The pandemic laid bare African countries’ dire shortage of medical oxygen. In Kenya, oxygen demand more than doubled during the pandemic.
Medical oxygen company Hewatele is one of a small number of local producers. Its 60 tons of monthly production barely put a dent in the nearly 900 tons needed per month in Kenya in 2021, but it set the company on a growth trajectory.
“Kenya is a net importer of oxygen, so we decided to raise funds to build a liquid oxygen plant that would increase our production capacity tenfold,” Hewatele’s Bernard Olayo told ImpactAlpha.
Private equity firm AfricInvest has invested $10.5 million to cover procurement and construction costs for Hewatele’s new plant, which will be able to produce 20 tons of medical oxygen per day.
Affordable oxygen
Olayo, a medical doctor and Harvard-trained public health specialist, first experienced the deadly impact of Kenya’s oxygen shortage while running district health services in the remote Nyanza province. He launched Hewatele in 2013 with a hub and spoke model for oxygen production and distribution. The company runs five production plants in Kenya and one in Uganda that supply oxygen to health facilities within a 70-mile radius.
“We cut the costs compared to the market price by 30% to 40%, and we want to cut it even further,” Olayo said.
Hewatele’s plants serve over 400 hospitals and clinics daily, mostly in rural areas and low-income communities. Nearly three-quarters of its customers say Hewatele’s prices are more affordable than market alternatives, according to a 60 Decibels survey.
Funding pivot
The funding from AfricInvest will help Hewatele keep development plans for the plant on track. The US International Development Finance Corp.committed to providing a $10 million loan, but it hasn’t been disbursed due to the Trump administration’s US overseas funding cuts and pauses.
Last year, Hewatele was one of three recipients of a $22 million blended finance package from Unitaid, with support from Clinton Health Access Initiative, to build liquid oxygen plants in Kenya and Tanzania.
Hewatele is also backed by Soros Economic Development Fund, FinnFund, the UBS-Optimus Foundation and Grand Challenges Canada.
Hewatele’s plans for a larger plant are bolstered by government tax breaks for oxygen manufacturers, which have been in place since the pandemic. The Kenyan government and NGO Amref Health Africa launched a medical oxygen roadmap in May this year to support development of infrastructure and equipment sourcing.
