US, Finland, Canada partner to fund Sh2.8bn medicinal oxygen plant

In a groundbreaking initiative, the United States, Finland, and Canada have joined forces to provide $20 million (Sh2.8 billion) in funding for Hewatele, a Kenyan medical oxygen producer.

The funding has been secured from the US International Development Finance Corporation (DFC), Finnfund, Soros Economic Development Fund (SEDF), UBS Optimus Foundation, and Grand Challenges Canada.

Hewatele will utilise the funds to establish a cutting-edge Cryogenic Medical Liquid Oxygen Air Separation Unit plant at Tatu Industrial Park.

Set to commence operations in March 2025, the facility will be the first modern liquid oxygen manufacturing plant located in East Africa in the last 60 years.

It will go a long way in helping fill the escalating demand for medical-grade liquid oxygen in healthcare facilities across Kenya, Uganda and Northern Tanzania.

"Hewatele's investment, backed by the world’s preeminent development finance institutions and foundations, represents a transformation of healthcare in Kenya and across East Africa,” David Karimi, Deputy Country head at Rendeavour, the owner and developer of Tatu City said.

Hewatele founder Bernard Olayo said the oxygen plant represents a significant leap in ensuring sustainable and affordable access to medicinal oxygen.

“The increased production capacity here at Tatu City will improve oxygen affordability, particularly for maternal and child healthcare, and enhance primary healthcare support,” Olayo said.

According to the Ministry of Health, the demand for medical oxygen has increased significantly since the Covid-19 pandemic, from 410 tons per month to 880 tons per month.

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

Due to the high production costs, and 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.

Hewatele’s facility will boost the production of medical oxygen by at least 20 tons per day, reducing the cost to its rural and urban healthcare customers by up to 30 per cent.

It will combat infant mortality rates and lessen fetal distress in the East African region.

Improving access to oxygen and administering oxygen can reduce child mortality from pneumonia by 35 percent lessen foetal distress and save lives when given to women during pregnancy.

“The emergence of the COVID pandemic made everyone around the world aware of the importance of oxygen supply,” Johanna Raehalme, Finnfund’s Head of Origination in Africa said.

“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,” he said.

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.”

Optimus Foundation Maya Ziswiler CEO noted that the company invests in organisations that demonstrate clear impact and innovative and scalable business models.

"That is why we were early supporters of Hewatele, 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,” Maya said.

"With our first base in Western Kenya, our expansion to Tatu City will create 50 new direct full-time jobs and over 100 indirect jobs, stimulating the local economy. We are honoured to be part of the healthcare ecosystem in Kiambu County,” Hewatele CEO Zulfiqar Wali said.

More than 3,000 homes and apartments are occupied or under construction and 4,500 students study at Tatu City’s schools.