Entrepreneurship Zone: 18 July 2023 :: Ethiopia: Converting plastic waste into affordable homes

Tue Jul 18 07:52:25 CAT 2023

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Entrepreneurship Zone: 18 July 2023 ::  Ethiopia: Converting plastic waste
into affordable homes

Bulls ‘n Bears Investors Diary: Today’s Events

 <https://www.hyundai.co.zw/> 

Kubik, a startup with offices in Kenya and Ethiopia, transforms recycled
plastic waste into interlocking building materials, including bricks, beams,
and columns. Recently, the company has commenced operations in Ethiopia,
where it is targeting the affordable housing market. The country currently
faces a housing deficit of around 1.2 million units, with a need for 381,000
new housing units annually. In contrast, only 165,000 units are produced
each year.

Kubik’s origins

Established in 2021, Kubik is the brainchild of co-founders Kidus Asfaw and
Penda Marre. The company’s founding traces back to 2018, when Kidus, a
former employee of Google, Accenture and the World Bank, was working for
UNICEF. During a conference in Prague, Kidus received a call from his
friend, Aboubacar Kampo, the then head of UNICEF in Côte d’Ivoire.

Kidus was urged to immediately travel to Côte d’Ivoire following the
conference. Upon arriving in Abidjan, Aboubacar promptly chauffeured him
from the airport to a local elementary school.

Initially puzzled by the ordinary-looking structure before him, Kidus soon
learned that what stood in front of him was not simply a classroom, but five
tonnes of repurposed plastic waste.

In the subsequent months, Kidus, along with Aboubacar’s team, supported the
outfit that produced these plastic bricks. They set up a factory in Abidjan,
and secured the government’s commitment to build over 500 classrooms using
these recycled materials. Also working on the project was Penda Marre,
Kidus’s future co-founder, who had left her successful construction company
in Texas to help support UNICEF’s plastic-to-schools project in Côte
d’Ivoire.

However, from the moment the project took off, Kidus wondered how this
technology could scale beyond Côte d’Ivoire and classrooms. He concluded
that only a profit-driven company could achieve this. While several entities
in Africa – including the one that UNICEF supported in Côte d’Ivoire –
transformed plastic to building materials, none had managed to scale
significantly. Some operated as non-profit organisations relying on donor
grants, while others focused on exporting to regions like Europe, rendering
the product too costly for African markets. Many set their prices higher
than conventional building materials.

It was this realisation that motivated Kidus and Penda to strike out on
their own.

The classroom in Abidjan, built from recycled plastic bricks, which inspired
the founding of Kubik.

Targeting real estate developers

Kubik primarily caters to real estate developers. According to Kidus,
convincing builders to adopt this nascent building material hinges on
competitive pricing, quick construction times, and structural integrity.
Developers are also looking for a product that allows them to finish walls,
in terms of painting and plastering, according to their own preferences.
Kidus states, “They are not looking for fancy products, they’re actually
looking for super boring products.” He says the fact that the bricks are
made from recycled plastics, and has a significantly lower carbon footprint
than traditional materials, is usually the last detail shared with potential
buyers.

Kidus reveals, “We spent the majority of our time really thinking through a
business model that can allow the price of our product to be very
competitive compared to cement [and] at the same time caters to real estate
developers’ needs.” He says Kubik’s building materials sell for over 40%
less than traditional cement bricks.

There’s an immense housing deficit in Africa, amounting to over 100 million
units. Kidus highlights that Ethiopia’s market for low-cost housing
materials is worth over $3 billion annually. On a larger scale, the value of
this market across Africa exceeds $700 billion.

Working with waste collectors

The Kubik team consciously steers clear of direct involvement in waste
collection, viewing it as a separate industry already well-established in
many African countries. Instead, it focuses on incentivising collectors to
sell their plastic waste to them.

Strategically, Kubik uses plastics not typically in high demand among other
recyclers. This creates a new market for waste collectors, allowing the
company to avoid competition for more popular plastics like PET, commonly
used for water bottles.

Plastic sorting and manufacturing

Upon procurement, Kubik’s team sorts the collected plastic waste into
various types. The sorted plastic is then transported to the company’s
factory, situated in an industrial park on the outskirts of Addis Ababa.
Here, the plastic undergoes a thorough cleaning process. Post-cleaning, the
plastic is converted into flakes or pellets. These are then put through an
extrusion process to create the building materials.

Navigating funding obstacles

In June, Kubik revealed that it had secured $3.34 million in seed funding
from a string of investors, including Plug & Play, Bestseller Foundation,
GIIG Africa Fund, Satgana, Unruly Capital, Savannah Fund, African
Renaissance Partners, Kazana Fund, Princeton Alumni Angels, and Andav
Capital.

However, fundraising was still a challenge, according to Kidus. He states
that venture capitalists are typically hesitant to finance capex-heavy
businesses like Kubik, which operates a factory. On the flip side, those
investors who do support manufacturing ventures usually prefer more
established businesses.

The construction of the factory represents Kubik’s largest investment to
date, Kidus notes.

He predicts that Kubik will achieve profitability next year. “It’s a very
profitable business. And our business model is really focused around how we
can then reinvest a lot of that profit into making this technology better.”

Kidus Asfaw, CEO and co-founder of Kubik

—Howwemadeitinaafrica

INVESTORS DIARY 2023

Company

Event

Venue

Date & Time

CBZ

AGM

Virtual

July 21 2023 | 4pm

POSB

AGM

Chapman Golf Club

July 25 2023 |10am

Afdis

AGM

Virtual | St Marnocks, Lomagundi Road, Stapleford

July 26 2023 | 12pm

RTG

AGM

Rainbow Towers Hotel

July 27 2023 |12pm

ZHL

AGM

206 Samora Machel Avenue

July 28 2023 | 10am

Delta

AGM

Virtual | Head Office, Northridge Close, Borrowdale

July 28 2023 | 12:30pm

Heroes’ Day

Aug 14

Defence Forces Day

Aug 15

zIMBABWE

2023 harmonised elections

August 23

REST OF AFRICA

Counters Trading Under Cautionary

CBZH

GetBucks

EcoCash

Padenga

Econet

RTG

Fidelity

TSL

FMHL

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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
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