The Uganda railway revival story continues to gather momentum, but its biggest challenge is no longer rebuilding tracks or attracting cargo.
It is finding enough money to finance an ambitious transformation that Uganda Railways Corporation (URC) believes could reshape the country’s logistics and industrial economy over the next five years. URC’s return to transporting coffee exports after an eight-year hiatus illustrates the potential. Earlier last week, URC dispatched a block train carrying 606.6 tonnes of coffee from Kampala to the Port of Mombasa, replacing about 17 heavy-duty trucks. According to URC, moving the consignment by rail reduced transport costs by more than $62,000 (Shs223.4m), highlighting the commercial advantage rail could offer exporters if services become reliable and regular.
However, that successful shipment represents only a small step in a much larger plan. According to a report to the Physical Infrastructure Committee of Parliament presented by URC Managing Director Benon M. Kajuna, the corporation has developed a five-year strategy that seeks to transform rail into the backbone of Uganda’s industrialisation, export logistics and regional trade. The report argues that URC already has a clear commercial pipeline, but what threatens its success is a persistent funding gap that continues to delay rehabilitation, rolling stock renewal and network expansion. Unlike previous attempts to revive the railway network, the current strategy places freight rather than passenger transport at the centre of URC’s business model.
In his report, Kajuna told Parliament that the rail network is expected to remain a key link in supporting agro-industrialisation by transporting coffee, cocoa, cotton and wheat bran, while also serving manufacturers, steel producers, fuel distributors and the oil and gas sector through lower-cost bulk transport. URC ultimately wants to shift more than 1.2 million tonnes of cargo annually from roads onto rail and inland waterways, reducing transport costs by as much as 40 percent, while strengthening Uganda’s position as the logistics gateway to the Great Lakes region. Planned industrial sidings for manufacturers, logistics companies and the Buyala oil terminal form part of that strategy.
The report also shows that URC increasingly views railway investment as an industrial policy rather than simply a transport programme. Under government’s Ten-Fold Growth Strategy and National Development Plan IV, rail is expected to support manufacturing, agriculture, tourism, mining, regional integration and urban mobility. Lower logistics costs could improve the competitiveness of exports while reducing the cost of imported industrial inputs. Planned expansion of commuter rail services around Greater Kampala is also intended to reduce congestion and improve labour mobility. But URC’s ambitions contrast sharply with the present state of Uganda’s railway network.
Kajuna’s report shows that only 269 kilometres of the country’s 1,266-kilometre metre-gauge railway network is operational, equivalent to just 21 percent of the system. The remaining lines require extensive rehabilitation after decades of underinvestment, deferred maintenance and encroachment. Progress is nevertheless visible. The Tororo-Kumi section of the Tororo-Gulu rehabilitation project has already been handed over, while the wider 382-kilometre corridor had reached 75.63 percent physical progress and 83.14 percent financial progress by June 2026, with completion expected in October. URC is also preparing projects to rehabilitate the Gulu-Pakwach line, modernise Port Bell, expand Greater Kampala commuter rail services, automate level crossings and rehabilitate locomotives and wagons.
One of the report’s most significant conclusions is that demand for rail services increasingly exceeds URC’s operational capacity. During the reporting period, freight volumes reached 266,318 tonnes, almost half URC’s estimated break-even level of about 540,000 tonnes annually. Kajuna attributes the gap not to insufficient customers but to shortages of locomotives, wagons and operational assets that prevent URC from serving existing demand. Rolling stock remains one of URC’s biggest weaknesses. Out of 46 locomotives, only 10 were operational during the review period. URC also operated only 298 wagons against a target of 1,067, while passenger services relied on just five operational coaches.
These shortages continue to limit freight growth despite growing interest from exporters and manufacturers. Kajuna identifies financing as the principal reason these constraints persist. Between the 2020/21 and 2025/26 financial years, government approved approximately Shs1.141 trillion for URC. However, only about Shs465.8b, URC noted in the report, was released, leaving a cumulative financing deficit of roughly Shs675.4b. Although URC secured an additional Shs100b supplementary allocation during the 2025/26 financial year, Kajuna argues that years of underfunding continue to affect rehabilitation, maintenance and asset acquisition.
The report identifies several structural obstacles beyond funding, which include ageing rolling stock, deferred maintenance estimated at Shs1.5 trillion, vandalism of railway infrastructure, encroachment on railway land, a limited operational network and shortages of specialised railway skills. Together, these constraints reduce service reliability and limit URC’s ability to capture available freight opportunities. To reduce dependence on government financing, URC plans to increase internally generated revenue through higher freight volumes, commercialisation of its property portfolio, digital revenue collection, industrial last-mile connectivity and public-private partnerships for logistics parks, terminals and railway sidings.
URC also proposes introducing a Railway Development Levy to establish a predictable source of long-term infrastructure financing while seeking additional government support for rolling stock acquisition and counterpart funding for ongoing projects. The successful return of coffee exports to rail demonstrates that exporters remain willing to shift cargo when competitive services are available.
The challenge now is whether URC can secure the financing needed to convert isolated successes into a nationwide logistics system capable of supporting industrialisation and regional trade. Kajuna’s presentation to Parliament suggests the corporation has already identified the commercial opportunities, strategic projects and policy reforms required to restore rail as a key driver of the economy. Whether that vision materialises, however, may depend less on engineering than on whether government can provide the sustained financing needed to close a funding gap that continues to define the railway’s future.