Kenyan taxpayers are looking at a potential Ksh.23.1 billion in compensation package to the clean energy startup Koko Networks, following the government’s failure to honour an earlier signed agreement.
This is after the startup shut down its operations in Kenya, resulting into layoff of its entire workforce after a prolonged dispute with the Kenyan government over carbon-credit sales that were meant to subsidise its business model.
What Went Wrong
According to a report by Business Daily, Koko’s business depended on selling cookstoves and bioethanol fuel at subsidised prices to low-income households. The company planned to cover its losses by selling verified carbon credits in compliance markets, where buyers such as airlines purchase credits to offset emissions.
However, the Kenyan government failed to issue the required letters of authorisation that would allow Koko to trade these credits internationally, under Article 6 of the UN Paris Agreement.
Without this authorisation, Koko could not monetise its carbon credits, cutting off the revenue stream crucial to its financial viability.
Koko Networks has a workforce of more than 700, who have all been sent home as of Friday, January 30, 2026.
International Insurance and Compensation Risk
Koko had obtained political-risk insurance from the Multilateral Investment Guarantee Agency (MIGA), a part of the World Bank Group, valued at $179.6 million (about Sh23.1 billion).
Also Read: KenGen allowed to sell 4 million tonnes of carbon credits
Documents show that this insurance covers losses if a host government frustrates or blocks a project’s operations.
Because the Kenyan government’s inaction on the carbon-credit authorisation is seen as a potential breach of contract, Koko is expected to file a claim under this policy.
If successful, Kenya may be legally obliged to compensate the investors, shifting the financial burden onto taxpayers.
Analysts warn that the situation could undermine confidence in Kenya as a destination for green investment, especially in mechanisms tied to carbon markets.
It also raises questions about the sustainability of financing models that rely heavily on regulatory approvals and complex international revenue structures. p
Koko had attracted significant backing from global investors, including the Microsoft Innovation Fund, Mirova, and Rand Merchant Bank, and had invested hundreds of millions of dollars in building its network across Kenya and Rwanda.
