Uganda’s First Sovereign Sukuk for SGR Railway Funding

Corporate editorUpdated 1 hour Ago1 Mins read17

The Government of Uganda is preparing to issue its first-ever Sovereign Sukuk as part of efforts to raise money for the construction of the Standard Gauge Railway (SGR), one of the country’s biggest infrastructure projects.

According to the Ministry of Finance, Planning and Economic Development, the Sukuk will finance 15 per cent of the total €2.7 billion required for the railway project. Cabinet approved the financing structure for the SGR in January 2025. Under the approved arrangement, 60 percent of the funding will come from Export Credit Agencies (ECAs), while 25 per cent will be sourced from Development Finance Institutions (DFIs). The remaining 15 per cent is expected to come from the planned Sukuk issuance.

A Sukuk is a form of Islamic financial instrument that operates in line with Sharia principles. Unlike conventional bonds that earn interest, Sukuk investments are backed by tangible assets or projects and generate returns through profit-sharing structures. Governments around the world have increasingly used Sukuk to raise money for infrastructure development.

The Deputy Secretary to the Treasury, Patrick Ocailap, is currently leading a regional roadshow across East Africa to attract investors ahead of the issuance. The delegation is engaging potential investors in Kenya, Tanzania and Zanzibar.

Officials say the roadshow is aimed at market sounding, price discovery and strengthening investor confidence before the official launch date is announced.

The delegation includes representatives from Stanbic Bank Uganda, Bank of Uganda, the SGR technical team, legal advisors and officials from the Debt Policy and Issuance Department at the Ministry of Finance. Salaam Bank Uganda has also been named as the receiving bank for the Sukuk transaction.

Government officials believe the inaugural Sovereign Sukuk could widen Uganda’s investment market by attracting both local and international investors interested in Islamic finance products. It is also expected to provide an alternative source of long-term financing for national infrastructure projects. The Ministry of Finance says more details about the Sukuk structure and how Ugandans can participate will be released in the coming days.