Economics of Oyo State solid waste market

Wikipedia sees solid waste as any garbage, refuse, sludge from a wastewater treatment plant, water supply treatment plant, or air pollution control facility and other discarded materials including solid, liquid, semi-solid, or contained gaseous material, resulting from industrial, commercial, mining and agricultural operations.

In Nigeria today, solid wastes are indiscriminately dumped at various corners and even seen in the streets, thereby constituting health and environmental hazards to citizens. In spite of the abundance of solid wastes in Africa’s largest economy, many are yet to come to terms with its economics and the fact that money can be made from collection, transport, treatment, disposal and recycling/conversion.

Oyo State, located in the South West Nigeria, has demonstrated commitment to developing the solid waste market in such a way that the private sector earns modest return on investment while the government generates revenue to meet with the ever-growing demands of the state and the people.

The model, developed by Ernst& Young (EY) and supported by the World Bank, rides on the public-private partnership (PPP) and exposes the possibility of making money from collection while also recycling solid wastes to generate renewable energy, fertiliser as well as finished products and industrial raw materials.

The model in Oyo State was easy because the state government had, before the PPP, been spending N3.6 billion on clearing wastes each year, according to solid waste stakeholders. This became a burden on the government in the face of declining federal allocations and increased financial demands.

Currently, there are 214 registered private contractors collecting wastes in the 11 local government areas, according to the Oyo State Waste Management Agency (OYOWMA). The structure of the solid waste management in Ibadan is such that 80 percent of the monthly collection charges are collected by private waste collectors, while 20 percent is either paid or retained by OYOWMA.

It is estimated that 84 percent of wastes in the city end up in unauthorised places.

The business looks viable as data show that the quantity of waste management in Ibadan in 2012 was about 635,000 tons, comprising mainly organic wastes (42 percent), paper (ten percent), plastics (nine percent), metals (five percent), glass (four percent) and wood (three percent).

Ayodeji Ogunyemi, director, advisory services, Ernst & Young, said there are key challenges such as finance and human resources, among others, but added that the way forward is for the private sector to collect wastes and then pay a percentage to OYOWMA.

Ogunyemi told BusinessDay that currently in Lagos, private participators are collecting wastes and converting same into fertilizer and fuels, stressing that the model that now works is for waste depositors to pay to the private sector collectors.

“When the process works properly, there is money to be made,” he said.

“Private sector can scale their operation to match their input. If you have enough wastes to set up five mega power plant, you can do so. There is plenty of waste and money can be made from it,” he added.

In an interview, Salim Rouhana, urban development and resilience specialist, World Bank, said the World Bank is involved in the process because it has a direct impact on health and can also be an avenue for job creation.   Rouhana said the event tagged ‘World Bank-Private Sector Participation in Solid Waste Management Activities in Ibadan’ was necessary as government could not do it  but needs the participation of the private sector.

Joseph Alabi, general manager, OYOWMA, told journalists that all stakeholders, including market women, local governments and community development councils, have agreed on the ‘pay as you dump’ system, stressing that a minimum of N50 will be paid by anybody who dumps waste in the market.

“We have agreed with stakeholders and they have embraced the policy. All we are doing now is sensitisation,” Alabi said.

Patrick Mwanzia of the Practical Action, Urban WASH and Waste Programme in Kenya, explained how the government of Kenya shifted waste collection in Nakum Town. Mwanzia said before the privatisation of the sector, waste collection was merely 20 percent in the area, but added that 95 percent collection was achieved after it was handed over to the private sector.

He said government generated huge revenue from it while about 250 tons per day were collected.

Joel Tembo Wira of the Republic of Congo explained how the private sector in Goma area of the country turned solid wastes into wealth.

According to Wira, there was a perception that solid waste was an opportunity rather than a problem, stressing that cities were divided into zones and the task of solid waste management given to companies with high level of commitment.

Wira said the result of the private sector participation was that wastes were recycled and used to produce plastics, bags and several products that are in high demand in and outside the DRC.

He said organic fertiliser, which is made from the process, has a high quality and is in high demand by farmers.

“We do not even have enough supply to meet the demand. For it to work in Nigeria, you need a regulation that will make it an attractive business,” he said. 

ODINAKA ANUDU