Kenya's communications regulator is moving to create a dedicated licensing category for colocation data center operators, a shift that could significantly lower barriers to entry in one of East Africa's most active digital infrastructure markets. The Communications Authority of Kenya (CA) has issued a public notice proposing that colocation data center providers be licensed separately from the Network Facilities Provider-Tier 2 (NFP-T2) category under which they currently operate — a classification the authority acknowledges is a structural mismatch, given that data centers do not deliver telecommunications services to end users.
The proposed framework is designed to give the regulator clearer oversight of critical digital infrastructure while avoiding what it describes as an over-application of Network Facilities Provider licensing requirements. "The proposed approach is intended to provide regulatory clarity, enhance visibility over data centre operations, support investment in digital infrastructure, and align Kenya's framework with proportionate approaches adopted in comparable jurisdictions," the CA said in its notice. "The proposed license will cover entities that provide colocation data centre services, including the attendant supporting services."
Under the proposal, applicants would face a KSh 5,000 (US$38.64) application fee, a KSh 100,000 (US$772.74) initial fee, and an annual operating fee of KSh 80,000 (US$618.19) or 0.4 percent of gross annual turnover, whichever is higher. Licenses would run for 15 years, and a Universal Service Fund contribution — currently set at 0.5 percent of annual gross revenue, though subject to change — would form part of the cost structure. By contrast, an NFP-T2 license currently carries a 15-year license fee of KSh 15 million (US$115,910) or 0.4 percent of gross annual turnover, whichever is higher, meaning a standalone data center license would reduce fees substantially.
The CA also noted that entities already holding an NFP or Application Service Provider license would not need a separate data center license to establish and operate facilities, a provision that avoids duplicative regulatory burdens for established operators. The proposal is now open for public consultation, with stakeholders granted 30 days to submit comments. Based on that feedback, the framework will be finalized before a broader revision of Kenya's telecommunications market structure takes place, with implementation currently planned for the 2027/2028 financial year.
The regulatory shift comes as Kenya continues to draw interest from data center developers and operators even under the existing licensing regime. Earlier this week, Digital Realty expanded its data center campus in Nairobi following the opening of its Nairobi Two Data Center, a facility with 6.2 MW of capacity and 4,000 square meters of IT space available. The CA's proposal signals a broader recognition that data centers represent a distinct infrastructure class warranting tailored regulation — a trend already visible in markets such as Singapore, India, and the European Union, where policymakers have moved to create dedicated frameworks for colocation and hyperscale facilities. For Kenya, the stakes are considerable: a clearer, more proportionate licensing regime could accelerate capital deployment into a market that serves as a gateway to East Africa's growing cloud and connectivity demands.