scrap turns in a pretty penny
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| Nairobi Business MonthlyApril
BY AKINYI JOSEPH
W
ith the capital city alone producing
2,000 tonnes of garbage a day - equiva-
lent to four mountain high footballfields - the waste management industry in
Kenya continues to oer a lucrative source of
revenue for local businesses who are willing
to rifle through the trash.
Taka KenyaEvery business - regardless of the industry -
works on the basic idea of exchanging money
for a good or a service. At a shop, you exchange
money for groceries; at a restaurant for food;
at a petrol station for fuel and so on. The busi-
ness model operates on the simple concept of
give and take: give money and get something
in exchange.
Garbage collectors, on the other hand, have
the potential to diversify this standard model
since they are paid a service fee to collect a
product - business and residential waste - that
has a resale value, thus creating two streams of
revenue from one product.
Of the 70 private garbage collection compa-
nies which operate in the void left by the coun-
trys city and municipal councils, however, the
countrys rubbish is currently only transported
Enterprise&IdeasCONTENTSTaka Kenya 50The Metal Merchants 51The Flip Flop RecyclingCompany 52Bottom of the Pyramid 53
Sh500,000The overseas resale value
of one ton of copper, a
non-ferrous metal
STARTING UP
Entrepreneurs are investingand earning millions fromrecycled materials
from a residence or business to a dump site such
as Dandora and various other illegal landfills.
Taka Kenya which started operations in
Nairobi in February, however, completes the
profitable business model by oering an inte-
grated waste management solution that collects
solid waste, sorts it into various groups (paper,
plastic, glass, metal, food etc) and sells the prod-
uct forward to a recycler.
Why do we manage homes, businesses, even
our own lives, but not our waste? 31 year old
Zameer Noorali and Exective Director of Taka
Kenya asks.
The result of this is two-fold. First, a smaller
percentage of the countrys waste - between 5%
to 20% - ultimately arrives at a dumpsite after all
the value has been gleaned from it. And second,
a cost sharing approach to the business through
which both the waste producer and the waste
manager benefit.
It is a business opportunity that Zameer, a
50% shareholder, and his three business part-
ners - two local real estate investors, and a US
based company which oers technical support
Scrap turnsin a pretty
penny
In less than threemonths TakaKenya already boastsa high profile clienteleincluding the SerenaGroup, Diamond Plaza,Nakumatt, LondonDistillers and variousresidential homes
Above: Zameer Noorali, Executive Director of TakaKenya.The bulk of Taka Kenyas start up investment
was spent on semi-automated trucks.
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April Nairobi Business Monthly |
- considered lucrative enough to invest Sh43
million into.
The bulk of the companys investment has
gone into the purchase of twelve special trucks
- five of which will service Nairobi and its envi-
rons by end April - each of which caters which
for between 12 to 20 tonnes of waste. The trucks,
which are semi automated, sort and compact
the garbage into its dierent groups which are
later o oaded at its Addis Ababa Road and Karen
warehouses. The semi automated system also
allows Taka Kenya to oer its clients a quarterly
breakdown of the kinds of garbage that each
business and residence produces.
While food waste is turned into compost by
various community based organisations in
Nairobis informal settlements, the glass is sold
to Kitengela Glass and the paper to Kamongo
Paper Recyclers and Mandhav Paper Group.
Plastic recycling is not yet a viable business in
Kenya because it doesnt have a resale value,
and so most of it is exported to China.
In less than three months Taka Kenya already
boasts a high profile clientele including the
Serena Group, Diamond Plaza, Nakumatt,
London Distillers and various residential
homes in Kilimani, Kileleshwa, Westlands and
Parklands. The young company hopes that an
increased consciousness of waste production
practices will help its business to grow, even
as it cultivates a relationship with a leading
retail supermarket chain to set up recycling bins
outside their locations where customers can
dispose of their waste sorted into dierent bins.
Taka Kenyas waste management services
range from between Sh150 to Sh200 per house-
The Metal Merchants
The Metal Merchants is a scrap metal
recycling company that has been in
operation since 1985. Shezad Fazal,
the Managing Director of The Metal Mer-
chants, said We collect non-ferrous metals
like copper, aluminium, brass, bronze from
registered dealers across the country like
Nyanza, Kisumu, Nakuru, Eldoret, Rift Valley
and Mombasa. They also source scrap metal
from Uganda, Tanzania, Rwanda and Burundi.
On arrival at their yard in Embakasi, the
scrap metals are weighed, then manually
sorted and grouped by his 100 strong staff,
and compressed by machine into cubes.
No one in Kenya smelts these metals, said
Shezad, because the cost of electricity is very
high and so non-ferrous metal is exported
to markets like China, India and Barcelona.
Nairobi does have non-ferrous metal smelters
such as Kens Metals, said Shezad, but they are
only able to handle small quantities. The Met-
al Merchants sell some of their scrap locally
and export the rest. Local prices for scrap
are however lower than what is offered by the
international market, and so dealers prefer to
sell their wares abroad. According to media
reports from December, the government is
planning to establish a steel factory that will
smelt non-ferrous scrap metal, create localjobs and stem export of the same.
The cubes of non-ferrous metal are loaded
into a container and shipped to China where
they are smelted and reused. Between 8 to 10
tonnes of scrap metal fit in one container. The
most expensive non-ferrous metal is copper
and one ton can sell for upto Sh500,000; the
cheapest is hard aluminium (like motor vehi-
cle spares) and goes for Sh90,000 a ton.
Since each metal melts at a different
temperature, different metals require
independent smelting plants, and
according to Shezad, no one in Africa
- excluding South Africa - smelts cop-
per. The main barrier to opening a smelting
plant, he said, are inhibitive operating costs
such as the high cost of power and various
bylaws including those from environmental
associations, and council permits, which aim
to balance the social and economic benefit ofrecycling.
Kenya does have smelters for ferrous metal
(metals containing iron) such as Steel Minings,
Apex Steel Mills and Bachoo based at Athi
River, whose end product is reused in the local
building, construction and hardware sector.
Ferrous metal is available in greater volumes
locally but has a lower resale value.
The scrap metal sector has been accused
of vandalising key installations such as elec-
tricity and
telephone
cables,
roadside
lamp posts,
guard rails
on bridges
and manhole
covers. Vandals
however target
ferrous metals,
said Shezad.
Licensed dealers are members of the Kenya
Scrap Metal Dealers Association (KSMDA), a
vocal group that has defended the rights of
local businesses to legally source and recycle
scrap metal. Until 2007, dealers were regu-lated by the Scrap Metal Act, a statute that
makes provision for the control and regula-
tion of dealing in scrap metal. In 2007 the
law abolished the requirement for a licence
to deal in scrap metal, which left the industry
unchecked and open to abuse.
KSMDA lobbied the Ministry of Industriali-
sation to regulate the sector and the Scrap
Metal Draft Bill 2012 is currently tabled in
Parliament.
Shezad Fazal, MD of The Metal
Merchants (right) Piles of metal waste
at their Embakasi yard
c
r
la
gu
on
n
cov
how
ferr
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