Uganda courts Tanzanian investors in €405m Sukuk bond for SGR financing

The Shari’ah-compliant bond, which includes a €45 million greenshoe option, will partly finance the construction of the 272-kilometre SGR line linking Malaba on the Kenyan border to Kampala.

Uganda’s Deputy Secretary to the Treasury, Mr Patrick Ocailap, pitched the investment opportunity to Tanzanian investors and secondary market dealers during a Non-Deal Roadshow meeting held at the Dar es Salaam Stock Exchange (DSE).

According to a statement shared by local Sukuk consultants, Yusra Sukuk Company Limited, Uganda opted for Sukuk financing as part of efforts to diversify funding sources for strategic infrastructure projects.

“The Sukuk is intended to finance 15 percent of the €2.702 billion required for the construction of the Malaba-Kampala Standard Gauge Railway,” Mr Ocailap said.

The issuance, which is being arranged by Yusra Sukuk Company Limited, is expected to be launched globally in either the third or final week of June 2026.

Ugandan officials said investor interest had already been strong following a series of regional and international roadshows, raising prospects of an oversubscribed offer.

Yusra Sukuk Company Limited executive chairman, Sheikh Issa Mohamed, said the arranger had already engaged nearly 25 prospective investors from Gulf Cooperation Council (GCC) countries through virtual roadshows, alongside more than two dozen regional investors.

“Currently, we are conducting physical roadshows across East Africa, and we expect to travel to Kuala Lumpur in Malaysia later this month, followed by South Africa, for further investor engagements,” he said.

Ugandan authorities said additional subscriptions could be accommodated should demand exceed both the original issuance and the greenshoe option.“We will not deny investors who want to participate in Uganda’s development,” Mr Ocailap said.

He noted that the portion expected to be financed through the Sukuk would cover only about 42 kilometres of Uganda’s planned 1,724-kilometre SGR network.

Under the financing structure, development finance institutions are expected to fund 25 percent of the Malaba-Kampala railway project, while export credit agencies will provide 60 percent.

The Sukuk issuance will finance the remaining 15 percent.

The Sukuk has been structured as a hybrid Forward Ijarah and Istisna instrument. Under the arrangement, the Ijarah component will provide semi-annual returns to investors, while the Istisna structure will finance construction works.

Uganda plans to issue the Sukuk in two tranches. The domestic and regional tranche will amount to €205 million, alongside a €30 million greenshoe option, while the international tranche will account for €200 million with an additional €15 million greenshoe option.

The regional tranche will be denominated in Ugandan shillings and US dollars, while the international tranche will be issued solely in US dollars.

DSE chief business development officer, Emanuel Nyalali, welcomed the planned issuance, saying it would strengthen East Africa’s financial market integration and expand investment products available within the region.

“This Sukuk issuance is not only about East African market integration, but also financial and product integration, which will deepen regional capital markets,” he said.

Mr Nyalali added that the DSE would cooperate with Ugandan authorities to facilitate cross-listing and investor participation in Tanzania.

The Sukuk will be issued through a special purpose vehicle, Uganda Treasury Sukuk1 Limited, which is wholly owned by the government of Uganda.

The bond is expected to be cross-listed on several regional and international exchanges, including the Johannesburg Stock Exchange, Luxembourg Stock Exchange, Nasdaq Dubai, the London Stock Exchange and Bursa Malaysia

Ugandan authorities also said preparatory work for the SGR project was already underway, including land acquisition, feasibility studies, environmental and social impact assessments, and contractor mobilisation.