By Jerameel Kevins Owuor Odhiambo
Data centres represent the physical backbone of our digital world, housing thousands of networked computer servers that store, process, and distribute vast amounts of information upon which modern society depends. These facilities range from small server rooms requiring 500 kilowatts to massive hyperscale operations consuming hundreds of megawatts of electricity continuously. Operating around the clock, data centres power everything from cloud computing and social media platforms to financial transactions and artificial intelligence systems, making them indispensable to contemporary economic activity.
The global data centre market, valued at $196.9 billion in 2023, is projected to reach $464.6 billion by 2032, reflecting a compound annual growth rate of 10.30 percent as digitalization accelerates worldwide. As of March 2024, more than 11,800 data centres operate globally, with the United States dominating the landscape by controlling 45.6 percent of the total, followed by Germany and the United Kingdom at 4.4 percent each. These facilities have evolved from simple storage spaces into complex technological ecosystems that require sophisticated cooling systems, uninterruptible power supplies, security infrastructure, and cutting-edge computing equipment to maintain the reliability that billions of users demand.
A single medium-sized data centre consumes approximately 110 million gallons of water annually for cooling purposes, equivalent to the water usage of roughly 1,000 households while larger facilities can consume up to 5 million gallons per day, rivaling the consumption of towns populated by 10,000 to 50,000 people.
Countries hosting major data centres gain substantial economic advantages that extend far beyond the immediate infrastructure investment, positioning themselves as digital leaders in an increasingly connected world. The United States, with 5,388 operational data centres, has established “Data Center Alley” in Northern Virginia, creating a concentrated hub that drives regional economic development and technological innovation. Germany’s 520 facilities and the United Kingdom’s 512 centres have similarly positioned these nations as European digital powerhouses, attracting billions in foreign direct investment. Emerging markets including India with over 140 data centres, Singapore, Brazil, Kenya, and the United Arab Emirates are rapidly scaling their investments to establish regional leadership positions.
Research from the Uptime Institute indicates that for every dollar invested in a new data centre, an estimated five to seven dollars in economic activity is generated in surrounding sectors such as construction, energy provision, telecommunications infrastructure, and information technology services. McKinsey & Company’s analysis emphasizes that countries with robust domestic data centre infrastructure experience up to 40 percent faster growth in their digital economies compared to those without such capabilities, demonstrating the multiplier effect of these investments on broader economic development, innovation ecosystems, and high-skilled job creation.
During a visit to Qatar, President William Ruto humorously recounted Kenya’s negotiations with Microsoft and G42 regarding the establishment of data centres, revealing a sobering reality that encapsulates the fundamental challenge facing developing nations pursuing digital transformation. The President disclosed that upon learning one data centre would require 1,000 megawatts of electricity, nearly half of Kenya’s total installed capacity of just 2,300 megawatts, the magnitude of the infrastructure gap became starkly apparent.
He candidly noted that Kenya’s existing 2,300 megawatts is insufficient even for current domestic needs, with the Kenya Power and Lighting Company regularly rationing electricity to specific areas through scheduled outages that are advertised to the public. The implications were unmistakable: if the proposed data centre became operational, approximately half the country would be plunged into darkness to keep the servers running. This stark arithmetic led President Ruto to conclude that for Kenya to genuinely grow into an industrialized nation capable of supporting such digital infrastructure while meeting domestic needs, the country must increase its energy production capacity to at least 10,000 megawatts. This anecdote illustrates the profound gap between digital aspirations and physical infrastructure realities that confront many developing economies, highlighting that data centre development cannot proceed in isolation from fundamental energy sector transformation.
Data centres serve as powerful economic multipliers that create direct and indirect employment opportunities across multiple sectors while attracting substantial foreign investment. Beyond the immediate construction phase requiring engineers, architects, and specialized contractors, operational data centres employ highly skilled technicians, IT professionals, security personnel, and facility managers who command competitive salaries. The presence of data centre infrastructure attracts related technology companies, cloud service providers, and digital startups, creating innovation clusters that generate additional employment.
Countries hosting hyperscale facilities benefit from billions in capital investment, property tax revenues, and economic activity that ripples through local communities. Studies demonstrate that data centre investment correlates strongly with regional GDP growth, with the multiplier effect extending to supporting industries including telecommunications, logistics, specialized equipment manufacturing, and professional services. For developing nations particularly, establishing data centre infrastructure signals technological readiness and attracts the type of high-value foreign direct investment that can transform economic trajectories.
