Plastic recycling and reprocessing
Plastic recycling and reprocessing
Business Model Description
Establish and operate recycling plants for repurposing plastics.
Expected Impact
Mitigate against the negative environmental effects of waste and foster a circular economy especially with plastic.
How is this information gathered?
Investment opportunities with potential to contribute to sustainable development are based on country-level SDG Investor Maps.
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Country & Regions
- Rwanda: Kigali
Sector Classification
Infrastructure
Development need
The country significantly underscored in SDG 9 - Industry, Innovation and Infrastructure, SDG 7 - Affordable and Clean Energy, SDG 11 - Sustainable Cities and Communities and SDG 6 - Clean Water and Sanitation.(1) Rwanda faces high costs of logistics and long transport times due to its relatively poor supply chains.(2) As infrastructure improves overall productivity of the economy, it will be the key driver for enhancing Rwanda’s sustainable development and economic growth.(3)
Policy priority
Rwanda's industrial sector accounts for approximately 15% of gross domestic product (GDP), making it a crucial component of the national economy.(4) The government recognizes the construction materials industry faces several constraints arising from the infrastructural gap, which makes building products relatively expensive.
Gender inequalities and marginalization issues
Developing a gender-responsive infrastructure is a key element to accelerate poverty reduction efforts and economic growth. Infrastructure projects in transport, energy, water and sanitation not only reduce the time and labor burden of women and girls, but can also improve their level of mobility, productivity and access to markets.(36)
Investment opportunities introduction
The growing population, accompanied by rural-urban migration, will require heavy investment in urban planning and development (sanitation, waste management, low cost housing, electric supply and information and communication technology (ICT) connectivity.(3)
Key bottlenecks introduction
Limited physical infrastructure, constrained by hilly and mountainous topography, remains a major challenge for producers and farmers in increasing their access to markets, enhancing competitiveness, and improving incomes and livelihoods. It also negatively influences the pace of structural transformation.(2)
Waste Management
Policy priority
Studies show Rwanda recognizes solid waste mismanagement as a major challenge to sustainable development, particularly considering the health and safety implications for citizens. The government aims for 40% of non-organic solid waste being recycled by 2029-30.(5)
Waste Management
Pipeline Opportunity
Plastic recycling and reprocessing
Establish and operate recycling plants for repurposing plastics.
Business Case
Market Size and Environment
Half of Kigali's residents, forecast to be 2.5 million by 2032, have access to waste collection services.
Estimates suggest only around half of households in Kigali have access to waste collection services.(5)
The Utilities and Amenities Thematic Report shows only 48.9% of waste in Kigali is disposed through public waste collection service, while 33.5% is thrown into the bushes or fields, 13.6% is composted and 0.7% is abandoned in water basins.(7)
Because of the single use plastic ban imposed by the Rwandan Government, the demand for recycled plastic is rising.(8),(9) From a non-existent market in 2008, 14 companies were already present in Rwanda in 2019.(10)
Indicative Return
15% - 20%
20% - 25%
A case study suggests an estimated benchmark internal rate of return of 19%, assuming a fully integrated plastics recovery and reprocessing facility with a production capacity of 80,000 tons of plastics per year and a capital cost of around USD 37 million.(11)
The benchmark return on equity is 19% to 21%, based on cost of equity data for the subsector including a country risk premium.(12)
Investment Timeframe
Long Term (10+ years)
Based on a mixed plastics recycling case study, the positive 19% internal rate of return is calculated for a 10-year timeframe.(11)
The standard investment period is estimated to be 15 - 25 years, based on sectoral benchmark information.(12)
Ticket Size
USD 1 million - USD 10 million
Market Risks & Scale Obstacles
Business - Supply Chain Constraints
Market - Highly Regulated
Capital - CapEx Intensive
Impact Case
Sustainable Development Need
The country significantly underscored in SDG 9 - Industry, Innovation and Infrastructure, SDG 7 - Affordable and Clean Energy, SDG 11 - Sustainable Cities and Communities and SDG 6 - Clean Water and Sanitation.(1)
Between 2011 and 2019, the amount of solid waste generated in Kigali has doubled from 400 tons per day to 800 tons per day. Currently, it is estimated that around only half of households in Kigali have access to waste collection services.(5)
Nearly half of the households in Kigali have access to waste collection services, indicating the country's inefficient waste management.(5)
Gender & Marginalisation
Developing a gender-responsive infrastructure is a key element to accelerate poverty reduction efforts and economic growth. Infrastructure projects in transport, energy, water and sanitation not only reduce the time and labor burden of women and girls, but can also improve their level of mobility, productivity and access to markets.(36)
Expected Development Outcome
Reduced pollution and environmental degradation
Reduced need for imports of plastic, improved aesthetics, improved environment
Facilitation of responsible consumption and production
Gender & Marginalisation
Investments could reduce the time and labor burden of women who are largely occupied with waste management.
