The city of Nairobi generates thousands of tonnes of waste every day, much of which is dumped in streets and rivers. The majority of low-income earners cannot afford to pay for waste management services. TakaTaka Solutions, a waste management company, is hoping to clean up Nairobi. German-born founder Daniel Paffenholz told How we made it in Africa’s Dinfin Mulupi about the opportunities in Kenya’s waste management sector and his experience doing business in Africa.[hidepost=9][/hidepost]
What was the inspiration behind TakaTaka Solutions?
I was staying in Coastal Kenya where most households burn their waste, in particular their plastic waste. This motivated me to start research on the waste management sector in Kenya with an initial idea of setting up a plastic waste management factory. I realised later that this would not be feasible because most people do not separate waste. In addition, most of the waste is organic and the majority of the population does not have any collection service. Nearly 2.5 million people in Nairobi do not have proper waste collection services because they cannot afford to.
We began the business about 18 months ago with our core duties being collecting and processing of solid waste in parts of Nairobi. We charge a dollar per household per month. We currently collect waste from 1,000 households and a number of schools, businesses and a vegetable market in Nairobi. This is a small percentage of the market because Nairobi produces more than 2,000 metric tonnes a day.
What do you do with the waste after collection?
We push our clients to separate waste into organic, recyclable and residual waste. We then process the organic waste into organic fertiliser (also called compost) and bio-charcoal. The recyclables are sorted and sold to recycling industries. We also just started the first out of three demonstration farms where we are conducting trials to show the benefits of compost in East African conditions. The benefits of compost are well known in Europe and the US, however, this awareness does not yet exist in East Africa. Tropical soils, as the ones in Kenya, are low in organic matter. Compost supplies organic matter to the soil and, hence, is very important in improving the soil structure. This means that the water holding capacity of the soil is dramatically increased and plants are enabled to better utilise the nutrients in the soil.
You will need thousands of customers to sustain the business at a dollar a month fee. Is this a sustainable business?
At our current price we need to have thousands of customers to be fully sustainable. This is a volumes game. Across Africa, large waste management companies win tenders but are rarely in a position to offer services that a majority of the population can afford, and because of this illegal systems thrive. We are hoping to be in a position where we can offer services at any income level and that will require huge numbers. This is not a pipe dream. Our waste collection service is just a few months away from breaking even.
Describe the challenges you face at TakaTaka Solutions.
Getting people to separate waste is a big challenge. We are now introducing monthly competitions for the best separating plots and offering training on the benefits of separating. The other main challenge is getting people to sign up for the service because they can just dump their waste. We have learnt that it is not a question of affordability but rather a question of buying in to the idea of having a proper waste collection service. Developing the organic fertiliser market is also a challenge because it is a nascent market. We are, however, making good headway there.
What advice do you have for other entrepreneurs?
You need a good combination of stubbornness and flexibility. If things are not going too well and people give you justified criticism, you should not be demotivated. Test every idea that you have, see what works and adjust.
Describe the experience you have had doing business in Africa.
There are issues like licensing that take longer, yet the beauty of Africa is that things are not yet fully set-up. If you go to Switzerland, there is not much space in the waste management sector because everything is already functional. It is difficult to enter with new ideas. In Africa, a lot of the basic services like waste management, water and energy supply are not existing, at least for a wider part of the population. The need and market gap is present and that makes things more difficult but also more interesting.
Where do you see the business in five years?
In five years we are looking to cover more than 50% of waste collection in Nairobi. We will be producing more than 10,000 tonnes of compost and collecting more than 5,000 tonnes of recyclables.