AfDB Pledges $650M to Uganda Railway as China Belt and Road Falters

On May 31, the African Development Bank tentatively allocated $650 million to Uganda for a railway linking Kampala to Malaba at the Kenyan border. The sum covers roughly half the estimated project cost. Uganda's finance ministry confirmed the allocation.

The AfDB is not Uganda's traditional railway financier. China's Exim Bank and China Civil Engineering Construction Corporation have dominated Uganda's rail ambitions for a decade. The standard-gauge railway from Kampala to the Kenyan border was originally a Chinese Belt and Road project. That deal stalled.

China's lending to sub-Saharan Africa fell 66% between 2013 and 2023, per Boston University data. Uganda felt the contraction directly. The Kampala-Malaba segment, critical for connecting landlocked Uganda to the port of Mombasa, had no committed financing after Chinese lenders tightened terms.

The AfDB's $650 million is a tentative allocation, not a signed loan. Uganda must still negotiate terms, environmental clearances, and procurement rules. The bank's standard sovereign lending framework applies: concessional rates, long tenors, and strict governance conditions.

Uganda's debt dynamics make this allocation consequential. Public debt reached 52% of GDP in 2025, per the IMF. The country's foreign exchange reserves cover less than four months of imports. A $650 million loan at concessional rates is cheaper than commercial debt but still adds to the stock.

The railway's economics are unproven. Uganda's freight volumes on the existing meter-gauge line have declined for years, per Uganda Railways Corporation data. Road transport dominates. The new line's projected traffic assumes a shift from trucking that has not materialized in comparable East African rail projects.

The AfDB's involvement signals a broader shift in African infrastructure finance. Multilateral development banks are filling gaps left by China's retreat. The AfDB, World Bank, and European development finance institutions have increased infrastructure commitments to Africa by 40% since 2020, per the Infrastructure Consortium for Africa.

This is not charity. The AfDB's capital base was expanded by $115 billion in 2023, allowing larger commitments. The bank charges interest, requires repayment, and imposes procurement standards that favor Western contractors. Uganda will buy rails, signals, and rolling stock under competitive bidding rules.

The Kampala-Malaba railway is a test case. If the AfDB can deliver a functioning railway on time and on budget, it will validate multilateral infrastructure finance as an alternative to Chinese state-backed lending. If the project stalls, critics will argue that only China's speed and lack of conditionality can build African infrastructure.

Uganda's government expects construction to begin in 2027. The AfDB's allocation is a down payment on that timeline. The bank's board must still approve the final loan. Uganda must pass procurement laws and resettle communities along the route. Both are uncertain.

The $650 million allocation is a bet on multilateralism in a region where Chinese lending once seemed inevitable. The railway's completion will determine whether that bet pays off.