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The Informal Solid Waste Sector In Egypt: Prospects for Formalization

Table of Contents 1. Background....................................................................................3

1.1. Introduction ................................................................................................................ 3 1.2. Purpose of the Study .................................................................................................. 4

2. Methodology...................................................................................5

2.1. Selection of Field Site ................................................................................................ 5 2.2. Questionnaires ............................................................................................................ 5 2.3. Sampling .................................................................................................................... 6 2.4. Data Collection ........................................................................................................... 7 2.5. Profile of Respondents ............................................................................................... 7

3. Solid Waste Collection and Recovery..........................................8

3.1. Collection And Transportation ................................................................................. 11 3.2. Recovery of Primary Materials ................................................................................ 16 3.3. Contractual Agreements for Collection and Transportation .................................... 23

4. Trading Enterprises....................................................................26

4.1. Trading networks...................................................................................................... 27 4.2. Complementary Activities ....................................................................................... 28

5. Small Scale Recycling Industries...............................................29

5.1. Type and Growth of Recycling Industries ............................................................... 29 5.2. Trading Networks: Suppliers and Customers........................................................... 31

6. Labor............................................................................................35

6.1. Labor in Collection and Transportation ................................................................... 37 6.2. Labor in Recovery of Primary Materials.................................................................. 38 6.3. Labor in Trading Activities ...................................................................................... 39 6.4. Labor in Recycling Industries .................................................................................. 41

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7. Workplace....................................................................................42 7.1. Workplace for Sorting and Recovery ....................................................................... 43 7.2. Workplace for Trading Activities ............................................................................ 43 7.3. Workplace for Recycling Industries ......................................................................... 44

8. Transportation.............................................................................46

8.1. Transportation for Collection and Recovery ............................................................ 47 8.3 Transportation for Recycling Industries ................................................................... 48

9. Capital..........................................................................................50

9.1. Capital for Collection and Recovery ........................................................................ 51 9.2 Capital for Trading Activities .................................................................................. 51 9.3. Capital for Recycling Enterprises ............................................................................ 53

10. Conclusions and Recommendations..........................................55

10.1. Conclusions .......................................................................................................... 55 10.2. Total Magnitude of Solid Waste Activity in the Informal Sector ........................ 55 10.3. Recommendations ................................................................................................ 56 10.4. The Future of Solid Waste Systems in Egypt ...................................................... 57

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The Informal Solid Waste Sector In Egypt: Prospects for Formalization

1. Background

1.1. Introduction The informal sector around the world, as in Egypt, is an undisputedly large and growing phenomenon in economic, social and political arenas. The informal sector has been, and continues to be, a dynamic sector of the economy, providing employment and income generating opportunities for hundreds of thousands of individuals. The role of the informal sector in development continues to be an issue that is extensively and intensively debated around the world. Academics, national planners, international organizations, development practitioners and policy makers have all engaged in this debate. The role of the informal sector and small-scale enterprises in the industrialization of developing countries is a critical point in the debate. The design and implementation of different intervention programs in the informal sector have varied across time and space. While many argue for the need to formalize the informal sector, others insist that the informal sector is a source of economic vitality and as such its dynamism and potential for growth lie in its adaptability to local conditions. The informal sector in Egypt plays an overwhelmingly significant and vital role in solid waste management and has become an institution in its own right. This sector has been growing over the last three decades. The scope and range of its activities has increased in both depth and breadth as they meet new challenges to meet the increasing demands of a growing city for garbage collection services and linking with a large national market for recovered materials. This informal sector has now created a giant industry, which spreads across the entire nation and provides a partial solution to man-made waste1. As the activities of this sector have been growing in size and diversity, it becomes imperative for us to understand its intricacies, its significance and its vitality. Hordes of people in Egypt make a living of the waste, which the affluent discards. These hordes consist of cleaning staff of municipalities, informal collectors, scavengers from municipal containers on streets, dumpsite scavengers, the 'roamers', the small middlemen, the large traders, the processors (plastic crushers, aluminum smelters, cloth grinders, paper compactors, etc.) and the re-manufacturers. This creates working and income generating activities for hundreds and thousands of individuals throughout the country, predominantly in the informal sector. The informal sector in solid waste management has been steadily growing in size and scope over the last three decades. During this time, this sector has grown in terms of the volume of waste that it handles and has expanded and diversified the range of its 1 Iskandar, Laila. (Community and Institutional Development, C.I.D.)Waste Management, The Case of the Cairo Municipality: The Informal Sector Recycling Program. Workshop Proceedings on Cost Recovery and Public/Private Partnerships, General Assembly of MEDCITIES Network; Rome, December 1998.

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activities, to becoming the most innovative and enterprising recyclers in the nation. The recovery and recycling processes that are integral processes in this informal sector allow Egypt to potentially recover about 80% of municipal solid waste, which is one of the highest rates of recovery in the world. The informal settlements where the garbage is collected and sorted have become hubs of activity, generating employment and income for thousands of individuals. Over the years, the garbage collectors in these settlements have expanded their activities beyond the physical confines of their locations, as was traditionally the case. They have developed numerous forward and backward linkages to the national economy, both formal and informal, and have become integrated in trading and manufacturing networks throughout the nation. Their trading partners are spread in a vast network throughout the country. This study focuses on one such group, namely the recyclers of Mokattam, Cairo as the scope of our research was not broad enough to cover the whole of Egypt.

1.2. Purpose of the Study The purpose of this study is to establish the credit-worthiness of that sector and their potential role in a demand-driven credit and employment scheme linked to formal lending institutions, donor-driven development interventions and the development of further small and medium enterprises. The study does that by attempting to document the following about the present sector activity:

1- Magnitude of the activity in the informal sector for municipal solid waste management in Cairo

2- Employment Generation: the number of people working in the solid waste collection and disposal in the informal sector in Cairo

3- Volume of trading in primary materials recovered in the informal sector 4- Magnitude of small recycling industries 5- Turnover of capital 6- Potential effects of formalization of that sector on the waste handling services in

Egypt. It is our aim to assess the size of enterprises and economic activity in that sector, the credit worthiness of small and medium enterprises in the informal sector, and the potential role formal lending institutions can play in the further development of that economy. Additionally, we will explore the inferences of these issues with regards to formalization of certain sectors of the informal economy, and the impact that policy decisions have on economic growth or stunting of certain vibrant sectors of the informal economy.

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2. Methodology

2.1. Selection of Field Site For this study, we selected one of five garbage collectors settlements in and around the Greater Cairo area. All the garbage collectors in these informal settlements serve the residential areas in the city. We selected the Mokattam settlement as the field site for a number of reasons.

� In this settlement, the initial efforts of the transformation and formalization of the trade of garbage collection took place.

� The activities in this settlement represent the range of activities and processes that form the entire system for solid waste collection and disposal in the city.

� These activities range from collection, transportation, and recovery of primary materials, trading and recycling.

� It is the largest settlement in terms of population and activities. � Major endeavors during the 1980s in particular were critical in the development of

the trade of garbage collection in the settlement through mechanization, infrastructure development, route extension, and credit programs for small and medium enterprises.

Conducting field research in the Mokattam settlement was an effort to gain more insight into the depth and breath of the transformation of the settlement and more critically the entrepreneurial aspect of waste handling.

2.2. Questionnaires Three questionnaires were used in this study. Each focused on gathering information about the specific activities that exist within the settlement of garbage collectors. The main activities were: collection, transportation, recovery of primary materials, small and medium enterprise (SME) trading activities and small scale recycling industries. A separate questionnaire was used for each of the following; collection and recovery, trading activities and recycling industries. The process of designing the questionnaire included the participation of individuals from the settlement who had extensive experience with the occupation of garbage collection. Several brainstorming sessions were held to develop the survey instruments. The questionnaires were pre-tested in the field and modified and refined according to the results of the pretest. The information gathered on the collection, transportation and recovery processes was:

� Collection routes � Type and number of households served � Volume of solid waste collected � Contractual arrangements between the garbage collectors and ‘waahis’ � Labor

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� Cost of operation � Capital � Type and quantity of recovered primary materials � Methods of handling � Methods and costs of disposal of non-recovered materials

The questionnaire on the trading enterprises included information on:

� Type and volume of merchandise � Labor � Operating costs � Capital � Trading networks

The information collected on the small scale recycling industries included:

� Type of recycling activity � Labor � Operating costs � Capital � Trading networks

2.3. Sampling The samples for the trading and recycling enterprise were drawn from a list of each type of activity located in the Mokattam settlement. Our aim was to select a random sample of 20% of the sampling units for each of the three samples we had of the main activities in the informal sector for solid waste management; collection of solid waste, trading in primary materials and recycling industries. In a survey conducted in January 2000, all the trading (80) and recycling enterprises (228) in the settlement were listed.2 As a result of this survey, we developed a comprehensive listing of all the trading and recycling enterprises in the area. Separate lists were composed, the first for the trading enterprises and the second for the recycling industries. A random sample was selected from each list. This allowed us to draw two representative samples; the first for the trading enterprises and the second sample was representative of the recycling industries. In 1998, the Association of Garbage Collectors for Community Development (AGCCD) conducted a survey of all the residential and commercial units in the settlement. This survey listed the units on each street in the settlement. We used this comprehensive list of all the garbage enterprises in the settlement to select our sample. The sample for the collection and recovery enterprises was randomly selected from a list composed of all garbage collectors’ enterprises in the settlement. We randomly selected about 20% of the list that consisted of 786 enterprises. The garbage collectors’ enterprise refers to the garbage collector, the head of the household, and his family. Collection and transportation of household solid waste is a family

2 Community and Institutional Development, Survey of Micro-enterprise Workshops in Mokattam Neighborhood, 1996 and updated January 2000.

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business. The head of the family, his wife, children and any of his other dependents all work with him. The family enterprise constitutes the labor that takes care of the collection and sorting of household waste on a daily basis.

2.4. Data Collection The fieldwork was conducted from July 1st – July 31st, 2000. Three teams of interviewers were trained to conduct face-to-face interviews with the three groups of respondents. Each team was assigned one of the questionnaires for the three categories of activities in the settlement. The members of the team of 24 interviewers, were assigned to work on one of the three questionnaires (one on collection and recovery, the second on trading activities and third on recycling industries) based on their prior working experience in the settlement as well as their knowledge of specific activities in collection, recovery, trading and recycling cycles that take place within the settlement.

2.5. Profile of Respondents The respondents all reside and work in the Mokattam settlement. They are 176 garbage collectors and sorters, 55 traders in primary recovered material, and 60 recycling workshop owners. About 90% of the garbage collectors enterprises surveyed provide direct services to households around the city. Of this group, the majority of the garbage collectors (61%) work on collection routes in middle-low income neighborhoods and 39% collect household waste from high-middle income neighborhoods around the city. They collect and waste from households to the settlement in Mokattam where they carry out sorting and recovery of primary materials. The remaining garbage collectors enterprises surveyed (10%) are roamers i.e. they do not have fixed collection routes but roam the streets of the city in trucks and donkey carts, and collect garbage that has accumulated on the streets or in empty lots. Only three enterprises (2%) purchase the waste from other collectors in the neighborhood or private sector companies and thus only have the sorting and recovery activities.

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3. Solid Waste Collection and Recovery The culture-specific aspect about garbage collection in Egypt is that collection systems are regular only if the collector is someone who profits from the recovery and trade of items in the garbage. The system costs less to the user (waste generator) if the collector and recoverer are one and the same, and the system is more environmentally friendly if the collector will benefit from the recovery of items in the garbage (uncontrolled dumping and burning is reduced to a minimum). If the collector profits from recovered garbage he will attempt to protect his profit by collecting directly from his client, i.e. he will want to obtain it from source (door-to-door) and not from the street. If the privilege of recovery and profit from non-organic materials were given to someone other than the waste collector, then the latter's input in the system would have to be his labor in sorting. If he were not willing to provide that input, then it would mean that he did not see the inherent value of recovering, processing and manufacturing the recovered items and this would jeopardize the reliability and efficiency of the system. The latter describes the relationship between the formal waste collection companies that are not garbage collectors and the waste that they collect3. The context of poverty in Egypt dictates most of the elements of this system. Importing equipment, training people to maintain and operate it, is no guarantee of comprehensive solid waste management systems reform because it neglects the culture-specific dynamics of solid waste processing and removal in Egypt. Since poverty dictates the system, there will always be a niche where the city council has to operate - namely the public domain. For it is in that domain that scavengers operate, and where private collectors will not venture because the garbage is not 'lucrative' since it comes from low income homes while rich residents are serviced door-to-door. In tourist destinations in Egypt, the 'rich' residents are the hotels4. An in-depth understanding of the complex web of relations and interactions, and as importantly the links between the formal and informal sectors, that constitute the solid waste management system in Cairo today is essential and critical for introducing change and meeting the need to develop this system as it stands today. Interventions and innovations should be considered within this context. The current system of solid waste management in the city of Cairo is a multi-layered and multi-dimensional process that includes a multitude of actors and processes. The first in this chain is the average individual living in one of the residential neighborhoods in the city. Such individuals generate a large amount of waste on a daily basis. This household waste in then collected by the garbage collectors on a daily basis, thus providing a vital and indispensable service to the middle and upper class residents of the city, a service they cannot live without under any circumstances. To date, the informal garbage collectors are primarily the ones who provide this service, in spite of the growth of formal private sector collection companies. The efficacy of including the informal garbage 3 Iskander, Laila., (Community and Institutional Development) Municipal Solid Waste Management – Local Knowledge and National Development: A Case Study from Egypt. Conference Proceedings of the Seventh International Waste Management and Landfill Symposium, Sardinia, Italy, October 4-8, 1999. 1998. 4 Ibid.

