Uganda has secured a monumental financial boost for its long-delayed Standard Gauge Railway (SGR) project after the Islamic Development Bank (IsDB) officially approved a €650.75 million (approximately Shs2.72 trillion) financing package.
The approval, granted by the IsDB Executive Board during the bank’s 51st Annual Meetings in Baku, Azerbaijan, marks the largest single-project financing package the institution has ever authorized for Uganda. The monumental funding is designated specifically for the eastern section of the railway, linking the border town of Malaba to Kampala.
The breakthrough comes as a massive relief to the government, arriving just days after public confusion regarding the project’s future, sparked by recent remarks from the Chief of Defence Forces, Gen. Muhoozi Kainerugaba, who suggested the government had canceled its implementation contract with Turkish construction firm Yapi Merkezi.
According to the Ministry of Finance, Planning and Economic Development, the IsDB funds are earmarked for critical, high-cost infrastructure along the 272-kilometer Malaba-Kampala corridor.
Key deliverables under this financing package include the construction of the 553-meter Jinja Nile Bridge and the 2.12-kilometer Mbuya-Kampala tunnel.
Additionally, the funds will finance the construction of six major passenger and freight railway stations located in Tororo, Iganga, Jinja, Lugazi, Kampala East, and Kampala City. It will also cover the establishment of three locomotive maintenance workshops in Kampala East, Jinja, and Tororo.
Uganda’s delegation to the IsDB Annual Meetings in Baku was led by the Permanent Secretary and Secretary to the Treasury (PS/ST), Dr. Ramathan Ggoobi, who served as the Temporary Governor for Uganda.
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During the high-level engagements, Dr. Ggoobi reaffirmed the government’s unwavering commitment to the SGR project, dismissing any lingering doubts about its execution. He informed the IsDB board that Uganda is determined to achieve full financial closure for the multi-billion-dollar project by November 2026, which will pave the way for full-scale, uninterrupted construction works.
Dr. Ggoobi also commended the IsDB for launching the Islamic Concessional Fund, noting that as traditional foreign aid declines in both volume and reliability, developing nations urgently need multilateral development banks to become more inclusive, adaptive, and responsive to modern financing needs.
The entire Malaba-Kampala SGR project is valued at approximately €2.7 billion (about Shs11.8 trillion). For years, the project remained stagnant due to financing hurdles, culminating in the termination of an initial 2015 agreement with China Harbour Engineering Company (CHEC) after the firm failed to secure backing from Beijing.
The government later pivoted to an engineering, procurement, and construction (EPC) arrangement with Yapi Merkezi, while simultaneously building a diversified funding strategy. Cabinet approved a financing structure heavily reliant on external borrowing: 60 percent of the funds are expected from Export Credit Agencies, 25 percent from Development Finance Institutions like the IsDB and the African Development Bank (AfDB), and the remaining 15 percent through Sovereign Sukuk (Islamic bonds).
Before this historic approval, Uganda’s active IsDB portfolio comprised eight public sector operations worth roughly $896.55 million, largely anchored by the Integrated Transport Infrastructure Services Programme.
Once operational, the Standard Gauge Railway is expected to cut cargo transit times between the Kenyan Port of Mombasa and Kampala from roughly five days to less than 24 hours, dramatically lowering logistics costs by up to 40 percent and cementing Uganda’s position as a competitive regional trade hub.
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