Entrepreneurship Zone: 20 October 2022 :: Making money from waste in Nigeria

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Entrepreneurship Zone: 20 October 2022 ::  Making money from waste in Nigeria

 


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Waste is everywhere in Nigeria. The streets are littered with plastics and metallic parts. The culprits are regular citizens who discard trash with little regard to how and where, and even the decrepit waste collection trucks can sometimes be seen trailing trash in their wake.

In the absence of strong environmental policies or government infrastructure, there has been a proliferation of privately-owned companies that make money removing this waste from the streets. It’s a competitive and tough business but one company has come up with a model that has seen it expand rapidly.

Scrapays started with a simple premise – any company that relied on its own collection infrastructure was going to struggle to make money. “Without a central collection point, the amount spent on logistics might be higher or equal to your business profit,” explained Scrapays co-founder, Boluwatife Arewa.

So Scrapays came up with a system that offers the most efficiency.

The waste distribution chain begins with a waste producer who places a pickup order that a collector receives. The collector weighs the items at the pickup point and pays the producer accordingly. Next in the chain are the agents, who usually assemble waste from multiple collectors for offtake to the processing point.

Technology enables the company to maintain a stakeholder network. Scrapays provides a quick code (USSD) platform for waste producers and collectors. “A significant number of players in the recycling business do not use smartphones, so the USSD makes it easy for them to interact with our system,” Arewa explained.

The low-tech mobile messaging service allows them to place pickup orders, track earnings and make payments from their mobile wallet; earnings can be transferred directly to a local bank account and withdrawn as cash.

While the quick codes may be simple to use, a fully integrated artificial intelligence framework enables agents to value items and make payments to collectors within a short timeframe. The system receives inputs automatically from a wide variety of sources, to keep valuations up to date.

“The app we created for our agents has an internet of things (IoT) system,” Arewa said.

Arewa revealed that incentives received by each individual in the chain depend on the type of material recovered, time of the year, and local and international market forces.

“Over the past three weeks, the price of metal has been increasing with everyone recovering metal earning more.” While metal appreciates, “the price of cartons are decreasing,” he added.

 

He explained that the price fluctuations result from the ongoing rainy season in Nigeria. To ensure transparency, the company’s system provides recent prices of the recyclables, including plastic, aluminium, metals and PET bottles.

“The payments are not fixed; stakeholders are rewarded based on how much value they bring to the chain,” said Arewa.

One of Scrapays agents, a commercial tricycle vendor, makes around 1.3 million Nigerian naira ($3,000) every six weeks from selling the vehicles’ packaging materials – cartons, plastic stretch wraps and light metals. Previously, she paid people to dispose of them.

Some agents set up multiple collection locations and help retrieve up to four tonnes of waste from the environment, monthly.

“When people see us make money from waste, they want to join too,” said Ndidi Achonye, a waste collector in Lagos.

Arewa founded the company together with fellow geoscience coursemates Tope Sulaimon and Olumide Ogunleye while the three were still undergraduates at the Federal University of Technology Akure, in southwest Nigeria.

They initially named it Panti – a Yoruba word for waste. Currently operating in five states in Nigeria, including Lagos, Scrapays’ business model has, like the company, evolved significantly. Importantly, by connecting everyone in the recycling ecosystem and making pricing, collections and payments more transparent and reliable, the system they’ve developed incentivises the waste producers themselves to recycle and helps collectors make more money.

According to Arewa, Scrapays’ collectors network has grown by 25% on a month-on-month basis.

“Our agents have autonomy over their activities. We only provide them with the technology and structure to do it in a scalable manner,” he said.

The company also leverages its multi-use platform – USSD, mobile apps and web – to generate profit from app subscriptions as well as in-app transactions, to boost its primary earnings from facilitating the recycling value chain.

Scrapays’ it is the only waste management company selected for the latest Google Black Founders Fund.

A little-known additional revenue source for the company is carbon credits. The company has tapped into the international carbon trading system, earning dollars for the removal of carbon from the environment.

With growth and increased credibility, it might be expected that the company would push to establish branches right across the country. However, Scrapays is segmenting its expansion very strategically. It is looking to expand one Nigerian state at a time, while also expanding to other countries – not only in Africa but also Latin America and Southeast Asia – that face similar waste problems to Nigeria’s.

 

 

 

 

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DISCLAIMER: This report has been prepared by Bulls ‘n Bears, a division of Faith Capital (Pvt) Ltd for general information purposes only and does not constitute an offer to sell or the solicitation of an offer to buy or subscribe for any securities. The information contained in this report has been compiled from sources believed to be reliable, but no representation or warranty is made or guarantee given as to its accuracy or completeness. All opinions expressed and recommendations made are subject to change without notice. Securities or financial instruments mentioned herein may not be suitable for all investors. Securities of emerging and mid-size growth companies typically involve a higher degree of risk and more volatility than the securities of more established companies. Neither Faith Capital nor any other member of Bulls ‘n Bears nor any other person, accepts any liability whatsoever for any loss howsoever arising from any use of this report or its contents or otherwise arising in connection therewith. Recipients of this report shall be solely responsible for making their own independent investigation into the business, financial condition and future prospects of any companies referred to in this report. Other  Indices quoted herein are for guideline purposes only and sourced from third parties.

 


 

 


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