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collectors becomes apparent as we recognize the need to continue providing this service. As the municipal solid waste system has developed over the years, so have the informal garbage collectors. They have adapted to the changes in the system over time and have been able to remain in this business. They have demonstrated this capacity over the years and are expected to continue doing so in the future. They are a critical link in the chain that have to be taken into consideration and can have an active role in improving the current system. The people working in this informal sector have invested large amounts of money, time, and labor (often unpaid, unrewarded and unrecognized) over the last two decades. The garbage collectors, traders and recyclers in the settlement have continued to provide a vital service to the residents of the more affluent neighborhoods of the city unceasingly and without interruption. More critically, they have invested in their trade over time. They have invested in building homes in the settlement; in multi-storey permanent structures. They built one room at a time, one wall at a time. They saved some of the income and whenever they had accumulated enough savings, they would make another addition to their home, adding the ceiling and roofs. They spent years to complete the construction of these homes. They also have invested in their fleet of trucks, meeting the requirements enforced by the municipality, but also developing the tools of their trade. They also have invested in their workshops, buying machines for the recycling industries. They have spent considerable time and effort to develop those links to markets outside the settlement, in both the formal and informal sectors.

The informal garbage collectors form a complex dynamic system for the collection and handling of solid waste in Cairo. They have expanded the scope and range of their activities in trading of primary materials and recycling industries. They now have become a large economic force and a vital part of the national economy. This growing thriving sector has created hundreds of jobs as well as wage and income earning activities for a multitude of people in Cairo and elsewhere around the nation. Their linkages with other local and national markets have made them critical to certain industries. Changes or interventions at any point in this complex web of activities and trading relations will have repercussions on the whole system and the flow of products. While it is imperative to improve the living conditions of the informal settlement and upgrade the trade of garbage collection, we have to recognize the extent to which they have become integrated into the city life and economy. It is therefore critical for policy and decisions makers to be fully aware of the extent, intricacy and complexity of this system. The following diagram charts the different stages and processes that form the solid waste management system in Cairo.

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Collection of Solid Waste from Households

Transportation of Solid Waste to Settlement

Organic Waste

Composting Plant or Municipal Dump

Paper Metals Glass Fabric Bones

Manual Re-Sorting by Type

Compacted

Manual Re-Sorting by Type & Color

Manual Re-Sorting by Type

Manual Re-Sorting by Type & Color

Preparation Processes

Sold to Workshops and Factories

Municipal Dumps

Sold to Intermediary Traders

Sold to Intermediary

Grinding Process Preparation

Processes

Flow Chart 1: Waste Flows as Implemented in the Informal Sector

Manual Sorting of Organic and Non-organic Waste

Manual Sorting by Main Classification of Type of

Primary Materials

Sold to Intermediary

Plastic Non-recycleables

Non-organic waste

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3.1. Collection And Transportation In a sample of 176 garbage collectors, 158 (90%) of the garbage collectors served 58100 household units on a daily basis. Each garbage collector enterprise collects waste from an average of 368 households every day. Of the garbage collectors surveyed and who serve households in residential areas, about 139 garbage collectors enterprises (88%) have one route and 19 (12%) operate on two routes. Both routes are in residential areas around the city. A route consists of a specific path through certain streets in a neighborhood. The garbage collectors pass by the same buildings to collect the garbage from all the apartments in each of the buildings on this route. The remaining 18 (10%) garbage collectors surveyed in the sample are roamers. The roamers collect about 12 tons of garbage from the streets of the city on a daily basis, i.e. each roamer collects an average of two thirds of ton of the garbage strewn around the street of Cairo every day. About 50% of the roamers use donkey carts, and 28% use trucks that have a one-ton capacity while 22% use trucks that have a three-ton capacity. The garbage collectors surveyed provide services to a large and growing proportion of the residents of the city. They not only provide the service to households in specific neighborhoods, but the roamers serve the city in general as they collect waste that would otherwise accumulate on the sidewalks, streets and any other open space around the city. The garbage collectors surveyed work on a total of 173 collection routes in the Greater Cairo metropolitan area, serving over 58,100 residential units. To work on a route, the garbage collectors take on the responsibility of making daily rounds to collect garbage from specific households in the residential areas around the city. They knock on the doors of each household on this route, hauling away the garbage to the settlement. They collect about 375 tons per day of household waste. Each garbage collector collects approximately 1.5 kilograms of garbage per household on a daily basis (375 tons ÷ 58,100 households) thus performing a vital service to urban residential areas. They work 6.4 days per week, thus collecting about 124,800 tons per year (6.4 days/wk. x 375 ton/day = 2,400 ton/week x 52 weeks = 124,800 tons/year). They recover 80% of this tonnage, i.e.124,800 x .80 = 99,840 tons/year, which they trade, prepare as primary inputs for formal industry and re-manufacture themselves. And herein lies the formidable importance of this informal sector to the economy – both formal and informal. Not to mention the critical importance of this particular informal sector to the environment in Egypt embodied in reducing pressure on landfills, and reducing the amount of uncontrolled burning of waste in urban centers and mega cities like Cairo. The majority (94%) operates only one round per day for each collection route. Most of the garbage collectors (62%) collect between 1-2 tons of household waste per day. Each garbage collector and his family, who constitute the majority of workers employed in this endeavor, are responsible for one collection route around the city. On average, each route for the collection of the solid waste from the residential areas includes about 368 households. In essence, each household or family of garbage collectors serves about 368 affluent households around the city.

Table 1 Quantity of Waste Collected on a Daily Basis

(In tons) Number Percentage Under one ton 40 23 Between 1-2 tons 108 62 Between 3-4 tons 24 13 Over 4 tons 3 2 Total 175 100

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They collect and transport the garbage produced by these middle class households (about 550 kilograms per day, i.e. at a rate of 550 ÷ 368 = 1.5 ton/household/day). This is accumulated and dumped in the yard of the garbage collector and his family, where it is sorted and made ready for the market. This indicates the high capacity of each of the informal sector to handle large quantities of waste on a daily basis. The increase in the number of garbage collectors’ enterprises and corresponding increasing in the number of households served in Cairo over the last thirty years is indicative of the capacity of this informal sector to grow and expand to meet the increasing demands made on the solid waste collection system in Cairo during that period. The growth in the population and housing stock of the Greater Cairo area provide this community with a growing market for their activities. It has not been demonstrated that the formal sector has grown with the same speed and responsiveness to the growth of the needs of the city for more efficient waste handling services. And again, herein lies a critical advantage the informal sector enjoys over the formal sector: their ability to respond to demand-driven forces faster, and their flexibility in designing systems that provide customers with market needs.

The informal garbage collectors have been able to meet these increasing demands for their services to a significant extent. The services provided by the garbage collectors in the Mokattam settlement have continued to grow over the last three decades. Prior to 1970, the number of new garbage collectors’ enterprises established in the informal settlement was limited. While only 24 garbage collectors enterprises were added before 1970, the rate of growth of the number of collectors and enterprises expanded significantly from 1970 to the present. The results of the survey indicate that largest increase in the number of newly acquired collection routes (37%) was during the 1980s. This growth trend continues throughout the 1990s (26%). This is economic growth at the community level, sector level and national level. It reflects the establishment of new enterprises, new entrants into the labor force, new trading networks and new creation of wealth and capital. This investment of capital will be discussed in a subsequent section, but it is sufficient to note here that if this growth were not profitable, it would not have

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25

37

26

0 5 10 15 20 25 30 35 40

Perc

enta

ge G

row

th

Before 1970 1970-1979 1980-1989 1990-2000 Year

Figure 1: Growth of Garbage Collectors Enterprises

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occurred. Therefore it is safe to assume that it reflects an investment that yields a viable rate of return.

Table 2 Increase in Number of Enterprises and Households Served

Time Frame No of Enterprises

Percentage No of Households

Percentage

After 1990 51 26 13537 24 Between 1980-1989 72 37 19773 34 Between 1970-1979 48 25 15877 27 Before 1970 24 12 8700 15 Total 195 100 57887 100

The same trend is evident in the growth of the number of households served within the Greater Cairo metropolitan area. The results of the survey show that the 1980s ushered in the largest expansion in the number of households served. About 34 % of the total number of households added since 1970 occurred during the 1980s, while an increase of 24% took place from 1991 to the present. This trend is indicative of the expansion capacity of the informal sector to meet the ever-increasing needs of the burgeoning population of Cairo. It is therefore imperative to examine how best to provide this sector with credit and to institutionalize their activities within the framework of national policies in both formal lending sectors, the environment and local government administration. Each garbage collector’s enterprise is allocated a certain number of households in the residential areas around the city. Each collection route consists of a specific number of households located on certain streets in the residential neighborhoods.

Figure 2 Increase in Enterprises and Households

0

20

40

60

80

100

120

After1990 Between1980-1989

Between1970-1979

Before1970 Total

Perc

enta

ge

Enterprise

Household

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� Approximately 40% serve less than 250 households. � The majority (48%) serves between 250-500 households, i.e. they pass by these

apartments to take away their garbage on a daily basis. � About 8.5% serve between 500-750 households. � Only 3% have more than 500 units on each of their collection routes.

� A very small proportion of the garbage collectors surveyed (0.7%) serve up to 1000 households on their collection routes.

The average number of units served by each garbage collector is about 368 households. In other words, each family within the settlement that comprises a garbage collectors enterprise, and also a household in their own right, actually serve 368 households in the residential areas around the city.

Table 3: Number of Units Served Number Percentage Less than 250 units 61 39.9 Between 250-500 73 47.7 Between 501-750 units 13 8.5 Between 751-1000 units 5 3.3 Over 1000 units 1 0.7 Total 153 100.0

The garbage collectors in essence perform four main functions: collection, recovery, trade and recycling. The new formal companies that have been formed by individuals outside the settlement mostly perform one function only: collection and transportation. The recovery process is carried out only in the informal settlements of Egypt. Sometimes the formal companies subcontract with the informal garbage collectors, whereby the former will collect the solid waste from the households and then proceed to sell it to the garbage collector who will haul it to the settlement in Mokattam where the recovery process takes place.

15

27

34

24

0

510

1520

2530

35Pe

rcen

tage

Gro

wth

Before 1970 1970-1979 1980-1989 1990-2000

Year

Figure 3: Growth in the Number of Residential Units

Percentage Growth

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Currently, the informal sector in the Mokattam settlement serves two main categories of neighborhoods in Cairo, middle-high income areas and middle-low income areas. Approximately 61% of their collection routes are in middle-low income neighborhoods and only 39% are in high-middle income areas. The number of households in each type of varies. About 59% of the households are in middle-income areas and only 41% are in high-middle income areas. Most of the households served by the garbage collectors surveyed are in high-middle income areas. Although only over one third of the collection routes are located in the high-middle income neighborhoods, they account for the larger number of households that are served. The garbage collectors respond to market and price mechanisms in the manner in which they select collection routes and allocate the number of households designated for each route. They tend to design a smaller number of routes in the higher income areas than the lower income areas. This is a response to pricing mechanisms. They can sometimes charge higher service fees in the high-middle income areas. But more essentially, they know they can recover more valuable waste with potentially greater profits in high income neighborhoods. The ability of the informal sector to respond to price fluctuations and create market mechanisms to deal with those fluctuations is demonstrated in the solid waste sector as well as many other informal economy sectors.

