Why it Matters
The EUR650.75 million approval from IsDB moves Uganda’s Malaba–Kampala Standard Gauge Railway from financing mobilisation towards physical implementation. With early works already underway at Iganga, including the sleeper factory and associated construction facilities, the project is advancing beyond planning into the delivery phase.
For Uganda, the corridor is central to reducing logistics costs, improving freight and passenger movement, and strengthening connectivity with regional trade routes. The combination of multilateral financing, counterpart funding and planned Sukuk mobilisation also highlights the scale and complexity of the funding structure behind major railway development in East Africa.
The Islamic Development Bank (IsDB) Board of Executive Directors has approved EUR650.75 million in financing for Uganda’s Standard Gauge Railway project between Malaba and Kampala, as part of a wider US$2.8 billion package of development financing approved during the 2026 IsDB Group Annual Meetings in Baku, Azerbaijan.
The financing supports the construction of the Malaba–Kampala Standard Gauge Railway, a 326km corridor intended to provide Uganda with a modern, high-capacity and low-carbon rail network. The project is expected to reduce transport costs and travel times, improve passenger safety, lower CO₂ emissions and generate an estimated 3,000 jobs.
According to the project update, the approval by the IsDB Board is expected to unlock the next phase of implementation, including the start of key railway infrastructure works such as stations and bridges in the coming months.
The Government of Uganda has been in ongoing discussions with development partners co-financing the project, including the African Development Bank, IsDB and the World Bank. Uganda is also expected to issue a Sovereign Sukuk bond to raise approximately EUR405 million, which will contribute towards 15% of the country’s counterpart funding. Discussions with several Export Credit Agencies are also ongoing.
The African Development Bank has pledged US$650 million, approximately UGX2.45 trillion, towards the construction of the Malaba–Kampala railway line.
Preparatory works are already underway. The first consignment of equipment for the sleeper factory in Iganga District has been received. Construction of the sleeper factory forms part of the early works being undertaken under the Limited Notice to Proceed.
Other activities under the Limited Notice to Proceed include the establishment of a workers’ camp, which is almost complete, as well as a batching plant for industrial-scale concrete production. These facilities will be located at the Iganga campsite along the Malaba–Kampala Eastern Route.
Site investigations have been concluded, while land acquisition and compensation processes are continuing. In November 2025, land acquisition entered the final three districts of Mukono, Wakiso and Kampala. Environmental and social audits are also ongoing along the corridor to ensure that funding and pre-funding obligations are met.
The Malaba–Kampala Standard Gauge Railway forms part of Uganda’s broader rail development programme and is expected to strengthen freight and passenger connectivity along one of the country’s most important regional trade corridors.
Written by Phillippa Dean
