Koko Networks, a Kenyan clean-cooking startup, on Friday laid off its total 700-person workforce and shut down operations after the federal government blocked its sale of carbon credit.
A board member and an worker, who requested to not be named to talk freely, advised TechCabal that the choice adopted two days of intense conferences on the firm’s Nairobi workplaces, the place executives weighed their choices after the Kenyan authorities rejected a letter of authorisation (LOA) essential to Koko’s enterprise mannequin of promoting biofuels to low-income households.
On Friday, the Monetary Occasions reported that the startup was going through chapter after failing to get the federal government’s nod to promote carbon credit. Administration knowledgeable workers of the rapid closure on Friday, telling them to not report back to work the subsequent day, in keeping with individuals who spoke to TechCabal.
“It’s been two days of intense deliberations on the matter,” the board member mentioned. “We had been going through chapter as a result of promoting carbon credit is vital to our enterprise mannequin.”
Koko’s shutdown may push about 1.5 million households again to dirtier, extra polluting fuels like kerosene and charcoal. The corporate additionally employed over 700 direct staff and labored with hundreds of brokers working over 3,000 automated refuelling machines.
Koko didn’t instantly reply to a request for feedback.
Koko sells biofuel, fuels derived from biomass, and stoves at subsidised costs. It depends on income from carbon credit score gross sales overseas to fund these subsidies and its operations. The startup sells a litre of bioethanol at KES 100 ($0.77), in contrast with a market value of KES 200 ($1.54). The price of the stoves can be subsidised at KES 1,500 ($11.53), towards the market value of KES 15,000 ($115.3).
With the LOA rejection slicing off this significant funding, the insiders mentioned the corporate can now not maintain its subsidised mannequin. The shutdown comes barely a 12 months after Koko secured a $179.64 million (KES 23.18 billion) assure from the World Financial institution to help its growth in Kenya. The assure, offered via the Multilateral Funding Assure Company (MIGA), the Financial institution’s political danger insurance coverage arm, was supposed to guard the corporate towards dangers together with civil unrest, land expropriation for public use, and breaches of contract.
On the time, Koko had deliberate so as to add not less than three million clients in Kenya by December 2027, an growth that may have superior the federal government’s push to develop the adoption of unpolluted cooking fuels. Based in 2013 by Greg Murray to fight deforestation pushed by the widespread use of charcoal, the startup has raised greater than $100 million in debt and fairness financing from buyers like Verod-Kepple, South Africa’s Rand Service provider Financial institution, Mirova, and Microsoft Local weather Innovation Fund.
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