Microsoft’s planned data centre investment in East Africa has been delayed following a dispute with the Kenyan government over demands for guaranteed annual payments.
According to reports, the disagreement centres on Microsoft’s request for state-backed commitments to purchase a fixed level of data centre capacity each year.
The project, unveiled in May 2024, represents a $1 billion investment in Kenya and is being developed in partnership with UAE-based AI firm G42. It was announced during President William Ruto’s official visit to Washington under the Biden administration.
The facility was initially planned to run on geothermal power and host a dedicated Microsoft Azure region for East Africa, aimed at supporting both government systems and private digital services.
However, both Microsoft and G42 reportedly pushed for a binding agreement requiring Kenya to purchase a set amount of computing capacity annually. Talks stalled after Kenyan authorities said they could not provide guarantees at the requested scale.
Sources suggest the project may be reduced in scope if the impasse continues, although negotiations have not been fully abandoned.
The Ministry of Information in Kenya has rejected suggestions that the initiative has collapsed. Principal Secretary John Tanui stated that the project remains active, but requires further work on structuring, particularly around energy supply and overall scale.
Power supply constraints
Earlier reporting by Business Insider Africa highlighted concerns from President William Ruto over Kenya’s limited electricity capacity as a key challenge for hosting large-scale digital infrastructure.
Kenya currently generates around 3,000 megawatts of power, while the proposed data centre would demand a substantial portion of that output.
Ruto has since used the project to emphasise the need to expand national electricity generation to 10,000 megawatts by 2030. His government is targeting about $38 billion in investment to support this expansion, including private-sector participation and potential asset divestments.