Kenya Lost a $1 Billion Data Center — And Nobody Is Talking About It

[00:00:00] Speaker 1: kenya didn't just lose a data center it lost a compounding economic position microsoft was here to help g42 was part of the deal but kenya threw in the towel honestly that is not a fashionable thing to do at this point in time we are in a digital era or ai era if you like it that way and having a data center is a massive achievement you know you do online shopping do whatsapp video calls browse all that you find normal but the enormous work at data centers making that happen can be shocking now in this ai era kenya africa silicon savannah should be leading in data centers but someone could be wondering what am i talking about because they think kenya already has sufficient data centers and we are okay no we aren't okay allow me to explain it though first there is a quote i picked up a few days ago and it has been ringing on my mind all day you should pay attention to this quote too as we try to make sense of kenya's loss of a hyperscale data center investment at africa ceo forum annual summit in kigali 2026 one of the speakers emmanuel bazandio said as i quote ai cannot benefit all of humanity if africa is not included that is profound uh from a company [00:01:33] Speaker 2: perspective i'm the africa leader i joined the company about a year and two months ago and ever since i commenced my tenure has been quite exciting um the company's mission is that ai benefits all of humanity but it cannot benefit all of humanity if africa is not included now including africa means [00:01:50] Speaker 1: africa should have data centers to support this inclusion and kenya was to be in the lead but let me shock you in may 2024 president ruto was in washington dc for a state visit the first african leader invited in 16 years he walked out with a deal where microsoft and uae's g42 committed to a 1 billion us dollars data center in kenya's old career geothermal fields but as we talk today the deal has told and the reason for that is insufficient electricity to power a data center kenya's installed capacity is slightly over 3000 megawatts and this data center required 1000 megawatts implying half of the country would have gone off-grid just to power this facility you know when i went for the um for the for the trip i went to [00:02:49] Speaker 3: to the united states with biden so we signed an agreement there between g42 of uae microsoft of america and kenya to establish the data centers the data center [00:03:25] Speaker 1: shocking laughable but let's continue the deadline for completion for this data center was to be this year that is 2026 but what kind of data center did kenya lose when in africa kenya is second in terms of data centers south africa leads with 56 data centers kenya sits second with 19 and nigeria third with 17 together they account for about 41 percent of africa's entire data center infrastructure on the continent anyway for ethiopia it is essentially a beginner and has a wing good data center in addis ababa which is just 15 megawatts shocking it is the country's first major commercial data center facility now i would like you to understand this there are three main data center types there is enterprise data data center this is built and used by one company for its own operations for example safarcom's internal servers there is also colocation this one is a shared data center where multiple companies rent space and power these ones we have it is kenya's most common type by the way nxtra by airtel africa some time back broke ground on a 44 megawatt data center at tattoo city this was said to be east africa's largest now this is a colocation one also there is hyperscale this one includes massive facilities built by google microsoft or amazon to power the global cloud this word kenya doesn't have but it has to have it it has to have it for one data sovereignty right now every kenyan government system bank and hospital using cloud storage has its data sitting on servers in south africa or europe a local hyperscale data center keeps that data inside kenya's borders kenya also needs a hyperscale data center for latency you know speed of the internet east africa's azure customers today are served by south african or european regions adding milliseconds of latency and regulatory complexity to every transaction get this right for a nairobi startup a kenyan banks app or a hospital's system that lag you experience is costly at scale but assuming we had a hyperscale data center here all that would be avoided kenya also needs this data center as an economic multiplier a hyperscale data center doesn't just store data it makes kenya the routing point for east africa's entire internet economy every regional company ethiopia uganda tanzania rwanda would pay kenya to host their cloud workloads okay this is recurring foreign revenue another reason is obviously for ai access ai models run on data centers no local hyperscale means kenyan developers researchers and businesses accessing ai tools are doing so through through infrastructure they don't own can't control and pay premium prices for to make it more comprehensible without a hyperscale data center kenya's digital economy remains built on someone else's foundation every transaction every government record every ai query the rent goes to either south africa you know johannesburg or amsterdam so when microsoft discovered kenya doesn't have enough power they cancelled these 1 billion us dollars investment this means kenya lost direct investment of 1 billion us dollars kenya lost direct jobs of over 1 000 indirect jobs projected were more than 5 000 kenya lost internet access target for 20 million kenyans see this kenya's data center market size as of 2023 was 184 million us but with this data center the projected market size by 2029 would be 370 million us dollars that is at 12 compounding annual growth rate let me emphasize this this microsoft and uae's g42 investment was projected to create over 1 000 direct and 5 000 indirect jobs these aren't just employment numbers at kenyan average tech sector wages that is hundreds of millions in annual household income all that is just gone like that unless kenya fixes its electricity capacity get this right many people hear data center and picture a big building with computers that is not what this is a hyperscale data center the kind microsoft was to build in kenya needs five things working perfectly every single day uninterrupted power to power its operations significant amount of water for industrial cooling running 24 7 high-speed submarine cable connectivity kenya has a cost line a big advantage secure physical infrastructure kenya is stable enough to offer such security also such a data center requires government guaranteed contracts before a single foundation is poured you know when you miss any of these components the deal dies kenya missed two power and government guaranteed contracts essentially kenya signed the announcement for these data center before anyone running the energy math also due diligence wasn't done you know kenya wasn't even ready to underwrite the investors cloud based on reports microsoft asked the government to commit guaranteed annual capacity payments before a single megawatt was confirmed as kenya's deal is told microsoft pivoted to south africa with 329 million us dollars investment south africa offers land and offers power and water readiness when you look at ethiopia and south africa they have registered growth in power generation ethiopia has 8 000 megawatts installed anchored by the grand ethiopian renaissance dam at over 5 000 megawatts alone this is impressive now ethiopians are diversifying their power sources for south africa it has 48 000 megawatts 16 times kenya's a 1000 megawatt data center is a two percent ask on that grid that is south africa's grid so kenya's major challenge is power it has sea access which ethiopia lacks but in this ai race south africa will give kenya a run for its money however remember this kenya is keen on producing more energy it has greater thermal capacity wind and all manner of electricity sources all in all microsoft and uae's g42 data center laws is a huge one the power grid is insufficient but kenya negotiated a 1 billion us dollar infrastructure deal the way it negotiates a handshake with ambition and no architecture no energy audit and by the time ruto returned to his desk from washington dc the deal was already dead also kenya did not do geopolitical risk analysis because based on reports g42 is said to have connection with china and you see microsoft is america's world multinational company and understanding how china and us relate sometimes they cannot do business together this is a missed opportunity but for kubaliana [00:11:48] Speaker 3: and we are going to do business with the data center and we are going to do business with the data center and we are going to do business with the data center and we are going to do business with the data center and we are going to do business with the data center and we are going to do business with the data center and we are going to do business with the data center and we are going to do business with the data center [00:12:17] Speaker ?: and we are going to do business with the data center and we are going to do business with the data center [00:12:17] Speaker 3: we are going to do business with the data center and we are going to do business with the data center and we are going to do business with the data center and we are going to do business with the data center and we are going to do business with the data center and we are going to do business with the data center and we are going to do business with the data center. we are going to do business with the data center and we are going to do business with the data center and we are going to do business with the data center. We cannot make progress unless we have enough power.