The Islamic Development Bank’s (IsDB) executive board has approved a 650.7-million-euro (USD 746.2 million) loan to Uganda to help finance its standard gauge railway (SGR) project, confirmed the African country’s finance ministry on June 19.
Uganda is raising funds for the 2.7-billion-euro project, which has already won backing from lenders including the World Bank and the African Development Bank (ADB). Citibank has been appointed to help mobilise financing.
Construction of the railway, which began in 2024, is being carried out by Turkish firm Yapi Merkezi.
Apart from financing the crucial infrastructure project, IsDB has already consolidated its position as one of the African country’s biggest sources of external financing and, as of the end of May 2026, had projects in the East African country worth USD 896.5 million, government data showed.
The 272-km (169-mile) line will reportedly link landlocked Uganda to Kenya’s rail network, providing crucial access to the Indian Ocean port of Mombasa, through which the African nation imports most of its goods.
Apart from the key funding support from Uganda, it 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.
Talking about Kampala’s upcoming maiden sukuk issuance, it will finance 15% of the estimated 2.7-billion-euro (USD 3.16 billion) cost of the SGR. Export credit agencies, on the other hand, are expected to provide 60% of the project financing, while development finance institutions (IsDB, World Bank, and ADB) would contribute the remaining 25%.
A month back, Deputy Treasury Secretary Patrick Ocailap launched a regional investor roadshow across East African Community (EAC) member states, including Kenya and Tanzania, to build the anticipation 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.” A delegation including representatives from Yusra Sukuk, the lead arranger for the transaction, as well as representatives from Stanbic Bank Uganda and the Bank of Uganda, was reportedly present during the investor roadshow.
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 Yapi Merkezi to build the connectivity between Kampala and Malaba.
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 towards 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 towards 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.