Keypoints:
- Uganda seeks 85% debt for €2.7bn rail
- Turkey’s Yapi Merkezi leads construction works
- Line to connect Kampala with Kenya border
UGANDA is negotiating with international lenders to finance most of its planned €2.7bn railway, officials confirmed on Wednesday, even as the country grapples with concerns about rising public debt.
Perez Wamburu, head of Uganda’s railway construction project, told Reuters that discussions with development finance institutions and export credit agencies are already at an advanced stage. The government is targeting debt to cover 85 per cent of the cost, while committing to fund the remaining 15 per cent.
International financiers in talks
Wamburu named potential financiers as the OPEC Fund for International Development, the African Development Bank, the Islamic Development Bank, and several European export credit agencies. He added that the Ministry of Finance is working closely with these institutions to achieve financial closure in the coming months.
‘The possible financiers are available … the Finance Ministry is actively engaged with them and financial closure should be soon,’ Wamburu said.
So far, Kampala has released $75 million to support preliminary work on the railway, which began earlier this year.
Turkish firm leads construction
Turkey’s Yapi Merkezi, a firm with experience in large-scale African rail projects, won the construction contract in October 2024. The 272-kilometre line will form the first section of Uganda’s planned 1,700km electric rail network.
The line will run from the capital, Kampala, to the Malaba border, where it will connect with Kenya’s railway network. The project is viewed as critical to boosting regional trade and cutting transport costs for the landlocked country.
Debt burden raises concerns
Uganda’s push to finance the railway comes amid concerns about the country’s mounting public debt, which has been rising steadily in recent years. Critics warn that adding billions more in external borrowing could tighten fiscal space.
Nevertheless, officials argue that the railway is essential infrastructure. By connecting Uganda more directly to Kenya’s ports, the government hopes to reduce logistics costs and attract investment.
The success of the financing talks will determine how soon full-scale construction can proceed, with Wamburu expressing confidence that agreements with lenders will be finalised in the near future.
