Plastic recycling facilities

Plastic recycling facilities
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Plastic recycling facilities
SectorMost major industry classification systems use sources of revenue as their basis for classifying companies into specific sectors, subsectors and industries. In order to group like companies based on their sustainability-related risks and opportunities, SASB created the Sustainable Industry Classification System® (SICS®) and the classification of sectors, subsectors and industries in the SDG Investor Platform is based on SICS.
Infrastructure
Infrastructure
Business Model Description

Build and operate recycling and recovery facilities for plastic disposables.

Expected Impact

Mitigate against the negative environmental effects of waste and recover energy sources.

Indicative ReturnDescribes the rate of growth an investment is expected to generate within the IOA. The indicative return is identified for the IOA by establishing its Internal Rate of Return (IRR), Return of Investment (ROI) or Gross Profit Margin (GPM).
15% - 20% (in IRR)
Investment TimeframeDescribes the time period in which the IOA will pay-back the invested resources. The estimate is based on asset expected lifetime as the IOA will start generating accumulated positive cash-flows.
Long Term (10+ years)
Market SizeDescribes the value of potential addressable market of the IOA. The market size is identified for the IOA by establishing the value in USD, identifying the Compound Annual Growth Rate (CAGR) or providing a numeric unit critical to the IOA.
Nigeria produces 2.5 million tons of plastic waste each year.
Average Ticket Size (USD)Describes the USD amount for a typical investment required in the IOA.
> USD 10 million
Direct ImpactDescribes the primary SDG(s) the IOA addresses.
Good health and well-being (SDG 3) Responsible Consumption and Production (SDG 12) Life Below Water (SDG 14)
Indirect ImpactDescribes the secondary SDG(s) the IOA addresses.
Clean water and sanitation (SDG 6) Industry, Innovation and Infrastructure (SDG 9) Sustainable Cities and Communities (SDG 11)
Country
Regions
  • Nigeria: South West
SectorMost major industry classification systems use sources of revenue as their basis for classifying companies into specific sectors, subsectors and industries. In order to group like companies based on their sustainability-related risks and opportunities, SASB created the Sustainable Industry Classification System® (SICS®) and the classification of sectors, subsectors and industries in the SDG Investor Platform is based on SICS.
Infrastructure
IF

Development need: Nigeria will face several challenges in the next decades, with the infrastructure sector as the basis for the country’s sustainable development due to its cross-cutting characteristics. There are several potential areas for investments. These opportunities focus on, but do not exclusively relate to, serving rapidly growing urban populations, and include electricity generation or waste management.

Policy priority: National Integrated Infrastructure Master Plan 2019 - The value of Nigeria’s core infrastructure stock represents only about 25% of gross domestic product (GDP) according to 2013 estimates, a value significantly lower than the global benchmark of 70%. This low stock has been attributed mainly to low public and private spending on infrastructure.(1)

Gender inequalities and marginalization issues: Poor infrastructure can exacerbate the gender gap. In low income countries, women are responsible for over 70% of water and fuel wood collection. The time spent on water collection adds up to 200 million hours every day. Unsafe and low security transport also disadvantages women, by exposing them to violence. This affects their wellbeing and workforce participation.(26)

Investment opportunities introduction: To efficiently revamp infrastructure across various sectors, estimated investment of USD 30 trillion is required over 30 years (2014 – 2043). This estimate includes investments in the following priority areas: Energy, transport, social infrastructure and housing. (1)(2)

Key bottlenecks introduction: The low infrastructure stock has been attributed mainly to low public and private spending on infrastructure.(1)

SubsectorMost major industry classification systems use sources of revenue as their basis for classifying companies into specific sectors, subsectors and industries. In order to group like companies based on their sustainability-related risks and opportunities, SASB created the Sustainable Industry Classification System® (SICS®) and the classification of sectors, subsectors and industries in the SDG Investor Platform is based on SICS.
Infrastructure
IF

Development need: Nigeria generates 65 million metric tons of waste annually.(3) According to indicators for SDG 14 – Life below water (for which Nigeria is currently underscoring), approximately 81% of plastic waste is handled improperly.(4)

IndustriesMost major industry classification systems use sources of revenue as their basis for classifying companies into specific sectors, subsectors and industries. In order to group like companies based on their sustainability-related risks and opportunities, SASB created the Sustainable Industry Classification System® (SICS®) and the classification of sectors, subsectors and industries in the SDG Investor Platform is based on SICS.
Waste Management
IF-WM
Investment Opportunity Area

Plastic recycling facilities

Business Model

Build and operate recycling and recovery facilities for plastic disposables.

