A planned Microsoft and G42 data centre in Kenya has stalled after the Kenyan government declined to provide the payment guarantees requested by the two companies.
Bloomberg reported that Microsoft and Abu Dhabi-based technology conglomerate G42 had asked the Kenyan government to commit to buying a fixed amount of cloud computing capacity each year.
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The discussions broke down when the government could not make that commitment.
According to the report, the companies could now reduce the scale of the project.
Kenya’s principal secretary for information, John Tanui, said in the report that the project was still active.
“It is not failed or withdrawn,” Tanui said, adding that power requirements are also still under discussion.
The project was announced in 2024 as a $1bn geothermal-powered data centre aimed at increasing cloud computing capacity across the region.
At the time of the announcement, Microsoft president Brad Smith said the proposed project was the “single biggest step to advance the availability of digital technology” in Kenya’s history.
An initial phase of about 100 megawatts had been expected to become operational this year, with a longer-term target of up to one gigawatt.
Kenyan President William Ruto has also said that the project’s energy requirements are greater than the country’s available resources, the report added.
Separate discussions are continuing for a smaller 60-megawatt facility with local developer EcoCloud.
The stalled development was the first joint venture between Microsoft and G42 after Microsoft’s $1.5bn investment in the UAE-based group.
Before that investment, G42 had agreed to divest from Chinese holdings and remove Chinese equipment from its operations.
For G42, the Kenya project represented its plans to expand beyond its home market and establish itself as a significant artificial intelligence (AI) cloud provider.
The data centre was the central part of a wider Microsoft commitment to build Kenya’s AI capabilities, including job training programmes and new software models.
