Uganda Railways' Ambitious Turnaround Plan Hinges on Securing Critical Funding

The Uganda Railways Corporation (URC) is pursuing an ambitious five-year plan to revitalize the nation’s rail network, aiming to transform it into a cornerstone of industrialization, export logistics, and regional trade. Recent successes, such as the return of coffee exports via a block train carrying 606.6 tonnes to Mombasa, demonstrate the potential for significant cost savings and efficiency gains, with this single shipment saving over $62,000 compared to road transport.

URC’s strategy, presented to Parliament’s Physical Infrastructure Committee, prioritizes freight transport, envisioning a shift of over 1.2 million tonnes of cargo annually from roads and inland waterways. This would not only drastically reduce transport costs by up to 40 percent but also solidify Uganda’s role as a key logistics hub for the Great Lakes region. The plan includes developing industrial sidings and expanding commuter rail services in Greater Kampala to alleviate congestion and boost labor mobility.

However, the corporation faces a substantial obstacle: financing. Of the approximately Shs1.141 trillion approved between FY2020/21 and FY2025/26, only Shs465.8 billion has been released, leaving a deficit of roughly Shs675.4 billion. This underfunding has hampered critical rehabilitation, rolling stock renewal, and network expansion efforts. Currently, only 269 kilometers of the 1,266-kilometer network are operational due to decades of underinvestment and neglect.

Shortages in operational assets, including locomotives and wagons, severely limit URC’s capacity to meet existing demand, despite a growing commercial pipeline. Out of 46 locomotives, only 10 were functional during a recent review period, and the number of operational wagons was drastically below target. To address this, URC plans to boost internally generated revenue through increased freight volumes, property commercialization, and public-private partnerships. They are also exploring a Railway Development Levy and seeking further government support for asset acquisition and project funding.

Despite these challenges, the successful coffee export shipment underscores the demand for reliable rail services. The ultimate success of URC’s vision hinges on securing sustained government financing to close the persistent funding gap and realize its potential as a driver of economic growth.