HewaTele Secures $10.5 Million to Build East Africa’s Largest Medical Oxygen Plant: Addressing Critical Healthcare Infrastructure Gap

HewaTele Limited, a Kenyan medical oxygen producer, has secured US$10.5 million from AfricInvest’s Transform Health Fund to build a large-scale plant capable of producing oxygen at 99.6% purity. The investment represents a critical step toward addressing East Africa’s medical oxygen crisis, which has contributed to preventable deaths across the region for decades.

Founded in 2014 by Dr. Bernard Olayo, HewaTele has been at the forefront of expanding access to affordable medical oxygen through on-site generation plants and distribution networks that supply hospitals and clinics. The investment is part of a US$20 million funding package combining earlier debt and equity commitments from a syndicate of existing backers, positioning the company to transform healthcare delivery across East Africa.

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East Africa’s Medical Oxygen Crisis: A Regional Emergency

The significance of HewaTele’s expansion cannot be understated given the scale of East Africa’s medical oxygen shortage. Over 70% of Kenya’s existing Pressure Swing Adsorption (PSA) oxygen plants are either non-operational or producing oxygen at purity levels far below the World Health Organization’s 90% minimum standard for medical use.

This crisis extends far beyond Kenya’s borders. Across sub-Saharan Africa, most countries have less than 10% of the oxygen volume needed to treat high-burden conditions like pneumonia, chronic obstructive pulmonary disease (COPD), and neonatal respiratory syndrome. The shortage becomes particularly acute when considering that pneumonia is the seventh leading cause of death in Kenya and remains a primary killer of children under five across the continent.

The COVID-19 pandemic starkly exposed these vulnerabilities. During the third wave of the pandemic, African countries were only producing a third of the medical oxygen needed, according to Dr. Matshidiso Moeti, the World Health Organization’s regional director for Africa. The crisis led to preventable deaths and overwhelmed healthcare systems across multiple African countries.

Transform Health Fund: Innovative Blended Finance for Healthcare

The investment comes through AfricInvest’s Transform Health Fund, a pioneering US$111 million blended-finance initiative that combines commercial, public, and philanthropic capital to address Africa’s healthcare challenges. The fund, managed in partnership with the Health Finance Coalition, has attracted investors including the International Finance Corporation (IFC), the U.S. International Development Finance Corporation (DFC), Proparco, Swedfund, Royal Philips, Merck & Co., and the UBS Optimus Foundation.

“Oxygen is a cornerstone of effective healthcare. HewaTele’s approach offers a transformative solution, strengthening health system resilience and expanding access to care for underserved communities,” stated the Transform Health Fund in announcing the investment. This investment philosophy reflects the fund’s broader strategy of targeting locally-led health supply chains, care delivery, and digital solutions across sub-Saharan Africa.

The Transform Health Fund represents a new approach to healthcare investment in Africa, moving beyond traditional donor funding toward sustainable, scalable private-sector models that can generate both social impact and financial returns. With sub-Saharan Africa carrying 20% of the global disease burden but receiving minimal impact investment, the fund aims to bridge this critical gap.

HewaTele’s Innovation: Local Production for Local Needs

Dr. Bernard Olayo, a medical doctor and Harvard-trained public health specialist, founded HewaTele after experiencing firsthand the deadly impact of Kenya’s oxygen shortage while running district health services in the remote Nyanza province. The company has adopted an innovative hub-and-spoke model for oxygen production and distribution, establishing plants adjacent to major hospitals rather than relying on costly transportation from remote industrial facilities.

HewaTele produces oxygen by separating nitrogen from air using naturally occurring salts, a process that offers significant cost advantages over traditional methods. The company currently operates plants in Siaya, Kisumu, and Nakuru, supplying oxygen to hospitals in over ten counties directly and through distribution networks. The company’s approach has proven particularly effective during health emergencies, with HewaTele’s plants serving over 400 hospitals and clinics daily, mostly in rural areas and low-income communities.

Technical Specifications and Market Impact

The new Air Separation Unit (ASU) facility will represent a significant technological advancement for East Africa’s healthcare infrastructure. The plant will produce 20 tonnes of medical oxygen daily at 99.6% purity, well above WHO standards and sufficient to supply more than 300 healthcare facilities across East Africa.

