By Abbas Nazil
Koko Networks, a Kenyan clean cooking startup, has shut down operations and laid off its entire workforce of about 700 employees after the government blocked its ability to sell carbon credits.
The decision followed the government’s rejection of a letter of authorisation required for Koko to trade carbon credits, a move that executives say effectively collapsed the company’s business model.
Sources within the company said the shutdown came after two days of intense meetings at Koko’s Nairobi offices, where management concluded that continuing operations was no longer financially viable.
Employees were informed on Friday that the company was closing immediately and that they should not report to work the following day.
A board member said the company faced imminent bankruptcy because revenue from carbon credit sales was essential to sustaining its operations.
The Financial Times reported that Koko’s financial crisis was triggered directly by the government’s refusal to approve its carbon credit arrangements.
Koko’s closure is expected to have significant social and environmental consequences, potentially pushing around 1.5 million households back to using dirtier fuels such as charcoal and kerosene.
The startup provided subsidised bioethanol and cooking stoves to low-income households, positioning itself as a key player in Kenya’s clean cooking transition.
Beyond its direct employees, Koko worked with thousands of agents who operated more than 3,000 automated fuel dispensing machines across the country.
The company sells bioethanol, a fuel derived from biomass, at heavily subsidised prices made possible by revenue from carbon credits sold abroad.
A litre of bioethanol was sold at about 100 Kenyan shillings, roughly half the prevailing market price.
Cooking stoves were also sold at a fraction of their market value, allowing low-income households to access cleaner energy options.
With the rejection of the authorisation letter, insiders said Koko could no longer fund these subsidies or maintain its operations.
The shutdown comes just over a year after Koko secured a major guarantee from the World Bank to support its expansion in Kenya.
The guarantee, valued at about $179.6 million, was provided through the Multilateral Investment Guarantee Agency to protect the company against political and contractual risks.
At the time, Koko planned to add at least three million new customers in Kenya by the end of 2027.
The expansion was aligned with the Kenyan government’s stated goal of increasing the adoption of clean cooking fuels.
Founded in 2013 by Greg Murray, Koko was created to combat deforestation caused by widespread charcoal use.
The company raised more than $100 million in debt and equity from investors including Verod-Kepple, Rand Merchant Bank, Mirova and the Microsoft Climate Innovation Fund.
Koko did not immediately respond to requests for comment on the shutdown.
The closure highlights growing tensions between climate-focused startups and regulatory frameworks governing carbon markets in Kenya.
It also raises questions about the future of carbon credit-dependent business models supporting clean energy access for low-income households.