Published by:

Ministry of Environment

Waste Management Regulatory Authority

National Solid Waste Management Programme

With the support of:

Deutsche Gesellschaft für Internaionale Zusammenarbeit (GIZ) GmbH

Photo Credits:Copyright © National Solid Waste Management ProgrammeQube Productionhttp://www.koreefilms.com/

Design & Layout:Chubby Studiosherif@chubbystudio.com

Printed by:Liquid Advertisinginfo@liquid-adv.com

Contact:National Solid Waste Management Programme Egypt (NSWMP) 17 Port Said St., Maadi Sarayat, Maadi, Cairo, EgyptT +202 238 00 339www.nswmp.netwww.facebook.com/egyptnswmpwww.twitter.com/Egypt_NSWMP

As at:December 2017

Disclaimer:All information included in this brochure are based on interviews held with the companies.The NSWMP is not held accountable for the accurateness of the data mentioned by the companies.

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INTRODUCTION

In Egypt, around 60% of municipal solid waste is col-lected (rural area: 0 to 30%, municipal area: 40 to 90%). Yet, more than 80% of the collected waste is left on open dumpsites, with only 5% properly disposed and 2.5% recycled. In 2012, Egypt generated nearly 90 million tons of solid waste with an annual increase of 3.4%. Thus, it is of outmost importance and a great opportunity for the private sector to take an active role in the country’s waste management and to modernize and increase its efficiency, whilst mobilizing private cap-ital to profitable and scalable projects. When taking a closer look at Egypt’s private sector at large, its vast majority (<75%), consists of Small and Medium sized Enterprises (SMEs). The fragmentation and limiting out-reach challenges knowledge transfer, cooperation, and synergies across SMEs. These challenges are even more prominent for informal businesses, which form the majority of Egypt’s waste sector. Therefore, there is a profound need to formalize, streamline and opti-mize their business practices and facilitate their growth through sustainable finance.

New business formation and especially firm growth are the foundation for a prosperous economy. However, the opportunities in the waste sector are often hidden to the general public. There is a misconception of discarded material to be a burden to the economy and the society at large. Waste in fact has great value to the economy if managed, processed, and reused effectively. Many new and established businesses are unaware of its potential and how to unlock its true value. The National Solid Waste Management Programme (NSWMP) aims with the “Success Stories of Egypt’s Waste Sector” brochure to spur the attention and in-vestment towards the sector’s development and growth potential. It is to increase the interest of private compa-nies to explore the field of waste management, expand their practices and build synergies for the formal indus-try to scale. With disclosing current challenges of the industry and suggested solutions from industry experts, the “Success Stories of Egypt’s Waste Sector” brochure aspires to aid the needed policy dialogue and coopera-tion opportunities between the public and private sector on waste management, especially on higher value add-ed recycling businesses in Egypt.

BACKGROUNDINFORMATIONON NSWMPThe Egyptian-German-EU-Development (EGED) Partnership’s National Solid Waste Management Pro-gramme (NSWMP) supports the sustainable develop-ment of the waste sector in Egypt. The NSWMP com-bines financial cooperation for investment in municipal solid waste management infrastructure and services, with its technical cooperation addressing the policy, le-gal and institutional framework and providing capacity building at the national, governorate and local level. The financial cooperation is led by KfW and EU, whereas the technical cooperation is implemented by GIZ. Com-bined they support the Egyptian Government in imple-menting the NSWMP.

Solid Waste Management (SWM) practices in Egypt are very diverse and complex. The absence of a defined policy and lack of legislation, regulations and guide-lines, lead to discrepancies in the SWM systems across the country. Quality and coverage of waste collection services vary considerably across Egypt’s governorates as well as the level of informal recycling business activ-ity. Waste treatment facilities are in place, but many are ineffective or not operational and therefore the access to sanitary landfill is low. Uncontrolled dumping of mu-nicipal waste in vacant plots and waterways is common practice with little awareness regarding the impact of current practices on public health and the environment. An important outcome of the NSWMP has been the es-tablishment of the Egyptian Waste Management Reg-ulatory Authority (WMRA) in late 2015, taking on the leading role within Government of developing policy, legislation and strategy, as well as supporting and guid-ing the decentralised implementation of SWM systems across the country.

