Uganda is preparing to issue its first sovereign sukuk as the government seeks alternative financing to support a major railway infrastructure project aimed at strengthening regional trade and transport links. Officials say the planned Islamic bond issuance will help diversify Uganda’s funding sources while attracting investors interested in Sharia-compliant financial instruments, as reported by Reuters.
The sukuk proceeds are expected to contribute toward financing Uganda’s long-planned Standard Gauge Railway project, which is designed to improve cargo movement between East African countries and reduce transport costs for businesses. The railway is considered a critical part of regional integration efforts linking Uganda to ports in Kenya and other neighbouring markets.
Uganda joins a growing number of African countries exploring Islamic finance as governments seek new ways to fund infrastructure amid tighter global borrowing conditions and rising debt costs. Analysts note that sukuk markets have expanded significantly in recent years, particularly across the Middle East, Asia, and parts of Africa.
CNBC Africa says the debut issuance could also help deepen Uganda’s domestic capital markets and position Kampala as a regional participant in Islamic finance. Market observers believe successful execution of the sukuk could encourage additional non-interest financing initiatives for infrastructure, energy, and development projects across East Africa.
