A Microsoft data centre site in East Africa has reportedly been delayed due to disagreements between the technology giant and the government of Kenya.
First reported by Bloomberg, the site is being delayed because Microsoft has requested guaranteed payments.
People familiar with the matter told the publication that the government has been asked to commit to paying for a certain amount of capacity annually by Microsoft and its partner, G42. When the government couldn’t provide a guarantee, the talks reportedly broke down. This could result in the project being scaled back.
John Tanui, principal secretary at Kenya’s Ministry of Information, told Bloomberg that Kenya is still proceeding with the talks.
“The scale of the data centre they wanted to do still requires some structuring,” he explained, adding that power requirements are also still under discussion.
First agreed in 2024, the project was to consist of a US$1 billion geothermal-powered project to significantly increase cloud computing across the region. Speaking at the time, Microsoft said it would initially build capacity of roughly 100 megawatts (MW), remarking that it could be operational this year. The end goal was to build out enough to facilitate one gigawatt (1GW).
The site was also positioned as a critical part of Microsoft’s commitment to help Kenya built out AI.
Microsoft has been pushing the expansion of its cloud business globally, with the Kenya project being described by company president Brad Smith as a sign of diplomatic strength between the US and the UAE, given that G42 is a partner.
When it was announced, he called the proposed project the “single biggest step to advance the availability of digital technology” in Kenya’s history.
The site in Kenya is a joint project and came after Microsoft invested $1.5 billion into the UAE. For G42, the site represented an opportunity to expand outside of the UAE and become a significant AI cloud partner.
However, President of Kenya William Ruto has suggested that the energy required for the Microsoft project exceeds the country’s available resources. This level of scale perhaps surpasses what Kenya can currently handle, as a significant amount of energy is required to support next-generation digital infrastructure.
“We would need to switch off half the country for the data centre to be powered,” he said at a recent state event in Nairobi, as reported by Bloomberg.
The data centre market in Kenya is expected to grow from $266 million in 2025 to $805 million by 2031 on account of high demand for AI and cloud services. However, the stalling of this project could threaten such plans if Kenya is unable to match power and capacity with rising demands.
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