By most measures, medical oxygen in sub-Saharan Africa isn’t an investable market. Indeed, when Oxygen CoLab set out to map Nigeria’s oxygen supplier landscape, the prevailing view was that funded demand for oxygen services barely existed, and that the companies in the space — outside of the big multinational gas firms — were too informal and too few to take seriously as investment targets. And on the surface, our findings seemed to confirm that view: Of the 80 small- and medium-sized oxygen suppliers we assessed in depth, 60% self-finance their operations and just 40% are reliably profitable. A reasonable person might conclude that the SMEs in this sector are too fragile to justify the investment risk.
That conclusion is wrong, and the same mistake is being repeated across global health, including in areas like dialysis and medical equipment, reinforcing a Catch-22: The business models capable of meeting enormous clinical need are capital-intensive and operationally demanding, which means they typically stall out or get absorbed into grant-funded programs rather than growing into commercially viable operations. Investors and other funders read that as evidence that there’s no money in the system to pay for the services, and so the financing those businesses need to reach commercial traction never arrives.
Once that conclusion takes hold, it becomes self-fulfilling. As a result, businesses that might have thrived while improving patient outcomes never get the chance to prove themselves.
Medical oxygen is where we can show that this Catch-22 can be broken — that the money is in the system, and the business models to unlock it do exist.
Why the catch-22 can be broken for medical oxygen
After COVID, the assumption across much of the global health community was that the challenge of providing medical oxygen had been largely solved. Billions were invested to expand production capacity — from oxygen concentrators to large-scale generating plants — and infrastructure that was genuinely inadequate a decade ago became meaningfully better. Yet the Lancet Global Health Commission on medical oxygen security found that 91% of people in sub-Saharan Africa still lack reliable access when they need it. While COVID-era investments significantly expanded oxygen production, these efforts stopped short of getting it to patients’ bedside with guaranteed reliability.
The bottleneck is no longer production capacity, but the Missing Middle: the absent layer of local businesses that handle logistics, maintenance, monitoring, training, and clinical support between the plant and the patient. As HealthPort founder Dr. Aishat Adeniji put it in a recent podcast hosted by Oxygen CoLab, even a hospital with 10 cylinders in stock can’t guarantee that a patient will be able to get oxygen at 2:00 a.m. without someone solving for “the last metre, not the last mile.” The evidence bears this out: Independent research led by Karolinska Institutet and Makerere University found that oxygen concentrators supported through services-based models were functional 95% of the time, against around 25% for equipment under standard procurement (in which equipment is owned and maintained by the facility) — even on the same wards. Meanwhile in Uganda, oxygen-as-a-service provider FREO2 maintained 100% oxygen uptime at partner facilities despite 215 power outages across these facilities in a three-month period. This suggests that the difference isn’t in the equipment: It’s in who is accountable for keeping it running.
Building that accountability is the way to break the Catch-22. And where it has been built, the results speak for themselves.
Working business models with paying customers
Over the past five years we’ve been lucky to work with a handful of local operators who have implemented services-based models for medical oxygen delivery. In this approach, a local operator takes performance responsibility for the full delivery chain (equipment, maintenance, distribution, clinical training, back-up supply, remote monitoring), and bills the facility post-service for what its patients use. The facility focuses on patient care, while the operator is accountable for uptime.
This model works for health facilities and their patients, but it can be financially punishing for operators without sufficient scale — especially when their access to affordable capital is limited. These businesses face high costs, covering customer acquisition, equipment and material purchases, and ongoing operating expenses, but post-service billing means they can work for weeks or months before facilities pay. For their customers, this is a feature, not a bug: Post-service billing is good for health facilities. They pay for what their patients use, after the fact, with no money upfront — a benefit that’s particularly important for facilities with thin budgets, which is where most of the public-sector need lies. But the working capital gap it creates limits scalability because, in many low- and middle-income (LMIC) markets, high commercial interest rates mean capital financing costs force operators to price for margin and require payment up front. This pushes pricing beyond what most health facilities can afford, and the addressable market shrinks to the private facilities that can absorb those terms — while excluding the public facility market that could offer a pathway to greater scale, along with the patients with the most unmet need. Our supplier mapping in Nigeria found that roughly 83% of oxygen SMEs serve private hospitals and clinics — roughly twice the share serving public primary care or maternity centers. These numbers provide a very clear signal of how the capital environment shapes who these businesses sell to.
HealthPort has been running a services-based model across hospitals in Nigeria for five years, with support from Oxygen CoLab and others that has allowed them to price for affordability, rather than survival, from day one. According to the company’s operating data, this has enabled HealthPort to deliver oxygen services at price reductions of up to 70% relative to prevailing market prices, and oxygen availability at its customer health facilities has moved from roughly 10% of clinical demand to 100%, including during surge periods. Retention across health facility customers is above 95%, and demand is outpacing capacity, with a waitlist for providers in as-yet-unserved regions. Meanwhile, HealthPort’s revenue from hospital customers has grown sixfold over three years, doubling in 2024 and tripling in 2025.
HealthPort shows what happens when the right capital lets businesses adapt their models to health facilities’ needs and deliver at prices those facilities can absorb: Latent demand becomes paying demand. Once supply became reliable and affordable, clinicians who had been rationing an unreliable supply started making clinical decisions they had previously been unable to make, and oxygen use at HealthPort’s customer facilities increased up to threefold.
Businesses like FREO2 and HealthPort have paying customers and growing revenue — these are not programs being kept solvent by donor grants (Oxygen CoLab’s support to these companies ended early this year). And our mapping suggests that other oxygen businesses could follow, with the right market conditions and the right capital behind them.
