Why Kenya is poised to lead Africa's next data centre wave

Konza Data Centre. [File, Standard] A global rush to build next-generation data centres is exposing cracks in the construction supply chain as artificial intelligence (AI) workloads transform the technological and infrastructure demands of the digital economy. According to the newly released 2025-2026 Data Centre Construction Cost Index by global professional services firm Turner & Townsend, 2025 marks an inflexion point for the industry as it shifts from traditional cloud-based, air-cooled facilities to high-density, liquid-cooled data centres built to handle the computational intensity of AI applications. The report paints a picture of a sector under mounting strain, revealing that 83 per cent of industry experts believe global supply chains are not yet prepared to deliver the advanced cooling technologies essential for AI-ready facilities. In Africa, the report highlights a maturing but uneven data centre landscape. The construction cost per watt across key markets shows Lagos (Sh1,386 per watt) and Cape Town (Sh1,364 per watt) as the most expensive cities, followed by Johannesburg (Sh1,328 per watt). Nairobi, however, emerged as the most affordable African city for data centre construction at Sh1,286 per watt, reflecting growing local capacity and improving construction efficiency. Experts say this affordability positions Kenya as a potential magnet for investors seeking cost-effective locations for AI and cloud infrastructure in East Africa. "Nairobi's competitive costs demonstrate the benefits of growing local expertise and more established construction supply chains," said Turner & Townsend's Data Centre Cost Index Lead for Africa Wendy Cerutti. "It reflects the city's evolution from a secondary market to a viable regional hub for digital infrastructure investment." The report attributes the narrowing cost gap across African cities to maturing supply chains and increased private investment. For instance, Lagos, which entered Turner & Townsend's 2024 index as the seventh most expensive city globally, has seen costs stabilise as new supply chains and technical expertise take root. The city now ranks 27th globally, underscoring the rapid transformation in the continent's digital ecosystem. Africa's data centre boom is being fuelled by a mix of global and local players, including Microsoft, Amazon Web Services (AWS), Google, and several regional developers investing billions in cloud infrastructure, storage, and connectivity. "Africa's data centre sector reflects a burgeoning digital landscape, fuelled by the twin engines of demand for cloud services and the AI revolution," Cerutti noted. "Governments are stepping up with supportive policies, while operators are racing to deploy infrastructure that will anchor the continent's digital economy for decades." The move from air-cooled to liquid-cooled systems, which enable higher processing densities, is a defining trend of the AI data centre era. However, this transition requires specialised equipment and highly skilled contractors, both still scarce in many emerging markets. The report emphasises the need for innovation and collaboration between developers, suppliers, and regulators to scale up the production and delivery of advanced systems. "Supply chain innovation will be critical. Developers must work closely with manufacturers to localise production, while governments should incentivise training and sustainable technology adoption," Cerutti said. Sustainability is also climbing higher on the agenda. With AI workloads demanding significantly more power, operators are under pressure to incorporate energy-efficient designs, renewable energy sources, and circular water systems to minimise environmental impact. The report advises developers and investors to review procurement models, strengthen partnerships with local suppliers, and invest in modular, scalable designs to enhance resilience. It also urges governments to streamline approvals, expand grid infrastructure, and align policy frameworks with the continent's digital growth ambitions. "Africa may hold just one per cent of global digital infrastructure, but it's home to 20 per cent of the world's population," Cerutti emphasised. "The opportunity lies not just in building more data centres, but in shaping a digital future that is inclusive, resilient, and ready for the demands of AI." In Kenya, initiatives such as the digital superhighway and Konza Technopolis have positioned the country as a continental leader in ICT infrastructure. Meanwhile, private-sector projects in Mavoko and Karen technology zones are expanding capacity to meet growing enterprise and hyperscale data needs. However, power availability has emerged as the single biggest challenge, with nearly half of industry respondents citing access to reliable energy as the top obstacle to timely project delivery. "We are witnessing the dawn of a new era in data infrastructure, one where the complexity of AI workloads is redefining design, energy, and cooling requirements," said Cerutti. "But the rapid pace of transformation has outstripped the readiness of local supply chains and energy systems to keep up." The annual index, based on cost data from 52 global markets, indicates that construction cost inflation for traditional data centres remains high at 5.5 per cent in 2025. In markets such as the United States, the report identifies a seven to 10 per cent cost premium for AI-optimised facilities compared to traditional builds of similar IT capacity, driven by the expense of advanced cooling systems, increased power density, and specialised hardware. While global demand for data infrastructure continues to surge, the report warns that project delays are likely to worsen unless procurement and energy access issues are addressed. "Power access, regulatory bottlenecks, and the ability to integrate sustainable design solutions are now the defining challenges for developers. Without coordinated action, we risk slowing down the digital transformation that AI promises," Cerutti cautioned. Industry analyst Dr Paul Karanja added that East African governments must act quickly to reinforce competitiveness. "AI-ready data centres consume exponentially more energy and require sophisticated liquid-cooling systems. Unless African governments prioritise stable energy supply and modern regulation, we risk building infrastructure that can't meet tomorrow's demands," he said. With global construction costs rising and the race for AI infrastructure intensifying, Kenya's cost advantage could make it a key destination for data investment in East Africa, provided it continues to strengthen energy reliability, technical expertise, and regulatory readiness.

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