In addition, they select routes that have a large number of households thus maximizing the money, and invariably the waste, they collect on a monthly basis, The middle-low income areas provide the garbage collectors with different pricing mechanisms. To make the collection and transportation routes in these areas more viable, they have to add more routes as they charge lower fees and recover waste of lower market value. The contractual basis for the right to service Cairene neighborhoods is summarized below: � The contractual basis on which local authorities engage the informal sector operators differs

from the one by which they engage the new private sector companies which have penetrated the solid waste sector recently. The new companies purchase tender documents, bid competitively, sign a contract with the Cairo Beautification Authority and get their contract fee from the same Authority. They are not left open to the risk of some residents

Table 4 Type of Neighborhoods Served

(Based on classification of routes) Number Percentage High-middle income 68 39 Middle-low income 105 61

Figure 4Types of Neighborhoods Served

39%

61%

High-Middle IncomeN i hb h d

Middle-Low IncomeN i hb h d

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paying for the fee-for-service and others not doing so. The informal sector operators, on the other hand, have to pay a deposit ‘insurance’ to the Cairo Beautification Authority up front, in return for the right to service a specific number of apartment blocks. They have no guarantee that these blocks are all inhabited, that residents will pay or that they will recover their cost. Thus they are forced to live off the recovery of recyclables, trade them and re-manufacture them.

The average monthly service fee collected from each household served by the garbage collectors is L.E.2 per month. This includes both high-middle and middle-low income areas. The majority of the garbage collectors receive between L.E.2-4 per month. The monthly income derived from fees paid by households varies according to the number of households each collector serves. In addition, the terms of the agreements between the waahi and the garbage collector determines how much of this monthly fee that latter gets to keep. Profit sharing schemes in the informal sector are based on historical, traditional and indigenous verbal contractual agreements. In recent years, formal private collection companies have become licensed to service new middle-income neighborhoods in Cairo. These concentrate on commercial and institutional waste generators and informally sell the waste they collect to the garbage collectors who recycle it5. This saves the private collection companies the extra cost of transporting the waste to the outlying municipal dump. Most of the private collection companies do not have the capacity to carry out the sorting and recovery processes that are undertaken in the yards of the households of the garbage collectors in the informal settlements. Selling the garbage they collect from households and residential units to the garbage collectors allows these companies to profit from the hauling business. As the garbage itself has little value to the formal private companies, they save on the costs of disposal by selling it to the garbage collectors, who haul it the extra distance to their homes for sorting and recovery. What is perceived as unprofitable in the formal sector economy is perceived as valuable by the informal sector.

3.2. Recovery of Primary Materials Solid waste recovery and re-use in Egypt is based on the single most important motive for such behavior: economic motivation. Be it the garbage collectors of Cairo, or the residents of cities, towns and villages all over the nation bartering their non-organic waste, the strong driving force behind the recovery and re-use is the financial incentive. It follows, therefore that any plan to recover uncollected municipal waste, need only devise schemes that will compensate people for the recovery of that item. Most of the income generated by the garbage collectors is from the sale of primary materials that are recovered from the garbage, such as paper, plastics, rags, metal

5 Assaad, Marie and Moharram, Ayman. The Role of NGO's in Solid Waste Management. Cairo, 1994.

Table 5 Monthly Service Fee

Number Percentage Less than 2 pounds 41 25.0 Between 2-4 Pounds 114 69.5 Over 4 pounds 9 5.5 Total 164 100.0

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and glass. These are discarded by residential units around the city but can be re-used for other purposes either through sale or manufacturing6. Another critical aspect of informal sector activity, be it in the waste sector or other sectors, is that it is essentially a family business. Each and every member of the family is involved in this business either as a truck driver, a collector or a sorter. Most critically, the women and girls in the family are the sorters. They are the ones, who amidst their daily household chores of washing, cleaning and cooking, manually sort the garbage that is deposited in their yards. They do this on a daily basis. In this connection, we propose that a closer look be taken at source separation of waste to address the efficiency of the recovery process as well as the health hazards that hundreds of women and girls are exposed to in their daily chores. During the sorting process, the garbage is sorted into its organic and non-organic components. The organic waste is fed to the animals, sold to other breeders in the settlement or sent to composting plants and municipal dumps. However, animal breeding has dropped significantly over the last two decades and is continuously on the decline. The spread of composting plants offers other options to dispose of the organic waste. The high rate of recycling in Egypt is a function of the intensive and multi-layered sorting process that takes place in the informal settlements where the garbage collectors are located. The intricate, detailed and sophisticated system of classification of the recovered primary materials that the informal sector has developed over time allows them to re-use up to 80% of the municipal solid waste. This system of classification has evolved over time and is constantly being revised and refined as the technology in the recycling industries has developed. Over the last two decades, an increasing number of usages have evolved for more and more of the primary materials. As such needs arise and the appropriate technology is adopted, both in the informal and formal sectors, the garbage collectors have been able to come up with the appropriate differentiation of the main primary materials by type, size, usage, texture, color. The non-organic waste is then sorted into different categories of materials, primarily plastics, paper, glass, metal, fabric, bones and non-recyclables. Another sorting process is then undertaken to sort the different sub-types of each of the main categories of materials. Sorting is done according to color, size, shape and potential use or re-use of the materials. These re-sorted and reclassified materials are then sold to intermediary traders. These traders will in turn either sort or process these materials so that they can sell them to other customers for resale or manufacturing purposes. The primary recovered materials are sold in formal and informal markets and to large industrial plants throughout the country. The recovery process is the crux of the efficiency of recycling of solid waste. It should, at the very least, be maintained, but also enhanced as we improve the design of solid waste management systems in the city in general. Materials that cannot be recycled or resold are hauled to the municipal dumps. The efficiency of sorting and recovery reduces the amount which ends up in controlled dumps and sanitary landfills. Approximately 85% of the solid waste collected by the informal garbage collectors is recycled while only 15% is considered unusable “rabbish” i.e. residual waste. The women and

6 Iskandar, Laila. (Community and Institutional Development, C.I.D.)Waste Management, The Case of the Cairo Municipality: The Informal Sector Recycling Program. Workshop Proceedings on Cost Recovery and Public/Private Partnerships, General Assembly of MEDCITIES Network; Rome, December 1998.

18

girls in the settlement sort the garbage on a daily basis into 16 different categories of material depending on the type, usage and method of recovery. See Table 6 for the listing and volume recovered for each kind of recovered material. All the recovered primary materials are sold to intermediary traders in the settlement or traders located in other informal and formal markets around the Greater Cairo area and throughout the nation.

Trucks are used to transport the non-recyclables to municipal landfills on a monthly basis. The majority (61%) use the trucks provided by the Association of Garbage Collectors for Community Development (a local non-profit organization located in Mokattam) for that specific purpose. Only 6% use rental trucks and the rest (33%) use their own trucks to haul these materials to the municipal dumps. The average cost for each time they transport one truck-load of “rabbish” to the landfills is L.E.30. On average, the garbage collectors have to clear their workspace about 6 times per month, bringing the average annual cost of disposing of the non-recyclables L.E.2,160. This expense constitutes a cost that Cairenes pass on to the garbage collectors, as it is not covered by the monthly service fee that the residents pay. Thus, in essence the informal sector subsidizes the formal sector i.e. the poor subsidize the rich. The cost is even more exorbitant to the informal sector when health hazards, lack of industrial safety and disabilities are calculated in the cost of collection and recovery.

7 Nakdah consists of wide variety of items that do not have specific uses for recycling. This category includes articles such as toys, vases, artificial flowers, spoons, forks, and miscellaneous objects run by small motors.

Table 6 Primary Recovered Material

Type Volume Per Week

Percentage

Iron 1.2 0.05 Nylon Bags 3.3 0.13 Copper 3 0.13 Soft plastic 6.6 0.3 Animal Bones 6.6 0.3 Aluminum 8.8 0.4 Transparent Plastic 16.5 0.7 Cloth 23 1.0 Broken Glass 27 1.1 Paper 36 1.5 Tin 95 3.9 Cardboard 99 4.1 Rabbish 366 15.3 Nakdah7 477 20.0 Organic Waste 478 20.0 Glass 753 31.3 Total 2400 100

19

Figure 5Means of Transportation of Non- Recyclables Municipal Dumps

61%33%

6%

Association Truck

Private TruckRental Truck

Based on the results of our survey of the sorting process, the garbage collectors report that about 20% of the total garbage they collect is organic waste. This organic waste is either fed to the animals (for the minority who are still raising pigs), sent to the composting plant or to municipal dumps (if and when these are available). The organic waste residual waste is removed from the workspace four times per year. It is either transported to composting plants or to farmers in the Delta. The average annual cost of that activity is LE.1, 620. Each of the primary recovered materials is handling according to its potential uses8. Plastic: The most commonly recycled item in garbage, it includes food containers, mineral water bottles, black garbage bags, medicine bottles, etc. Each is sorted by type and color. The intermediary or informal traders specialize in handling the different kinds of plastic. Thus one trader will specialize in mineral water bottles, another in food containers, a third in trash bags, etc.

a. Food containers, oil containers and household items: These are cut in half manually using a big pair of industrial-size scissors, sorted by color, washed in boiling water and potash in a huge tub with a burning furnace underneath, left to dry then put through the funnel top of the plastic crusher and packed in sacks awaiting sale to merchants who act as middlemen between the plastic crushers and the manufacturers. Manufacturing of plastic takes place in the garbage neighborhood as well. These microentrepreneurs evolved a few years after the inauguration of the first credit scheme and were largely self start-up small businesses using locally designed and manufactured technology available in the informal sector of the economy in Egypt. Start up capital came either from the sale of the wife's gold earrings, a piece of furniture, a T.V. set, credit from loan sharks or the sale of a small plot of land still owned back home in the home village in Assuit.

8 Iskandar, Laila. Mokattam Garbage Village. Cairo, Egypt. Printed by Stallion Graphics, Heliopolis, Cairo, 1994

20

b. Black Plastic Bags: These are washed manually in a big container with soap and water, left to dry on a clothes line and put through a plastic crushing machine which transforms them into beads. These are in turn re-manufactured into black shopping bags or trash bags.

c. Mineral Water Bottles: The lid and label are peeled by the women in the family, then the bottle is cut into half using manual industrial-size scissors, then crushed using the same process followed by the food container plastic crushers except for the separation by color since mineral water bottles all come in the same clear blue color.

Animal Bones: Animal bones are collected and sold to middlemen who re-sell them for fodder and to glue manufacturers.

Glass: This component continues to be sold to manufacturers outside of the community but the community does produce a handful of glass middlemen who would buy from garbage collectors who went out on the garbage route and sorted the glass into according to type, size and color. Intermediary traders specialize in handling these different types such as medicine bottles, beer bottles, etc.

The following flow charts illustrate the complex and extended web of relationships among the informal sector operators in the field of waste and between them and the formal sector of the economy. A close look at that flow indicates the inextricable links between the two economies – formal and informal. It becomes apparent that a dis- equilibrium in one link in the chain can potentially disturb the entire chain. Backward and forward linkages between the formal and informal economies are critical factors to examine by policy makers, formal lending institutions, economists and market analysts.

21

Flow Chart 2

The Product Flow for Glass and Paper

PAPER

Compression Workshops in Settlement

GLASS

Sorted Into

Broken Glass

Whole Glass

Sold to Internal Intermediaries

Sorted by Color

Sold to Large Scale Formal Sector Industrial Plants

Sold to Internal & External Intermediaries

Sorted by Type

Sold in Other Formal & Informal Markets Across the Nation

Sorted Into

Thick Paper

Office Paper

Sold to Sold to

Formal Sector Factories in 10th Ramadan

Informal Traders & Wholesalers

22

Flow Chart 3 Product Flow for a Plastics Sub-Type --- Hard Plastic

Hard Plastic

Manually Sorted by

type/texture

Sold to Intermediary

Traders

Manually Sorted by color

Sold to Intermediary

Traders Washing

Crushing

Granulating

Sold to Intermediary

Traders

Sold to Formal & Informal Traders

and Manufacturers

Sold to Formal & Informal Traders

and Manufacturers

Sold to Intermediary

Traders

Pelletizing

Sold to Formal Industry for

Manufacturing

23

3.3. Contractual Agreements for Collection and Transportation

The relationship between the wahiya and the garbage collectors was, and in some cases still is, an informal contractual agreement. They had traditionally cooperated to provide their services to households around the city when the system had no or limited government regulation. As the municipal system of solid waste started to change during the late 1980s and into the 1990s, the relationship between the wahiya and the garbage collectors also underwent some changes. During the 1980s, the Cairo Cleansing and Beautification Authority (CCBA) was created to regulate the solid waste management system in the city through the creation of licenses for the collection and removal of waste. Only private, registered companies were considered eligible to bid for such licenses. This prompted the waahis and the garbage collectors to form private companies with the assistance of the consultants firm Environmental Quality International. The waahis continue to have the responsibility of organizing the work on the collection routes and the garbage collectors provide their labor in exchange for the garbage, which generates most of their income. The majority of the waahis and garbage collectors have formed companies that can bid for, and be granted, licenses from the CCBA. Most of these companies are owned by the waahis9. The companies build on the arrangements that had existed between the waahis and the garbage collectors. However it has enabled them to continue working in this trade as they now meet the licensing requirements of the CCBA, while hauling the garbage continues to be worked out between the waahis and the garbage collectors. The companies pay the licensing fees to CCBA and collect the service fees from the households. Partnerships, mergers and contractual agreements regulate, in an informal but equally binding manner, informal sector activity. The pattern of relations between the garbage collector and the wahi has changed from the traditional arrangement where the waahi only has the right to the service fee. During the early 1990s, the CCBA started to grant licenses to private companies that are owned by both the waahis and the garbage collectors. These companies were registered in order to meet the new licensing requirements enforced by CCBA. These companies allow the wahiya and garbage collectors to participate in the CCBA bidding process. Some of these companies are jointly owned by both the wahiya and the garbage collectors, other are owned by the garbage collectors alone, but the wahiya independently own the larger proportion of such companies. The institutional and contractual arrangements between the wahiya and the garbage collectors have changed over time. This yet again demonstrates the ability of the garbage collectors to adapt to new changes in the market and the regulation of their trade. As they operate in the informal sector, they have capitalized on the adaptability and flexibility that is particular to that sector in general to reach agreements that serve their purposes. Depending on who actually collects the user fees from the household, the garbage collector and the waahi share the proceeds. The only standard feature of this system is that when the waahi collects the service fees from the households, he pays the garbage collector a certain amount of money every month. When the garbage collector collects the service fees from the residential units, he in turn pays the waahi a specified amount of money every month. The amount paid by the waahi to the garbage collector or the garbage collector to the waahi varies according to the nature

