Open Society Supports a $20 Million Expansion of a Medical Oxygen Producer in Kenya

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Date October 20, 2023
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NEW YORK—The Soros Economic Development Fund (SEDF) is leading other international funders in supporting a $20 million expansion of Hewatele, a Kenyan social enterprise that is currently the country’s leading locally-owned manufacturer of medical oxygen.

SEDF, the impact investment arm of the Open Society Foundations, will invest $4 million in Hewatele, a company founded in 2013 by Bernard Olayo, MD its current chairman, to address persistent shortages and inadequacies in the supply of oxygen to medical facilities across the country.

Hewatele will use the debt and equity funds raised to finance the building of a liquid oxygen manufacturing facility outside Nairobi, together with regional distribution capacity, while also doubling its existing capacity at hospital-based sites to produce and distribute medical oxygen using pressurized gas cylinders.

“Hewatele has stepped in to solve the failures of the medical oxygen industry, dominated in East Africa by foreign suppliers,” said Muthoni Wanyeki, executive director of Open Society-Africa. “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.”

Shortfalls in the supply of oxygen for hospitals and clinics in Kenya were painfully highlighted during the COVID-19 pandemic, when demand for the commodity more than doubled. The local market is currently dominated by the subsidiary of a London-based multinational, which operates the country’s only other liquid oxygen plant.

Under Olayo, Hewatele adopted a new approach to the distribution of medical oxygen, lowering costs and smoothing supply issues by establishing oxygen plants adjacent to major hospitals, rather than trucking in supplies from plants based in more remote industrial areas.

SEDF’s investment in Hewatele is part of a portfolio of investments by the Open Society Foundations to expand global access to affordable, good quality public health products and technologies, and the development of locally-based research, development, distribution, and manufacturing. These investments build on two decades of support for improved access to medicines advocacy and global policymaking.

Georgia Levenson Keohane, chief executive officer 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.”

Finnfund, a Finnish government development agency, and UBS Optimus Foundation, a Switzerland-based philanthropic fund, will also take stakes in Hewatele as part of the funding package, which will include a $10 million loan from the U.S. International Development Finance Corporation, and a $1.1 million loan from Grand Challenges Canada, a Canadian government development initiative.