Primary SDGs addressed
3.9.3 Mortality rate attributed to unintentional poisoning
1.32 per 100,000 individuals (31)
N/A
6.3.2 Proportion of bodies of water with good ambient water quality
15% (32)
N/A
12.4.2 (a) Hazardous waste generated per capita; and (b) proportion of hazardous waste treated, by type of treatment
12.5.1 National recycling rate, tons of material recycled
N/A
N/A
N/A
N/A
Secondary SDGs addressed
Directly impacted stakeholders
People
Gender inequality and/or marginalization
Planet
Corporates
Public sector
Indirectly impacted stakeholders
Corporates
Outcome Risks
Without proper filtration, harmful compounds may be released into the atmosphere or cause health problems due to exposure to chemicals.(15),(16)
Waste recovery sites may become unhygienic. Hazardous chemicals in waste can pollute water and soil, and harm plants and fish. Mixing with rainwater creates leachate, a poisonous compound.(17)
Recycling may contribute to linear consumption instead of circular economy, by justifying the industrial system of production as it is and preserving a growing consumption pattern.(18),(19)
Impact Risks
Execution risk if waste management processes are not set up through careful planning
Unexpected impact risk given increasing greenhouse gas emissions from waste management activities
Impact Classification
What
Upscaling of plastic recycling is likely to have a positive impact because it contributes to reducing waste and pollution and provides reusable materials.
Risk
Changing regulations in plastic usage can affect the business model, forcing companies to modernize their production lines (either input or output).
Impact Thesis
Mitigate against the negative environmental effects of waste and foster a circular economy especially with plastic.
Enabling Environment
Policy Environment
Policy document: The policy environment for plastic recycling is favorable. Law No. 17/2019 prohibits manufacturing, importing, using and selling plastic carry bags and single-use plastic items.(8)
National Sanitation Policy Implementation Strategy 2016: This strategy determines the government's goals and targets for properly disposed waste and waste recycling.(20)
Water and Sanitation Sector Strategic Plan 2018-2024: This plan establishes a strategic framework for implementing waste management services, recycling and composting.(21)
National e-Waste Management Policy for Rwanda: This policy provides a framework for efficient and effective management of e-waste. It is achieved by providing appropriate legislation and regulations that promote green growth and sustainable development in Rwanda.(22)
Financial Environment
Fiscal incentives: A 7-year tax holiday is available for investments in the manufacturing sector, provided the investment is at least USD 50 million and the investor contributes a minimum of 30% of this investment in form of equity.(29)
Other incentives: Investors registered with the Rwanda Development Board (RDB) can apply for certification making them eligible for benefits, such as corporate income tax reductions, value added tax exemptions on raw materials and vehicles imported for themselves and their foreign employees, and a duty exemption on plant, machinery and equipment.(30)
Regulatory Environment
Regulations No 002/EWASTAN/SW/RURA/2015 Governing Solid Waste Recycling in Rwanda: These regulations provide information on licensing, technical requirements, operational requirements, monitoring and sanctions for a solid waste recycling plant.(23)
Law No 17/2019-Relating to the Prohibition of Manufacturing, Importation, Use and Sale of Plastic Carry Bags and Single-Use Plastic Items: This Act provides a framework for exceptional consent to manufacture, import, export/use of plastic disposables. It also defines prohibited items and lists sanctions imposed for breaches.(8)
Regulations No 005/R/SAN-EWS/RURA/2016 Governing Liquid Waste Collection and Transportation: These regulations cover licensing, transportation, reporting, monitoring and compliance. They also list the sanctions imposed for breaching the regulations.(24)