What catalytic capital has to do differently
However, the businesses that could fill the Missing Middle in medical oxygen don’t fit the capital structures that currently exist. Development finance institutions have transaction economics that push toward larger deals, and a business at pre-scale stage falls well below the threshold where per-deal due diligence costs are recoverable. SME lending requires financial documentation, governance structures and collateral profiles that early-stage health businesses haven’t had the time or support to build.
But solutions to this mismatch exist, and volume guarantees and blended-finance vehicles have de-risked suppliers and changed buyer behavior in health markets before. For example, MedAccess and Unitaid’s work with the East African Program on Oxygen Access combined volume commitments with demand-generation support from the Clinton Health Access Initiative to scale local oxygen production and distribution across Kenya and Tanzania, crowding in capital from local and international investors.
However, these instruments work best in the environment they were designed for: centralized procurement and large multinational deals. Extending them to reach decentralized, last-mile SMEs will require three shifts in how catalytic capital is designed:
- Pooled due diligence: Due diligence costs need to be spread across portfolios of SMEs in the same sector rather than borne on a per-deal basis; the economics of small-deal investing are otherwise unworkable.
- Working capital built in: Operators facing working-capital gaps need bridging finance to be built into deals from the outset — not just equipment financing, which is what most oxygen-related capital has addressed. Trust-based philanthropic funders (Segal Family Foundation and Ripple Foundation among them) have shown what this flexibility can look like in practice, providing the kind of unrestricted and patient support that allows organizations like FREO2 to build the commercial track record that lets them take on larger and more structured catalytic capital, the kind they could not have absorbed at an earlier stage.
- Bundled support: Technical assistance addressing financial systems and governance should be embedded in the investment itself, available as part of the deal’s structure rather than required as eligibility criteria the business must satisfy beforehand.
We’re not alone in seeing the need for such a shift. Kaodili Udeh, Head of Regional (Africa) investments at MedAccess described the logic in our recent podcast: “Instead of supporting one large manufacturer at a time, we can support a portfolio of smaller manufacturers within the same sector. And what this does is it diversifies risk, but it also reduces transaction costs, because there are commonalities between the different SMEs, and so you can spread the due diligence costs around.”
These instruments are catalytic precisely because they’re designed to be temporary — to build the track record and scale that make commercial and domestic finance possible.
Why Capital Alone isn’t Enough to Scale Oxygen Markets
But even well-designed capital won’t get oxygen markets to scale on its own, because it’s the conditions businesses operate in that determine whether the unit economics work.
In Nigeria, imported pharmaceuticals enter at 0% duty and oxygen therapy devices at 5%. Seamless steel cylinders (the primary container for distributing medical oxygen), on the other hand, carry an effective tariff of 60%. This isn’t a result of some deliberate design; it’s simply a residue of a system that categorized cylinders as industrial equipment rather than medical infrastructure. Even with the right capital and the right delivery model, a business can still find its unit economics unworkable inside that tariff structure.
The same challenge extends to regulation and market intelligence. Many regulatory frameworks written for industrial gas producers create market entry costs that medical oxygen SMEs can’t absorb. Nigeria’s National Agency for Food and Drug Administration and Control is responding directly to this need, evolving its capacity for the regulation of medical gases to facilitate the appropriate entry of new businesses into the market. In terms of market intelligence, this challenge manifests as a tendency among investors to support the same small group of well-established businesses, since they lack visibility into how smaller or younger enterprises are navigating these market conditions. In response, supplier mapping (the kind of exercise that identified roughly 14 credibly investable businesses out of over 100 we assessed in Nigeria) is the type of work that makes it possible for capital to reach the right companies rather than the most visible ones.
The key to success in these and other efforts to create an enabling environment for medical oxygen is coordination: Catalytic funders must deploy capital alongside policy reform and market intelligence, while governments base their procurement efforts on maximizing uptime rather than just acquiring equipment. And each of these activities must be treated as part of the same investment thesis rather than a separate lane of activity.
A decision point for catalytic funders of medical oxygen
Medical oxygen isn’t the only area where enormous clinical need coexists with businesses too capital-intensive to reach scale without financing designed to fit them. The same pattern traps a whole class of services. Biomedical equipment maintenance fits it exactly: 40-70% of medical devices in LMIC hospitals are broken or unused, and though local service businesses exist, the financing has never been structured to let them scale. In dialysis, to take one example, fewer than 2% of people with end-stage kidney disease in sub-Saharan Africa currently receive treatment, and the operators who deliver this service reliably are locked into out-of-pocket private markets because no one has built the financing that could enable them to reach government purchasers.
Oxygen is where the working models are in place, the evidence now exists, and governments in countries like Nigeria and Uganda have shown that they have the political will to act. If catalytic capital can be structured to fit in this sector, the same architecture will become available in other health-related sectors that are dealing with similar challenges.
The global health sector has been calling for a shift from aid to investment for years; designing the right type of capital is the last piece to executing that shift, and the success of this effort will determine whether this new investment-centric model is successful. That is the challenge — and the opportunity — facing catalytic funders now.
Disclosure: Both authors are members of the Oxygen CoLab team and employed/contracted by Brink (part of Africa Practice), which supported HealthPort and FREO2 with grant funding and technical assistance, and worked directly with NAFDAC, Karolinska Institutet and Makerere University on the projects described in this article. Oxygen CoLab was funded by the UK’s Foreign Commonwealth and Development Office between 2020-2026.
Alex Losneanu is Innovation Director at Brink; Jason Houdek is an independent global health consultant focused on medical oxygen access and health-market development in sub-Saharan Africa.
Photo credit: Three Spots
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