Plastic waste is everywhere in Nigeria. The streets are littered with lightweight plastic and metal parts. The culprits are ordinary citizens, who throw away their rubbish very little and where, and sometimes even see run-down garbage collection trucks trailing their rubbish.
In the absence of strong environmental policies or government infrastructure, private companies making money by removing street waste have proliferated. It’s a competitive and tough business, but one company has developed a model that has allowed it to expand rapidly.
Scrapays starts with a simple premise: Any company that relies on its own collections infrastructure will struggle to make money.
“Without a central collection point, logistics expenses can be higher than or equal to your business profits,” explained the Scrapays co-founder. Boluwatife Areva.
So Scrapays came up with the most efficient system.
The waste distribution chain starts with the waste producer, who places a pickup order to the collector. The consignee weighs the item at the pickup point and pays the producer accordingly. Next in the chain are the agents, who usually collect garbage from multiple collectors and take it to where it will be processed.
Technology enables companies to maintain a network of stakeholders. Scrapays provides a Quick Code (USSD) platform for waste producers and collectors.
“A large number of players in the recycling business do not use smartphones, so USSD makes it easy for them to interact with our system,” explains Arewa.
Low-tech mobile messaging services allow them to place pickup orders, track earnings, and pay through their mobile wallets; earnings can be transferred directly to a local bank account and withdrawn in cash.
While quick codes may be easy to use, a fully integrated artificial intelligence framework enables agents to value items and pay collectors in a fraction of the time. The system automatically receives input from a variety of sources to keep estimates up to date.
“The application we created for the agent had an Internet of Things (IoT) system,” Arewa said.
Arewa shows that the incentives everyone in the chain gets depends on the type of recycled material, the time of year, and the strength of local and global markets.
“Metal prices have been rising for the past three weeks, and everyone is recovering from rising metal incomes,” and while metals appreciate, “carton prices are falling,” he added.
He explained that the price volatility is due to the ongoing rainy season in Nigeria. To ensure transparency, the company’s system provides up-to-date prices for recycled materials, including plastic, aluminium, metal and PET bottles.
“Payments are not fixed; stakeholders are rewarded based on the value they bring to the chain,” Arewa said.
One of Scrapays’ agents, a supplier of commercial tricycles, earns about 1.3 million Nigerian naira ($3,000) every six weeks by selling the vehicle’s packaging materials (carton, plastic stretch wrap and light metal). Before, she paid someone to deal with them.
Some agencies set up multiple collection locations and help recover up to 4 tonnes of waste from the environment each month.
“When people see us making money from waste, they want to join in, too,” said Endidi Aconyea waste collector in Lagos.
Arewa founded company with earth science classmates Top Sulaimon and Olumide Ogunleye The three are still undergraduates Federal Polytechnic University of Akureyriin southwestern Nigeria.
They originally named it Panti, which is the Yoruba word for trash. Currently operating in five states in Nigeria, including Lagos, Scrapays’ business model, like the company, has changed significantly. Importantly, by connecting everyone in the recycling ecosystem and making pricing, collection and payments more transparent and reliable, they develop a system that incentivizes waste producers to recycle themselves and helps collectors make more money.
According to Arewa, Scrapays’ collector network grew by 25% month-over-month.
“Our agents have autonomy over their activities. We only provide them with scalable technology and infrastructure,” he said.
The company also leverages its multipurpose platforms – USSD, mobile app and web – to generate profits from app subscriptions and in-app transactions, boosting its primary revenue by facilitating the recycling value chain.
Investors and organisations offering grants are very interested in Scrapays’ business model. It was the only waste management company selected for the latest Google Black Founders Fund.
A little-known source of additional revenue for the company is carbon credits. The company has joined the international carbon trading system and makes money by removing carbon from the atmosphere.
In an article published by ESI Africa, Jean-Paul AdamThe director of the United Nations Economic Commission for Africa (UNECA) was quoted as saying: “A well-structured carbon credit system allows African countries to protect resources at risk and generate revenue from protecting those resources.”
With growth and credibility, the company is expected to push to establish branches across the country. However, Scrapays segmented its expansion very strategically. It hopes to expand one Nigerian state at a time, as well as to other countries in Africa and Latin America and Southeast Asia, which face similar waste problems as Nigeria.
Story Credit: Kate Okori via Bird Stories Agency