This production capacity addresses multiple critical needs simultaneously. According to commercial units at Pulse will range from 29 to 262 square meters, while medical units will range from 36 to 112 square meters. The project’s first offering includes 40 units, representing 35% of the total development, with flexible payment plans designed to attract a wide range of investors and clients.

The facility’s strategic importance extends beyond immediate healthcare needs. Kenya currently imports significant amounts of medical oxygen, creating supply chain vulnerabilities and pricing pressures. By establishing large-scale local production capacity, HewaTele’s plant will help reduce Kenya’s dependence on oxygen imports while providing a model for other East African countries to develop similar capabilities.

Financial Structure and Investment Syndicate

The US$10.5 million investment from AfricInvest’s Transform Health Fund is structured as a senior secured bridge facility, designed to complement ongoing support from HewaTele’s impressive syndicate of international backers. The company has attracted backing from leading development finance institutions and foundations, including the U.S. International Development Finance Corporation, Finnfund, Grand Challenges Canada, the Soros Economic Development Fund, and UBS Optimus Foundation.

This diverse funding base reflects the critical importance of medical oxygen infrastructure for global health security. HewaTele has raised over $40 million to date, demonstrating sustained investor confidence in the company’s mission and business model.

The Soros Economic Development Fund’s US$4 million investment reflects the strategic importance of local oxygen production capacity. As Muthoni Wanyeki, executive director of Open Society-Africa, noted, “Hewatele has stepped in to solve the failures of the medical oxygen industry, dominated in East Africa by foreign suppliers.”

Addressing Market Failures and Price Disparities

The medical oxygen market in East Africa has long been characterized by significant market failures that HewaTele aims to address. Traditional suppliers, often subsidiaries of multinational corporations, have focused primarily on industrial applications, serving only a fraction of medical needs. This has created a situation where oxygen in hospitals in sub-Saharan Africa costs about five times more by volume than in Europe and the United States.

The pricing disparity has had deadly consequences. During COVID-19 surges, oxygen prices in some African countries increased by ten times, reaching US$260 per cylinder – more than the average monthly wage. A critically ill patient could require up to four cylinders per day, making treatment financially impossible for many families.

HewaTele’s model directly addresses these challenges by establishing local production capacity and reducing distribution costs. Nearly three-quarters of HewaTele’s customers report that the company’s prices are more affordable than market alternatives, with the company cutting costs by 30% to 40% compared to traditional suppliers.

Regional Implications and Scalability

The new facility’s impact extends far beyond Kenya’s borders, reflecting broader efforts to develop regional medical oxygen capacity across East Africa. The plant will be strategically positioned to serve healthcare facilities in Uganda and Northern Tanzania, creating a regional hub for medical oxygen distribution.

This regional approach aligns with initiatives like the East African Program on Oxygen (EAPOA), a groundbreaking US$22 million initiative launched by Unitaid to develop regional liquid oxygen production capacity. The program aims to increase oxygen production from 750 tons to 2,000 tons per month across the region and save hundreds of thousands of lives over the next decade.

HewaTele’s expansion supports these broader regional development goals while demonstrating the viability of private-sector solutions to healthcare infrastructure challenges. The company’s success in Kenya provides a template for expansion into neighboring markets, with CEO Zulfiqar Wali identifying significant opportunities in Uganda, Tanzania, and Ethiopia.

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Clinical Impact and Healthcare Outcomes

The clinical implications of improved oxygen access cannot be overstated. Medical oxygen is essential for treating a wide range of conditions, from respiratory infections and surgical procedures to maternal and neonatal care. The World Health Organization recognizes oxygen as an essential medicine without substitute, used to treat pneumonia, COVID-19, advanced HIV infection, severe forms of tuberculosis and malaria.

For pediatric care, the impact is particularly significant. Administering oxygen can reduce child mortality from pneumonia by 35 percent, while proper oxygen therapy during childbirth can reduce fetal distress and save lives for both mothers and children. Studies from Malawi and Nigeria show that less than a third of adults and children who needed oxygen actually received it, highlighting the scale of unmet need that HewaTele’s expansion aims to address.

Technology and Quality Standards

HewaTele’s new facility employs Air Separation Unit (ASU) technology to produce liquid oxygen through cryogenic distillation, where air is cooled to extremely low temperatures to separate oxygen from nitrogen. This method produces oxygen at 99.6% purity, significantly exceeding the WHO’s minimum standard of 90% and ensuring compatibility with all medical applications.

