Microsoft-G42 $1 Billion Kenya Data Center Stalls Over Payment Demands

A planned $1 billion AI data center in Kenya, backed by Microsoft and Abu Dhabi-based G42, has stalled after negotiations with the Kenyan government broke down over guaranteed payment demands and power capacity concerns. Announced in 2024 as the largest private-sector digital investment in Kenyan history, the project envisioned a geothermal-powered campus in the Olkaria region of the Rift Valley, starting at 100 megawatts and scaling to 1 gigawatt. No construction has begun, and the original timeline for the first phase to become operational this year has passed.

Microsoft and G42 requested that Kenya commit to purchasing a fixed amount of cloud computing capacity annually, but the government could not meet the required threshold. President William Ruto warned that powering a 1-gigawatt facility would consume roughly a third of Kenya's total installed electricity capacity, effectively requiring the country to switch off half the nation to keep it running.

Despite the impasse, Kenyan officials insist the project has not been abandoned. John Tanui, Principal Secretary at the Ministry of Information, stated that structuring discussions remain active. A smaller 60-megawatt alternative involving local developer EcoCloud is now under consideration. The dispute underscores a broader challenge for hyperscale cloud expansion in emerging markets, where AI infrastructure projects increasingly demand sovereign finance commitments that many governments cannot provide.