Entrepreneurship Zone: 26 July 2024: From Zurich investment banking to building a recycling company in Kenya

Fri Jul 26 09:49:16 CAT 2024

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Entrepreneurship Zone: 26 July 2024:  From Zurich investment banking to building a recycling company in Kenya

Entrepreneur Keiran Smith left his investment banking career in Zurich to establish Mr Green Africa, a plastic waste recycling company in Kenya. Mr Green Africa purchases plastic waste from informal waste collectors and recycles it into small pellets, which are then sold to plastics manufacturers as raw materials for new products.

The company has differentiated itself through its ‘fair-trade’ sourcing approach, which provides waste collectors with the opportunity to earn a higher, predictable, and transparent income. It also offers a better quality product than many other recyclers.

Smith shared his business journey with How we made it in Africa editor-in-chief Jaco Maritz.

Highlights from the interview include:

·         Smith’s transition from a banker in Switzerland to running a recycling company in Kenya

·         The company’s early mistake of purchasing the wrong equipment

·         Initial difficulties in finding buyers for its products

·         How a partnership with consumer goods giant Unilever dramatically changed the company’s fortunes

·         Challenges in fundraising and how he ultimately convinced American chemicals giant Dow and other investors to back the business

·         Competition in Kenya’s recycling industry

·         Reflections on what he would have done differently if he started the company again

Watch the full interview below:

>From Zurich to Nairobi

Keiran Smith used to work as an investment banker for Bank of New York Merrill Lynch in Zurich. In 2010, while still at the bank, he and a few friends launched a waste recycling business in Switzerland. Their business model involved collecting recyclable waste directly from people’s homes, rather than requiring them to drop off waste at various collection points. However, this was a part-time venture for Smith, as he continued working at the bank.

But through this experience, Smith realised the value of waste. “Traders and recyclers started reaching out to us, wanting to buy these materials from us,” he says.

While still employed at the bank, Smith also came across stories about Africans in the diaspora – living in places like London and New York – moving back to the continent to start businesses. These stories piqued his curiosity about opportunities in Africa.

In 2012, he travelled to Kenya with a Kenyan friend from Zurich, marking his first visit to the continent.

While in Kenya, he noticed the large volumes of plastic waste lying around. Recognising its value, he was intrigued that no one was capitalising on it.

“When I got back to Switzerland, I couldn’t stop thinking about it,” Smith says. This persistent thought eventually led him to quit his banking job, move to Kenya, and start Mr Green Africa.

Experimenting and moving up the value chain

Once the business was incorporated in Kenya and all the permits were secured – a process that took considerable time – Smith rented a warehouse in Nairobi and got to work.

Following advice from European recycling companies he consulted, Smith initially focused on waste collection rather than processing. “If you have invested all that money into a factory and then don’t know how to get your material, you can go bust really quick,” he explains.

Mr Green Africa’s strategy of offering informal waste pickers a higher price for their plastic made it relatively easy to attract suppliers. “The value proposition was there from the get-go and because of that word of mouth spread really quickly. Waste pickers tell other waste pickers … ‘There is Mr Green who buys at a much higher price, go there’,” Smith recalls.

Waste collectors come in various forms. Some work full-time, while others have other jobs and collect waste when they need extra money. In addition to individuals, there are also aggregators who buy from smaller-scale waste pickers.

Mr Green Africa identified a gap in Kenya’s recycling industry for PET plastics, typically used for water bottles. The company began with basic value addition by compressing these bottles for the export market. However, an early mistake occurred when they imported a second-hand compressing machine from the UK that lacked the necessary power. The machine couldn’t compress the plastic to the target weight required for economical shipping. This shortcoming made it impossible to export the plastic cost-effectively.

This setback prompted the company to experiment with other types of plastic and start basic processing. Gradually, Mr Green Africa moved up the value chain.

An employee holds a handful of recycled plastic pellets, which are now ready for sale after being processed at Mr Green’s factory in Nairobi.

Breakthrough partnership with Unilever

Finding buyers for its plastics proved difficult at first. Because of Mr Green Africa’s approach of paying waste collectors a fair price and delivering high-quality recycled plastic, it had to charge more for its products. However, local plastics manufacturers weren’t used to paying such prices. “To convince a plastic producer to make that switch was super difficult. We completely underestimated it,” Smith admits.

A significant breakthrough for the company was a partnership with Unilever. Seeking to increase the recycled content in its packaging, the fast-moving consumer goods giant collaborated with Mr Green Africa to create packaging made entirely from recycled materials supplied by the company.

Smith says the Unilever deal gave the company a lot of credibility in the eyes of local plastics manufacturers. Today, Mr Green Africa counts multiple brand owners among its customers. “We have some of the largest plastic manufacturers in the region who are part of our customer base. And that is really attested to us being able to go through this difficult journey of showcasing and proving, together with Unilever, that it is possible to use locally collected, locally recycled plastic waste … in high-quality application packaging,” he explains.

In early 2022, the company began expanding its footprint beyond Nairobi to cities such as Mombasa, Eldoret, and Kisumu.

Financing the business

To get the business off the ground, Smith cashed out his pension savings. “It was not a lot, but it was some,” he says. A friend from the bank also provided a loan. He pieced together small amounts of funding until 2016, when the company secured its first significant angel investor.

Smith recalls numerous times when financial worries loomed large. “There was even a time when it was so stressful where I had to ask the employees if it’s okay that we can pay them one week later or two weeks later … I didn’t pay myself a salary for many many years – even my own pockets were empty,” he remembers.

Mr Green Africa has since raised investments from various organisations, including American material sciences company Dow, impact investment firms AlphaMundi and DOB Equity, the Global Innovation Fund, and international retail solutions company Smollan, to name a few.

Expansion plans

Smith believes there is potential for Mr Green Africa to easily grow tenfold in the Kenyan market. Even if the local plastics market reaches saturation, the company can export its recycled material. From a sourcing perspective, the production and consumption of plastics in Kenya continue to increase.

The company is also eyeing international expansion to other African countries, as well as regions like Latin America and Southeast Asia. “Everywhere where there are informal waste picking communities that today still get exploited in one way or another … Anywhere where there’s ineffective and inefficient … waste management collection services … Anywhere where it’s a high growth market, where consumption is just bound to rise and grow, there is room for an innovative model like Mr. Green Africa,” Smith says.

“It’s all about finding the right partners in these markets. We’re not as naive anymore to believe that we can go in all these markets alone and build them from scratch, just the way we’ve done it here in Kenya. A, it would take us so much more time, and B, it would take us so much more resources because the learnings that it takes to be able to understand local context, local dynamics, et cetera, is a costly endeavour. And so in our approach, we’re looking and seeking for partners who would like to joint venture, who would like to become part of the bigger story of Mr Green and integrate their business into ours,” he adds.

Kieran Smith, the CEO of Mr Green, poses for a photograph at their recycling factory in Nairobi, Kenya.

Interview with Keiran Smith
CEO AND CO-FOUNDER, MR GREEN AFRICA

Lives in: Nairobi, Kenya

—Howwemadeitinafrica

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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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