scrap turns in a pretty penny

8/12/2019 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

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la

gu

on

n

cov

how

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scrap turns in a pretty penny

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