In 2017, NSWMP launched its investment component, which aims at supporting the implementation of envi-ronmentally sound and climate-friendly municipal solid waste management systems and the related infrastruc-ture according to national laws and regulations in the Governorates of Kafr El Sheikh, Gharbia, Assiut and Qena. Further in 2017, the programme initiated its pri-vate sector development support focusing on intensi-fying the communication and cooperation between pri-vate and public stakeholders in Egypt’s waste sector. Its purpose is to increase private businesses’ engage-ment through strengthening technical capacities and collaboration on waste management technologies and practices as well as facilitating access to finance to sus-tainable and scalable waste management businesses.

ACRONYMS AND ABBREVIATIONS

CSD: Carbonated Soda Drinks

CO2: Carbon Dioxide

ELT: End-of-Life Tires

EU: European Union

GAIN: Global Agriculture Information Network

GIZ: Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH

(German Development Cooperation)

HDPE: High Density Polyethylene

ISCC: International Sustainability Carbon Certificate

KfW: German Development Bank

MENA: Middle East and North Africa

NSWMP: National Solid Waste Management Programme

PET: Polyethylene Terephthalate

PP: Polypropene

RDF: Refused Derived Fuel

SECO: Swiss State Secretariat for Economic Affairs

SDG’s: Sustainable Development Goals

SFD: Social Fund for Development

SMEs: Small and Medium Enterprises

UCO: Used cooking oil

UK: United Kingdom

USA: United States of America

WMRA: Waste Management Regulatory Authority

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BARIQ

Success Stories of Egypt’s Waste Companies

Mohamed Gamal Abu El EzzDirector of businessdevelopment & operations

www.bariq-eg.com info@bariq-eg.com (+202) 38642424/9

PET BOTTLE RECYCLING According to Plastics Insight, an online portal for the plastic in-dustry, the global polyethylene terephthalate (PET) resin market amounted to 20.6 million tons in 2015 with an expected growth rate of 8% annually. Today, Egypt generates approx. 180,000-210,000 metrictons of PET per year (6-8 trillion bottles), of which only a lim-ited number are collected. The remaining bottles are either openly dumped, landfilled or burned. The rise in PET production forms an environmental threat if not recycled and reused. The recycling of PET is an interesting and profitable sector in the recycling industry and requires a high collection rate. The average collection rate in emerging markets, such as India and China is around 70-85% for PET packaging. In Europe some countries, for instance Sweden, reach a 100% collection and recycling rate.

“[...] the PET resin market amounted to 20.6 million tons in 2015 with an expected growth rate of 8% annually”

Unlocking these opportunities requires investment into technology and trainings. Raya Holding committed to unleashing these un-tapped opportunities in Egypt’s recycling industry through estab-lishing the first bottle-to-bottle recycling plant in the Middle East and North Africa, called BariQ. Its business model is based on the foun-dation of the sustainability triangle, as a profitable business with social and environmentally sound practices. BariQ is located in the outskirts of Cairo, where post-consumer PET bottles are cleaned, shredded, and recycled to small pellets to be used for new food-grade plastic compliant PET products.

“[...] first bottle-to-bottle recycling plant in the Middle East and North Africa..”

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BARIQ’SPROPOSED SOLUTIONS Low supply: To improve the collection rate as well as the supply quality, large investments into highly as-set-intensive services are needed that require long-term financial instruments. To increase the efficiency of the PET bottle collection, BariQ collaborates with key public institutions and other organizations to formalize the waste collection businesses in order to enable long-term contract agreements, improve and standardize the collection system, and simultaneously secure a stable income for the waste collection businesses.