Hosting domestic data centres enables countries to exercise control over their citizens’ and businesses’ data, reducing dependence on foreign servers and strengthening cybersecurity posture while enhancing digital sovereignty. When critical information including government records, financial transactions, healthcare data, and communications resides on servers within national borders, governments can better protect sensitive information from foreign surveillance, ensure compliance with local data protection laws, and maintain operational continuity during international disputes.
This digital sovereignty becomes increasingly important as geopolitical tensions rise and data localization requirements proliferate globally. Countries without domestic data centre infrastructure remain vulnerable to service disruptions, data access restrictions, and privacy concerns when their information resides on foreign servers subject to external jurisdictions. Additionally, local data storage reduces latency, improves service reliability, and enables faster response times for applications requiring real-time processing. As artificial intelligence, machine learning, and advanced analytics become more central to national competitiveness, controlling the infrastructure where these computations occur becomes a strategic imperative for maintaining technological independence and protecting national interests.
Countries investing heavily in data centre infrastructure position themselves at the forefront of emerging technologies including artificial intelligence, 5G/6G networks, Internet of Things, blockchain, and advanced analytics. The presence of state-of-the-art data centres attracts technology companies, research institutions, and innovative startups that require access to computational power and connectivity, creating virtuous cycles of innovation and development. Universities and research centers benefit from proximity to advanced infrastructure, enabling cutting-edge research in data science, machine learning, cybersecurity, and related fields.
This concentration of technological capability fosters knowledge transfer, skill development, and entrepreneurial activity that extends far beyond the data centre sector itself. Countries like Singapore, South Korea, and Estonia have successfully leveraged data centre investments to establish themselves as global technology leaders, demonstrating that strategic infrastructure development can accelerate national transformation. Furthermore, as technologies like autonomous vehicles, smart cities, telemedicine, and augmented reality become mainstream, countries with robust data centre infrastructure will be better positioned to deploy these innovations at scale, maintaining competitive advantages in the global digital economy.
Data centre construction drives broader infrastructure improvements including electricity grid enhancement, telecommunications network expansion, water management systems, and transportation networks that benefit entire regions beyond the immediate facility. The massive power requirements of modern data centres incentivize utilities to upgrade generation capacity, improve transmission infrastructure, and invest in renewable energy sources to meet demand sustainably. In Kenya’s case, the Microsoft-G42 partnership catalyzed development of geothermal-powered infrastructure in Olkaria, advancing the country’s renewable energy goals while creating capacity for industrial development.
Telecommunications companies invest in fiber optic networks, submarine cables, and last-mile connectivity to support data centre operations, creating digital highways that enable broader economic participation. Water utilities implement conservation technologies and treatment systems to serve data centre cooling needs efficiently. These infrastructure improvements create spillover benefits for surrounding communities, industrial facilities, and commercial operations that can leverage enhanced electricity reliability, improved connectivity, and modernized utilities to expand their own operations and competitiveness.
Data centres enable governments, businesses, and institutions to digitalize services, improve efficiency, enhance citizen engagement, and provide 24/7 access to essential information and transactions. E-government platforms hosted on local data centres allow citizens to access public services remotely, reducing bureaucratic delays, minimizing corruption opportunities, and improving transparency in public administration. Financial institutions can offer digital banking, mobile money, and financial inclusion services that reach previously underserved populations.
Healthcare providers deliver telemedicine, electronic health records, and diagnostic services to remote areas through reliable digital infrastructure. Educational institutions provide online learning, digital libraries, and remote access to educational resources that democratize knowledge access. Businesses leverage cloud computing, data analytics, and digital marketing tools to expand markets, optimize operations, and compete globally. The COVID-19 pandemic demonstrated the critical importance of digital infrastructure as societies shifted to remote work, online education, and digital commerce, with countries possessing robust data centre infrastructure weathering disruptions more effectively than those dependent on foreign servers or inadequate domestic capacity.
