Uganda Launches Maiden €405.5M Sukuk Bond for Standard Gauge Railway

Uganda plans to issue its inaugural sovereign Sukuk bond valued at €405.5 million (Shs1.75 trillion). The funds will cover 15% of Phase 1 for the 272-km Standard Gauge Railway (SGR) stretching from the Kenya border at Malaba to Kampala.

Future SGR phases will connect northern and western routes to Rwanda, DRC, and Tanzania. The full project, spanning seven years and costing over €2.7 billion, will transport passengers and cargo at speeds up to 120 km/h for passengers and 100 km/h for freight, slashing Mombasa-Kampala travel from 14 days to one day.

Benefits include 35% lower freight costs, faster transit, better reliability, and reduced emissions compared to the old metre-gauge system. It will ease road congestion and boost trade under Africa’s Agenda 2063. Local content is targeted at 40% (Shs4.3 trillion) for Ugandan firms.

Facing tight global credit and public debt hitting 55.5% by June 2026, Sukuk provides a non-debt alternative. Unlike conventional bonds, Sukuk offers asset ownership and profit/rental income, attracting Shariah-compliant investors excluded from standard markets.

Global Sukuk issuance surged 25% in 2025 to over $1 trillion, with Africa’s jumping to $3 billion led by Egypt. Uganda’s Islamic banking since 2023, Salaam Bank, and Tamini Takaful position it well.

Investors will earn rental income from the operational railway via a Ugandan SPV holding the asset. Principal repays at maturity upon government repurchase. Returns qualify as tax-exempt interest for 10+ year infrastructure bonds.

Minimum investment is Shs1 million (~$265), with listing on Uganda Securities Exchange and abroad. Subscriptions open soon, after setting up SPV, Shariah board, and governance. Efforts include public awareness to boost uptake.

This offers Ugandans a stable, asset-backed investment in a project key to 10-fold GDP growth to $500 billion by 2040.

Source: Daily Monitor (Uganda)