Data centers are not new. For decades, data centers have supported banking, telecommunications, government services, commerce, and the internet. What is new, and increasingly concerning, is the speed and scale at which data centers are expanding. Artificial intelligence, cloud computing, video streaming, and other data-intensive services are driving demand for much larger facilities, more powerful equipment, and significantly more electricity, cooling, water, and land. The International Energy Agency (IEA) estimates that global data center electricity consumption could roughly double between 2025 and 2030. At the same time, communities in several wealthy nations are questioning whether the promised economic benefits justify the pressure placed on local infrastructure, household utility costs, water resources, land, and the environment. Data centers, however, have become essential infrastructure for the digital economy and have come to stay. The real choice is where they will be built, under what conditions, and who will benefit, making government and community readiness essential before construction begins, not after problems emerge.
As community opposition, regulatory delays, and energy constraints intensify in wealthier nations, some developers will look elsewhere. Developing countries may appear particularly attractive because they can offer land, growing digital markets, favorable tax arrangements, renewable-energy potential, and governments eager for foreign investment. But this should not be mistaken for an inevitable wholesale relocation. Data center decisions also depend on reliable power, high-capacity fiber connections, proximity to customers, political stability, cybersecurity, data-protection rules, and access to skilled workers. The World Bank similarly identifies connectivity, computing capacity, data context, and workforce competency as central requirements for AI readiness. The likely outcome is therefore a selective shift toward developing countries that can combine competitive costs with dependable infrastructure, informed communities, and credible governance. This creates a genuine opportunity, but also a danger, as countries may compete aggressively for investment without calculating whether their public systems can sustain data centers, whether host communities understand the consequences, or whether the long-term benefits will exceed the concessions made to secure it.
The first readiness test is reliable energy. Data centers require continuous, high-quality electricity; even brief disruptions can threaten operations. Yet many developing countries are already struggling to meet household, commercial, and industrial energy demand. The IEA notes that frequent outages and power-quality problems can make local data center operations costly and risky, encouraging businesses to use overseas hosting instead. A national electricity surplus does not necessarily mean that the proposed location has sufficient transmission capacity, substation resilience, or timely access to new generation. Leaders must look beyond a developer’s stated energy needs and assess the additional generation and grid infrastructure required - who will finance it, how quickly it can be built, and whether it will raise costs or reduce reliability for other users - before making a decision. It is also important to examine what happens if the data center project is delayed or abandoned after public infrastructure has been built. A data center should receive reliable electricity only in ways that do not shift instability or higher costs onto communities, and the best projects strengthen the broader grid by adding clean generation, storage, and capacity.
The second readiness test is environmental protection. Data center water requirements vary widely according to cooling technology, climate, facility design, and operating intensity. Although data centers' water use may appear modest at a national level, several facilities concentrated within one watershed can create serious local pressure. The World Bank cautions that global figures can obscure local competition for water, particularly in developing economies seeking AI-related investment. In warmer regions of developing countries, site‑specific planning is crucial because cooling demand often rises precisely when water supplies are most strained. Readiness must therefore be evaluated at the watershed and utility-system level, not through national averages or annual water allocations alone. Authorities should evaluate seasonal water availability, drought risk, cumulative demand, water quality, ecosystem needs, and the indirect water used to generate electricity. Developers should disclose expected withdrawals and consumption, justify why their cooling system fits the site, maximize reuse where possible, and commit to clear rules for responding to shortages.
The third test is governance and community readiness. Data center approvals often involve investment agencies, utilities, water authorities, environmental regulators, planning departments, and digital ministries. Each institution may perform its own function while no one evaluates the combined consequences. One agency may promise rapid approval, another may plan a new substation, and a third may hold incomplete information about water commitments or future climate risks. The World Bank emphasizes that weak data protection, cybersecurity, regulation, infrastructure, and talent can prevent countries from scaling AI responsibly. Readiness requires a coordinated decision process built on shared data and consistent assumptions. It also requires communities that understand the proposed project, the resources it will use, the benefits it may create, and the risks they may be expected to absorb. Governments should assess the entire proposed data‑center campus - including future expansion phases- and guard against small initial projects that later grow beyond the capacity originally evaluated. Contracts and permits should define performance standards, monitoring requirements, disclosure obligations, inspection rights, and consequences for noncompliance. Communities should receive understandable information and have a meaningful opportunity to influence decisions. A country is ready when its institutions can negotiate effectively, communities can participate meaningfully, and commitments can be verified and enforced throughout the data center lifecycle.
The fourth test is readiness to create lasting local value. Large capital announcements can be impressive, but much of the spending may go toward imported servers, specialized equipment, and temporary construction. Governments and communities should distinguish headline investment from permanent employment, domestic procurement, tax revenue, workforce development, research capacity, and affordable access to digital services. They must also calculate the public value of tax incentives, discounted land, preferential electricity rates, and publicly financed infrastructure. Hosting servers does not automatically give local businesses access to affordable computing power, strengthen domestic innovation, or give citizens greater control over their data. Those outcomes must be intentionally negotiated. The World Bank’s approach to AI infrastructure acknowledges that data centers must be accompanied by policy reform, adequate financing, competitive data markets, and strengthened local capabilities. It is important to consider the meaningful value that will return to the people, institutions, and natural systems that make the investment possible. Developing countries may consider tying incentives to measurable outcomes such as skills transfer, local supplier development, and transparent environmental performance.
Developing countries' readiness may differ by country, city, watershed, institution, community, and project, but the most responsible approach to readiness is to use staged approvals that allow development of data centers to public benefits. Governments should stress-test proposals against factors such as drought, grid failure, rising energy prices, climate hazards, technological change, and future community demand. On the other hand, communities should be equipped to ask informed questions, scrutinize promises, and participate in monitoring agreed safeguards and benefits. Governments must also retain the authority to change a project’s design, reduce its scale, move it to a more suitable location, or defer it altogether. Done well, data centers can strengthen digital capabilities, stimulate infrastructure investment, and connect developing economies to the next phase of global growth. Data center pushback in wealthy nations may bring new investors to the door of developing countries. However, this does not make every proposal a good deal, so governments and communities should focus on how their people, institutions, infrastructure, and environment can become stronger with the presence of data centers.
How ready are you for data centers?
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David Tsetse, Ph.D. | SiBI Institute