NAIROBI, Kenya — Clean-cooking firm Koko Networks is on the brink of collapse after the Kenyan government failed to issue authorisations required for the sale of carbon credits, threatening more than 700 jobs and placing a $300 million private investment at risk.
The crisis has also exposed significant regulatory uncertainty in Kenya’s emerging carbon markets, raising broader concerns about the country’s credibility as a destination for climate-linked investment.
According to the Financial Times, Koko Networks is considering filing a $179.6 million insurance claim with the World Bank’s Multilateral Investment Guarantee Agency (MIGA), alleging breach of contract by the Kenyan state under the world’s first carbon-linked political risk insurance cover.
Carbon credit revenues form a core pillar of Koko’s business model.
The company generates compliance carbon credits by transitioning low-income households from charcoal and firewood to bioethanol cooking fuel, with emissions reductions certified under internationally recognised carbon standards.
However, despite years of engagement, the government has not issued the necessary authorisations to allow the sale of the credits, effectively cutting off a major revenue stream.
The regulatory standoff has now placed Kenya at the centre of a high-stakes international investment dispute.
In 2025, MIGA issued a $179.6 million guarantee to support Koko Networks’ investment in Kenya, covering risks including expropriation, transfer restrictions, and breach of contract for up to 15 years. The guarantee was designed to de-risk the large-scale clean-cooking project and crowd in private capital.
The project involves the nationwide distribution of bioethanol cookstoves to low-income households as a cleaner alternative to charcoal and wood, aligning with Kenya’s climate commitments, public health goals, and deforestation reduction targets.
If activated, the claim would represent one of the most significant tests of carbon-linked political risk insurance globally and could set a precedent for how multilateral insurers assess regulatory conduct in carbon markets.
The situation also intersects with wider legal uncertainty over Kenya’s taxation and regulation of carbon credits.
Experts have repeatedly warned that gaps in statutory definitions and approval processes expose both investors and the state to costly disputes.
Beyond the immediate financial implications, the dispute raises constitutional and governance questions around legitimate expectation, administrative fairness, and the state’s duty to facilitate lawful economic activity once policy commitments and contractual assurances have been made.
For climate investors, the standoff sends a chilling signal: that even projects backed by multilateral guarantees and aligned with national climate policy may still be derailed by administrative inaction.
As pressure mounts, the Koko Networks case is increasingly viewed as a stress test for Kenya’s carbon governance architecture and for the country’s willingness to match climate ambition with regulatory certainty.
