The saga of Koko Networks is one of the most significant business collapses in recent Kenyan history, a cautionary tale of what happens when climate finance, government policy, and millions of households meet on the ground.
Employees at one of Africa’s biggest clean cooking firms received a text message on Monday, January 31, 2026, telling them not to appear at work. The company shut down its Kenyan operations at the end of January and entered insolvency proceedings on February 1. PricewaterhouseCoopers was appointed joint administrator. Over 700 jobs were lost as the company laid off direct employees after the shutdown. Yet about 1.5 million Kenyan households had relied on Koko’s subsidized bioethanol cooking fuel for years and were suddenly without their main cooking source.
The failure wiped out an estimated $300 million in investment in Kenya, leaving more than 3,000 automated fuel dispensers idle across urban and peri-urban Kenya. The key question is: how can a World Bank-funded, Microsoft Climate Innovation Fund- and international investor-supported company collapse so quickly?
The Business Model: A Delicate House of Cards
Australian entrepreneur Gregg Murray established Koko in 2013 to provide clean cooking solutions to people living in low-income urban areas. The company developed an automated dispensing machine network of more than 3,000 “fuel ATMs,” located in neighborhood shops throughout Kenya. A mobile app or card let customers fill reusable canisters with clean fuel once their accounts were activated, making clean fuel as readily available as mobile airtime.
The company’s prices were competitive: a two-burner stove cost only KSh 1,500, while the market price was around KSh 15,000, representing a 90% discount. Bioethanol was sold at about KSh 100 per liter, roughly half the market price of KSh 200.
However, these prices were not viable without subsidies. Koko’s entire business model relied on selling carbon credits in international compliance markets. It cost nearly KSh 13,600 per customer to keep its fuel and stove affordable, but the company funded these subsidies through carbon-credit revenues.
The calculations were simple, but the math was shaky. A customer who needed 10 liters of fuel a month had to pay Koko about KSh 1,000 per month in subsidies (or KSh 12,000 per year). If the figure were applied to one million households, it would amount to an annual subsidy cost of KSh 12 billion ($93 million). The subsidy was possible only because Koko could produce about 6 million carbon credits per year, certified by the Gold Standard under a methodology developed by the UN. At launch, Koko had issued almost 15 million credits.
These credits were not traded on the less volatile voluntary carbon market, where prices have been low. Koko designed its business to target compliance markets, specifically the International Civil Aviation Organization’s Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA), where eligible credits could command substantially higher prices. The Kenyan government issued one key document needed to access these markets: a Letter of Authorization (LoA).
The Government Standoff
In June 2024, the Kenyan government signed an investment framework agreement with Koko, which seemed to set the stage for transactions on the compliance market. The deal granted Koko ownership rights over carbon credits and included government commitments related to their transfer.
However, the company never received the authorization letter. The company waited for at least eight months. The government had earlier revoked Koko’s import license for bioethanol products in 2023, leaving the company dependent on local supplies that it considered unreliable and costly.
The government’s public justification cited market concentration issues. The business model did not fit, Trade Cabinet Secretary Lee Kinyanjui said: “If Kenya had accepted the volumes they wanted, no other company would have benefited because they would have taken up the entire allocation. If Koko had claimed as many credits as it did, it would have completely cornered Kenya’s international compliance market, much to the detriment of other sectors like agriculture, manufacturing and the forestry industry.”
The issue is “multidimensional” and raises questions about the credibility of cookstove carbon credits, Kenya’s climate policies, carbon market rules, transparency in business models, and diplomatic pressures, David Ndii, President William Ruto’s economic adviser, said.
Questions were also raised about Koko’s carbon-accounting methodology. An investigation by REDD-Monitor, linked to an analysis by cookstove project specialist Tom Price, suggested Koko used a 93% non-renewable biomass (fNRB) assumption for its cookstove projects. In contrast, the fNRB use rate for urban cooks in Nairobi and other cities could have been as high as 38%. Cookstove carbon credits have faced significant scrutiny since their inception because of reports of overestimated emissions savings. An investigation of sampled projects published in 2024 found that claimed emissions savings were more than nine times too high.
The Collapse: What Happened When the Credits Stopped
Without the LoA, Koko could not sell its credits to the targeted compliance markets. Without carbon revenues, it would not have had the funds to subsidize fuel prices. Without subsidies, the business model became financially unsustainable.
The shutdown was immediate and complete. After internal discussions, management decided to cease operations. Fuel supply was halted, and many automatic refill machines were turned off. Employees were told not to come to work the following Monday. The closure was announced via mass text messaging on January 31 to staff and clients. Koko did not initially make a detailed public statement.
The Human Toll
The shutdown was a disaster for the families that depended on Koko.
Grace Kathambi, a resident of Kibera, said it was a life-changing experience. “I did not have enough money to fill a gas cylinder, but I had Koko as my next best bet if I wanted to cook, and with approximately 30 U.S. cents I could fill enough Koko fuel for a cooking session.”
Margaret Auma added: “I can’t afford to use gas… Koko made life easy for those of us who don’t earn that much from casual jobs; we feel abandoned; it’s not our fault.”
The machines stopped operating without warning for Fredrick Onchenge, a Koko agent who used to serve up to 50 customers daily. “I was confused at first, and then I realized what had just happened: I lost my job. I called the salesperson, but they were out of service.”
