Start-ups turning plastic waste into gold in Kariobangi

For the four years Charles Kalama was at the University College London, he never came across a waste polythene bag lying on the ground.

The clean university environment, however, only served to remind him of his home city with images organic and inorganic waste like of polythene papers, which have virtually become permanent features of Nairobi, recurring in his mind.

This prompted him to start thinking about how he could help clean up the city, while making a living out of the waste.

But it was only last year when his aspirations turned into a reality after he entered the Chora Bizna competition which finances small entrepreneurs with good business ideas.

He walked away with Sh1 million. Mr Kalama had jumped the hurdle he faced to set up Global Bioenergy Solutions (GBS), a start-up to recycle the polythene waste.

His dream was to make money out of the waste by recycling the polythene into fencing poles.

“I was very delighted to have won in the Chora Bizna competition but the prize would never have been enough to finance the project, so I approached the competition sponsor to let me invest the money in a venture which I had always wanted to explore and was just as good, which they did”, said Mr Kalama at his office in Kariobangi South where the company is situated.

His initial idea was to generate electricity and manufacture fertiliser from organic waste, but armed only with the money he got from the award, the project was obviously beyond his means.

He therefore ventured into recycling polythene waste which needed less investment.

Having the plant in Kariobangi South Light Industries was a strategic decision, and Mr Kalama points out that its proximity to the Dandora dumpsite and the cost of the business premise there were made Kariobangi the ideal site.

Other factors he considered include having the three-phase electricity supply and a nearby industry that crushes the plastics.

His partner, Oscar Aghan is very passionate about the business and says that their long-term plan is cleaning the environment while creating employment for thousands of jobless youth, especially in the low-income earning segments of the city.

“We are trying to find a local solution for our problems, rather than wait for a western solution. We thought it better to put together our expertise and resources to make this a big project that would earn us some money, create lots of home-grown employment opportunities and clean up our environment,” said Dr Aghan, a Fellow of the Chartered Management Institute (UK).

Their project will go a long way in supplementing the government efforts to reduce the amount of polythene waste due to environmental concerns.

Figures from the Nairobi City Council environmental department indicate that Nairobi produces more than 2,400 tonnes of garbage daily, with at least 15 per cent it being plastic.

This offers an enormous opportunity for the supply of used polythene.

The plastics are bought from a group of young men from the locality, who get them mainly from the Dandora dumpsite, for between Sh10 and Sh20 per kilogramme.

The plastics are first sorted out according to their colour and viscosity then taken to a different industry that grinds them to make small chips at a cost of Sh5 a kilogramme.

Once the plastic chips are ready, they are fed into the extruder machine which melts them and forces the molten plastic through a mold that has the shape of the eventually desired pole.

The most popular shapes are round poles although they also produce square and rectangular poles.

“It costs more than Sh5 million to acquire an extruder machine from the UK, we did not have that much so we opted for a used one that cost us Sh550, 000.

“This is an older model and most of its operation is manual, we are looking forward to buying a newer model that is faster and requires less of our input”, added Mr Kalama.

In their first week of operation, they already have an order of 500 poles, each going for Sh500.

This order would take at least a week to be processed, which is a long time according to Dr Aghan because a modern machine would easily have produced double the amount in a day.

Their electricity-powered extruder machine boils the plastic chips at about 350 degrees.

Electricity also runs the motor which pushes the molten plastic into the molds.

Biggest problem

Raising capital is one of the major challenges that GBS has had to contend with.

Operating costs such as electricity bills are also likely be high and could impact on the business.

Although GBS is yet to receive its first electricity bill, Mr Kalama fears that it might be a significant amount of money.

“The cost of raising capital is the biggest problem that SMEs encounter, no investor or bank want to talk to startups irrespective of the business idea that the entrepreneur has, only Private Equity funds become interested when the business is already making profits and is seeking to expand,” notes Dr Aghan.

Mr Kalama is hopeful that they will overcome the financing hurdle in the near future when he travels to the Netherlands to meet private equity investors who have shown interest in loaning their business.

His project came up tops in a recent business plan competition which was organised by a foreign agency to pool investment ideas for potential funding by venture capitals and private equity funds from Europe.

Dr Aghan has also been a winner in different business plan competitions. The two met at a of the business plan competition forum.

And even though they had different business plans, both were based on ‘going green’ and using available resources sustainably.

“I was sure something good would come out of our meeting after reading through his plan and understanding his professional background,” he says.

They plan to buy additional extruder machines that would make production easier, faster and more efficient.

If Mr Kalama secures the $25,000 loan he has requested from the foreign investors, he will buy three additional machines to enable him satisfy market demand that he is almost certain will top 350,000 poles a year.

In the rare chance that the funding does not come through, Dr Aghan suggests that the government should come up with a collateral against which small businesses can access loans, especially for projects like theirs which has environmental interests as its core.

They are hopeful that they will get significant backing from organisations and companies which support environmentally-friendly ventures.

They are looking forward to employing at least 20 people directly in the production process by the end of the third year, while many more would be involved indirectly in the sourcing of raw materials and in distribution of the finished products.

They also hope that in the future they will be able to expand their product line to include roofing tiles, floor tiles, paving tiles for walk ways and even make modern plastic houses.