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Can emerging countries benefit from the circular economy?

Developing countries have not benefited from the linear economy; the economy in which goods are manufactured from raw materials, sold, used, and then discarded as waste. They have poor access to cheap goods to improve the quality of life of their populations. They do not take advantage from the extraction and exportation of raw materials to developed countries: almost 80% of resource-driven countries have a per-capita income below the global average[1]. Conversely, they have large quantities of waste brought in from developed countries: more than 90% of discarded computers from the developed world are exported to developing countries such as Ghana, Pakistan, and India[2].

Adam Cohn/Flickr CC by 2.0
Adam Cohn/Flickr CC by 2.0

Can developing countries better capture the value of the circular economy? It might seem a stretch. Developing countries have not built stocks of infrastructure and goods, which they can recycle, repair or reuse. However, they fortunately produce far less waste than industrialised countries (a region such as sub-Saharan Africa is responsible for only 5% of the world’s waste while OECD countries produce almost half of it[3]).

Very little analysis has been conducted so far to assess the potential benefits of the circular economy for developing countries. But these opportunities are worth exploring. Some early initiatives seem indeed to demonstrate a promising potential. Relying on underdeveloped industries and infrastructures, some of these initial initiatives may be rudimentary, such as recycling or repairing used assets. But some others can address, in the long term, the economic, social, and environmental challenges of developing nations.

Improve waste collection and recycling performance

In low-income countries, solid waste management is characterised by poor collection and improper disposal of municipal solid wastes. 59% of waste is not collected[4] and typically ends up in informal waste dumps. Landfilling is still the predominant means of disposal. Recycling operations, primarily managed by the informal sector, use inappropriate techniques that severely jeopardise the health of workers and cause major environmental harm.

Yet, solutions exist to improve the economic and environmental performance of waste collection and processing. Organic waste is probably the most untapped resources in low-income countries. While 64% of municipal solid waste is organics[5] (28% in high-income ones), composting at scale is rare despite its relative simplicity and compelling economic and environmental benefits. Organic waste composting creates jobs and generates revenue. In sub-Saharan Africa, it is also a viable alternative to phosphate fertilisers – which farmers cannot afford – to counter the continent’s low soil fertility.

With respect to technical materials such as plastic, glass, or paper, many entrepreneurs and communities are processing them through artisanal but efficient recycling operations. In Senegal for instance, Proplast produces 15 tons of plastic resins per month from plastic waste collected locally. However, most developing countries lack access to technologies and investments required to transition from artisanal to industrial recycling operations. To address this issue, the African Development Bank is financing, for example, the implementation of a plastic waste collection and recycling infrastructure in Ivory Coast. Using innovative recycling technologies, this operation not only provides local industries with raw materials, it also supports the social and economic reintegration of 2 000 ex-combatants.

Koshy Koshy/Flickr CC by 2.0
Koshy Koshy/Flickr CC by 2.0

In their transition towards a more circular economy, developing countries can also better leverage their informal sector. Approximately 1% of the urban population of these countries, at least 15 million people, survive by salvaging recyclables from waste in the streets or in open dumps[6]. Using waste pickers to collect trash in landfills cannot be a desirable outcome, in particular because of terrible working conditions. However, during a transition period, waste picking could be organized and supported to create jobs and reduce poverty. In Mexico, Danone has built, outside the landfill, a sorting centre where waste pickers can sort waste more efficiently and safely. As a result, over 400 families have seen their income risen by 30% and their health care covered.

Strengthen the repair and refurbishing sector

While few emerging countries have developed high performing recycling operations, many have established robust repair industries. Because they cannot afford brand new goods, such as electronic equipment or cars, many developing countries import used ones from industrialized countries. In Nigeria, for example, 95% of cars are second hand vehicles[7]. A vibrant repair and refurbishing sector has developed in most countries to repair and maintain these goods.

Jan Truter/Flickr CC by 2.0
Jan Truter/Flickr CC by 2.0

The practice of importing used goods from Europe or North America is often criticized due to the lack of appropriate recycling infrastructures in the developing world. However, not all imported pre-owned assets have to be immediately recycled. In Ghana for example, 80% of second hand electronic products (such as cooling and freezing equipment, computing equipment, TVs, and mobile phones) are not recycled but re-used, repaired or refurbished[8]. The refurbishing sector, with an estimated 1200 repairers, generates income for more than 30 000 people[9]. In the capital of Nigeria, Lagos, two refurbishing clusters, Ikeja Computer Village and Alaba International Market, supply refurbished equipment not only to Nigerian households, but also to other West and Central African countries[10].