Data centres represent one of the most energy-intensive infrastructure types, with U.S. facilities alone consuming 183 terawatt-hours in 2024, over 4 percent of total national electricity consumption thus creating substantial burdens on power grids and threatening energy security. This figure is projected to grow by 133 percent to 426 terawatt-hours by 2030, equivalent to the electricity demand of entire nations, driven primarily by artificial intelligence workloads that require far more computational power than traditional applications. In Kenya’s context, President Ruto’s revelation that a single data centre would require 1,000 megawatts representing 43 percent of the country’s entire installed capacity; illustrates the fundamental incompatibility between current infrastructure and data centre ambitions.
Countries that cannot reliably supply existing domestic demand face impossible choices: either deny half their population electricity to power data centres or forego digital infrastructure development entirely. Even in developed nations, data centres strain electricity grids, with Goldman Sachs Research identifying them as the largest driver of future U.S. electricity consumption growth, while utility companies struggle to build generation capacity and transmission infrastructure quickly enough to meet surging demand. The energy burden extends beyond immediate consumption to include backup power systems, cooling infrastructure, and power conditioning equipment that collectively account for approximately 40 percent of total data centre energy use.
Data centres consume enormous quantities of freshwater for cooling purposes, creating direct competition with residential, agricultural, and industrial users while exacerbating water scarcity in already stressed regions. In 2023, U.S. data centres directly consumed 17 billion gallons of water for cooling operations, with hyperscale facilities expected to consume between 16 and 33 billion gallons annually by 2028, figures that exclude indirect water consumption from electricity generation which adds another 211 billion gallons annually.
Individual facilities present staggering demands: Google’s Council Bluffs, Iowa data centre consumed 1 billion gallons in 2024 alone—enough to supply Iowa’s entire residential water needs for five days. Large data centres can consume up to 5 million gallons daily, equivalent to towns of 10,000 to 50,000 people, placing them in direct competition with communities for limited freshwater resources. Artificial intelligence operations intensify this burden, with each 100-word ChatGPT query consuming approximately 519 milliliters of water, the equivalent of one bottle, multiplied across billions of daily users globally.
Many data centres rely on evaporative cooling systems that consume rather than recycle water, with contaminated wastewater often unsuitable for reuse due to dust, chemicals, and minerals that hamper efficiency if recirculated. Less than one-third of data centre operators actively track water usage metrics, creating transparency deficits that prevent communities from understanding the full impact on their water supplies, particularly problematic in drought-prone or water-stressed regions.
Despite industry commitments to sustainability, data centres generate substantial greenhouse gas emissions both directly through on-site generation and indirectly through electricity consumption, undermining climate goals and environmental health. A 2024 study found that U.S. data centres emitted 105 million metric tons of carbon dioxide equivalent to approximately 2 percent of all U.S. emissions with projections indicating continued growth as facilities proliferate and artificial intelligence workloads expand.
The environmental impact extends beyond carbon: data centres generate electronic waste from constantly upgraded equipment, contribute to urban heat island effects through waste heat discharge, and can contaminate local water supplies if cooling water containing chemicals and heavy metals is improperly discharged. Poorly managed facilities pose particular risks in developing countries where environmental regulations may be less stringent or enforcement inadequate, potentially creating pollution hotspots that affect surrounding communities.
The cooling systems required to prevent server overheating constitute 30 to 40 percent of data centre energy consumption, with most still powered by fossil fuel-generated electricity despite renewable energy commitments. While companies announce ambitious carbon neutrality targets, the reality is that natural gas supplies over 40 percent of electricity for U.S. data centres, with similar or worse ratios in many developing countries heavily dependent on coal or oil generation.
Developing countries face a fundamental paradox where the infrastructure prerequisites for hosting competitive data centres, reliable electricity, abundant water, robust telecommunications, and skilled workforce, are precisely the resources these nations lack, creating barriers to entry that perpetuate digital divides. Kenya’s situation exemplifies this challenge: even with geothermal energy potential and Microsoft-G42 partnership commitments totaling $1 billion, the country’s installed electricity capacity falls dramatically short of requirements for meaningful data centre development without compromising domestic supply.
President Ruto’s assessment that Kenya requires 10,000 megawatts more than four times current capacity to simultaneously support industrialization and data centre infrastructure represents investments of tens of billions of dollars over decades. Similar constraints afflict water infrastructure, with many developing countries struggling to provide clean water for basic human needs, rendering multi-million-gallon data centre demands untenable.
