Investing in the waste and circular sector in Kenya
According to the United Nations, the world population reached 8.0 billion by the second half of 2022, from an estimated 2.5billion people in 1950. Population is expected to increase by nearly 2 billion people in the next 30 years. Kenya, one of the largest economies in East Africa, projected the population to stand at 52 million people in 2024 according to the Kenya National Bureau of Statistics, with a projection to increase to 70 million by 2045. This rise in population is likely to lead to two common challenges; increase in solid waste especially in urban areas and the amount of green house gas emissions (GHG).
Heavy private sector investments have been deployed in renewable energy to tackle the challenges of global warming with yearly Conference of Parties (COP) convened in different parts of the world to find a collective solution to this global problem. The world has come together to make decisions on different approaches to combating global warming such as during the 1997 Kyoto Protocol, and later superseded by the 2015 Paris agreement. The mission remains the same, combat global warming by reducing global gas emissions with many experts focussing on climate adaptation measures as a more sustainable approach. However, even as we find ways to tackle this global issue, more attention and investment needs to go towards other pressing areas such as managing solid waste, as majority of it, especially in developing countries ends up in dumpsites or incinerated, further contributing to GHG emissions according to research carried out by ANDE and Kois.
As populations across the world continues to grow exponentially, there is a potential for more solid waste being poorly managed and contributing further to GHG emissions. Kenya produces 24,000 tons of waste per day which translates to 8.8 million tons a year whereby, 75% of the solid waste ends up in landfills or is incinerated. According to the research, 65% of the 24,000-ton waste is organic, whereby 40% is incinerated, 15% ends up at dumpsites, 18% is composted and 10% recycled.
Sector Management
Waste collection management companies experience a daunting task in segregating the waste as per the Sustainable Waste Management Act that provides guidelines for waste management, licensing, monitoring and enforcement. The Act requires that waste be segregated at source for proper management before ending up at the landfills, but the lack of infrastructure makes execution of these guidelines difficult. There is more traction in enforcing policies surrounding plastic waste and e-waste but the lack of national awareness, limited monitoring and ineffective communication makes it difficult to enforce these policies on other types of waste. Waste collection companies are more actively involved in recycling glass, plastic and metallic waste since they are easily resalable to manufacturing companies and repurposed into more useful items compared to organic waste which majority of it still ends up at the landfills. According to research, most of the organic waste is not upcycled because of the limited public sector involvement especially with the county governments and private sector limited maturity capacity.
There are a number of private sector players in Kenya such as; Sanergy, Chanzi, Insect Pro, Regen organics, Sistema Bio that have taken up the task of converting organic waste into high protein animal feeds, organic fertilizers and biodigester that provide an alternative energy source for homes. These organizations have managed to transition from early-stage companies to growth stage having more experience and exposure in the sector. They are however, just some of the few private companies that have gained traction in the organic waste management and circular economy sector poised to have a market potential of $54 billion by 2030. The sector has also attracted a number of other smaller players that Agri Frontier is supporting with accessing catalytic funding such as; Alisam, organic fields, Eco Charge, Safi Organics who have created employment opportunities for young people while offering safer, higher quality alternative products to the market.
The huge potential for the sector has seen waste collection companies such as Greenleaf set up a secondary business venture, utilizing the organic waste that they collect and Black Soldier Flies to process high protein animal feeds. This however, requires significant investment support to set up the infrastructure for BSF farming, an investment not many waste management companies can afford out of pocket. Lack of sufficient investment has been the main hinderance to many small and growing businesses (SGBs) thriving in this sector which though growing, is still fairly new to the market and has not yet attracted a lot of investor confidence in the sustainability of the model.
Industry Opportunities
As more SGBs continue to enter the sector, more catalytic investment is necessary to drive growth and promote sustainable value addition to what would otherwise have been look down as waste. There are a number of potential economic opportunities that exist such as;
Organic Fertilizer Production
- Converting organic waste into fertilizers provides a sustainable and cost-effective solution to over 7.5 million small holder farmers in Kenya, noting the sector employs 40% of the total Kenyan population and 70% in rural areas as of 2022. The country’s agricultural sector requires about 750,000 megatons of fertilizers annually, of which 95% is imported. The ability to produce organic fertilizers locally from waste would not only reduce import dependency but promote soil health.
Renewable energy generation
- Biogas produced from organic waste provides an alternative source of electricity and heat, The Biojoule thermal power plant is capable of producing 2.4MW of electricity from farm waste which can provide power to home, machinery and used in local agricultural application.
Animal feed production
- The previous overreliance on soybean and fish meal as protein sources for commercial poultry and pig farmers have discourage many farmers to scale as they are expensive and difficult to access as Kenya does not produce enough quantities of soybean and the limited supply makes importation necessary which is expensive.
- Organic waste together with BSF provide an opportunity to produce a sustainable high source of animal protein. The BSF larvae is rich in protein, fatty acids and minerals providing a sustainable alternative to traditional soybean meal and fish meal. The increased shortage of protein feed for animals makes this a worthwhile alternative for farmers.
The jury is out, the sector is poised for growth and a number of already established key players have proven the business concept but the fact still remains, strengthening local patient capital and technical assistance are necessary components to catalyse the industry and fully tap into the huge market potential the sector has to offer.
By Brian Ndegwa, Senior Agri Business Financial Consultant.
https://andeglobal.org/writer/kois
https://andeglobal.org/wp-content/uploads/2023/03/ANDE-Building_the_Green_Economy-KENYA.pdf
https://www.fao.org/kenya/news/detail-events/en/c/1681135
https://www.aciar.gov.au/media-search/blogs/kenyan-agripreneurs-fly-high-black-soldier-flies
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