The government is in advanced stages of issuing its first-ever Sovereign Sukuk as part of efforts to raise funding for the construction of the Standard Gauge Railway (SGR), a major infrastructure project expected to transform regional connectivity and trade.
The Sukuk will finance 15 percent of the total Euro 2.7 billion required for the railway project, marking a significant shift in Uganda’s approach to infrastructure financing through Islamic-compliant investment instruments.
According to the financing structure approved by Cabinet in January 2025, 60 percent of the project funding will be mobilised through Export Credit Agencies (ECAs), 25 percent from Development Finance Institutions (DFIs), while the remaining 15 percent will come from the Sovereign Sukuk.
A Sukuk is an Islamic financial instrument often described as the Sharia-compliant equivalent of a bond, but it differs in structure because it does not involve charging or paying interest, which is prohibited under Islamic law.
Instead, Sukuk represents partial ownership in an asset, project, or investment activity, and investors earn returns through profit-sharing, rental income, or proceeds generated by the underlying asset.
This makes Sukuk a way for governments and companies to raise funds for large projects—such as infrastructure—while ensuring compliance with Islamic finance principles.
The initiative is being led by Deputy Secretary to the Treasury Patrick Ocailap, who is currently conducting a regional Sukuk roadshow across the East African Community to engage potential investors in Kenya, Tanzania, and Zanzibar ahead of the official issuance.
The roadshow is focused on market sounding, pricing discovery, and strengthening investor confidence in Uganda’s first Sovereign Sukuk offering.
“This engagement is critical in building investor confidence and ensuring successful participation in the planned issuance,” Ocailap said during the engagements.
The delegation includes key institutions involved in structuring the Sukuk, among them Yusra Sukuk as lead arranger, Stanbic Bank Group as part of the book runners, Bank of Uganda, the Standard Gauge Railway technical team, N.S. Kigozi as Sukuk legal advisor, and Salaam Bank Uganda Limited as the receiving bank.
Officials say the Sukuk will not only unlock new financing for strategic infrastructure but also broaden Uganda’s investor base by attracting both conventional and Sharia-compliant investors.
The Ministry of Finance, Planning and Economic Development is expected to provide further details in the coming days to guide public understanding of the financing model and its implementation.
The Standard Gauge Railway remains one of Uganda’s flagship infrastructure projects, expected to significantly reduce transport costs, improve cargo movement efficiency, and enhance regional economic integration once completed.