The high purity standard is particularly important given ongoing debates about oxygen quality in African healthcare systems. Some industry players have argued that only 99.95% concentrated oxygen should be used for COVID-19 patients, a standard achievable only through cryogenic production. However, medical experts and WHO guidelines confirm that oxygen concentrations above 82% are medically appropriate, with HewaTele’s 99.6% purity level providing a substantial safety margin.

Workforce Development and Capacity Building

Beyond infrastructure development, HewaTele invests significantly in training healthcare workers on safe oxygen administration and cylinder handling to reduce patient risks and improve clinical outcomes. This capacity-building component is crucial given the technical expertise required for safe medical oxygen use in clinical settings.

The new facility will create substantial employment opportunities, with similar oxygen plants typically generating 10,000 to 30,000 employment opportunities during construction and operation phases. These jobs span multiple skill levels, from technical positions in plant operations to logistics and distribution roles supporting the broader supply chain.

Implementation Timeline and Operational Planning

Construction of the new facility is scheduled to begin in March 2026, with full production expected by June 2025 according to recent updates from company leadership. The plant’s components began arriving in Kenya in December 2024, with CEO Zulfiqar Wali noting that construction is progressing on schedule following site visits to equipment suppliers in India and Turkey.

The facility will be located in Tatu Industrial Park, near Nairobi, representing the first cryogenic medical liquid oxygen air separation unit plant in East Africa in over 60 years. This strategic location provides access to transportation infrastructure necessary for regional distribution while being close to major healthcare facilities in Kenya’s capital region.

Market Competition and Industry Transformation

HewaTele’s expansion occurs within a medical oxygen market historically dominated by subsidiaries of international industrial gas companies. These suppliers, primarily focused on industrial applications, have often treated medical oxygen as a secondary market, leading to supply constraints and pricing challenges for healthcare providers.

The company’s growth represents a broader transformation of East Africa’s medical oxygen industry toward local ownership and healthcare-focused business models. By establishing dedicated medical oxygen production capacity, HewaTele challenges the traditional industry structure while demonstrating the viability of healthcare-specialized oxygen producers.

This market transformation has attracted attention from development finance institutions and impact investors seeking to support healthcare infrastructure development. The success of HewaTele’s model may encourage additional investment in local oxygen production capacity across sub-Saharan Africa, potentially reducing the region’s dependence on imported medical oxygen.

Future Expansion and Regional Growth Strategy

Looking beyond the immediate project, HewaTele has articulated ambitious plans for regional expansion. CEO Zulfiqar Wali has identified significant opportunities in Ethiopia, noting the country’s population of 120 million and energy costs that are one-fourth of Kenya’s levels, despite acknowledging challenges including exchange restrictions and ongoing conflict.

The company also sees expansion potential in Uganda and Tanzania, leveraging its experience in Kenya to develop similar oxygen production and distribution networks. This regional growth strategy aligns with broader East African integration initiatives and reflects the company’s vision of creating a regional healthcare infrastructure network.

Policy Implications and Government Support

The development of local medical oxygen production capacity has significant policy implications for East African governments seeking to strengthen health system resilience. Prior to the COVID-19 pandemic, only two African countries – Ethiopia and Nigeria – had national oxygen policy road maps, highlighting the need for more comprehensive policy frameworks.

HewaTele’s success demonstrates the potential for private-sector solutions to address healthcare infrastructure gaps while reducing government expenditure on medical oxygen imports. The company’s model provides governments with a framework for supporting local healthcare manufacturing through targeted policy interventions and public-private partnerships.

Global Health Security and Pandemic Preparedness

The COVID-19 pandemic highlighted medical oxygen’s critical role in pandemic preparedness and response. About 14 percent of all COVID-19 cases require oxygen therapy, with 5 percent requiring intensive care unit treatment. HewaTele’s expanded production capacity will significantly enhance East Africa’s pandemic preparedness by ensuring adequate oxygen supplies during health emergencies.

This preparedness extends beyond pandemic response to encompass broader health security challenges, including the treatment of respiratory infections, surgical procedures, and maternal and neonatal care. By establishing resilient local production capacity, the facility contributes to regional health security while reducing dependence on international supply chains that may be disrupted during global crises.

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By: Montel Kamau

Serrari Financial Analyst

25th August, 2025