9 Environmental Quality International, The Zabbaleen Environmental And Development Program: An Evaluation, Cairo, 1997.

24

of the agreement between the waahi and the garbage collector. The amount of money that is paid by one party to the other is determined by the nature of the relationship between the two parties. Agreements to share the service fees are informed by a number of factors;

� The proportion of the hauling costs that each party to the agreement will share � The proportion of the cost of the vehicle that each party will pay, if the wahi has helped

the garbage collector to acquire the trucks � Who provides the labor for the collection of the garbage from the households � Who provides the labor for the transportation of the garbage from the residential

neighborhoods to the settlement

The terms of these agreements are made between each waahi and garbage collector individually. There is no standard form for these agreements but there are multiple formulae for such agreements. Agreements are reached based on the historical relationship between any particular waahi and the garbage collectors he deals with. In addition, as the system for collection and transportation changed over time, so have the factors that have informed such agreements.

The average monthly payment from the garbage collector to the waahi is approximately L.E.140 per month. The garbage collector pays a fee to the waahi who has the concession to collect the garbage from the households. By participating in the licensing and bidding processes implemented by CCBA, the wahiya and the garbage collectors can be granted license to collect the garbage from neighborhoods around the city. The licensing fee paid to the CCBA secures the right of the garbage collector to get the garbage from those residential units. Based on who actually collects the service fees from the residential units, payments are exchanged between the waahi and the garbage collector. The minimum payment made by the garbage collector to the waahi is LE50 per month when the fomer collects the fees from the households. The maximum payments is L.E.400 per month. On the other hand, the waahi pays the garbage collector an average of L.E.110 per month, when the former collects the fees from the households. The minimum payment made by the waahi to the garbage collector is L.E.10 per month and the maximum is L.E.350 per month. This dual pattern of payment between wahiya and garbage collectors is a function of several factors. One of these factors is historical arrangement between each party. The fees paid by the waahi and garbage collector are based on the informal positions of financial power between the wahiya and the garbage collectors. Traditionally, only the wahiya had the right to collect the service fees, while the garbage collectors lived off what they could make from the garbage itself. With the changes in the current system, some of the garbage collectors have recently acquired the right to collect the service fees. This has resulted in new patterns between the wahiya and the garbage collectors. The critical factor in this relationship is who has won the concession for the right to the collection routes. These concessions are awarded through binding processes conducted by the local municipal authorities. These individuals, in turn, tend to have more power over setting the formula for sharing the service fees collected between the wahiya and garbage collectors. The second factor is the provision of labor for the physical collection and transportation of the garbage. The garbage collectors generally provide the labor and most of their income is generated from the sale of the primary materials. The wahiya still appear to have a stronger bargaining position vis-à-vis the

Table 7 Responsibility for Fee Collection from

Households Number Percentage Waahi 87 50 Garbage Collector 49 29 Both 32 19

25

garbage collectors and appear to receive the larger proportion of the income generated from the service fees. The amount of payment from waahi to garbage collector and vice versa is determined by:

� Size and magnitude of the market (the number of households served) � Income levels (the service fees collected from each household) � Links between customers and service providers (who collects the fees) � Labor (who collects the waste from each household)

In some cases, the waahi uses his own workers (individuals that he pays directly and are not accounted for among the solid waste workers i.e. they are not accounted for in this survey) to collect the solid waste from the households and accumulate it at a specific location outside the building. The garbage collector then hauls it from that spot to the settlement in Mokattam. In others, the garbage collector is responsible for collection of the waste from the households and transportation to the settlement in Mokattem. Both the garbage collectors and the wahiya have the right to the service fee. In some cases, the garbage collectors collect the fee from the residential units. In such cases, the garbage collectors have to pay an agreed upon amount to the waahi. If the waahi collects the service fee from the residential units, then he has to pay the garbage collectors operating on those routes a certain proportion of the fees collected. The amount paid by one party to the other is agreed upon between them prior to working on the collection routes. The changes in the regulation of the municipal solid waste management system made by the municipal authority over the last two decades have resulted in some changes to the nature of the traditionally informal and verbal contractual agreement between the wahiya and the garbage collectors.

Table 8 Monthly Payments made by Wahiya and Garbage Collectors

Payments Made By Waahi To Garbage Collector

Payment Made by Collector To Waahi

Number Percentage Percentage Number Less than L.E.100 per month 15 36 31 44 Between L.E.100-200 per month 16 38 31 44 Over L.E.200 per month 11 26 9 12

26

4. Trading Enterprises Trading and manufacturing networks have grown to cover the whole country from Alexandria to Aswan. The industry has spawned its own dealers, its own centers of production and recycling, and its own business culture of credit, trade and finance. A thriving informal sector which recovers, trades in, processes and re-manufactures plastic, scrap metal, paper, cardboard and bones10. After garbage collectors sort the primary materials are sorted into the main primary materials and then sorted again into the sub-categories of these materials, the garbage collectors sell these materials to intermediary traders. Some of these traders are based in the settlement while others come from different parts of the city as well as country. Most of these traders are part of the informal sector, but a significant number of formal sector traders are increasingly attracted to this large and lucrative market. The intermediary traders will mostly buy the bulk of the materials accumulated by the garbage collectors on a weekly basis. The informal traders in the settlement generally specialize in one type of material such as glass or plastic. In some cases, they are even more specialized as they focus on certain sub-categories of these materials such as plastic water bottles for re-use or crushed plastic containers for recycling. The traders who are based in the settlement store these materials in warehouses scattered around the area. On average, it takes about a week for them to accumulate quantities that are large enough to sell to their customers. These customers are mainly traders from other markets around the country, and in some cases large manufacturing plants. They have developed a large network of customers who rely on their proven ability to deliver the required materials on a regular basis. More often than not, the agreements made between these trading partners are verbal agreements to which they all adhere. In general, there is a demonstrable inclination toward specializing in one or the other kind of recovered material. The most crucial factor in decisions about organizing this work and making tangible profits is the sorting activity. The sorting activity requires space and technical expertise. This is supported by the results of the survey that demonstrate that there is a high degree of specialization in the trade of recovered materials among the micro enterprise traders in the settlement. Of the 55 traders surveyed, approximately 37 traders (67%) specialize in only one type of recovered material such as rags, 14 traders (25%) trade in two types of recovered material e.g. colored glass and whole glass and only 4 traders (7%) trade in three types of material, mostly different kinds of plastics based on color and reuse. There are seven main categories of primary recovered materials in which the intermediary traders in the settlement deal in; glass, plastics, paper, metals, rags, bones and nakdah. Most of these categories are composed of several components, for example:

10 Iskandar, Laila. (Community and Institutional Development). The Informal Sector: A Dynamic Force in Municipal Solid Waste Management. Workshop Proceedings of the Friends of the Environment Association (FEDA), Earth Day Meeting, Cairo, 1997.

27

� Glass: broken pieces of glass and whole pieces of glass, then sorted by color and then according to whether they can be refilled.

� Paper: sorted into thick heavy paper referred to as carton and other paper such as office paper and computer printouts.

� Plastic: divided into whole pieces and broken pieces, then sorted by color, type, shape, e.g. HDPE, LDPE, PET, …

Most of the intermediary traders surveyed worked in plastic (30%) and paper (29%) trading. Metal traders in general, such as tin, aluminum and copper accounted for 22% of the traders surveyed. This concentration on these materials reflects two main factors, (1) the amount of these materials that is recovered from the garbage (See Table 6 Primary Recovered Material), and (2) the expansion in the recycling industries that are based on these materials (See Table 13 Growth in Recycling Industries).

4.1. Trading networks Most of these traders have arrangements with the garbage collectors to purchase specific kinds of materials. On average, each trader contracts with 26 suppliers who are mostly located in the settlement and in other areas around the city. The majority of these traders (40%) have up to 25 suppliers from within the community and only 9% have over 50 suppliers. These intermediary traders contract, on an informal basis without written agreements, to purchase certain types of recovered primary materials from the garbage collectors. They generally make daily rounds to haul these materials to their storage locations within the settlement, as the garbage collectors do not have enough space to accumulate up to 16 types of recovered materials for one week. The intermediary traders, in turn, accumulate the recovered material and sell larger quantities to their buyers on a weekly basis. Ownership of warehouse space counts as an asset for enterprises in trading in the informal sector. It is uncounted capital but still capital without title which cannot be used as collateral vis a vis formal lending institutions. On the other hand, the majority of these traders (84%) have one or two customers to whom they sell accumulated volumes of the merchandise. Most of their customers are either recycling workshops in the settlement or large traders from outside the community or large-scale plants and factories in industrial areas such as 10th of Ramadan and 6th of October Cities. Approximately 58% of the customers of the intermediary

Table 9 Distribution of Trading Activities

Type of Material Number PercentagePlastic 17 30 Paper 16 29 Glass 5 9 Tin 11 20 Aluminum 1 2 Rags 4 8 Animal Bones 1 2

Table 10 Suppliers to Intermediary Traders

Number Percentage Less than 25 suppliers 40 73 Between 26-50 suppliers 10 18 Over 50 suppliers 5 9

Table 11 Customers of Intermediary Traders

Number Percentage One buyer 22 40 Two buyers 24 44 More than two buyers 9 16

28

traders are located outside the settlement and are spread throughout the country. The intermediary traders in the settlement have been able to develop extensive links with the national economy, trading with partners as far south as Sohag. The spread and outreach of the informal economy reverberates across trading networks nationally.

4.2. Complementary Activities In addition to collection and storage, other complementary activities are undertaken during this process of trading in primary recovered materials. In most cases, the intermediary informal trader in the settlement will collect certain kinds of materials only such as glass, plastic, tin, copper, since most of these traders specialize in only one kind of material. These materials are sorted according to type and color, either on the premises of the garbage collector or in the warehouse in the settlement. Different arrangements are made depending on the volume of the primary material. In some cases, these workers throw out some material that they consider not appropriate for re-sale. For example, this happens with certain types of metals that are considered too small or copper wires still covered with plastic or whole glass are sorted according to color, then according to type and size. The intermediaries will then sell each of these types to traders from outside the settlement whom specialize in certain types of glass only. A similar process takes place with paper. It is sorted according to type, e.g. newspapers, office paper, computer paper and thick paper. Each type is then compressed separately and sold to specialized traders or large scale manufacturing plants. This process is also carried out for plastic, where is it sorted according type, size and color. Each type is processed separately and sold as cut pieces of plastic or as washed, palletized or granulated plastic. This high degree of specialization is coupled with the flexibility of the informal sector. Market differentiation dictates the need for such sophisticated sorting activity and therefore the informal sector is highly responsive to market demands.

