Keypoints:
- $800m deal signed with Islamic Development Bank
- Funds to boost SGR, health, water and roads
- Project links Uganda to Mombasa via Kenya
UGANDA has secured a landmark $800 million financing agreement with the Islamic Development Bank (IsDB) in a move set to accelerate the country’s infrastructure ambitions, including the long-anticipated Standard Gauge Railway (SGR) project.
Signed on May 20, 2025, during the IsDB’s 50th Annual Meetings in Algiers, Algeria, the three-year agreement forms part of Uganda’s Country Engagement Framework (CEF) for 2025–2027. The deal is expected to significantly improve trade connectivity and socio-economic development in the landlocked East African nation.
The Ugandan Ministry of Finance confirmed that a substantial portion of the financing will support the SGR, which will link directly to Kenya’s standard gauge railway and eventually to the Port of Mombasa on the Indian Ocean, drastically cutting transport costs and freight times.
‘This agreement marks a turning point in our effort to integrate regionally and transform our trade competitiveness,’ said Uganda’s Finance Minister in a statement.
Breakdown of the funding package
The $800 million financing package includes contributions from multiple arms of the Islamic Development Bank Group:
- $500 million from IsDB directly
- $150 million each from the Islamic Corporation for the Development of the Private Sector (ICD) and the International Islamic Trade Finance Corporation (ITFC)
- An additional $400 million in support from the Islamic Corporation for the Insurance of Investment and Export Credit (ICIEC), earmarked for insurance and reinsurance needs linked to the projects
The funding will be disbursed over three years, focusing on strategic sectors that align with Uganda’s development goals.
SGR project to boost regional trade
A key component of the financing will be the Standard Gauge Railway Development, aimed at connecting Uganda’s transport network to Kenya’s SGR line and onward to Mombasa.
Once completed, the railway is expected to enhance regional trade by reducing transit times between Kampala and the Kenyan coast from several days to under 24 hours. This will make Ugandan exports more competitive and lower the cost of imported goods.
China back as Kenya-Uganda SGR financier
Other sectors to benefit
The deal goes well beyond rail, targeting multiple critical sectors:
- Health: Establishing regional cancer treatment centres in Arua and Mbale, upgrading Katakwi General Hospital, and building new facilities in Lwengo.
- Water and Sanitation: Investments include the Bukedea Water Works Project and Water Supply and Sanitation Program III.
- Energy: Rural electrification projects aim to expand energy access in underserved regions.
- Roads: Infrastructure upgrades in Nakapiripirit, Isingiro, and on key cross-border routes to Tanzania.
- Agriculture: The Drylands Development Project in Karamoja will receive funding for infrastructure and resilience against climate shocks.
- Human Capital Development: Skills training programmes in agriculture, ICT, petroleum, hospitality, and healthcare — particularly targeting youth and women.
Regional integration strategy
The SGR project is part of Uganda’s broader regional integration and trade competitiveness plan. Officials say linking up with Kenya’s railway system will not only strengthen ties within the East African Community (EAC) but also position Uganda as a key transit and logistics hub for countries like Rwanda, South Sudan, and eastern DRC.
Uganda’s renewed engagement with the IsDB also signals a shift towards diversified financing partners, as China re-enters the conversation as a backer of East Africa’s railway network.
A boost for infrastructure and beyond
The agreement is seen as a major milestone for Uganda’s long-term development agenda, especially amid increasing demand for reliable infrastructure and resilient public services. Officials say the success of this financing model could pave the way for similar multi-sector partnerships across Africa.
As regional integration deepens, projects like the SGR — supported by international financing and local commitment — could become a defining feature of East Africa’s economic transformation.
