railway construction contract was awarded to China Harbour Engineering Company in 2015, under an arrangement requiring the contractor to secure financing from the Chinese government, repeated funding delays since the last decade forced the Ugandan government to cancel the contract in January 2023. Authorities later signed a new agreement in October 2024 with Turkish construction firm Yapi Merkezi to build the connectivity between Kampala and Malaba.
As per Ecofin, “The railway project forms part of a broader regional integration strategy aimed at connecting Uganda to Kenya’s railway network and the Indian Ocean port of Mombasa.”
Kenyan President William Ruto in March 2026 inaugurated construction works on a new phase of Kenya’s SGR linking Naivasha to Kisumu, with a later extension planned toward the Ugandan border. The standard gauge railway network has been the lifeline when it comes to travelling between Mombasa and Nairobi and onwards to Naivasha since 2019.
“Over the longer term, Kenya and Uganda aim to extend the rail corridor toward Rwanda, South Sudan and the Democratic Republic of the Congo as part of efforts to strengthen regional trade and logistics integration across East and Central Africa,” Ecofic concluded.