Table 12 Supplementary Activities to Trade

Number Percentage Sorting 46 84 Preparing 13 24 Compressing 5 10

29

5. Small Scale Recycling Industries Recycling industries in Egypt have expanded, diversified and increased in number over the last 15 years. The 1980s ushered in a move towards investing in recycling workshops in the Mokattam settlement. Initiatives to start such endeavors were supported by external funding and technical assistance. After that first phase, the establishment of recycling industries has gained momentum and expanded to be the second largest employment generator in the informal settlement. These recycling workshops rely on the primary material sorted by the garbage collectors and sold through intermediaries. They are their raw materials from the settlement. They also rely on the inhabitants in the informal settlement for their labor. However, these recycling workshops have also become a magnet for youth from other parts of the city. The recycling workshops employ the largest number of workers from other communities. Some of these workers commute to the settlement on a daily basis, while others have relocated and now live in the settlement. The size, scope and activities of the recycling workshops vary. Some specialize in a particular step of the recycling process, having invested in only one machine. Others have larger investments and undertake a multi-step process in the recycling of certain types of primary materials. The recycling workshops produce both final products and intermediary products. Their clients are located throughout the country, seeking the output. The final products are destined to end up in the markets around the city. The intermediary products are sold to larger workshops and often to large-scale industrial plants in and around Cairo as well as those around the country, such as the 6th of October, the 10th of Ramadan, Alexandria, and Suez.

5.1. Type and Growth of Recycling Industries The growth in depth and breadth of recycling industries in the informal sector has soared over the last few years. From 1996 to 2000, the number of workshops in the settlement increased by approximately 29% during these four years. The largest increase was in the cutting tin and pelletizing workshops, while the number of washing and sorting plastic workshops fell by about 25%. Some of the workshops have expanded to include more than one step in the plastic recycling process. In July 2000, there were 228 micro and small scale recycling enterprises in the Mokattam settlement that employed 1435 individuals from various communities. In 1996, there were 163 workshops that employed 1002 workers. The recycling workshops in the area created approximately 30% new job opportunities during this four-year period. The total invested capital in these enterprises was L.E.3,080,650, of which and equipment cost was L.E.1,805,350 was allocated to the acquisition of equipment. The average amount of capital invested in recycling workshops was L.E.13,800 of which L.E.7700 (56%) was allocated to cover the cost of equipment. The average number of workers employed in each of these workshops is 6 individuals. The largest number employed was 20 workers.11

30

Table 13 Growth in Recycling Industries12

Type Number in1996

Number in2000

Percentage Growth

Plastic Crushing Machines 44 65 32 Washing & Sorting Plastic 8 6 -25 Plastic Granulation 6 15 60 Cloth Grinders 16 17 6 Paper Compacting Machines 15 19 21 Cutting Tin 11 29 62 Washing Tin 2 2 0 Pellletizing Machines 6 11 45 Other Plastics 8 7 -13 Injection Mold 27 44 39 Aluminum Smelters 20 13 -35 Total 163 228 29

With the advent of paper compactors, also part of the micro enterprise scheme, assembling little bits of paper and packing them into large, square bales of paper gave birth to a new category of product for traders and recyclers. Paper is compacted and sold to traders and manufacturing plants in the formal sector. Examples of recycling manufacturers of plastics are those who produce clothes hangers, pitchers, ice cream spoons, lollipop sticks, and the like. A thriving market for

12 Based on a Community and Institutional Development survey conducted in the Mokattem settlement in January 1996 and updated in January 2000.

163 228

100140

0 50 100 150 200 250

Number of Enterprises

PercentageGrowth

Figure 6Growth of Recycling Enterprises

1996-2000

1996 2000

31

such products exists in low income neighborhoods in Egypt and is actually very active in its trading outlets in the south (Upper Egypt)13.

The micro enterprise credit scheme began in 1986 introduced cloth grinding machines which consist of two cogs moving anti-clockwise and crush the cloth into cotton stuffing for mattresses and pillows and the like. These machines are powered by electric power that is becoming more and more costly every year, especially in view of structural adjustment programs. The crushed cloth makes its way to low income, informal markets and does not conform to high quality control or hygiene standards.

A couple of years into the recycling experience, locally designed aluminum smelters began dotting the neighborhood. These were not even purchased from outside the neighborhood. Rather, they were designed, manufactured and installed manually by the entrepreneur himself and required negligible start-up capital since they simply involved a deep furnace powered by diesel fuel, a few antediluvian tools to poke the aluminum down into the bottom of the furnace, and a giant size ladle to pour the molten aluminum into square molds locked into place with a single hole at the top to receive the molten aluminum. After allowing this product to set, the mold would be opened up into two parts, with one falling back as a flap and the solidified aluminum rectangle would be picked up using metal tweezers and placed in piles, then rows of piles to cool down. This technology was home grown and the implements were very basic. Dark smoke emitted from a pipe attached to the furnace and it would have been too much to expect people engaged in the survival game of recycling to design a system that would reduce or remove these emissions. Thus there is a pressing need to provide technical support and credit to allow these entrepreneurs to develop and adopt appropriate technology, avoiding negative side effects.

The same ubiquitous, industrial size scissors appeared here again in recycling tin, to separate the tops of aerosol cans from the can. The can part was flattened using a heavy, handmade flat hammer and the flattened tin was tied up in bunches of fifties and hundreds in anticipation of tin middlemen. Those who bought the flattened tin used another indigenous technology to clean it and process it for manufacturing. That technology involved a barrel filled with boiling water and potash, sitting on top of a small furnace. The washed tin would then be placed in a drum into which holes had been pierced and mixed with ash to ensure the thorough elimination of rust and dirt from the recycled tin. That drum was hooked to an electrical power source and rotated as soon as the switch was turned on. Bits of rust, dust, dirt and ash would fall out of the holes in the rotating drum and onto the ground below the drum. The end product -- clean round, oval, square, rectangle pieces of tin - would be sold to manufacturers who used it to make paint cans and a number of other items14.

5.2. Trading Networks: Suppliers and Customers

13 Iskandar, Laila. (Community and Institutional Development, C.I.D.)Waste Management, The Case of the Cairo Municipality: The Informal Sector Recycling Program. Workshop Proceedings on Cost Recovery and Public/Private Partnerships, General Assembly of MEDCITIES Network; Rome, December 1998. 14 Ibid.

32

The micro enterprise and small scale recycling workshops in the settlement predominantly rely on the informal network of garbage collectors and intermediary traders within the settlement to purchase their raw materials. The recycling workshops have on average three suppliers each. In this case, suppliers are those individuals who provide the workshops with the necessary inputs. The owner of the workshop contracts, on an informal basis, with the garbage collectors (usually three) who will provide him with the raw material needed for his workshop. These agreements are usually verbal and informal but explicitly define the roles of each; the garbage collector is the supplier of the raw materials and the owner of the workshop is the purchaser. The price and quantity provided are agreed upon and the commitment of each party is clearly understood. This implies that the 55 trading enterprises surveyed reflect the involvement of 165 other individual garbage collectors in weekly transactions in this informal market. The size and volume of this market is central to the high percentage of recovery and recycling of solid waste in Cairo. The web of transactions allows for the re-sale and re-use of about 80% of the municipal solid waste. These transactions cut across the boundaries of the settlement as well as the formal and informal markets. They link traders and producers throughout the nation. Only 13% of the workshops rely exclusively on suppliers from other informal and formal markets outside the settlement. About 50% use multiple sources in order to buy their inputs, using both sources within the settlement and around the country. These workshops form linkages to the national economy, both in the informal and formal sectors. They have transactions with other traders from all over the nation and deal with a sizeable market and volume of trade. The impact of any changes to the current waste handling system of Cairo will have resounding effects that will reverberate in markets throughout the nation.

Table 14 Suppliers of Raw Materials

Number Percentage Garbage Collector 8 13 Internal Trader 14 24 External Trader 8 13 Multiple Sources 30 50

Table 15 Customers: Buyers of Primary Materials (M)

Number Percentage Trader in Settlement 15 25 External Trader 19 32 Workshops 4 7 Factories 8 13 Multiple Outlets 14 23

33

On the other hand, most of their customers are larger workshops and industrial plants in other parts of the country, particularly factories in industrial estates such as 10th Ramadan and 6th October industrial zones such as Univert, Elf and Virginia Plastics. Approximately 32% of the informal recycling workshops in the settlement sell their products to customers who come from outside the settlement. About 25% of the respondents of the recycling industries report that they use intermediaries based in the settlement to sell their products. In both cases, these products are used as input in other manufacturing processes that take place outside the settlement. These intermediaries generally have multiple sources within the settlement i.e. make arrangements with more than one workshop in the settlement. These external intermediaries will in turn sell their merchandise as inputs to large-scale factories. In addition, some of the recycling workshops in the settlement have established direct linkages with large-scale industries and thus do not have to go through intermediaries. Of the total enterprises surveyed approximately 13% of the workshops sell their products directly to manufacturing plants in industrial estates. About 23% resort to the use of both outlets in the settlement and traders or manufacturing plants outside the settlement. The recycling enterprises in the settlement have created multiple links with other markets for their products throughout the country and are not limited to the confines of the settlement or the informal market. They have become integrated in the larger network of economic relations and trading transactions with a multitude of partners spread out on the national scene. They are just as likely to be influenced by national economic trends and fluctuations as any other sector and enterprise in the country. Their extensive network of trading partners also implies that any

Figure 7

Customers: Buyers of Primary M aterials

0

5

10

15

20

25

30

35

Trader in Settlement

ExternalTrader

W orkshops Factories MultipleOutlets

Customers

Perc

ent o

f Pri

mar

y M

ater

ials

34

changes in their circumstances and ability to do business will have an impact on other markets and industries in the country. The informal sector has the capacity to diversify marketing strategies. These are linked to credit, cash payments, and repayment rates.

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6. Labor

The capacity of the informal sector to provide work opportunities for new entrants in the labor force has been growing over the last decade. According to the study by El Mahdi, both the numbers of entrepreneurs and workers in the informal sector has been rising since 199815. In 1998, more than half of the labor force was in the informal sector and large numbers of workers moved from the formal sector to the informal sector16. As is the case with the informal sector in the Greater Cairo area, the majority of the workers in the settlement work in the informal sector.

15 El Mahdi, Alia, The Labor Absorption Capacity of the Informal Sector, Paper Presented at the International Center for Economic Growth Conference, Cairo, 1999. 16 Wahba, Jackline, Informalization of Labor in Egypt, Paper Presented at the International Center for Economic Growth Conference, Cairo, 1999.

Figure 8 Distribution of Paid and Unpaid Labor

86

98

47

21

14

53

79

0 20 40 60 80 100 120

Collection & Transportation

Recovery

Trade

Recycling

Percentage Unpaid Labor Paid Labor

2

36

The results of this study show that 176 garbage collectors enterprises employ 1298 workers, both unpaid family workers and paid wage earners. The average number of workers in the garbage collectors enterprise i.e. the garbage collector, his unpaid family workers and other paid wage earners who collectively work on the collection routes and recovery of primary materials is composed of 7.4 persons. There were 257 workers in 50 trading enterprises and 399 workers in 60 recycling workshops. The average number of workers in the trading enterprises is 4.6 workers/enterprise and 6.7 in each of the recycling workshops. The garbage collection and recovery activities are the most labor-intensive activity in the informal sector for solid waste management, as compared to an average 4.6 workers in the trading enterprises and 6.7 workers in the recycling industries. A total of 375 tons of garbage are collected and sorted by 1298 individuals on a daily basis. Each ton of garbage produced by households in the residential areas in Cairo generates work for 3.46 persons (1298 divided by 375 = 3.46). The collection, transportation and sorting of one ton of garbage per day create work for over 3 individuals.

The average monthly wage for the worker in the informal sector for solid waste handling in

the Mokattam settlement ranges from L.E.360 – 450. The highest paid workers are those in the recycling industries. Their average monthly wage is L.E.450, while the lowest paid workers are those in the collection and transportation of solid waste (L.E.360). The workers in the trading activities are paid an average monthly wage of L.E.420. Workers in the trading enterprise are assigned several tasks: hauling the primary materials from the workplace to the warehouse, sorting the different types of primary material according to color, type and re-use, compacting paper, and washing plastic. Most of the workers in the informal sector in the Greater Cairo area are paid an average wage that is less than L.E.300 per month17. While their wages are relatively higher than the average for the informal sector in general, workers in the settlement are exposed to many hazards due to the nature of the trade. Those working on collection and recovery are exposed to innumerable health hazards, least of which is a wide range of infections caused by the improper handling of waste. Furthermore, the lack of measures that ensure any level of industrial safety exposes workers in the recycling industries to injury.

17 El Mahdi, Alia. Small Entrepreneurs in Greater Cairo Community. Preliminary Report, Social Research Center, American University in Cairo,Cairo, 1999.