Critical IOA UnitDescribes a complementary market sizing measure exemplifying the opportunities with the IOA.
Nigeria produces 2.5 million tons of plastic waste each year.

In 2018, Nigeria imported plastics and similar articles worth over USD 1.6 billion.(5) It requires action to avoid releasing them into the natural environment.

The amount of plastic bottles used in Nigeria doubled between 2016 and 2019, to approximately 150 million metric tons annually. According to a study, half of those bottles are consumed in Lagos only, and 80% of them do not undergo recycling.(6)

Nigeria produces 2.5 million tons of plastic waste each year. The average per capita consumption of plastics has increased by approximately 5% every year since 2007, from 4.0 kg to 6.5 kg in 2017 and an estimated 7.5 kg in 2020.(7)

IRRDescribes an expected annual rate of growth of the IOA investment.
15% - 20%

Based on a case study, the benchmark internal rate of return is estimated at 19%. This rate assumes 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.(8)

TimeframeDescribes the time period in which the IOA will pay-back the invested resources. The estimate is based on asset expected lifetime as the IOA will start generating accumulated positive cash-flows.
Long Term (10+ years)

The investment period is estimated to be 15 - 25 years, based on sectoral benchmark information.

Average Ticket Size (USD)Describes the USD amount for a typical investment required in the IOA.
> USD 10 million
Business - Supply Chain Constraints
Insufficient waste segregation, lack of proper infrastructure(9), limited awareness of citizens on the danger of plastic(10), technical complexity of the process(10), different types of plastics cannot be mixed together(11)
Sustainable Development Need

Plastics are a problem mostly due to their non-biodegradable nature and improper disposal leading to pollution. Global plastic production exceeded 311 million metric tons. From 2.5 billion metric tons of solid waste generated globally, about 275 million tons were plastic waste.(12)

In 2010, Nigeria was suspected of being the world's fifth biggest polluter of the marine environment, after reportedly releasing 0.34 million tons of plastic waste into the ocean.(13)

Nigeria generates 65 million metric tons of waste annually.(3) Lagos, Nigeria's biggest city, generates about 10,000 tons of urban waste every day.(14) According to indicators for SDG 14, approximately 81% of plastic waste is handled improperly in Nigeria.(4)

Gender & Marginalisation

Poor infrastructure can exacerbate the gender gap. In low income countries, women are responsible for over 70% of water and fuel wood collection. The time spent on water collection adds up to 200 million hours every day.(26)

Expected Development Outcome

Recycled plastic reduced dependency on imports of raw materials from other countries. Recycling helps create a cleaner environment, by keeping tons of plastic out of the waste stream and stopping plastics polluting the ocean. It also improves aesthetics which will promote tourism and foreign direct investment.

Investments could reduce waste and pollution, facilitate an improved circular economy approach, increasing savings on energy and prevent greenhouse gas emissions.

Gender & Marginalisation

Investments in waste management can help women living near wild dumping sites enjoy a cleaner and safer environment. These women are largely responsible for supplying household needs.

Primary SDGs addressed
3 - Good Health and Well-Being
Good health and well-being (SDG 3)

3.9.3 Mortality rate attributed to unintentional poisoning

Current Level

Mortality rate attributed to unintentional poisoning (Male): 0.0173 per 100,000. Mortality rate attributed to unintentional poisoning (Female): 0.0192 per 100,000.(27)

Target Level

By 2030: 0 (27)

12 - Responsible Consumption and Production
Responsible Consumption and Production (SDG 12)

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

Current Level

Hazardous waste generated per capita: 73.28%. Proportion of waste treated: 0.24%. (27)

0.24% in 2015. (27)

Target Level

N/A

N/A

14 - Life Below Water
Life Below Water (SDG 14)

14.1.1 (a) Index of coastal eutrophication; and (b) plastic debris density

Current Level

N/A

Target Level

N/A

Secondary SDGs addressed
6 - Clean water and sanitation
Clean water and sanitation (SDG 6)
9 - Industry, Innovation and Infrastructure
Industry, Innovation and Infrastructure (SDG 9)
11 - Sustainable Cities and Communities
Sustainable Cities and Communities (SDG 11)
Directly impacted stakeholders
People
Households
Planet
Air quality
Corporates
Small and medium enterprises
Indirectly impacted stakeholders
People
Entire population
Outcome Risks

Without proper filtration, many harmful compounds may be released into the atmosphere. Abandoned dump sites can severely damage the surrounding environment.

