Microsoft and UAE-based G42 announced a $1 billion investment package for Kenya in May 2024. The deal included plans for a geothermal-powered data center in Olkaria that would support a new Azure cloud region for East Africa.

Kenyan officials described it at the time as the largest single private-sector digital investment in the country’s history.

As of May 10, 2026, the data center project faces significant delays. No construction has started, and the original operations timeline has passed. Reports from Bloomberg state that talks broke down over demands for government payment guarantees to cover a set amount of computing capacity. Kenyan officials say discussions continue, and the project has not been canceled.

Power Capacity Concerns

President William Ruto addressed the issue in a recent speech in Nairobi. He said that powering the full-scale data center would require roughly one-third of Kenya’s total installed electricity capacity of about 3,000 to 3,200 megawatts.

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

Ruto noted the government entered the agreement with initial excitement but later recognized the scale of the electricity demand. He used the example to stress the need for Kenya to expand its power generation to 10,000 MW by 2030.

Officials, including Tech Envoy Philip Thigo, have said Ruto’s comments point to the importance of building more capacity rather than ending the Microsoft project.

Kenya relies heavily on renewable energy, with geothermal energy accounting for a large share of its energy mix. The Olkaria site was chosen for its access to geothermal power. However, current grid capacity limits the ability to support a large hyperscale facility without new generation and transmission lines.

Dispute Over Payment Guarantees

Aside from the power issue, Microsoft and G42 sought commitments from the Kenyan government to make annual payments to ensure steady revenue. According to reports, the government could not agree to the requested level of guarantees. Principal Secretary John Tanui said the talks involve project structuring and power supply arrangements.

The original plan called for an initial phase of around 100 MW with the potential to grow much larger. A concept note sent to the National Treasury did not receive full clearance.

Kenyan authorities continue to express support for the broader digital goals, including AI skills training, local language models, and innovation programs linked to the investment.

Bureaucracy and Investment Challenges

Kenya has faced repeated complaints about bureaucratic delays and demands that discourage large foreign investments.

This situation fits a pattern of difficulties in securing large foreign projects in Kenya. One former executive from a major American company, whose annual revenue once approached half of Kenya’s GDP, described sending a vice president to explore a manufacturing plant.

The vice president could not secure a meeting with the Health Cabinet Secretary because gatekeepers demanded shares before any discussion could begin. The company instead went to Ethiopia, where the team received a high-level welcome.

Nigerian billionaire Aliko Dangote also encountered difficulties in Kenya. In 2015–2018, Dangote planned a major cement factory in Kenya that was expected to cost around $100 billion shillings and create thousands of jobs.

Journalist Jeff Koinange later quoted Dangote as saying that officials in Kenya put personal greed ahead of the national interest. Dangote reportedly told Koinange he did not expect Kenya to be more corrupt than Nigeria, which led him to shelve the plans.

Instead, Dangote expanded cement operations in Ethiopia, where the company operates a 2.5 million tonnes-per-annum plant at Mugher, and announced a $400 million investment in 2025 to double its capacity to 5 million tonnes. Ethiopia has also secured a $2.5 billion fertilizer plant deal with Dangote Group.

Why This Matters

The delay comes as the United States, under President Donald Trump, maintains efforts to expand technology ties in Africa. The Microsoft-G42 project was announced during President Ruto’s 2024 visit to Washington and formed part of wider U.S.-UAE-Kenya cooperation in digital infrastructure.

Kenya aims to position itself as a technology hub in East Africa. Large data centers require reliable electricity, water, and connectivity at scales that test many developing economies.

The outcome of these negotiations will affect not only this $1 billion deal but also future interest from other global technology companies considering investments in the region.

Success depends on Kenya securing additional power generation and reaching a commercial agreement that satisfies Microsoft’s requirements for revenue certainty. A smaller initial phase tied to new renewable capacity remains one possible path forward.