Figure 7Labor in the Informal Sector for Solid Waste in

Mokattem Settlement

31%

36%

13%

20%

Garbage Collectors' Enterprises Recovery ProcessTrading Enterprises Recycling Enterprises

37

6.1. Labor in Collection and Transportation The collection and transportation of solid waste is primarily a family enterprise. In the working enterprises of the garbage collectors surveyed, a total of 598 workers were involved in the daily activities of collection and transportation of solid waste from households around Cairo. The vast majority of these individuals (90.5%) are family labor. These work as drivers and collectors or perform both tasks at the same time. About 85.5% of this family labor force is unpaid while only 5% are paid wages on a regular basis. Most of the family members forgo other work opportunities inside the settlement and elsewhere so that they can keep the family business going. This constitutes a cost that the residents of Cairo have been passing on to the garbage collectors for over five decades. The members of the family of the garbage collector would have earned regular income if they had been employed in other sectors of the economy or engaged in other economic activities. As the present system stands, this opportunity cost of their labor is not taken into account. The garbage collectors enterprises use about 6% of labor hired from within the community and only 3% hired on a daily or monthly basis from outside the community. The garbage collectors create working opportunities for their family members in the first place but also for other unemployed and/or unskilled labor in the settlement.

Table 16 Labor in Collection and Transportation

Number Percentage Unpaid Family Labor 511 85.5 Drivers 53 Drivers & Collectors 58 Collectors 345 Arbagy18 25 Paid Family Labor 30 5.0 Drivers 10 Drivers & Collectors 4 Collectors 16 Paid Labor From the Community 37 6.2 Drivers 18 Drivers & Collectors 5 Collectors 12

Paid Labor from Other Communities 20 3.3 Drivers 3 Drivers & Collectors 1 Collectors 16 Total Labor 598 100

The vast majority of family labor is unpaid. When they do get paid, the average wage for a family worker is L.E.11.75 per day. Those individuals who perform two tasks on the job (driving and collecting the solid waste from the households) are paid the highest average daily wage (L.E.13.25). However, other workers from the settlement and other communities earn an average

18 Arbagy refers to individuals who use donkey driven carts to collect the solid waste from the households.

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daily wage of L.E.10 and L.E.8 respectively. In this part of the system, labor performs two main functions. The first is to drive the vehicle to and from the settlement, ensuring that they follow their specified routes. The second task is to collect the garbage from the households or other designated locations as the case may be and to load it into the waiting vehicle. Upon returning to the settlement, their task is to unload the trucks in the yards of the houses of the garbage collectors, which is their workplace.

Table 17 Average Daily Wage in Collection & Transportation

Type of Paid Labor & Assigned Jobs Average Daily Wage (LE.)

Type of Paid Labor & Assigned Jobs

Average Daily Wage (L.E.)

Family Labor 11.78 13.25 10.25

10.58 12.00 8.70

Drivers Drivers & Collectors Collectors Paid Labor From the Community Drivers Drivers & Collectors Collectors

Paid Labor from Other Communities Drivers 10.68

5.00 9.25 7.50

Drivers & Collectors Collectors Arbagy19

6.2. Labor in Recovery of Primary Materials Sorting and recovery processes are conducted exclusively in the family business context, while workers for collection may be hired from the labor market at large. All the members are generally engaged in this work. The female family members of the family (98%) are primarily the main labor force working on the recovery of primary materials from the household solid waste. This process entails the manual sorting of organic and non-organic waste. The non-organic waste is in turn sorted according to the type of material such as paper, glass, plastic, tin, fabrics…etc. The women and girls of the family carry out this process on a daily basis as and when the waste is deposited in their courtyards. They are not paid for their effort. Additionally, sorting exposes the women and the girls to numerous health hazards. They run the risk of getting infections for cuts on their skin and handling contaminated waste that should be otherwise disposed of. The unsanitary recovery of certain items poses a threat to the health and well being of these individuals. As the women and girls manually sort through the garbage, they run the risk of cuts and infections from broken glass, syringes and sharp metal objects and hospital waste that is not properly disposed of.

19 Arbagy refers to individuals who use donkey driven carts to collect the solid waste from the households.

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Table 18 Labor in Recovery of Primary Materials

Number Percentage Unpaid Family Sorters 687 98 Paid Sorters from Community 10 1.5 Paid Sorters from Other Communities 3 0.5 Total 700 100

Family members are never paid for this activity, not even a minority as is the case with those working in collection and transportation. Only non-family sorters hired from within the community or from other communities are paid for their work. The average wage of non-family sorters from the community (L.E.10) is lower than those who do not reside in the settlement (8L.E.). In effect, the opportunity cost for each unpaid family worker is, on average about L.E. 9 per day. A total of 700 sorters, women and girls, working in the 176 garbage collectors enterprises in the Mokattam settlement, sort 375 tons per day, i.e. each sorter goes through an average of 0.54 tons of garbage per day. The cost of labor for sorting one ton of garbage in the settlement is L.E.18 per day for the two sorters necessary to complete the task. This is yet another cost that the residents of Cairo pass on to the garbage collectors. This is the opportunity cost of the unpaid female family workers who are traditionally responsible for the sorting and recovery of primary materials. This cost is also another subsidy that the informal sector provides the formal sector economy. An additional cost that is passed on to the informal sector is the health hazards, accident rates and curative health care costs attendant on this and other occupations.

6.3. Labor in Trading Activities The labor mobility among the families of the garbage collectors community is on the rise. Many families and individuals have moved away from collection and recovery processes and into other trades and occupations. The majority of the labor (47%) used for the trading activities is unpaid family labor. However, these enterprises hire a significant proportion of workers (29%) who do not reside in this community, but commute daily or eventually relocate in neighboring areas. The informal sector in solid waste is now becoming a magnet, attracting individuals from around the city to work in this area. The proportion of paid family labor is the lowest, about 8% only. Generally, when family members are paid, the male members of the family are compensated for their labor, particularly when they approach adulthood or marriage. The types of jobs that are required of these workers are driving, collecting and sorting. They are responsible for hauling the primary materials from their suppliers’ locations, in this case that is the garbage collectors enterprises. If necessary, they also sort the primary materials by type, color, size and potential use. An example is sorting whole glass containers, first by color, then by size, then according to its next potential use e.g. whether they be will refilled. At the end of this sorting process, each of these sub-

Table 19 Average Daily Wages for Sorters

Type of Paid Labor in the Average DailyRecovery Process Wage (L.E.) Sorters from Other Communities 10.00 Sorters from the Community 7.71

40

categories of materials is sold to a different customer. Skill acquisition in the informal sector is based on market demand. Non-formal learning that is designed in that sector becomes more specific, targeted and relevant than learning in formal educational institutions. It is linked to the local and global context of development and not disconnected the way formal learning is.

Table 20 Labor in Trading Activities

Number Percentage Unpaid Family Labor 121 47 Paid Family Labor 21 8 Paid Labor from Community 41 16 Paid Labor from Other Communities 74 29 Total 257 100

Members of the family are more often than not unpaid labor but when they are paid, the average daily wage for a family worker is L.E.12.50. This is the lowest average wage compared to workers from within the community and from other communities whose average daily wage is L.E.14.50 and L.E.12.75, respectively. Families decide to pay the younger men in the family a regular wage. Young men who are also considering marriage are more often than not paid a wage. The work of the women and girls is usually unremunerated. In the case of their marriages, the girls rely on their fathers in particular and families in general to provide the necessary amount of money and material goods that they are expected to bring to the marriage.

Table 21 Average Daily Wages in Trading Activities

Type of Paid Labor &Assigned Jobs Average Daily Wage (L.E.) Paid Family Labor Drivers 10.00 Drivers &Collectors 15.00 Collectors 10.00 Sorters 15.00 Paid Labor from the Community Drivers 21.12 Drivers &Collectors 13.00 Collectors 14.40 Sorters 9.50 Paid Labor from Other Communities Drivers 12.50 Drivers &Collectors 10.00 Collectors 13.25 Sorters 13.00 Arbagy 15.00

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6.4. Labor in Recycling Industries The employment pattern of the recycling industries indicates that labor mobility is increasing within the settlement and attracts newcomers to the community who either relocate to this area or commute on a daily basis. The small and medium scale recycling industries generate wage-earning activities for workers from outside the community. The trend in employment in these industries shifts from a primary dependence on unpaid family workers as is predominantly the case for the collection and recovery activities. Over two thirds of the workers are paid non-family workers (69%) attracted to the settlement from other communities around the city and the country. Almost half of the workers of these enterprises (47%) do not reside in the settlement but come in on a regular basis for work. The informal sector is a growth sector, dynamic and vibrant, a safety net for unskilled and semi-skilled workers.

Table 22 Labor in Recycling Industries

Number Percentage Unpaid Family Labor 86 21 Paid Family Labor 37 10 Paid Labor from Community 89 22 Paid Labor from Other Communities 187 47 Total 399 100

The average daily wage for workers in the recycling industries tends to be higher than those in the collection and transportation, and trading activities. The average daily wage for drivers is L.E.15.90 and for the workers is L.E.14. Unlike the other activities, workers from other communities have a higher average daily wage than paid family labor or workers who reside in the settlement. Workers in the recycling workshops perform a variety of tasks depending on the type of recycling process that is being carried out. Some of the more skilled operate the heavy machinery such as injection molding machines or film molding machines in the plastic recycling workshops. The rest of the workers are unskilled laborers who perform different tasks such as sorting, loading and preparing the inputs required.

Table 23: Average Daily Wages in Recycling Industries Type of Paid Labor & Assigned Jobs

Average Daily Wage (L.E.)

Paid Family Labor Drivers 8.00 Workers 13.00 Paid Labor from the Community Drivers 14.60 Workers 12.40 Paid Labor from Other Communities Drivers 25.00 Workers 16.00

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7. Workplace People living in the Mokattam settlement started to sell land on an informal basis during the 1980s. The urban upgrading project that was being implement by a private firm, Environmental Quality International, and the associations located in the settlement improved living conditions in the settlement and started to make it more attractive for people to build houses and in some cases relocate to the area. One of the elements of this project was to secure title to the land on which the garbage collectors were living and working. Few residents took this opportunity as they considered the price set for the land to be high. They argued that they should be charged the price of the land at the time they were moved into this settlement and not the current prices determined by the government20. To this day, this struggle continues and very few residents have indeed registered their land or secured legal title. However, the residents have established informal ownership to the land in the settlement. While this ownership is not officially recognized or registered with the government, the residents know and recognize each others’ rights to the ownership of the land on which they live and work. This has facilitated the sale of land between the residents or other individuals who desire to move into the settlement. This also allows for other transactions such as renting property to other individuals in the settlement either for housing, trading or recycling activities. Unless the individual is renting from another resident of the settlement, they consider this land and buildings to be their private property, albeit informally owned.

Ownership rights are important to defining a system of property rights in informal settlements. The central issue is that in order to have a functioning system of private property rights, we have to recognize the exclusive right to use certain property. The right to use also entails the right to decide on use, the right to freely transfer as well as enjoy the income that accrues from the use of this property. While the users of the properties in Mokattam have the right to use these properties, granting them official title to the land and property will gain in economic relevance as they convert these properties to real assets. Property rights that are not formally recognized render such assets as “dead capital”. This dead capital represents a significant proportion of the real assets in the community that is not being utilized efficiently or effectively. Recognition of these is a critical step towards raising their value and using them as capital. Giving the informal property holders legal title to these assets would allow them to use these in various transactions in the formal and financial markets whether they are used as collateral or guarantees, thus converting the dead capital into real assets that they use in such transactions21. The informal recognition of such property rights among the residents in the settlement has allowed them to rent and sell such property to generate income and capital to invest in their diverse enterprises. Such transactions only take place among and between the residents of the settlement, thus limiting the real estate and financial markets within which they can operate. The members of this community have established long relations of trust that allow them to conduct such transactions without formally registering these sales with the government. As they recognize each other’s rights to certain property, the residents may sell the property that they informally own, but only to other residents in the settlement or their kin. They also use their property in the settlement as collateral for some of their

20 Environmental Quality International, The Zabbaleen Environmental And Development Program: An Evaluation, Cairo, 1997. 21 De Soto, Hernando, Dead Capital and the Poor in Egypt, Paper Presented at the Human Development: Moving Forward Workshop, Mediterranean Development Forum, Marrakech, 1998.

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transactions. But again, such transactions are confined to members of the community and include only those assets that are physically located within the settlement. The following discussion of the results of the survey supports this premise. As transactions with individuals or any entity outside the settlement, particularly those in the formal sector, would require formal registration and legal deeds to the land, the residents will tend to avoid such transactions. Moreover, they are ultimately unable to engage in such transactions. Recognizing the legal private property rights of the residents of informal settlements may facilitate such transactions beyond the confines of their settlement.

