Microsoft $MSFT's planned $1 billion data center in Kenya has stalled after talks with the Kenyan government broke down over the company's request for guaranteed payments, according to Bloomberg, citing unnamed sources.
The government had been asked by Microsoft and G42, the Abu Dhabi-based tech conglomerate, to guarantee annual purchases of a fixed level of computing capacity. Talks fell apart after the government failed to offer guarantees at the threshold the companies required, Bloomberg reported. The project may ultimately be reduced in scope.
John Tanui, who serves as principal secretary at Kenya's Ministry of Information, told Bloomberg in an interview that the project remains active and that discussions have not ended. "The scale of the data center they wanted to do still requires some structuring," John Tanui said, adding that power requirements remain under discussion.
Kenya's president William Ruto has also signaled concern about the energy demands of the project. "We would need to switch off half the country for the data center to be powered," Ruto said at a recent state event in Nairobi. In an emailed statement, Philip Thigo, Kenya's special envoy for technology, clarified that Ruto was drawing attention to the country's energy infrastructure challenge, not signaling that the project had been called off.
A smaller, 60-megawatt facility with local developer EcoCloud remains under discussion, according to Bloomberg.
Originating from a 2024 agreement, the project called for a geothermal-powered campus starting at roughly 100 megawatts, with a long-term target of scaling up to 1 gigawatt. The first phase had been expected to be operational this year. The data center was positioned as a way to expand cloud computing access across the region and as a counterweight to Chinese technology companies' presence in Africa.
After Microsoft invested $1.5 billion in G42, the Kenya project became the first joint effort between the two companies. As part of the deal, G42 agreed to end its Chinese investments and remove Chinese-made equipment from its systems. The Kenya project also showed G42's goal to become a leading AI cloud provider outside the Gulf region.
The deal was also framed in diplomatic terms. At the time of the announcement, Brad Smith, Microsoft's president, framed the initiative as evidence of deepening diplomatic ties between the U.S. and the UAE, describing it as an unprecedented advance for digital access in Kenya.
Representatives for Microsoft and G42 declined to comment, according to Bloomberg.