What KOKO’s Collapse Reveals about Carbon Market Infrastructure and Why Africa’s Carbon Future Depends on Integrity, Not Discounts

KOKO Networks, once heralded as a leading clean-energy startup in Africa, abruptly ceased operations earlier this year, leaving 1.5 million Kenyan households without access to its bioethanol cooking fuel. Despite raising $100 million from global investors and securing a $180 million political risk guarantee from the World Bank, the company collapsed after failing to obtain a critical Letter of Authorisation from the Kenyan government. This document, mandated under Article 6 of the Paris Agreement, is essential for the international sale of carbon credits. As a result, 15 million carbon credits are now stranded, and thousands of families risk reverting to more polluting fuels, undermining progress in health, conservation, and emissions reduction. The failure of KOKO Networks highlights significant deficiencies in Africa’s carbon market infrastructure, particularly in registries, authorisation systems, and governance mechanisms. The company’s downfall was not due to product quality or market demand but stemmed from institutional weaknesses that erode trust in carbon credits. African carbon credits continue to trade at steep discounts, reflecting market scepticism about their credibility rather than an oversupply. Without robust integrity—meaning verifiable, enforceable, and transparent systems—carbon credits become speculative assets rather than reliable climate instruments, discouraging long-term investment and exposing communities and governments to risk. At recent climate summits, discussions around carbon markets have focused on price harmonisation, trust, and benefit-sharing, yet they often overlook the fundamental need for institutional guarantees of market integrity. African leaders have called for the establishment of continent-owned registries, clear authorisation frameworks, and legally binding benefit-sharing arrangements to ensure equitable participation and ownership within the carbon economy. However, KOKO’s collapse reveals a stark gap between political ambition and the readiness of institutional frameworks, a gap made more acute by global geopolitical instability and the retreat of major climate finance actors like the United States. Critics often argue that Africa requires rapid financial inflows rather than slow, rigorous standards, but KOKO’s experience disproves this notion, as the company had substantial funding and a proven business model. The real barrier lies in Africa’s exclusion from governance structures and the lack of stable, enforceable rules that inspire investor confidence. Moreover, concerns that benefit-sharing deters investment are misplaced; in fact, projects that fail to integrate communities face opposition and failure, whereas those embedding equitable practices build resilience and trust, as demonstrated by Zimbabwe’s Kariba REDD+ project. Looking ahead, Africa’s carbon market depends on decisive leadership to transition from pilot initiatives to fully operational national registries and codified Article 6 authorisation frameworks. Legal frameworks must underpin community benefit-sharing, and access to advanced monitoring and verification technologies must be expanded. KOKO’s collapse serves as a powerful lesson that high-integrity systems—rooted in sovereignty, fairness, and enforceability—are essential to unlocking the continent’s carbon market potential. Only by building confidence through robust institutions can Africa transform carbon credits from discounted commodities into valuable, durable climate