Microsoft's $1 Billion Kenya Data Centre Project Stalls Over Payment Dispute

A major $1 billion data centre project in Kenya, backed by Microsoft and its partner G42, has reportedly halted due to stalled negotiations with the Kenyan government. The impasse centers on financial assurances, specifically Microsoft's request for guaranteed annual payments for fixed computing capacity, which Kenyan authorities declined to commit to at the requested scale. Originally announced in 2024, the geothermal-powered facility aimed to deliver 100 megawatts initially, expanding to 1 gigawatt, to boost regional cloud infrastructure. However, concerns over energy demands have arisen, with President William Ruto noting that powering the centre could require switching off half the country. While Bloomberg reports that partners are considering downsizing, Kenyan officials state the project is not cancelled but under review regarding structure and power needs. This development impacts Microsoft's strategy to expand AI and cloud services in emerging markets amid growing competition from Chinese tech firms. The project represents a significant joint venture following Microsoft's investment in G42, which previously divested from Chinese-linked holdings. Talks for a smaller separate facility with EcoCloud continue, indicating ongoing interest in developing Kenya's digital infrastructure despite current setbacks.