Kenya’s plans to construct a $1 billion data centre backed by Microsoft and UAE-based G42 have stalled. This is after President William Ruto said the country lacks sufficient power capacity to support the data center project.

The data center facility was first announced during Ruto’s state visit to Washington in May 2024. It was expected to be located about 100 kilometres northwest of Nairobi and run largely on geothermal energy. Moreover, the investment, valued at approximately $1 billion, emerged as a flagship project to deliver cloud services via Microsoft’s Azure platform to businesses and government institutions.

The Data Center Cancellation Exposes Constraints in Kenya’s Electricity System

However, speaking in Nairobi last week, Ruto stated the scale of the project exposed significant constraints in Kenya’s electricity system. The country’s installed capacity currently stands at about 3,000 megawatts, and the proposed data centre alone would require roughly a third of that supply.

“To switch on that one data centre, we would need to shut off power for half the country. That’s when I knew there was a problem,” Ruto said.

Kenya has promoted its renewable energy credentials, particularly geothermal power, which accounts for around 40% of its energy mix. This aspect stood as a competitive advantage in attracting energy-intensive digital infrastructure. Yet officials now acknowledge that the existing supply remains insufficient to accommodate hyperscale data facilities without straining the national grid.

Government officials familiar with the discussions stated a concept note for the project was prepared by Kenya’s technology ministry and submitted to the National Treasury for funding approval. The proposal did not receive clearance, effectively stopping progress. By August 2025, meetings between Kenyan officials and Microsoft executives had already indicated that the project would miss its original May 2026 completion target.

Also, neither Microsoft nor G42 provided immediate comment on the latest developments.

Significance of the Project

The project had been viewed as a symbol of deepening ties between Kenya and the United States, particularly as Washington seeks to expand its technological footprint in East Africa amid growing competition from China. Its delay highlights the risks associated with high-profile investment announcements made during diplomatic engagements, which may not always reflect underlying technical or financial feasibility.

Impact of the Cancellation on Africa’s Digital Infrastructure

Analysts say the setback underscores a broader structural challenge across Africa, where demand for artificial intelligence and cloud services is rising faster than the infrastructure needed to support it. While Kenya’s data centre market expects to grow significantly, existing energy demands from households and industry limit the scale at which new facilities can be deployed.

Despite the uncertainty surrounding the Microsoft-backed project, momentum in Kenya’s data centre sector continues. Airtel Africa subsidiary Nxtra is currently developing a 44MW facility in Tatu City, expected to be the largest in East Africa upon completion. Additionally, Airtel is also developing a data center in Nigeria in bid to expand its digital infrastructure in Africa.

Other Microsoft Investments in Africa

Elsewhere on the continent, Microsoft has maintained its expansion plans. In April, the company announced a $329 million investment in South Africa to grow its cloud infrastructure and artificial intelligence capabilities, including improvements in power and water readiness for future data centres.

The contrasting trajectories highlight a key reality for African markets: while investor interest in digital infrastructure remains strong, execution will depend heavily on the pace of upgrades to foundational systems such as energy supply.

Project Factsheet

Project Name: East Africa Cloud Region / Olkaria Geothermal Data Center

Primary Partners: Microsoft (USA), G42 (UAE), Government of Kenya

Initial Investment: $1 Billion

Announced: May 2024 (during President Ruto’s State Visit to the USA)

Cancellation Date: May 2026

Primary Reason for Cancellation: Energy Shortfall. The project required 1,000MW, roughly 1/3 of Kenya’s total capacity.

Why it Failed

• Grid Capacity: Kenya’s total installed capacity is approximately 3,000 MW. The full-scale data center would have consumed roughly 1,000 MW. This is a demand the government determined to be impossible to meet without massive infrastructure upgrades.
• National Treasury Approval: The Kenyan National Treasury reportedly withheld final funding approvals for the government’s portion of the infrastructure support. This further stalled the project’s “concept note.”
• Geopolitical Scrutiny: The involvement of UAE’s G42 drew scrutiny from US officials earlier in the project’s life cycle. This was regarded to potential ties to China. This led to delays in security clearances for high-end AI chips.
• Timeline Slippage: it was originally slated for completion by May 2026. However, the project had failed to break ground by late 2025, making the target impossible to hit.