American, Finnish and Canadian governments fund oxygen plant at Tatu City SEZ, Kenya

6 March

Tatu City6 March 2024 – The governments of the United States, Finland and Canada are funding a sustainable, accessible and affordable medicinal oxygen manufacturing facility at Tatu City Special Economic Zone (SEZ), the 5,000-acre new city on Nairobi’s doorstep.

Hewatele, a medical oxygen producer in Kenya, has secured a USD 20 million funding package from the U.S. International Development Finance Corporation (DFC), Finnfund, Soros Economic Development Fund (SEDF), UBS Optimus Foundation and Grand Challenges Canada.

Hewatele will use the debt and equity funds raised to finance the building of a cutting-edge Cryogenic Medical Liquid Oxygen Air Separation Unit plant at Tatu Industrial Park. Set to commence operations in late Q1 2025, the facility will be the first modern liquid oxygen manufacturing plant located in East Africa in the last 60 years and help 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,” said David Karimi, Deputy Country Head, Kenya, at Rendeavour, the owner and developer of Tatu City.

Dr Bernard Olayo, Founder of Hewatele, said: “This medical 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.”

According to Kenya’s Ministry of Health, demand for medical oxygen has increased significantly since the COVID 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. Hewatele’s facility will boost production of medical oxygen by least 20 tons per day, reducing the cost to its rural and urban healthcare customers by up to 30%. Improving access to oxygen and administering oxygen can reduce child mortality from pneumonia by 35% and lessen foetal distress and save lives when given to women during pregnancy.

“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.”

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.”

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 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.”

“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,” added Dr Zulfiqar Wali, CEO of Hewatele.

More than 75 local, regional and global businesses are operational or under development in Tatu City’s business-friendly location, including CCI Global, Heineken, Dormans, Copia, Cooper K-Brands, Grit Real Estate Income Group, Twiga Foods, Freight Forwarders Solutions, ADvTECH, Friendship Group and Davis & Shirtliff. More than 3,000 homes and apartments are occupied or under construction and 4,500 students study at Tatu City’s schools.