Kenya’s proposed $1 billion data centre, backed by Microsoft and UAE-based G42, has been put on hold after President William Ruto revealed that the country does not currently have enough electricity capacity to sustain the project.
Originally unveiled during Ruto’s state visit to Washington in May 2024, the facility was planned for a site roughly 100 kilometres northwest of Nairobi and was expected to rely heavily on geothermal energy. The project, valued at about $1 billion, was intended to provide cloud services through Microsoft’s Azure platform to both businesses and public institutions.
Addressing the issue in Nairobi last week, Ruto admitted that the scale of the development highlighted major weaknesses in the country’s power system. With Kenya’s installed capacity at around 3,000 megawatts, the data centre alone would consume nearly a third of available supply.
He noted that powering the facility would effectively require cutting electricity to a large portion of the country, underscoring the severity of the constraint.
Although Kenya has positioned itself as a leader in renewable energy especially geothermal, which contributes about 40% of its power mix officials now recognise that current generation levels are not sufficient to support large-scale digital infrastructure without placing heavy pressure on the grid.
Sources familiar with the matter indicated that a project proposal was drafted by the technology ministry and forwarded to the National Treasury for approval, but it failed to secure funding, bringing progress to a standstill. By August 2025, discussions between Kenyan authorities and Microsoft had already suggested the project would not meet its initial May 2026 deadline.
Microsoft and G42 have not publicly responded to the latest update.
The initiative had been seen as a major symbol of strengthening relations between Kenya and the United States, particularly as Washington seeks to expand its tech presence in East Africa amid competition with China. Its suspension highlights the risks tied to high-profile deals announced during diplomatic visits that may not always align with practical realities.
Experts say the situation reflects a wider issue across Africa, where demand for cloud computing and artificial intelligence infrastructure is growing faster than the systems needed to support it. While Kenya’s data centre sector is expected to expand, existing electricity demands from households and industry limit how quickly new projects can be rolled out.
Ruto has pointed to the setback as a reason to accelerate plans to increase the country’s power capacity to 10,000 megawatts by 2030. The government is aiming to raise about $38 billion to finance energy and infrastructure development, including through private sector involvement and asset sales.
Even with the uncertainty surrounding the Microsoft-backed project, development in Kenya’s data centre market continues. Airtel Africa’s subsidiary, Nxtra, is currently building a 44MW facility in Tatu City, which is expected to become the largest in East Africa once completed.
In other parts of Africa, Microsoft is still advancing its expansion plans. In April, the company announced a $329 million investment in South Africa to strengthen its cloud and AI infrastructure, including improvements to power and water systems for future data centres.
These differing developments underline a broader reality across the continent: while interest in digital infrastructure remains high, successful execution will depend largely on how quickly essential systems like electricity supply can be upgraded.