Microsoft’s ambitious plan to establish a $1 billion data centre and cloud region in Kenya has encountered major delays, raising questions about Africa’s readiness for large-scale artificial intelligence infrastructure projects.
The project, announced in May 2024 during President William Ruto’s state visit to the United States, was a partnership between Microsoft and Abu Dhabi-based AI firm G42. It aimed to develop East Africa’s first major Azure cloud region in Olkaria, powered by geothermal energy, while also supporting AI training initiatives and internet access expansion across the region.
However, negotiations reportedly stalled after Microsoft and G42 requested that the Kenyan government guarantee annual payments for a fixed amount of data centre capacity. According to reports citing sources familiar with the discussions, Kenya was unable to provide guarantees at the level sought by the companies.
The project has also run into concerns over electricity consumption. At full scale, the proposed facility could require close to one gigawatt of power — roughly one-third of Kenya’s current installed electricity generation capacity of about 3,000 megawatts.
President Ruto acknowledged the challenge during recent remarks in Nairobi, warning that the facility’s energy needs could overwhelm the national grid.
“To switch on that one data centre, we would need to shut off power for half the country,” he said.
Despite the setbacks, Kenyan officials insist the project has not been abandoned. Special Technology Envoy Philip Thigo and other government officials say discussions are ongoing, although the scale and structure of the project may be revised.
Kenya’s Ministry of Information has indicated that a phased rollout is being considered, potentially beginning with a smaller 100-megawatt facility before gradually expanding capacity. Officials believe such an approach would ease pressure on the power grid while keeping the broader digital infrastructure vision alive.
The delays come at a time when African governments are increasingly positioning themselves as future hubs for cloud computing and AI infrastructure. Kenya has marketed its geothermal resources as a major competitive advantage for attracting energy-intensive technology investments. Geothermal energy already accounts for a significant share of the country’s electricity mix.
Analysts say the stalled project highlights a wider challenge facing emerging markets: balancing growing demand for AI and cloud services with the realities of limited energy and financing infrastructure.
The Microsoft-G42 initiative was initially hailed as one of the largest private-sector digital investments in Kenya’s history and a symbol of strengthening technological ties between East Africa, the United States, and the Gulf region.