Microsoft’s ambitious push to expand AI and cloud infrastructure in Africa has encountered a major setback after negotiations over a planned data centre in Kenya reportedly faltered over payment guarantees demanded from the government.
According to Bloomberg News, talks between the Kenyan government, Microsoft and Abu Dhabi based AI company G42 slowed after the companies requested guaranteed annual payments tied to the project’s future capacity. Kenyan officials reportedly could not meet the level of guarantees being sought, causing discussions to break down.
The project, first announced in 2024 during Kenyan President William Ruto’s state visit to Washington, was expected to become one of the most significant technology infrastructure investments in East Africa. Microsoft and G42 had planned to invest about $1 billion into the facility as part of a broader effort to expand cloud computing and AI services across the region.
The proposed facility was also positioned as a strategic AI infrastructure project for Africa. It was expected to run entirely on geothermal energy while powering Microsoft Azure cloud services for East African businesses, governments, and developers. Supporters viewed the project as a major step toward reducing Africa’s dependence on overseas data infrastructure and improving access to AI computing capacity within the continent.
Bloomberg reported that Microsoft and G42 wanted the Kenyan government to commit to paying for a minimum amount of computing capacity annually. Such guarantees are common in some infrastructure deals, especially where investors seek protection against uncertain demand. However, the scale of the guarantees reportedly became a sticking point in negotiations.
Despite the setback, Kenyan officials insist the project has not been abandoned. John Tanui, principal secretary at Kenya’s Ministry of Information, told Bloomberg that discussions are continuing and that the initiative has not been withdrawn. He added that the scale of the planned facility still requires further structuring, particularly around energy and power requirements.
The uncertainty surrounding the project highlights the growing tension between Africa’s AI ambitions and the financial realities of building large scale digital infrastructure. Demand for AI computing power is surging globally, but developing nations often face difficulties financing the enormous energy and operational costs required to support hyperscale data centres.
For Microsoft, the Kenyan facility was meant to strengthen its position in Africa’s emerging AI economy as competition intensifies among global cloud providers seeking dominance in new markets. A delay or downsizing of the project could slow efforts to localize advanced AI infrastructure on the continent at a time when African governments and startups are increasingly demanding domestic cloud and computing capacity.
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Emmanuel Abara Benson is a business journalist and editor covering artificial intelligence, global markets, and emerging technology.
He has previously worked with Business Insider Africa and Nairametrics, reporting on finance, startups, and innovation.
His work focuses on AI, digital economy, and global tech trends.
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