From waste to wealth: Bringing in the private sector to address shortcomings with waste management infrastructure

As domestic migration and population growth increase the pressure on urban waste management infrastructure, Nigeria’s federal and state-level policymakers are increasingly turning towards the private sector to attract investment and management expertise.

MOUNTING PROBLEM: Rapid urbanisation set off by the oil boom in the 1970s has outpaced the design and implementation of waste management policies in many urban areas, in particular Nigeria’s biggest cities, such as Lagos, Ibadan, Port Harcourt and Abuja. Over the past decades the situation has deteriorated to the point that lives are being put at risk by increased exposure to diseases such as malaria and hepatitis as well as flooding caused by blockages in drainage and sewage infrastructure. The problem reached such heights that in 1977, when Nigeria hosted the Festival of African Culture, the press called Lagos the world’s dirtiest city.

Despite various federal and state-level attempts since that time, administrative bottlenecks, technical inadequacies, corruption, and lack of manpower and public participation have led to marginal results, leaving the collection and disposal of refuse up to the informal sector, and resulting in public health and environmental risks. In early 2012 Olufunke Babade, director of the Department of Pollution Control and Environmental Health at the Federal Ministry of Environment, told local media that sustainable waste management had become one of the greatest challenges confronting developing countries. “The complexity arises not only because of the huge quantities of waste produced by modern society, but also because of the differences in the composition of the waste,” Babade stated.

POLICY TAKING SHAPE: As a result, policymakers have progressively turned towards the private sector for collection and management of municipal, industrial and commercial waste. In September 2012 the federal government organised a three-day workshop to finalise the draft policy for management of municipal and agricultural waste, including generation, storage, collection, transportation, resource recovery and disposal. If approved, the legislation will pave the way for awarding concessions on constructing and running integrated waste management facilities across the country that will encourage private sector involvement in the collection of refuse, recycling programmes, treatment methods and disposal.

Anticipating and, in some cases, preceding the progress at the federal level, state governments have started implementing private sector participation programmes (PSPs) aimed at deregulating industrial, commercial and municipal waste management to private players. Lagos, Nigeria’s biggest city with an estimated population of 15m producing approximately 10,000 tonnes of waste daily, has positioned itself at the forefront of such developments.

In 2007 the Lagos State Waste Management Authority (LAWMA) launched a PSP for waste management, awarding commercial players annually extendable concessions on waste collection in designated territories.

The programme’s goal is to regulate waste collection, have residents contribute by paying for services rendered rather than generic state taxes and create jobs.

Indeed, James Odunmbaku, managing director of Highways Managers, said, “There are various private sector participants operating under LAWMA. Together they employ over 3500 workers, which not only creates jobs but provides a great benefit to society.”

Since its establishment, over 350 companies have subscribed to the programme, many of which are small companies operating just one or two trucks. “Our aim has been to get as many companies involved as possible to ensure competitiveness as well as sustainable job creation,” Ola Oresanya, the agency’s managing director, told OBG. Oresanya estimates that over 10,000 jobs have thus far been created under the programme.

Despite the fact that the PSP prescribes that 20% of operators’ revenues go to LAWMA for sensitisation, maintenance of disposal sites and policy enforcement, Oresanya claimed that thus far such obligations have largely been waived to support operators in their first years of existence. “By mid-2013 most of these players should be commercially viable enough to pay their dues,” Oresanya told OBG. LAWMA is also investing in bulk supplies of trucks at favourable rates and leasing them out to smaller PSPs. The project has attracted interest from across the country. At the time of writing, nine others states had signed up for implementation of similar PSPs, including the states of Ekiti, Ogun, Oyo and, most recently, the Federal Capital Territory.

CHALLENGES REMAIN: The roll-out of the project is not without its challenges. Collection of payments from residents remains a particular issue, with many Lagosians arguing waste collection is a public service and must be paid for by the government. Another related issue is that of bank financing. Because of the mismatch between services rendered and revenues generated, the banking sector has thus far ignored waste management as a viable industry, Olumuyiwa Adeniyi, managing director of Waste-point, a PSP-operator on Victoria Island in Lagos, told OBG. Nevertheless, Oresanya is confident that a focus on sensitisation and visible results will eventually overcome such obstacles.

ROOM FOR FURTHER INVESTMENT: LAWMA’s next goal is to attract private sector investment and operators to upstream activities such as waste transfer and disposal sites, recycling plants and recovery facilities. As Oresanya pointed out, “Around 60% of the daily collected waste is recoverable, yet nothing is being done with it as the infrastructure is not in place. This offers a significant opportunity for the private sector.”

Some precedent has been set. In 2008 Earth Care Nigeria completed a $20m investment in a facility in Lagos to convert municipal waste into compost. The plant has a capacity of up to 200,000 tonnes of organic fertiliser per year, supplying farmers across the south-west of the country. Meanwhile LAWMA is also actively looking at more advanced plans to encourage resource recovery. A particular focus lies on the extraction of methane gas from Lagos’ three biggest landfills under a project titled the Clean Development Mechanism (CDM), established and executed in partnership with the US Environmental Protection Agency and the Clinton Global Initiative. The initial phase of the plan consists of completing pre-engineering design studies at the sites of Olusoshun, Solous and Abule-Egba, after which investors will be approached. The Lagos State government aims to award 20-year concessions, so investors can tap into what Oresanya referred to as a “gold mine” for gas exploitation, as “some dumpsites sit on top of 15 metres of waste”.

OUTLOOK: Waste accumulation and disposal has for many decades been an eyesore for many Nigerians, especially in rapidly expanding urban areas, with damaging effects to public health and the environment. But in recent years, states have increasingly embraced the issue as an opportunity to attract investment and create jobs. With the help of PSPs and national policy at the federal level, private operators are set to adopt sustainable waste management practices while bringing down the heaps of refuse in Nigeria’s streets, turning waste into wealth.

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The Report: Nigeria 2012

Utilities chapter from The Report: Nigeria 2012

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