- Uganda clinches landmark $30mn facility from Islamic finance arm of IsDB
- First ICD line of financing in East Africa to empower SMEs and innovation
KAMPALA, UGANDA – The Uganda Development Bank Limited (UDBL) has obtained a landmark $30 million (UGX 104 billion) financing facility from the Islamic Corporation for the Development of the Private Sector (ICD).
It marks a major breakthrough in access to Shariah-compliant capital in East Africa.
The deal represents ICD’s first-ever line of financing in Uganda and the wider East African region. It underscores the Islamic Development Bank’s (IsDB) growing confidence in Uganda’s financial ecosystem and signals a new phase in regional cooperation to support inclusive private-sector growth.
Structured under a long-term Commodity Murabaha arrangement, the financing is designed to provide Ugandan Small and Medium Enterprises (SMEs) with access to medium- and long-term capital for productive investment.
Unlike conventional lending that involves interest payments, the Murabaha model operates as an Islamic financing contract. The financier purchases an asset and sells it to the client at a pre-agreed profit margin, payable in instalments. This ensures ethical, Shariah-compliant access to credit while broadening Uganda’s pool of financial instruments.
Through this model, UDBL plans to channel funds into key sectors such as agribusiness, manufacturing, healthcare, and education, with investments targeted at fixed assets like land, machinery, and infrastructure.
Strengthening Uganda’s economy and regional leadership
The funding aligns with Uganda’s national development priorities and reinforces UDBL’s mission to catalyse private-sector-led growth. By providing SMEs with affordable financing, the initiative is expected to stimulate business expansion, job creation, and long-term economic resilience.
Beyond Uganda, the agreement is expected to set a regional precedent for collaboration between the ICD and other African financial institutions, paving the way for the expansion of Islamic finance across Sub-Saharan Africa.
Analysts say the deal’s timing is significant, coming amid efforts by African governments to diversify financing sources as global capital markets tighten.
“This partnership strengthens Uganda’s position as a gateway for Islamic finance in the region,” said a financial analyst on East African markets. “It also reflects a broader shift toward ethical and inclusive investment models.”
UDBL said it will continue working closely with development partners to ensure the funds directly benefit small and medium enterprises – seen as the backbone of Uganda’s economy.