Organic Law No 04/2005 of 08/04/2005 determining the modalities of protection, conservation and promotion of environment in Rwanda): This Act defines substances and processes, provides principles for protecting the environment and defines responsibilities of actors, and lists the sanctions imposed for breaches.(25)
Organic Law related to the Land Policy in Rwanda N°08/2005 of 14/07/2005: This Act regulates land ownership issues, provides the rules for management, exploitation and organisation of land, defines rights and obligations of the landlords and lists the penalties.(26)
Law N°57/2008 of 10/09/2008 relating to the prohibition of manufacturing, importation, use and sale of polythene bags in Rwanda: This Act provides a framework for obtaining exceptional consents to manufacture, import, export or use polythene bags. It also regulates the sanctions for breaching the regulation.(9)
Law N° 63/2013 of 27/08/2013 determining the mission, organization and functioning of Rwanda Environment Management Authority (REMA): This Act specifies REMA's scope of work.(27)
Law Nº16/2012 of 22/05/2012 determining the organization, functioning and mission of the National Fund for Environment (FONERWA): This Act specifies FONERWA's scope of work.(28)
Marketplace Participants
Private Sector
AGRUNI Company Ltd, COPED Group Rwanda, Ubumwe Cleaning Services Ltd, COCEN Ltd, Baheza General Services Ltd
Government
Rwanda Environment Management Authority (REMA), Rwanda Development Board (RDB)
Multilaterals
World Bank, European Investment Bank, African Development Bank, Rwanda Green Fund (FONERWA), Global Green Growth Institute (GGGI), United Nations Development Programme (UNDP)
Non-Profit
Watoto Vision on Africa (WVA), Rural Development Interdiocesan Service (RDIS)
Target Locations
Rwanda: Kigali
References
- (1) United Nations Development Programme (2020). Sustainable Development Report 2020. https://unstats.un.org/sdgs/report/2020/The-Sustainable-Development-Goals-Report-2020.pdf
- (2) Gatete, C. (2016). The Rwanda we want: Towards ‘Vision 2050’. https://www.minecofin.gov.rw/fileadmin/user_upload/Minecofin/Speeches/Hon_Gatete_Umushyikirano_Presentation_2016.pdf
- (3) National Institute of Statistics of Rwanda (2012). Fourth Population and Housing Census 2012. http://www.statistics.gov.rw/publication/rphc4-population-projections
- (4) Rajashekar, A., Bowers, A. and Sebarenzi Gatoni, A. (2019). Assessing waste management services in Kigali. International Growth Centre. https://www.theigc.org/wp-content/uploads/2019/11/Rajashekar-et-al-2019-paper.pdf]
- (5) Rajashekar, A., Bowers, A. and Sebarenzi Gatoni, A. (2019). Assessing waste management services in Kigali. International Growth Centre. https://www.theigc.org/wp-content/uploads/2019/11/Rajashekar-et-al-2019-paper.pdf]
- (33) African Development Bank (2008). Gender assessment: progress towards improving women’s economic status. https://www.afdb.org/fileadmin/uploads/afdb/Documents/Project-and-Operations/rwanda.pdf
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- (8) Republic of Rwanda. Law No 17/2019 - Law Single Plastic Use Ban. https://elaw.org/plastic/RW_PlasticLaws
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- (11) Waste and Resources Action Program (2009). A financial assessment of recycling mixed plastics in the UK, https://archive.wrap.org.uk/sites/files/wrap/WRAP%20A%20financial%20assessment%20of%20recycling%20mixed%20plastics%20in%20the%20UK.pdf
- (12) PwC analysis based on Prof. A. Damodaran data, 2020.
- (13)Kazoora, J. (2019). Exploring the future of plastic recycling industries in Uganda. http://dissertations.mak.ac.ug/handle/20.500.12281/7252
- (14) Cumberland County Pennsylvania. Frequently asked questions - plastics. https://www.ccpa.net/DocumentCenter/View/5384/Plastic_FAQs?
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- (27) Republic of Rwanda. Law N° 63/2013 of 27/08/2013 determining the mission, organization and functioning of Rwanda Environment Management Authority (REMA). http://extwprlegs1.fao.org/docs/pdf/RWA131807.pdf
- (28) Republic of Rwanda. Law Nº16/2012 of 22/05/2012 determining the organization, functioning and mission of the National Fund for Environment (FONERWA). http://extwprlegs1.fao.org/docs/pdf/rwa114654.pdf
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