Finnfund, DFC, SEDF (Soros Economic Development Fund), UBS Optimus Foundation and Grand Challenges Canada, have invested $20m in Hewatele, a medical oxygen producer in Kenya.

Hewatele will use the debt and equity funds raised to finance the building of a liquid oxygen (LOX) manufacturing facility some 20kms in the outskirts of City of Nairobi, together with regional distribution capacity at key strategic regions within Kenya, while also doubling its existing capacity at hospital-based sites to produce and distribute medical oxygen using pressurized gas cylinders (GOX).

Georgia Levenson Keohane, CEO of SEDF, said: “As a catalytic social impact investor focused on direct impacts and longer-term, systemic change, SEDF sees the investment in Hewatele as an important commitment to strengthening Africa’s rapidly expanding healthcare sector.”

Hewatele was founded by a group of doctors in 2013 in Kenya, headed by Dr Bernard Olayo and for past 4 years led by CEO, Dr Zulfiqar Wali. They manufacture and distribute medical oxygen through six operational Pressure Swing Adsorption (PSA) plants strategically positioned within Kenya and Uganda. 

The Kenyan medical oxygen market is characterised by inadequate and expensive supply as well as skewed availability of Life Saving Medicinal Oxygen as concentrated in urban areas. 

“The arise of the COVID pandemic made everyone around the world aware of the importance of oxygen supply”, said Johanna Raehalme, Finnfund’s Head of Origination in Africa. “We are happy to add yet another important investment in our healthcare portfolio and see that the increased awareness of oxygen will ensure market demand for Hewatele going forward.”

According to Kenya’s Ministry of Health, demand for medical oxygen has increased significantly since the coronavirus pandemic, from 410 tons per month to 880 tons per month. 

As a result, Kenyan hospitals frequently experience unpredictable deliveries, higher prices, and expensive transportation costs for medical oxygen. 

Due to the high production costs, fragmented delivery and storage options, medicinal oxygen is typically eight to ten times more expensive in sub-Saharan Africa than it is in Europe and North America. 

The construction of oxygen production facility is expected to enable Hewatele to boost production of medical oxygen by least 20 tons per day, which is expected to reduce the cost to its rural and urban healthcare customers by up-to 30%.

By providing enhanced, affordable supply of medical oxygen, this project is anticipated to have a significant developmental impact on Kenya’s healthcare sector. Improving access to oxygen and administering oxygen can reduce child mortality from pneumonia by 35% and lessen foetal distress when given to women during pregnancy, saving lives.

Maya Ziswiler, CEO Optimus Foundation, said: “UBS Optimus Foundation invests in organizations that demonstrate clear impact and innovative and scalable business models. That’s why we were early supporters of Hewa Tele, as we see the impact and value of their business model and are now pleased to make a longer-term commitment for them to reach even more undersupplied rural and urban communities in East Africa with affordable and life-saving medical oxygen.”