Harmful chemicals can leach into water and soil, causing water and soil pollution. When mixed with rainwater, a poisonous mixture (leachate) is formed, which is highly dangerous for water supplies.(15)

The bleaching process uses harsh chemicals that can cause health problems on exposure if proper measures are not taken.(15)

Impact Risks

Efficiency risk given the heavy involvement of public bodies (with higher costs) in the waste management sector

Execution risk if activities are not delivered as planned and do not result in the desired outcomes

Unexpected impact risk given recovery and recycling facilities may generate negative environmental impact if not handled properly

What

Investing in a plant to melt and reuse plastics is likely to have a positive impact because it limits plastic waste and pollution.

Who

Producers, natural environment, households that are aggrieved due to inadequate access to recycling facilities.

Risk

Although there are already several recycling plants in Nigeria, the model requires proper technology and trained people. It can worsen the ecological situation if improperly managed.

Impact Thesis

Mitigate against the negative environmental effects of waste and recover energy sources.

Policy Environment

National Policy on Plastic Lifecycle Management: The Federal government has implemented the National Policy on Plastic Lifecycle Management to drive resource efficiency, cleaner production and protection of the environment as stated in section 20 of the 1999 Constitution.

Basel Convention: This convention aims to reduce hazardous waste generation and promote environmentally sound management of hazardous wastes. It establishes a regulatory system for cases where cross-border movements are allowed.(16)

Montreal Protocol: This protocol establishes provisions for consumption and production of almost 100 chemicals causing ozone depletion.(17)

The Federal government invests in different types of projects, including plastic recycling plants in 26 cities in Nigeria, material recovery baling centers, transfer loading stations and briquetting plants.(18)

At the municipal level, the Lagos State Waste Management Authority (LAWMA) launched a private sector participation programme for waste management, awarding commercial players annually extendable concessions on waste collection in designated territories.(18)

Financial Environment

Financial incentives: The Nigerian Investment Promotion Commission Act incentivizes investment in waste management by granting the 'unconditional transferability' of profits, dividends and proceeds from sale of assets through authorized dealer banks.(23)

Regulatory Environment

National Policy on the Environment 1999 (Sub section 6.1, Section 6.0: This policy relates to issues regarding climate change. It indicates the government's strategy towards preventing climate change.(19)

National Environmental (Sanitation and Wastes Control) Regulations S. I. No. 28 of 2009: These regulations establish a legal framework for sustainable and environmentally friendly practices in environmental sanitation and waste management to minimize pollution.(20)

National Policy on Municipal and Agricultural Waste Management 2012: This policy governs generation and sorting, storage, collection, transportation, resource recovery, treatment/disposal, and minimization of the release of organic pollutants.(21)

National Policy on Solid Waste Management 2018: This policy provides a framework for integrating efforts between public actors, non-governmental organizations and other stakeholders in waste management.(22)

National Policy on Plastic Life Cycle Management (Draft) 2019: This draft policy establishes a framework to enhance resource efficiency, cleaner production and protection of the environment.(18) National Policy on Chemical Management 2010

