Hewatele secures US$20 million to scale up production of affordable oxygen supplies

KENYA —Hewatele, a Kenyan social enterprise leading the charge in locally-owned medical oxygen production, has received a substantial boost of US$20 million from the Soros Economic Development Fund (SEDF) and other international investors.

The injection of capital signifies a pivotal moment for Hewatele, which was founded in 2013 by the current chairman, Bernard Olayo, MD, with the primary goal of addressing the persistent shortages and inadequacies in the supply of medical oxygen to healthcare facilities throughout the country.

The SEDF, the impact investment arm of the Open Society Foundations, has pledged to invest US$4 million into Hewatele.

This substantial investment is a testament to the pressing need to rectify the shortcomings in Kenya’s oxygen supply chain, which has long been characterized by crippling deficits.

SEDF’s investment in Hewatele is a crucial component of the Open Society Foundations’ broader initiative aimed at improving global access to affordable, high-quality public health products and technologies.

This initiative also seeks to promote the growth of locally-based research, development, distribution, and manufacturing, building upon the foundation’s extensive two-decade-long support for enhanced access to medicines advocacy and global policymaking.

The funding package is a consortium of investors, with Finnfund, a Finnish government development agency, and UBS Optimus Foundation, a Switzerland-based philanthropic fund, also participating.

It includes a US$10 million loan from the U.S. International Development Finance Corporation and a US$1.1 million loan from Grand Challenges Canada, a Canadian government development initiative.

The loan from the U.S. International Development Finance Corporation is part of 17 new investment transactions approved for Africa, totaling more than US$655 million (Ksh. 86.77 billion).

Hewatele’s ambitious expansion plans will be fueled by the funds raised, involving both debt and equity, to establish a liquid oxygen manufacturing facility outside Nairobi.

Concurrently, they will develop regional distribution capabilities and double the production capacity at their existing hospital-based sites, ensuring the efficient distribution of medical oxygen through pressurized gas cylinders.

Muthoni Wanyeki, the executive director of Open Society-Africa, aptly emphasized Hewatele’s vital role, stating, “Hewatele has stepped in to solve the failures of the medical oxygen industry, dominated in East Africa by foreign suppliers.

“Oxygen in hospitals in sub-Saharan Africa is about five times more expensive by volume than it is in Europe and the United States. Building local production capacity will help solve this inequality and save lives.”

The COVID-19 pandemic underscored the perilous shortage of oxygen in Kenyan hospitals and clinics.

Demand for this life-saving commodity more than doubled during the crisis, shining a harsh light on the inadequacies of the existing supply chain.

Currently, the local market is under the grip of a subsidiary of a London-based multinational, British Oxygen Company (BOC), which operates the country’s sole liquid oxygen plant apart from Hewatele.

Hewatele’s game-changing approach under Olayo’s leadership

Under Olayo’s guidance, Hewatele implemented a groundbreaking strategy for oxygen distribution, which included the establishment of oxygen plants near major hospitals.

This innovative approach eliminated the need to transport supplies from remote industrial areas, resulting in significant cost reductions and a significantly more efficient supply process.

Hewatele currently operates oxygen plants in Siaya, Nakuru, and Nairobi, employing a chemical method that uses naturally occurring salt to extract oxygen from the air.

Hewatele’s first plant, established in 2014, was a public-private partnership (PPP) involving the GE Foundation, Hewatele, Center for Public Health and Development (CPHD), and Siaya County.

Today, this plant serves over ten counties with oxygen and oxygen accessories. The Nakuru plant is a collaboration between Nakuru County and Hewatele, with the support of Grand Challenges Canada.

Similarly, the Nairobi plant operates as a PPP between Nairobi County, Hewatele, UNICEF, and Grand Challenges Canada as the development partner.

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