7.1. Workplace for Sorting and Recovery

Most of the garbage collectors surveyed (99%) report that they own the places in which they work, the courtyard of their homes where they sort the household waste and store it until they sell recovered material to intermediaries or sent the non-recoverable materials to the municipal dumps. The official view considers residents of the informal settlement to be squatters with no legal title to the land. However, as far as the garbage collector is concerned, this property belongs to him and his family. The residents of the settlement think of this land and the buildings on it as their property even though the authorities and the rest of the world do not recognize his right to the land or buildings.

7.2. Workplace for Trading Activities

Table 24 Ownership of Workplace for

Recovery Number Percentage Own 174 99 Rent 2 1

Figure 8Ownership of Premises

99

91

90

Collection &Transportation

Trading

Recycling

Type

of A

ctiv

ity

Percentage

Percentage of Owned Premises

44

While the residents in this informal settlement have yet to formally register ownership of land and property with the government, these properties represent real assets owned by these individually. Extending formal property rights over such assets could enhance the ability of these micro enterprise traders to convert these assets into capital and to integrate in the formal economy. This could allow them to use it as collateral in transactions with formal financial institutions or other market transactions. The majority of the traders (73%) located in the settlement report that their workplace is about, or less than, 100 square meters. This space is used as a warehouse to store the materials they buy on a daily basis in the settlement until they are able to sell large quantities to their own customers. The average area for their workspace is approximately 120 square meters. About 93% report that they own the premises in which their workplace is located. As is the case with the garbage collectors, the traders in the settlement think of these warehouses as their private property and would not tolerate any infringement on their rights.

Figure 9

Ownership of Premises for Trading

Enterprise

9 %

91%

Own Rent

7.3. Workplace for Recycling Industries The average size of the workshop for the micro enterprise and small scale recycling activities is 155 square meters. While almost all the operators (90%) own their workshops, albeit semi-formally, only 10% rent their workspace for an average monthly rent of approximately L.E.270. The area of almost half the workshops (44%) is less than 100 square meters, while the area of only 18% is over 200 square meters. The size of the workshop is associated with the type of recycling industry. Generally, plastic recycling industries and cloth grinders use the most space and are housed in workshops that are larger than 200 square meters. The metal recycling industries are located in workshops that are between 100-200 square meters.

Table 25 Area of Workshops for Trading Activities

Number Percentage Less than 100 sq m 40 73 Between 100-200 sq m 9 16 Over 200 sq m 6 11

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Figure 10

Ownership of Workshops for Recycling Industries

90 %

10 %Own

Rent

Table 26 Area of Workshops for Recycling Industries

Number Percentage Less than 100 sq m 26 44 Between 100-200 sq m 23 38 Over 200 sq m 11 18

46

8. Transportation Access to means of transportation is critical to the operation of the garbage collectors and the intermediary traders in the settlement. Without their fleet, which is privately owned, the garbage collectors would go out of business. The garbage collectors make two major investments, the first is their workplace, the area where they haul the garbage to and sort it and the second is their vehicles. The intermediary traders in the settlement invest in those two main components, a warehouse to store and sort the primary materials until they resell them and a vehicle to transport these materials within the settlement i.e. from the workplace to the warehouses and if necessary to their customers based outside the settlement. The majority of the garbage collectors (99%) and the traders (74%) in the settlement own their trucks, as opposed to the recycling workshops that tend to rely more on renting vehicles to fulfill their needs. Only 36% of the respondents in the recycling industries reported that they own any vehicles. Thus they create a demand and an income for owners of transport vehicles from other informal markets outside the settlement. The informal sector ownership of assets makes them credit worthy but also generates economic activity for others to enable them, in turn, to own assets and be credit worthy. The level of activity in the informal sector influences the generation of income, demand for credit, ability to repay loans and ownership of assets.

99

74

36

0 20 40 60 80 100

Collection &Transportation

Trading

Recycling

Figure 13Mechanization of Means of Transportation

Percentage of Owned Vehicles

47

8.1. Transportation for Collection and Recovery

The upgrading and mechanization of the fleet of the garbage collectors started during the 1980s and continues to the present day. The first endeavor to develop the fleet was initiated and facilitated by Environmental Quality International during the 1980s. It was the first step in the development of transport by trucks for waste handling. In 1990, the Governorate of Cairo issued a decree banning the use of donkey carts from formal neighborhoods in Cairo, allowing only trucks to haul garbage in those areas. This forced the remaining portion of the garbage collectors who had resisted or could not readily afford to buy trucks to abandon the donkey carts and either acquire their own vehicles or make other arrangements. These arrangements included deals with the wahiya, renting trucks, or going into partnership with other garbage collectors so that they could continue to maintain the same volume of work. This demonstrated the ability of the informal sector to absorb shocks and adapt its systems and processes to respond to technical demands made by the market. Most of the garbage collectors surveyed use trucks in hauling garbage from residential neighborhoods to the Mokattam settlement. The largest vehicle they use is a three-ton truck. Trucks used by the garbage collectors surveyed venture onto narrow streets more easily than larger ones. Large streets become narrow because they are congested with double-parked cars on either side as a result of limited apartment building parking space. The huge problem of garbage in Cairo must not be perceived as requiring a huge solution, because large trucks and large private collection companies are not designed or managed to deal with the specificity of local communities. The majority (40% & 39%) of the garbage collectors use trucks that have a 3-ton capacity and 1-ton capacity, respectively. Only 12% use donkey driven carts, which have a half-ton capacity. These mostly serve low income areas and other informal neighborhoods. Those garbage collectors who have more than one collection route use the same vehicle for all their routes. Only three (2%) collection enterprises operate two vehicles, each serving one collection route. Most of these operators (73%) report that they own the vehicles they use on their daily collection routes. The average annual transportation cost for the daily collection of garbage from 368 residential units in the city and the transportation of an average of 124,800 tons of garbage per year, from these households is LE4404. The breakdown of this cost is as follows (in Egyptian pounds):

� Gas and fueling cost L.E.960 � License fees L.E.1098 � Cost of spare part L.E.1243 � Maintenance L.E.900 � Hauling equipment L.E.204

Table 27 Types of Vehicles Operated

(Based on Carrying Capacity of Trucks) Number Percentage 3 Ton Truck 2 Ton Truck 1 Ton Truck

71 16 70

40 9

39 Cart (half ton) 21 12

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8.2 Transportation and Trading Activities The majority (56%) of the intermediary traders in the settlement use donkey driven carts that have a half-ton capacity. Only 25% use trucks that have large carrying capacities of three, two or one tons per vehicle. The majority of these traders (74%) report that they own the vehicles they use in their businesses. These traders have their own routes on a daily basis. They collect the merchandise that they specialize in from the garbage collectors with whom they have contracted. A verbal agreement is made between the two parties, the garbage collector and the trader. They do not draw up any legal documents but refer to this arrangement as a contractual agreement. In some cases, the traders will advance the garbage collectors a certain amount of money referred to as “ardiyha”. This amount of money is deducted from the final sale when it is completed. The exchange of this initial amount of money that may be considered as a down payment is binding to both parties. The garbage collectors cannot then afford to sell to any other trader, as they would have to return this cash amount. They generally do not have easy access to cash. On the other hand, the traders, in turn, are committed to buying the primary materials from the garbage collectors with whom they have made this agreement. After completing the sale, the traders transport these primary recovered materials to storage locations inside the settlement. Most of them generally own these premises. When they accumulate large quantities they then sell those to traders from other informal and formal markets or to large scale manufacturing plants. In the latter case, the buyers undertake to transport the merchandise from the settlement using their own means of transportation. These trading ties constitute the basis of a credit system outside of formal lending institutions that merits further study to determine how to integrate the informal sector into mainstream economic activities and support them with access to bank credit. The average annual transportation cost for trading enterprise that employs about 5 workers and has an average working capital of L.E. 10, 200 is L.E. 6,750. The breakdown of this cost is as follows (in Egyptian pounds):

� Gas and fueling cost L.E.1044 � License fees L.E.1774 � Cost of spare parts L.E.1900 � Maintenance L.E.420

� Hauling equipment L.E.1612

8.3 Transportation for Recycling Industries The majority (40% & 39%) of the small scale recycling enterprise use trucks that have a 3-ton capacity and 1-ton capacity, respectively. Only 12% use one-ton capacity trucks. Only six individuals (10%) reported that they use donkey driven carts that have a half-ton capacity.

Table 28 Type of Vehicle Operated in Trading Activities Number Percentage Three ton truck 12 23 Two ton truck 1 2 One ton truck 10 19 Cart (half ton) 30 56

49

Unlike the collection and recovery, and trading activities, most of these operators (64%) report that they rent the vehicles they use in their businesses. The average rent for a vehicle is approximately LE.320. The recycling enterprises do not necessarily rely as heavily on having immediate access to those vehicles as the primary means of production as is the case for the garbage collectors who cannot operate without their trucks. The average annual cost for renting a vehicle is LE.3840 for use in the recycling industries to deliver their products or transport necessary inputs as and when the need arises. The average annual transportation cost for those who own the vehicles is LE4580. These enterprises employ about 7 workers and have an average capital of about L.E.19, 500. The breakdown of this cost is as follows (in Egyptian pounds):

� Gas and fueling cost L.E.1400 � License fees L.E.1310 � Cost of spare parts L.E.1425 � Maintenance L.E.445

Table 29 Type of Vehicle Operated in Recycling

Industries Number Percentage Three ton truck 29 48 Two ton truck 18 30 One ton truck 7 12 Cart (half ton) 6 10

Figure 14 Ownership of Vehicles for Recycling Activities

36%

64%

OwnRent

50

9. Capital The major sources of capital for small scale and micro enterprises in Greater Cairo tend to be savings from previous work (41%), inheritance (25%), friends and relatives (13%) and ROSCAs (13%)22. Our survey showed a similar trend among the working enterprises of the solid waste informal sector in the Greater Cairo area. Savings are an important source of finance for all types of enterprises surveyed primarily the working enterprises of the collection of garbage and recovery of primary materials (19%) as well as trading (29%) and recycling enterprises (33%). Similar to small enterprises in the informal sector in Greater Cairo, the informal recycling enterprises in the Mokattam settlement primarily rely on informal sources of finance, such as inheritance, family, friends and personal savings. In general, the about 93% of the transactions in the informal credit markets are carried out without using any marketable or tangible collateral23. These characteristics of the informal credit market in Egypt enable the garbage collectors to engage is such activities. These transactions are based on the availability of information about potential borrowers within the community. More importantly, the network of social and personal relations within such communities is in effect a form of collateral. Social norms and pressure become the mechanism for enforcement of the repayment of the debt. The reputation of the borrower is at stake, compromising his standing in the community and the trust of his compatriots in the trade, thus jeopardizing future business opportunities. However, only a relatively small proportion rely on formal sources of financing such as loans either from non-governmental organizations and associations working in the settlement or the formal banking sector. Only 3% of the respondents indicated that they acquired loans for the solid waste collection activities. However, this proportion increases for recycling activities. About 7% of the enterprises surveyed reported that their main source of capital was loans. The sale of property was an important source of capital for the informal enterprises in the settlement. This is especially evident for the collection and transportation of solid waste working enterprises (42%). The results of the survey indicate that the sale of property was also used to finance some of the trading (24%)and recycling activities (31%). This emphasizes the importance of the role of property and other assets in the accumulation of capital, reinforcing the need to examine policies to formalize individual property rights within the informal sector, thus allowing the use of such assets in formal transactions and as collateral to acquire credit. The results of the survey show the dependence of the enterprise in the settlement on informal sources of capital and limited access to and utilization of any formal sources of financing. While these opportunities have been created through the efforts of some of the associations in the settlement, these do not meet the growing need and demand for financing. As the number of trading and recycling enterprises increases in the settlement, so does the demand for diverse sources of capital. This creates an opportunity to develop appropriate programs for such endeavors. Efforts need to be carried out within the larger context of developing and integrating the informal sector into the municipal system for solid waste management.

22 El Mahdi, Alia. Small Entrepreneurs in Greater Cairo Community. Social Research Center, American University in Cairo, Cairo, 1999. 23 Mohieldin, Mahmoud & Wright, Peter. 2000. “Formal and Informal Credit Markets in Egypt.” Economic Development and Social Change, 48 (3), 657-670.

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9.1. Capital for Collection and Recovery

The major source of capital for the garbage collectors is reported to be the sale of property (43%), followed by savings (19%). Loans and ROSCAs account for only 3% each. This indicates the existence of an opportunity to investigate the potential of providing financial assistance to upgrade the workplace and facilities for collection and recovery of primary materials. Annex 1 illustrates the magnitude of that sector in detail.