Private Sector

Lexsz Plastics Limited, WeCyclers, CocaCola, OkwuEco

Government

Federal government, State government - Lagos State Waste Management Authority

country static map
urban
Nigeria: South West
Large cities such as Lagos have the largest populations, a significant proportion of whom are unskilled and live in poverty in concentrated areas. These people cold become waste collectors who could cooperate with the recycling plant. Lagos has a relatively developed road infrastructure, allowing the transport of recyclables. The capital generates the highest quantities of waste and is therefore a very convenient destination for a recycling facility. There also exist opportunities to cooperate with local businesses that sort waste across Lagos.(24)
Sector Sources
  • 1) National Planning Commission (2015). National Integrated Infrastructure Master Plan. 2) Federal Republic of Nigeria (2017). Economic Recovery and Growth Plan 2017 - 2020. Abuja: Ministry of Budget and National Planning. 3) Benson, A. Recycling: How These Small Businesses Make Millions Selling Aluminium Monthly. 4) SDG Center for Africa and Sustainable Development Solutions Network (2019). 2019 Africa: SDG Index and Dashboards Report.
IOA Sources
  • 5) United Nations. UN Comtrade Database. 6) Ibokun, Y. (2019). 'Nigeria Enlists Big Beverage Companies to Fight Plastic Waste,' Bloomberg Businessweek, November 13. https://www.bloomberg.com/news/articles/2019-11-13/nigeria-enlists-big-beverage-companies-to-fight-plastic-waste. 7) Benson, A. Recycling: How These Small Businesses Make Millions Selling Aluminium Monthly. 8) WRAP (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 9) Duru, R., Ikpeama, E.E. and Amaka, J.A. (2019). Challenges and prospects of plastic waste management in Nigeria,' Waste Disposal and Sustainable Energy 1: 117-126. https://www.researchgate.net/publication/334810551_Challenges_and_prospects_of_plastic_waste_management_in_Nigeria 10) Kazoora,J. (2019). Exploring the future of plastic recycling industries in Uganda. http://dissertations.mak.ac.ug/handle/20.500.12281/7252 11) CCPA. FREQUENTLY ASKED QUESTIONS - PLASTICS. https://www.ccpa.net/DocumentCenter/View/5384/Plastic_FAQs? 12) Ellen MacArthur Foundation (2016). The New Plastics Economy: Rethinking the Future of Plastics. https://www.ellenmacarthurfoundation.org/publications/the-new-plastics-economy-rethinking-the-future-of-plastics. 13) Dumbili, E. and Henderson, L. (2020). 'The Challenge of Plastic Pollution in Nigeria,' Plastic Waste and Recycling, 569–83. https://www.researchgate.net/publication/338805077_The_Challenge_of_Plastic_Pollution_in_Nigeria 14) Bakare, W. (2020). 'Solid Waste Management in Nigeria,' BioEnergy Consult. https://www.bioenergyconsult.com/solid-waste-nigeria/. 15) Baltimore Urban Debate League (2012). Recycling. http://budl.org/wp-content/uploads/2012/07/Recycling-Supporting-Docs.pdf 16) Basel Convention. http://www.basel.int/TheConvention/Overview/TextoftheConvention/tabid/1275/Default.aspx 17) United Nations (1987). Montreal Protocol on Substances that Deplete the Ozone Layer (with annex). Concluded at Montreal on 16 September 1987. https://treaties.un.org/doc/publication/unts/volume%201522/volume-1522-i-26369-english.pdf 18) United Nations Industrial Development Organization (2019). Current status of waste management and plastic management in Nigeria, Policy and Industry Aspects. http://www.unido.or.jp/files/191007_UNIDO-Seminar_Nigeria.pdf 19) National Policy on the Environment. http://extwprlegs1.fao.org/docs/pdf/nig176320.pdf 20) National Environmental (Sanitation and Wastes Control) Regulations. https://www.nesrea.gov.ng/publications-downloads/laws-regulations/ 21) Household Waste Disposal Laws in the Federal Republic of Nigeria. https://scholarworks.gsu.edu/cgi/viewcontent.cgi?article=1040&context=iph_capstone 22) All Africa (2020). Nigeria: Timely National Policy On Solid Waste Management. https://allafrica.com/stories/202007200029.html 23) World Bank (2020). 2019 Investment Policy and Regulatory Review: Nigeria. https://openknowledge.worldbank.org/handle/10986/33596 24) WOIMA Corporation (2021). Drowning in waste – Case Lagos, Nigeria. https://woimacorporation.com/drowning-in-waste-case-lagos-nigeria/ 25) Wecyclers (2021). Recycle with Wecyclers. http://www.wecyclers.com/ 26) OECD (2019). Gender Equality and Sustainable Infrastructure. https://www.oecd.org/gov/gender-mainstreaming/gender-equality-and-sustainable-infrastructure-7-march-2019.pdf 27) Federal Republic of Nigeria (2017). Implementation of the SDGs: a national voluntary review. https://sustainabledevelopment.un.org/content/documents/16029Nigeria.pdf