A great deal can be done to improve the economic and environmental performance of the repair and refurbishing industry, including building the capacity of self-taught repairers and refurbishers, and implementing proper recycling operations for used goods when they reach their end of life. For instance, HP, Dell, and Lenovo all make information readily available for repair technicians. In Nigeria, the government is working with the Japan international Cooperation Agency to draft a Nigerian end of life vehicle recycling law, and establish an automobile recycling system in order to manage more than 400 000 vehicles that reach their end of life every year. In Kenya, Hewlett-Packard, Dell, Philips, and Nokia have jointly worked to set up a network of 50 collections points and an electronic waste recycling facility with strict recycling standards.

Build resources efficient agricultural value chains

Hopefully, recycling, repairing, and refurbishing used goods imported from developed countries are not the only circular economy opportunities. Developing nations can also build resources efficient industries. In developed countries, linear industrial practices have been optimised over many years, making a transition towards the circular economy sometimes very challenging. Many emerging countries, not yet locked in to the linear economy, have the opportunity to design and build new farms, businesses, and industries for the circular economy. In particular, they can build resource efficient agricultural value chains.

Peacecorpschadsey/Flickr CC by 2.0
Peacecorpschadsey/Flickr CC by 2.0

Malawi, Mozambique and Zambia are experimenting with agro-ecology, agriculture that is not inspired by industry but instead by nature. In Porto-Novo in Benin, the Songhaï farm has developed a closed-loop system where all farming by-products are reintroduced in the production process. The farm produces 3.4 tons of rice per hectare, compared to only 1 ton of rice per hectare when it began.

In Brazil, the cosmetics maker Natura has invested in a 1.7 million square meter industrial park in the Amazon region, aimed at attracting companies interested in developing sustainable businesses. The facility intents to develop a closed-loop system by selling the bi-products of cosmetics production from Amazonian fruits, oils, and berries to other co-located companies in complementary industries.

Counter Culture Coffee/Flickr CC by 2.0
Counter Culture Coffee/Flickr CC by 2.0

Emerging nations can also improve the resource efficiency of their agricultural supply chains. The coffee value chain, for example, receives less coverage than e-waste recycling in Ghana (in places like Agbogbloshie for instance). But its impact is far worse. The processing of 1 kg of green coffee generates 2,5 kg of by-products, pulp and peel[11]. These by-products, highly toxic, are regularly released into rivers, affecting aquatic fauna and flora as well as downstream communities putting the health of the public at risk. They also generate considerable amounts of greenhouse gas emissions, particularly methane. Yet, wastes from coffee processing can be turned into various resources: feeds, compost, biogas but also beverages, vinegar, caffeine, or protein. In Central America, farmers convert coffee waste into biogas[12]. In Colombia, large coffee farms use the compost produced with pulp as an organic conditioner of soils[13]. In Mexico and Vietnam, farmers supply coffee pulp to a U.S. based company, Coffee Flour, which converts the pulp into flour.

Conclusion

To date, aside from a few local programs, international development organisations have paid limited attention on the benefits to be derived from the circular economy. Yet it could be a fantastic means to help achieve the new U.N. development goals. To begin with, development agencies should assist emerging countries to assess the full potential of the circular economy. Inefficient use of resources is a luxury neither developed countries, nor developing ones, can afford.

Notes

[1] Reverse the curse: Maximizing the potential of resource-driven economies. McKinsey Global Institute.

[2] Trends in sustainable development: Chemicals, mining, transport and waste management. United Nations. 2010.

[3] What a Waste: A Global Review of Solid Waste Management. World Bank. Daniel Hoornweg and Perinaz Bhada-Tata. March 2012.

[4] Private Sector & Development. Proparco’s Magazine. October 2012.

[5] What a Waste: A Global Review of Solid Waste Management. World Bank. Daniel Hoornweg and Perinaz Bhada-Tata. March 2012.

[6] The informal recycling sector in developing countries: Organizing waste pickers to enhance their impact. Martin Medina. October 2008.

[7] Daily Times Nigeria. Monday December 8, 2014.

[8] Ghana e-Waste Country Assessment. Basel Convention. March 2011.

[9] Where are WEee in Africa? Findings from the Basel Convention E-waste Africa Programme. Basel Convention. December 2011.

[10] Idem

[11] The coffee sector in West Africa: its impact on the economy and the environment. African Development Bank Group. Patrick Chabert. March 11, 2015.

[12] Farmers in Central America generate energy from coffee wastewater. UTZ Certified. August 27, 2014.

[13] Good Hygiene Practices along the coffee chain: a training resource for coffee producing countries. Food and Agriculture Organization of the United Nations (FAO). 2006.

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The Author

Rémy le Moigne

Rémy le Moigne

Rémy Le Moigne is a consultant and the author of an award winning book on the circular economy. He works with private companies and territories to accelerate their transition towards a circular economy. Previously Rémy has been a partner of Deloitte supply chain strategy practice where he led projects in Europe, West and Southern Africa.