9.2 Capital for Trading Activities The intermediary traders resort to several sources for their capital, primarily from savings and sale of property 29% and 24% respectively. The average amount of capital reported for trading enterprises is LE.10,200. The amount of capital used varies with the type of material traded in and the complementary activities that are carried out on the premises such as sorting, process preparation or compression (See discussion of complementary activities mentioned above).

Table 30 Source of Capital

Number Percentage Family 17 10 Friends 6 3 Associations 5 3 Savings 34 19 Loans 5 3 Sale of Property 74 42 Self 10 6 Inheritance 13 7 Partner 4 2 Other 8 5

Table 31 Source of Capital for Trading Activities

Number Percentage Family & Friends 5 9 Associations 8 14 Savings 16 29 Sale of Property 13 24 Self 10 18 Partner 3 6

139 143 14

5 19 2933

30 74224 31

61810

1460

0 5 10 15 20 25 30 35 40 45Percentage

Family & Friends

Associations

Savings

Loans

Sale of Property

Self

Other

Sour

ces

of F

inan

ceFigure 15: Sources of Capital

Collection& Transportation Trading Recycling

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The amount of capital invested in the informal trading activities in the settlement varies from about L.E.500 to L.E.10, 000. A significant proportion of the informal intermediary traders in the settlement (22%) have a reported capital of over L.E.10, 000. The amount of capital of the majority of the intermediary traders (76%) is under L.E.5, 000. Only 2% of the traders report that they have capital that is between L.E.5,000-10,000. Those intermediaries that trade in plastics and paper and have complementary activities on the premises tend to have larger amounts of capital. About 83% of the traders in paper and plastics had capital over L.E.10,000, while all those working in glass had capital amounts between L.E.5,000-10,000.

Table 32 Capital & Type of Trading Activities (Percentage Distribution)

Total Percent Plastic Paper Glass Metal Other Under L.E.5,000 42 76 71 69 80 100 60 Over L.E.5,000 13 24 29 31 20 0 40

The vast majority of the owners of the trading enterprises surveyed have invested up to L.E.5000. The results of the survey indicate that this level of investment cuts across trading in the different types of materials. On average 75% of the enterprise in the main categories of the main types of materials have the same level of investment in plastics, paper, glass, metal (includes tin, copper and aluminum) and other materials such as rags and animal bones. The turnover of capital for trading activities in the settlement is on average about one week. The trading cycle for most of these intermediary traders (69%)is between 1-7 days, while 25 % have a two-week trading cycle.

Table 33 Turnover of Capital & Type of Trading Activities (Percentage Distribution)

Number Percentage Plastic Paper Glass Metal OtherBetween 1-7 days 38 69 71 94 20 58 60 Between 8-15 days 14 25 18 6 60 42 40 Over 15 days 3 6 11 - 20 - -

The duration of the trading cycle and turnover of capital is associated with the type of material that is being traded. The results of the survey indicate that for most of these materials, with the exception of glass and metal, the trading cycle for over two thirds of the enterprises is between 1-7 days. On average, each of these traders buys and sells up to L.E.5000 worth of materials on a weekly basis. The trading cycle differs depending on the different types of products. The broad diversity of products, product ranges and complex classification of each of the main products into numerous sub-categories creates different patterns for each of these sub-products. Based on the results of our survey we have estimated that there at least 20 sub-products that are identified as separate products by the traders in the settlement. These sub-products are derived from the first round of sorting that the garbage collectors do prior to selling the primary materials. The garbage collector sorts the garbage into the different type of products such as plastic, paper, metal. These main types of materials are then sorted again according to type, color and re-use. The sub-categorization that yields at least 20 different sub-types is the result of a second round of sorting that is undertaken mostly by the traders. The cost and profit generated during the trading cycle

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differs for each of these sub-types of materials varies significantly based on each type. The results of this survey show the vast depth and range of the trading activities, but a detailed assessment of the trading cycle and turnover of capital for each of those sub-types of materials and products will require a more detailed study of the flow for each of these products separately.

9.3. Capital for Recycling Enterprises The recycling workshops resort to several sources for their capital, primarily from savings and sale of property 33% and 31% respectively. The average amount of capital invested reported for recycling industries is L.E. 19,500.

The cycle of the recycling industries is on average about 10 days. However, the turnover period of invested capital for approximately 61% of the workshops is between 1-7 days. Only 7% have a business cycle of over 15 days. The plastic recycling industries and cloth grinders tend to have the longest business cycles.

Figure 16Distribution of Size of Capital for Recycling Enterprises

65%

26%

9%

Under L.E.10,000 Between L.E.10,000-50,000 Over L.E. 50,000

Table 34 Source of Capital for Recycling Industries

Number Percentage Family 8 14 Associations 3 5 Savings 20 33 Loan 4 7 Sale of Property 19 31 Self 6 10

Table 35 Turnover of Capital for Recycling Industries

Number Percentage Between 1-7 days 37 61 Between 8-15 days 19 32 Over 15 days 4 7

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The amount of capital used varies with the type of process and material they handle. Almost two thirds of the workshops (65%) reported that their capital was under L.E.10,000, While only 9% had capital over L.E.50,000. The plastic recycling industries and cloth grinders tend to have the highest reported amounts of capital.

Table 38 Size of Capital for Recycling Industries

Number Percent Under LE10,000 39 65 Between L.E.10,000-50,000 16 26 Between L.E.50,000-100,000 4 7 Over L.E.100,000 1 2 Total 60 101

Figure # 17Size of Capital for Recycling Industries

0

20

40

60

80

100

120

Under LE10,000 Between L.E.10,000-50,000

Between L.E.50,000-100,000

Over L.E.100,000 Total

Cap

ital Percent

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10. Conclusions and Recommendations

10.1. Conclusions The results of the survey are illustrative of the size, magnitude and viability of the informal sector in solid waste management in Cairo. The informal solid waste collection and recovery sector demonstrated its capacity to develop, change and integrate within the formal municipal solid waste system as developed by the local government authorities. The informal garbage collectors have expanded the range of their services to include more households across the city. The largest increase took place during the 1980s and 1990s..This coincides with the implementation of the numerous programs and development projects. They have also adopted new methods of transportation as they abandoned their donkey drawn carts in the last two decades. Currently, the fleet used by the informal collectors is almost exclusively composed of large capacity trucks. This informal sector also has demonstrated its capacity to recycle at least 80% of all household solid waste. This is one of the highest rates of recovery and recycling of solid waste around the world.

10.2. Total Magnitude of Solid Waste Activity in the Informal Sector In the Mokattam settlement, 598 individuals are employed in the collection, and transportation of 2400 tons of solid waste from 58,000 households in Cairo every week. Another 700 individuals are involved in the sorting and recovery of primary materials. A thriving trade in these materials takes place within the settlement in informal markets but has also developed extensive links with formal markets throughout Cairo and the country in general. The trading enterprises surveyed (55 enterprises) employ about 257 individuals, and trade in an estimated value of L.E.560,000 worth of merchandise on a weekly basis. The recycling industries in the settlement employ 399 workers and offer the highest average daily wage (L.E.15) for their workers. Individuals working in the collection and transportation, and recovery process get the lowest average daily wages (L.E.10 and L.E.9 respectively), while those in trading enterprises get average daily wage of L.E.12. At least 257 individuals within the settlement work in various trading enterprises. These three types of enterprises collectively generate about L.E.24,425 in average daily wages. Recycling industries have spread in the settlement, employing about 400 individuals. These workshops attract labor from other neighborhoods in Cairo and Upper Egypt. The recycling industries in the settlement have developed extensive backward and forward linkages with other informal and formal markets throughout the country, where they purchase their raw material and their products are sold as either end products or inputs for other manufacturing plants. Ownership of property, albeit informally, has emerged as a integral element in the informal sector of solid waste collection and recovery as well as in the associated trade and recycling industries in Mokattam. For these three main activities, the majority of the individuals surveyed report that they own the premises in which their enterprise is based as well as the equipment that they use, vehicles or otherwise. Almost all the collection and recovery enterprises (99%) and 91% of the trading enterprises and 90% of the recycling enterprises report that they own, albeit informally, the property where their business is located. This “dead capital” represents a

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significant proportion of the real assets in the community that is not being utilized efficiently or effectively. Recognition of these is a critical step towards raising their value and using them as capital. Giving the informal property holders legal title to these assets would allow them to use these in various transactions in the formal and financial markets whether they are used as collateral or guarantees, thus converting the dead capital into real assets that they use in such transactions.

10.3. Recommendations To date, most of the efforts, by both the public and private sectors to develop an efficient and effective municipal solid waste system have tended to primarily focus on the collection and transportation of solid waste. These two processes are but the first steps in a complex interwoven web of relations and transactions that integrate the informal garbage collectors with municipal government services as well as the private sector. To formulate and implement a sustainable municipal solid waste system, several foci for intervention may be identified. Firstly, it is critical to recognize the role of the informal garbage collectors who handle one third of the garbage of the city of 15 million. Their role, methods and operations have expanded and developed as they are gradually becoming formalized through the Cairo Cleansing and Beautification Authority. Thus the integration of current informal garbage collectors in formal policy for municipal solid waste management becomes an imperative for the appropriate design and successful implementation of any such system. Most of these informal settlements have access to significant assets that can be useful in acquiring capital. One of their most significant assets is their labor. Property currently held, as “dead capital” has to be recognized as such and converted into real assets. This makes the need for developing systems and mechanisms for the formalization of ownership of real assets a critical step towards upgrading the trade. This would also enable their owners to participate in a larger framework to increase the productivity of these assets and to integrate with other government services and private businesses. One of the negative side effects of the large growth of recycling activities as well as persistent health hazards that are associated with the collection and recovery process is the impact of the health and well being of the individuals involved in this trade. Thus the pressing need to provide technical support and credit to allow these entrepreneurs to develop and adopt appropriate technologies.

The need to invest in the collection, transportation as well as the post-sorting activities in these informal settlements is essential to support the initiatives of this informal sector and further enhance these self-propelling dynamics of change. There is an urgent and critical need to preserve the links that are already established in the trading networks of non-organic waste which cover the entire country.

The issues touch upon all informal sector activities in Egypt, not just the waste collectors. Urban governance plans need to re-assess established practice of urban resettlement plans which move people out of their exiting neighborhoods and into farther ones from the hub of economic activity in the center.

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With each plan to move the informal sector’s activities further out of the city, the risks of poorer service, joblessness and social instability increase. These either come about as a result of longer distances, higher transport costs, prohibitive maintenance costs, higher labor costs and higher stoppage rates. Or, conversely, it could come about as a result of the informal sector workers leaving their trade and suffering the negative aspects of unemployment – temporary or otherwise. A new vision which integrates urban upgrading of informal sector communities needs to be developed. One where residents can remain in their neighborhoods and be left to practice their trade but where infrastructure and neighborhood upgrading really takes place. A plan where micro-enterprise workshops are upgraded and new appropriate technology inputs convert people from negative practices to better ones. A plan that will reap the benefits of the cumulative experience of community-based organizations and grass roots development interventions. A plan that will formalize the informal sector into formal sector companies, with attendant learning and technology upgrading.

People are, and have to be, engaged in the processes, which improve the quality of their lives and towns in order to develop and maintain lasting solutions to the solid waste issue. Communities are mobilized by a common vision and goal - something positive - that they would like to see about their town and its future. Currently, they are not invited to join around a common problem. This process is a step-by-step dynamic involving a wide range of actors and ultimately leads to the formulation and implementation of a more sustainable, and who listic vision of towns that is grounded in local knowledge, history and expertise.

10.4. The Future of Solid Waste Systems in Egypt

The new national trend in Egypt for the solid waste sector is to institute public-private partnerships where municipalities will play a different role from the one they have previously played. Burdened by an impossible task of keeping neighborhoods and towns clean, they have asked to be relieved of the responsibilities of the solid waste chain (collection-transport-transfer-sorting-recovery-recycling-composting-land filling) and have invited the private sector to step in. Municipalities must now learn to put together good tender documents, invite pre-qualifying bids, receive and evaluate bids, contract with the winning bidder, set performance indicators and monitor contracts.

Since no private sector companies with a strong track record in solid waste exist in Egypt, it is expected that local contractors will bid with large international companies in large urban centers like Alexandria, Cairo, etc. This risks supplanting the most efficient door-to-door collection system by large-scale, inappropriate technologies that will not generate the same 7-8 jobs per ton of waste collected, nor recover 80% of the waste collected - which the current informal sector system does. Below is the result of a study on the comparative advantages and disadvantages of each sector serving the city in municipal waste collection services. The study points to the overwhelming high ranking of the informal sector

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It is therefore imperative to teach the informal sector how to enter this new competitive bidding process in the new, proposed system. It would be a great loss to the sector if Cairo were to lose their valuable expertise – built over four decades in the capital