Kenya's Koko abruptly shuts down after the government blocked its sale of carbon credits

Koko Cooking Stove

Kenyan clean-cooking startup Koko Networks has shut down its operations in Kenya after the government blocked its sale of carbon credits. Koko sent mass SMS messages to customers on January 31, 2026, announcing that it was closing operations immediately. This closure has led to the layoff of the company's entire 700-person workforce, including those that depend on the company indirectly.

According to TechCabal's discussion with one of the company's board of directors, the shutdown decision came after two days of high-level discussions at the company’s Nairobi headquarters, as senior leaders reviewed their options following the government’s refusal to grant a letter of authorisation (LOA) that underpinned Koko’s model of supplying affordable biofuels to low-income households.

On Friday, FT reported that the clean energy startup was facing bankruptcy after the government’s refusal to grant a letter of authorisation (LOA) to sell carbon credits. The anonymous board member also confirmed this to TC, saying, “We were facing bankruptcy because selling carbon credits is key to our business model.”

In addition to what the anonymous employee told TC, management had to inform all staff not to return to work on Friday when the closure announcement was made. Notably, Koko’s shutdown could drive about 1.5 million households back to more harmful, polluting cooking options such as kerosene and charcoal.

The company supported more than 700 full-time jobs and relied on a vast network of thousands of agents that were managing over 3,000 automated fuel dispensers. So, this collapse will definitely affect more millions of lives in Kenya, both from the household and the people who depend on the company for means of financial survival.

Koko's carbon credit approval dispute with the government

The central reason for the shutdown is a deadlock between Koko Networks and the Kenyan government over carbon credit approvals, approvals that would allow the company to sell carbon credits from its clean-cooking operations in international compliance markets. Notably, Koko sells biofuel (otherwise known as bioethanol fuel), fuels derived from biomass, and stoves at subsidised prices in Kenay.

These Koko’s business models relied heavily on selling carbon credits internationally to fund and subsidise the cost of its ethanol cooking fuel and keep prices affordable for low-income households in Kenya. But the government refused to issue the documents, and these documents are legal authorisations required for a company registered in Kenya to sell carbon credits abroad, especially under the frameworks of Article 6 of the Paris Agreement.

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). In essence, without the legal authorisations from the government, there are no international sales of carbon credits into higher-value carbon credit markets and no funds to maintain its operations and subsidise prices in Kenya.

The insider said the company can no longer sustain its subsidised model with the LOA being denied because it cut off necessary funds to cover the cost of those subsidies and sustain operations. Now, Koko’s anticipated carbon revenue could not materialise, undermining the core economics of its business and leaving it unable to continue operations.

The reason for the government's blockage is still unknown, but some have described the dispute as part of a clash over how carbon finance works and regulatory support for clean-energy startups. Koko Networks had been one of Kenya’s most prominent climate-tech startups. It sold bioethanol cooking fuel and smart stoves, often through automated “KokoPoints”, and was backed by entities like the World Bank’s Multilateral Investment Guarantee Agency (MIGA).

MIGA, the World Bank’s political risk insurance arm, gave Koko a safety net that promised (agreed) to protect the company if it ran into certain serious government- or country-related problems like civil unrest, land expropriation for public use, and breaches of contract. This guarantee was meant to reassure investors and lenders that Koko wouldn’t lose everything because of political or regulatory actions outside its control.

Through this guarantee, Koko secured a $179.64 million (KES 23.18 billion) guarantee from the guarantor, the World Bank, to support its expansion in Kenya. 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. But the shutdown comes a year after the company secures the funds.