The closure affected:
- More than 700 direct workers who lost their jobs.
- Thousands of agents who operated the dispensing machines and depended on commissions.
- About 1.5 million households that had relied on Koko’s affordable cooking fuel.
Now they face a hard choice: either return to charcoal and kerosene as the government moves away from them, or pay for an expensive LPG cylinder, which the draft estimates at around KSh 1,200.
The Financial Wreckage
As a result of Koko’s collapse, there was a trail of financial casualties:
About $300 million had been invested in Kenya, with a substantial portion going toward production and distribution infrastructure.
Investors including Microsoft’s Climate Innovation Fund, Mirova, Rand Merchant Bank and Verod-Kepple have provided more than $100 million in debt and equity to the company.
A World Bank Group political risk guarantee worth $179.6 million (KSh 23.18 billion) from the Multilateral Investment Guarantee Agency (MIGA) covered Koko’s investment against specified political risks, including breach of contract, expropriation, transfer restrictions, war and civil disturbance.
The MIGA guarantee could become particularly important in the fallout from Koko’s collapse. The taxpayer risks paying a potential compensation bill of around KSh 21 billion ($162 million) for failing to meet contractual obligations, unless the government can prove it fulfilled its obligations to Koko.
The government argues that the guarantee covers political risks, including expropriation, civil unrest, and breach of contract, but that the company also had a duty to comply with existing laws and ensure that its business model complied with Kenyan regulations. If the dispute proceeds to arbitration, the process could have far-reaching consequences for future climate finance in Kenya and Africa at large.
The Asset Sale: What Remains
In July 2026, PwC’s administrators began selling Koko’s assets, offering them to buyers willing to pay more than $15 million. The package includes:
- Patents, hardware designs, and software technologies.
- A canister factory in Sanand, Gujarat, India, which produces and sells stoves.
- The network delivering services to more than 3,000 Kenyan automated fuel stations.
- The company’s 0.25 MPa ethanol cooking-system technology, developed over more than 10 years.
The $15 million threshold indicates a preference to sell the business as a whole rather than split its assets. But if a buyer were to purchase it, they would need to develop a new business model or secure the necessary carbon-market approvals. The financing mechanism is crucial to the infrastructure’s success.
The affiliated Koko companies in India, namely Saarus Innovations Pvt Ltd and Koko Networks Pvt Ltd, are being wound up through voluntary liquidation.
The Bigger Picture: What’s at Stake for Clean Cooking With Koko’s Collapse
Koko’s failure has affected Africa’s clean cooking sector and raised fundamental questions about financing the shift to clean fuels.
“The clean cooking situation in Kenya, and indeed across Africa, is a crisis,” Amos Wemanya, a senior analyst at Power Shift Africa, said. This isn’t about emissions or climate targets; it is about development, health, dignity and household survival. The problem is immense.”Traditional cooking fuels in homes in Africa contribute to the deaths of hundreds of thousands of people each year from household air pollution (HAP). Four out of five Africans still use polluting cooking methods.
Koko’s model, which provides a carbon-credit subsidy to low-income households for using clean fuel, was championed as a solution. However, its crumbling architecture reveals how precarious such strategies can be. “We’re not going to engage in carbon math and carbon credit spreadsheets; we’re not going to solve the clean cooking challenge with carbon,” Wemanya said. He argued that carbon markets can let polluters keep emitting while households bear the risks when projects fail.
Jacqueline Novogratz of the climate investing firm Acumen summed up the broader lesson: “This most recent failure highlights a stark reality: Markets for low-income people cannot be created with shaky economics. Now it’s time to have the more candid discussion about what it will take to build markets for low-income people.”
The Key Lessons From the Koko Collapse
1. Policy-dependent models can be fragile and problematic
Koko’s entire business was based heavily on one approval. The company had no Plan B if the government withheld approval, and climate finance projects need to withstand regulatory risk.
2. The carbon market must be trusted to function
Governments need to maintain confidence in carbon markets’ integrity.
Kenya was hesitant to approve Koko’s credits because of concerns about market monopolization, carbon accounting, and national climate commitments. Governments are now taking a more cautious approach to allocating carbon credits.
3. End users bear the ultimate cost
These systems are the ones that, when they fail, can harm households most. They have to switch to harmful substitutes such as charcoal and paraffin, even though they are not responsible for the failure.
4. Don’t underestimate regulatory risk
Koko was one of Africa’s biggest clean cooking companies, backed by the World Bank Group and investors. However, regulatory risk doesn’t care about scale. Approval risk cannot be mitigated with strong operating assets when the business itself relies heavily on government approval.
What Comes Next?
The Koko collapse isn’t the end; it’s merely a turning point. The clean cooking crisis in Africa is pressing, and the need to innovate in financing is greater than ever. However, the message is clear: subsidy schemes that rely on a single revenue source and a single government approval are fragile.
There are several things that future projects will require:
- Diversified income sources rather than reliance on a single source of revenue.
- Improved collaboration between governments and their partners, based on shared ownership and transparency.
- Stronger carbon-accounting tools to foster trust.
- Greater focus on cost-effectiveness, including electrification and other scalable solutions.
Currently, millions of households in Kenya lack affordable clean-cooking options and face an uncertain future. The blue flame symbolizing progress has ended. The next stage in Africa’s clean cooking revolution will need to be more resilient. The question is whether the sector will learn from Koko’s success and failure.
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