Telecommunications infrastructure, while improving through submarine cable investments, remains inadequate in rural areas where last-mile connectivity costs prohibit universal access. The skilled workforce required to operate, maintain, and secure sophisticated data centres is scarce, necessitating either expensive foreign expertise or multi-year training programs, further delaying meaningful deployment and creating dependencies on external partners.
The economic benefits of data centres concentrate among relatively small groups of highly skilled professionals, international corporations, and connected urban areas, often failing to meaningfully improve living standards for broader populations who bear infrastructure costs through higher utility bills and reduced service reliability. Employment generated by operational data centres, while high-paying, tends toward specialized technical roles requiring advanced education unavailable to most citizens in developing countries, creating islands of prosperity surrounded by persistent poverty. In Kenya’s case, skeptical citizens responding to President Ruto’s data centre announcements questioned how “common hustlers” would directly benefit from facilities serving international tech giants, highlighting the disconnect between headline-grabbing investments and tangible improvements in daily life for ordinary people. When electricity rationing increases to accommodate data centre demand, economically disadvantaged communities disproportionately suffer service disruptions while wealthier areas maintain reliable power.
Water competition similarly affects poor and rural populations most severely, as they lack financial resources and political influence to ensure adequate supply when industrial users claim scarce resources. The Carnegie Mellon University study estimating that data centres could increase average U.S. electricity bills by 8 percent, potentially exceeding 25 percent in highest-demand markets demonstrates how infrastructure costs transfer to consumers while profits accrue to corporations, a dynamic potentially more extreme in developing countries with weaker consumer protections and less competitive markets.
Data centres represent both tremendous opportunity and formidable challenge for nations pursuing digital transformation, requiring careful strategic planning, massive infrastructure investment, and balanced policy frameworks to realize benefits while mitigating substantial risks. The economic advantages are undeniable: job creation, foreign investment, technological advancement, and service improvement that can accelerate national development trajectories. However, the resource demands, particularly electricity and water are equally undeniable and potentially devastating for countries with inadequate infrastructure. President Ruto’s candid acknowledgment of Kenya’s power realities demonstrates the type of honest assessment essential for effective planning: aspirations must align with infrastructure capabilities, and bridging gaps requires sustained commitment measured in decades, not months.
For data centres to genuinely benefit developing nations rather than exacerbate existing vulnerabilities, several conditions must be met. First, renewable energy capacity must expand dramatically before significant data centre development proceeds, ensuring that digital infrastructure enhances rather than undermines energy security and climate commitments. Second, water conservation technologies including closed-loop cooling, air cooling in appropriate climates, and recycled water systems must be mandatory rather than optional to prevent unsustainable freshwater depletion. Third, benefit-sharing mechanisms must ensure that local communities receive tangible improvements in services, employment, and economic opportunity commensurate with resources consumed. Fourth, transparent reporting requirements must enable public understanding of actual resource consumption, environmental impacts, and economic contributions to inform policy decisions.
Fifth, countries should prioritize data sovereignty and domestic capacity building over purely commercial considerations, ensuring that infrastructure serves national development goals rather than merely providing cheap hosting for international corporations. The partnership model between Kenya, Microsoft, and G42, while promising, must ultimately deliver benefits to Kenyans beyond headline-worthy announcements and photo opportunities with international executives. The geothermal power commitment addresses one critical challenge, but questions remain about water consumption, employment quality and quantity, technology transfer, and whether services will meaningfully reach beyond Nairobi’s affluent corridors to rural areas where most Kenyans live.
Ultimately, data centres are neither inherent good nor inherent evil, but rather powerful tools whose impact depends entirely on how they are deployed, regulated, and integrated into broader development strategies. Countries proceeding thoughtfully investing first in renewable energy and water infrastructure, establishing robust environmental and social safeguards, ensuring transparent governance, and maintaining focus on inclusive benefit distribution can harness data centre potential to accelerate development. Those rushing forward without adequate preparation risk infrastructure collapse, environmental degradation, social conflict, and economic disappointment that leaves them worse off than before. The digital future is indeed compelling, but it must rest on solid physical foundations if it is to lift entire nations rather than merely enriching small elites while burdening broader populations with unsustainable resource burdens.
The writer is a legal researcher and writer.
