Uganda is in advanced stages of issuing its inaugural sovereign Sukuk bond as the country moves to finance part of the €2.7 billion (Sh409.16 billion) Standard Gauge Railway (SGR) project aimed at boosting regional connectivity across East Africa.
The Islamic bond issuance will fund 15 per cent of the total railway project cost as Kampala accelerates efforts to modernise transport infrastructure and deepen trade integration with neighbouring countries.
Cabinet approved the SGR financing framework in January 2025, setting out the funding model for the railway project.
Under the plan, Export Credit Agencies (ECAs) will provide 60 per cent of the financing, sovereign Sukuk bonds will account for 15 per cent, while Development Finance Institutions (DFIs) will finance the remaining 25 per cent.
Uganda’s Deputy Secretary to the Treasury, Patrick Ocailap, is currently leading a regional Sukuk roadshow across Kenya, Tanzania and Zanzibar in a bid to attract investors ahead of the planned issuance.
The delegation includes representatives from Stanbic Bank Group, Bank of Uganda, Salaam Bank Uganda Limited and other financial and legal advisors involved in structuring the bond.
Ocailap said the roadshow is intended to gauge investor appetite, support pricing discovery, and strengthen investor relations before the official launch of the sovereign Sukuk.
The issuance marks Uganda’s first attempt to tap into Islamic finance markets for large-scale infrastructure funding.
Kenya, Rwanda and Uganda have meanwhile reaffirmed their commitment to prioritising financing for the regional SGR network, which is expected to connect Mombasa through Malaba to Kampala and later extend to Rwanda and the Democratic Republic of Congo (DRC).
Uganda has already begun implementation works for the Malaba-Kampala section of the railway.
“The viability of this SGR depends on all of us committing to do the project,” said Uganda’s Minister of State for General Duties, Henry Musasizi.
He added that Uganda remains committed to extending the railway line to both Rwanda and the DRC to strengthen regional trade and cargo movement.
Uganda’s Permanent Secretary and Secretary to the Treasury Ramathan Ggoobi said the government has already contracted the construction of the 270-kilometre Malaba-Kampala line and appointed Citibank as the lead arranger for the financing.
The developments come as Kenya also explores plans to electrify its Chinese-built diesel-powered SGR through talks with Turkish contractor Yapi Merkezi Holdings AS.
The move is expected to improve integration with Uganda’s planned electric railway system and create a seamless regional transport corridor.
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