Microsoft, G42 Data Center Project in Kenya Delayed

A major planned data center project in Kenya involving Microsoft and Abu Dhabi-based technology group G42 has been delayed amid disagreements with the Kenyan government over financial guarantees and power supply requirements, according to Bloomberg.

The proposed project, initially valued at around $1 billion, was intended to significantly expand cloud computing and artificial intelligence infrastructure across East Africa.

According to people familiar with the discussions, Microsoft and G42 requested government-backed guarantees ensuring payment for a specified level of annual data center capacity.

Negotiations reportedly stalled after Kenyan authorities were unable to provide the level of financial commitments sought by the companies.

Officials involved in the talks indicated that the project has not been cancelled, though its scale may ultimately be reduced.

Kenyan authorities also continue to assess the project’s substantial energy demands, which have become a key point of contention.

President William Ruto recently acknowledged the scale of the challenge, saying the electricity required to operate the facility could exceed the country’s currently available capacity.

The original agreement, announced in 2024, envisioned a geothermal-powered data center beginning with around 100 megawatts of capacity and eventually expanding toward one gigawatt.

Despite the setbacks, Kenyan officials insist discussions remain ongoing.

John Tanui said the project “has not failed and has not been withdrawn,” but noted that its structure and energy requirements still need further work.

Separate discussions are reportedly underway regarding a smaller 60-megawatt facility in partnership with local developer EcoCloud.

The Kenya facility was expected to become a cornerstone of Microsoft’s regional AI and cloud computing expansion strategy, including digital training initiatives and support for advanced software infrastructure.

For G42, the project represented a major step in its international expansion ambitions following Microsoft’s $1.5 billion investment in the Emirati technology firm.

The initiative was also viewed as strategically important in strengthening Western-backed digital infrastructure across Africa amid growing competition from Chinese technology companies on the continent.