Rwanda's ambition to build its first small modular reactor (SMR) is moving closer to reality, but one major question remains unanswered: who will pay for it?
The government expects the country's first SMR to become operational in the early 2030s as it seeks to diversify electricity generation and meet rising energy demand.
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Officials at the Rwanda Atomic Energy Board (RAEB) say securing financing is one of several critical milestones that must be achieved before construction can begin.
Other key steps include completing feasibility studies, selecting a site, conducting environmental assessments, strengthening the regulatory framework, developing skilled personnel, and finalising financing arrangements.
Rwanda is currently evaluating different financing options through studies being conducted with the United Nations Economic Commission for Africa (UNECA) to identify the most suitable funding model.
In May, the International Atomic Energy Agency (IAEA) confirmed that Rwanda had advanced to Phase 2 of its nuclear power programme, a stage focused on preparing for contracting and construction.
Unlike conventional nuclear plants, SMRs generate up to 300 megawatts of electricity per unit—about one-third the capacity of traditional reactors. Because they are factory-built and assembled on-site, they require lower upfront investment, have shorter construction timelines and can be deployed incrementally as electricity demand grows.
The IAEA says SMRs can also be installed in locations unsuitable for large nuclear plants, operate on smaller electricity grids and supply power to remote areas with limited transmission infrastructure.
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Financing challenge
Despite their smaller size, SMRs still require substantial upfront capital.
According to the International Energy Agency (IEA), financing remains one of the biggest hurdles for nuclear projects worldwide because of their high capital costs, lengthy construction periods and investment risks.
The agency notes that governments typically play a central role in financing nuclear projects through direct investment, sovereign loans or guarantees that reduce risks for private investors.
The IEA also highlights the importance of predictable revenue streams, with countries often relying on long-term power purchase agreements or regulated pricing models to provide certainty for investors.
While SMRs may attract greater private-sector participation because of their smaller scale and shorter delivery timelines, government backing is still considered essential, particularly during the early stages.
Exploring financing options
Lassina Zerbo, Chairperson of RAEB, said discussions on financing nuclear energy in Africa are gaining momentum, with development finance institutions becoming increasingly receptive to supporting such projects.
According to Zerbo, institutions such as the African Development Bank (AfDB), which previously showed little interest in financing nuclear energy, are beginning to reconsider their position.
"After that, we heard that the World Bank rightfully has changed its stand on financing nuclear energy, and all of a sudden all the development banks have started to think about it," he said.
Zerbo argued that Africa should take a leading role in shaping global discussions on nuclear financing, given the continent's growing energy needs and abundant natural resources.
On possible financing mechanisms, he said a blended approach could offer the greatest flexibility.
"We have a blended financing mechanism. Whether you talk about private-public partnerships or export credits, there are different options," he said.
He also pointed to the potential use of certified critical mineral reserves as part of innovative financing models.
Under such an approach, countries could explore tokenisation, whereby part of the verified value of mineral reserves is converted into financial instruments to help fund strategic infrastructure projects, including nuclear energy.
However, Zerbo stressed that the challenge extends beyond raising capital.
"The issue is not only about securing funding, but creating mechanisms that allow financing to be effectively mobilised," he said.
He also called for greater involvement of national and regional financial institutions, noting that financing is needed across the entire nuclear programme—not just for construction.
"You could finance human capacity, pre-feasibility studies, feasibility studies, design and implementation. You can even finance the value chain in a country to bring it to a standard that will let programme implementation go smoothly."
No final model yet
Rwanda has yet to announce whether it will finance its first reactor through public borrowing, a public-private partnership, export credit or another model.
The country has, however, signed cooperation agreements with several international partners to advance its nuclear programme.
These include Russia's state nuclear corporation, Rosatom, and US-based Holtec International. Under its agreement with Holtec, the company will support site studies, financing mobilisation and planning for the safe deployment of nuclear power technologies.
Neither partnership has publicly disclosed how construction of Rwanda's first reactor will ultimately be financed.
How other countries funded nuclear projects
Countries pursuing nuclear energy have adopted different financing models depending on their financial capacity, strategic partnerships and energy priorities.
Egypt's El Dabaa Nuclear Power Plant, being developed by Russia's Rosatom, is financed through a Russian state loan covering 85 percent of construction costs.
South Africa, meanwhile, has relied on state ownership, with Eskom owning and operating Koeberg Nuclear Power Station—the only operational nuclear power plant on the African continent.
Ghana, like Rwanda, is still in the preparatory phase of its nuclear programme, focusing on strengthening institutions, regulatory frameworks and technical capacity before making a final investment decision.