Nigerian waste recycling business turns trash into cash
Olufunto Boroffice is the CEO of Chanja Datti, a waste recycling company based in Abuja, Nigeria. How we made it in Africa’s Nelly Murungi asked her about how she started the business, the challenges of the waste recycling industry, and the toughest situation she has found herself in as an entrepreneur.
1. How did you come up with the idea to start Chanja Datti?
I moved back to Nigeria in 2014. I had been to school and obtained my undergrad and my master’s in the US and had worked there for close to 20 years. I worked at General Electric for 12 years and reached the role of VP before I decided to return.
When I came back, I searched for an opportunity to not only give back but to work in sectors where there was a lot of need and I could make an impact. In Nigeria, you have to do a compulsory year of service for the country if you graduate before the age of 30. I ended up at the Ministry of Power working for the Honourable Minister in charge of charting the course for power generation. I was in charge of investor relations and donor programmes and met many external investors who wanted to invest in waste-to-energy projects.
At the time, in Nigeria, nobody sorted any waste in homes or offices. The investors were looking for a very specific type of waste; it had to be sorted and not mixed with any food or wet waste. As a result, there was no investment in any waste-to-energy projects. Even though Nigeria generates about 60 million tonnes of waste every year, it was not getting sorted. I realised then that this was the opportunity I had been looking for.
2. Explain how the business works.
Our business model has three channels: 1) We buy waste from local waste pickers and provide collection services for corporate clients such as embassies, hotels, donor agencies and banks; 2) we recycle plastic waste into semi-processed raw materials for plastic manufacturers; 3) and we recycle LDPE (low-density polyethylene) and HDPE (high-density polyethylene) into plastic resins or pellets.
Buying waste is the largest part of our revenue at 84%. We collect or buy around 300-350 tonnes a month: 200 tonnes of PET (such as soft drink bottles) waste, 50 tonnes of other types of plastic and 50 tonnes of non-plastic material. Our clients include organisations that turn PET waste into synthetic fibre for the stuffing of mattresses, pillows, toys and cushions. Others manufacture strapping and plastic household goods.
We also sell paper waste to Nigerian paper mills and materials like used beverage cans to local smelters who make items such as pots, pans, forks and farming utensils.
3. How competitive is the industry?
It is a highly competitive industry. Chinese companies are coming into the country and a few of our local competitors include Wecyclers, RecyclePoints and Vicfold Recyclers. Some of them just do waste collection. We are holding our own by adding value and processing these materials. We were almost at the point of obtaining our own injection mould machines to start manufacturing plastic wares when Covid-19 started.
The Earth’s natural resources are being depleted every day so the concept of a circular economy is becoming more popular and inviting more competitors.
4. Explain your biggest challenges in the waste recycling industry.
I think the main challenge is changing people’s behaviour as they do not clean and sort their waste. We are very dependent on waste pickers for this.
The second hurdle is Nigeria’s infrastructure. We struggle with an intermittent supply of electricity. As we move up the manufacturing chain, it gets harder to do what we want to do.
The third is access to finance. A lot of people don’t recognise the importance of waste management and recycling as a multibillion-dollar sector globally. It is tough to convince them this is a viable industry.
5. What mistakes have you made along the way?
We were initially B2C facing, sourcing recyclable waste from individuals, collecting directly from their houses. Our profits didn’t even cover the cost of our fuel. We had to re-strategise. We began approaching organisations that generated a lot of waste to minimise our logistics costs.
We have partnered with one bank. Any individual can go to one of our recycling hubs and open a savings account with their recyclable waste. The value of the waste is immediately deposited into their account. By doing so, we are making it easier for everyone to recycle. We are also trying to democratise the process of recycling by removing from the conversation the excuses people use to not recycle. This is why we want to roll out these Cash for Trash recycling hubs across the nation.
6. Tell us about one of the toughest situations you’ve found yourself in as a business owner.
It was in 2016. I had found out about a wealthy industrialist in Nigeria who owns a big plastic recycling plant. I was able to FaceTime him and introduce myself and my company. He said he required 600 tonnes of PET material and gave me a good price and promised to send his trucks to collect it. I was super excited.
I tried to get them to sign an order document but his PA constantly fielded my calls and I was so inexperienced, I didn’t want to hurt anybody’s feelings. So I spent three months at different dumpsites in Abuja. I was fine with not making a profit. I was convinced if I did this well, it would open up other doors. When we had accumulated 600 tonnes, we called their office but didn’t get any response.
When we eventually got hold of this man, he simply told me his Chinese partner no longer needed the waste. I wanted to faint. To say I was crushed is an understatement. I hadn’t gotten any advance and had borrowed money from my mother to make it happen. I think his PA felt sorry for me as he advised me of another Chinese company that bought PET materials. Unfortunately, they bought the materials for a fraction of the actual cost but I was desperate as I needed to recoup at least some of the money I had spent.
I could have given up at that point but these failures can be seen as a stepping stone. I learnt a few things from this. Now, if we enter a deal, no matter who the client may be, we insist on a contract.
I was so enamoured by the fact that this man is a billionaire industrialist, I didn’t do any additional due diligence. After our incident, I discovered other people had similar experiences with him. I learnt to be more diligent when I do my KYC (know your client).
Because I spent so much time at the dumpsite at the time, I made a lot of valuable connections that still serve me well. I developed empathy for the pickers and sorters at the dumpsite because of the appalling conditions they have to work in daily.
7. If you had to start your business again, what would you do differently?
I would make sure I had a few vital things in place. When I started Chanja Datti, I had this very idealistic idea of what I wanted our factory to look like. I spent close to 12 million naira (about $31,000) getting the space ready. We ended up not moving there because we had issues with permits and things like that.
In hindsight, I would have acquired a space, created coverings for the machines and started work and allowed the business to fund itself. I spent too much time making everything look pretty. I should have rather bought more equipment and started work.