A $1bn Microsoft-G42 data centre project in Kenya has stalled after the Kenyan government refused to guarantee the annual compute capacity purchases Microsoft required to justify the investment. Microsoft asked Nairobi to commit public bodies to defined annual cloud spending — an unusual hyperscaler demand driven by the relatively small local enterprise market and financing requirements for higher-risk geographies. Kenya's tight fiscal environment and IMF programme constraints made such a multi-year commitment politically untenable. The project is not formally cancelled; a rescoped, smaller facility or alternative financing structure could revive it. Meanwhile, Microsoft announced a $329m South Africa expansion as a hedge. The stall carries reputational costs for Kenya, which had positioned the facility as an anchor for a broader East African digital hub, and sets a precedent for other African governments — Nigeria, Egypt, Senegal — currently negotiating with hyperscalers.
