Uganda sovereign sukuk issuance is being prepared as part of a railway financing plan. The standard gauge railway is estimated at 2.7 billion euros ($3.16 billion). The planned line would run from Kampala to the Kenyan border. This is reported by the railway transport news portal Railway Supply.

Uganda sovereign sukuk targets SGR funding
Uganda sovereign sukuk targets SGR funding

The Islamic bond issue is expected to cover 15% of the project’s total cost. According to Uganda’s Ministry of Finance, export credit agencies are set to provide 60% of the financing. At the same time, development finance institutions are expected to contribute the remaining 25%. In addition, the sukuk would be one part of the wider funding package for the railway.

The ministry outlined the plan in a post on X on Tuesday, May 12. Also, the ministry said Deputy Treasury Secretary Patrick Ocailap had already started a sukuk promotion tour. The tour covers other East African Community (EAC) member states, including Kenya and Tanzania. Uganda is seeking investors before the issuance. Still, no launch date has been announced.

Ocailap was accompanied by representatives of Tanzanian brokerage firm Yusra Sukuk. Yusra Sukuk is acting as lead arranger. Stanbic Bank, the bookrunner, and the Bank of Uganda were also represented. He said the roadshow was intended to “test the market, determine pricing and build investor relationships to ensure the success of the operation.”

Uganda sovereign sukuk funding structure

Uganda originally awarded the railway construction contract in 2015 to China Harbour Engineering Company (CHEC). The contract required the Chinese company to arrange financing from the Chinese government.

After prolonged funding delays, the Ugandan government terminated the contract in January 2023. Separately, authorities signed a new deal in October 2024. The deal was with Turkish construction group Yapi Merkezi. The deal covers construction of the Kampala to Malaba railway line.

The railway is intended to connect landlocked Uganda with Kenya’s rail network. It would also connect Uganda with the Indian Ocean port of Mombasa.

Toward regional railway integration

Meanwhile, Kenyan President William Ruto launched construction in March on a new phase of Kenya’s SGR. The phase runs between Naivasha and Kisumu. A later phase is expected to extend the route to the Ugandan border.

Kenya’s SGR has connected Mombasa with Nairobi and onward to Naivasha since 2019.

Over the longer term, Kenya and Uganda aim to extend the corridor toward other landlocked countries. For example, these include Rwanda, South Sudan and the Democratic Republic of the Congo. The broader plan is to create a regional transport network. It is designed to support trade across East and Central Africa.

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