The education ministry has received over $153.4m (about sh398b) from donors to implement the Skilling Uganda programme aimed at curbing unemployment among the youth.
A total of $25.5m (about sh66b) is from the Organization of the Petroleum Exporting Countries (OPEC), while sh34.5b is from the Saudi Fund, a development agency of the Saudi government.
Other funders include the World Bank, Islamic Development Bank, and the Belgian government.
Dr. Chrysostom Muyingo, the State Minister for Higher Education, said the money will be used to construct and equip at least 26 vocational and technical institutions in 26 districts across the country.
"This month, we are going to open the 26 sites for the new institutes," Muyingo said. He was addressing journalists on Wednesday during the closure of this year's Education and Sports Annual Sector Review Workshop at Hotel Africana, Kampala.
Education and sports minister Jessica Alupo explained that $10m (about sh26b) from the World Bank will be used to equip locals in the oil-rich Albertine region with employable skills.
"Let us all embrace the Skilling Uganda programme in order to achieve the country's Vision 2040 of transforming the economy from a peasantry to a prosperous country," Alupo said.
Launched last year, Skilling Uganda, which is expected to cost sh2 trillion in 10 years, aims at empowering the youth with technical skills.
Under the project, the Government expects to offer short vocational and technical courses to Senior Four leavers, school drop-outs and graduates.
About 41,927 students are expected to be admitted in various institutions by 2016/2017.
The Government plans to hire temporary assessors to assess leaners under the revised system of education, build and renovate more institutions and hire more staff, for its effective implementation.
The workshop held under the theme "Improving teacher effectiveness for enhanced quality learning outcomes" was mainly attended by district education officers.
The Irish ambassador, Donal Cronin, speaking on behalf of development partners, assured Uganda of more grants to the sector, especially vocational education.
"As education development partners, we recognise the achievements of the sector over the last year. There has been considerable expansion of all the subsectors," he said.