A major Microsoft-backed data centre project in East Africa has reportedly run into delays after negotiations with the Kenyan government stalled over financial assurances sought by the US tech giant.
Microsoft and its Abu Dhabi-based partner G42 had sought commitments from the Kenyan government to guarantee annual payments for a fixed amount of computing capacity. But the discussions collapsed after Kenyan authorities were unable to agree to the scale of financial backing requested, Bloomberg reported.
The partners are now considering a possible downsizing of the project, they added. Both companies declined to comment on the development.
The planned facility, announced in 2024, was positioned as a $1 billion geothermal-powered data centre aimed at significantly expanding cloud computing infrastructure in the region.
The initial phase was expected to deliver around 100 megawatts of capacity, with long-term plans targeting up to 1 gigawatt. At the time of announcement, the first phase had been projected to be completed by this year.
But the project has faced questions over its energy requirements. Kenyan President William Ruto has previously indicated that the scale of power needed would place significant pressure on national resources.
“We would need to switch off half the country for the data centre to be powered,” he said recently.
John Tanui, principal secretary at Kenya’s Ministry of Information, said in an interview that discussions remain ongoing and the project has not been cancelled.
“It is not failed or withdrawn,” he said and further added that the structure and scale of the proposed data centre are still being worked out. He noted that power-related discussions are also continuing.
Alongside the main project, talks over a separate 60-megawatt facility with local developer EcoCloud are also still in progress, the report mentioned.
The Kenya project was part of Microsoft’s wider push to expand its artificial intelligence and cloud business in emerging markets while also helping develop digital skills in the region. The planned facility was also seen as an effort to strengthen Africa’s digital infrastructure at a time when Chinese technology companies are expanding their presence across the continent.
The deal marked the first major joint project with G42 following Microsoft’s $1.5 billion investment in the Abu Dhabi-based technology firm.
Before the investment, G42 had agreed to reduce its exposure to Chinese-linked holdings and remove Chinese equipment from its systems. The Kenya project was positioned by both companies as part of a wider global push to scale AI-focused cloud infrastructure.
