Kenya’s Koko shuts down after carbon credit dispute with government

Koko Networks, a Kenyan clean-cooking startup, on Friday laid off its entire 700-person workforce and shut down operations after the government blocked its sale of carbon credits.

A board member and an employee, who asked not to be named to speak freely, told TechCabal that the decision followed two days of intense meetings at the company’s Nairobi offices, where executives weighed their options after the Kenyan government rejected a letter of authorisation (LOA) critical to Koko’s business model of selling biofuels to low-income households.

On Friday, the Financial Times reported that the startup was facing bankruptcy after failing to get the government’s nod to sell carbon credits. Management informed staff of the immediate closure on Friday, telling them not to report to work the next day, according to people who spoke to TechCabal.

“It’s been two days of intense deliberations on the matter,” the board member said. “We were facing bankruptcy because selling carbon credits is key to our business model.”

Koko’s shutdown could push about 1.5 million households back to dirtier, more polluting fuels like kerosene and charcoal. The company also employed over 700 direct employees and worked with thousands of agents operating over 3,000 automated refuelling machines.

Koko did not immediately respond to a request for comments.

Koko sells biofuel, fuels derived from biomass, and stoves at subsidised prices. It relies on revenue from carbon credit sales abroad to fund these subsidies and its operations. The startup sells a litre of bioethanol at KES 100 ($0.77), compared with a market price of KES 200 ($1.54). The cost of the stoves is also subsidised at KES 1,500 ($11.53), against the market price of KES 15,000 ($115.3).

With the LOA rejection cutting off this crucial funding, the insiders said the company can no longer sustain its subsidised model. The shutdown comes barely a year after Koko secured a $179.64 million (KES 23.18 billion) guarantee from the World Bank to support its expansion in Kenya. The guarantee, provided through the Multilateral Investment Guarantee Agency (MIGA), the Bank’s political risk insurance arm, was supposed to protect the company against risks including civil unrest, land expropriation for public use, and breaches of contract.

At the time, Koko had planned to add at least three million customers in Kenya by December 2027, an expansion that would have advanced the government’s push to grow the adoption of clean cooking fuels. Founded in 2013 by Greg Murray to combat deforestation driven by the widespread use of charcoal, the startup has raised more than $100 million in debt and equity financing from investors like Verod-Kepple, South Africa’s Rand Merchant Bank, Mirova, and Microsoft Climate Innovation Fund.