Low quality: Investing in the sorting facilities will lead to better quality of products supplied. BariQ’s sugges-tion is to form a non-profit entity that is responsible for managing the whole waste management chain starting with the collection, sorting, and supplying of recycla-bles. The responsibilities would include monitoring and controlling the manual/automated sorting facilities and establishing logistic channels across Egypt for the deliv-ery of these materials to recyclers. Such organizations have already been established across Europe, such as Ecoembes in Spain and Nedvang in the Netherlands, which fall under the umbrella of a bigger non-profit or-ganization called Expra. FUTURE OUTLOOK

BariQ believes that the future outlook for the recycling industry in Egypt is promising. Accordingly, BariQ is investigating an expansion to double their production capacities in the near future. If an overarching non-prof-it organisation with a similar model to the Netherlands and Spain would be applied to Egypt, the true economic potential of the recycling industry is realized. In general, there are many untapped opportunities in Egypt’s waste sector, in particular in the still immature plastic recycling industry. The Egyptian government already started with initiatives to encourage SMEs to enter the waste sector by providing access to finance offered through several entities in Egypt, such as the Social Fund for Develop-ment (SFD) and Banque Misr. Such initiatives promote companies to secure the necessary funds for sustaining and growing their businesses.

COMPANYBACKGROUNDBariQ was established in 2010 and started its full op-eration in 2012. Today, the plant has a maximum re-processing capacity of 2 billion bottles (25,000 met-rictons) of postconsumer plastic PET bottles annually. The efficient and state-of-the art green technology from major European suppliers offers BariQ the opportunity to supply major international bottle and food container producers with high quality recycled PET pellets from Egypt. Based on the success over the past five years, BariQ expanded its operations and product portfolio by adding new recycling lines for various non-food prod-ucts, such as outdoor furniture, crates, pallets, pipes and insulation sheets out of high density polythene (HDPE) and polypropene (PP) containers.

WHYRECYCLING PET?The main market driver for BariQ is the geographic location of Egypt, as it facilitates the access to differ-ent regional as well as global markets under various free trade agreements. BariQ exports 100% of its food grade PET pellets to Europe (Belgium, France, Greece, Italy, Romania, Spain, Switzerland), Turkey and the USA. These PET pellets are then further manufactured into various packaging applications, such as plastic bottles for water, carbonated soda drinks (CSD), edible oil, cosmetics and detergents, as well as sheet rolls for food containers. Additionally, PET pellets are also used for the production of staple fibre grade resin for textiles and carpets. Besides the benefits of locally producing export goods, BariQ is driven to increase sustainable business practices at the core of Egypt’s businesses and play a pivotal role in promoting the Sustainable De-velopment Goals (SDG’s).

● Global PET resin market is increasing by 8% per year ● Producing new plastic products from recycled ma-terials uses two-thirds less energy compared to raw (virgin) materials ● The production of plastics from recycled material saves over 1.5 tons of CO2 for every 1 ton of plas-tics produced ● Using recycled PET presents a solution to fluctuat-ing resin supply and costs

BARIQ’S MAINCHALLENGES

Low quality: BariQ depends mainly on informal waste collectors. Due to current collection practices, many PET bottles are contaminated and only 50-55% can be in fact used in the recycling process. At the end, less than 20% of the available postconsumer PET bottles are currently being recycled.

Low crude oil prices: PET resin is based on petro-chemical substances and therefore global crude oil supply/demand fluctuations and price dynamics directly shape the virgin PET resin market. The recycled PET resin prices are directly correlated to the virgin prices, and indirectly related to the petrochemical substances. With lowering crude oil prices, virgin PET resin selling prices suffer a drastic drop which outweighs the de-creased costs of manufacturing. As a result, the price for virgin PET becomes very competitive compared to recycled material, therefore lowering the demand for the latter.

Limited investment: There is a lack of investment into the waste management sector. Most businesses are eq-

uity financed, and this is amongst others due to (1) the missing understanding of the mechanisms in the sector, (2) a large proportion of the sector operating informally, and consequently (3) a severe lack of data that makes accurate predictions and cost-calculations almost im-possible. These obstacles have thus far hindered finan-cial institutions to offer economic financing instruments for the sector, despite the potential and profitability of Egypt’s waste management and recycling industry.

Low and fluctuating supply: BariQ receives only a low amount of PET bottles at their facility. Also, the supply of postconsumer PET bottles is fluctuating throughout

the year, which makes a yearlong efficient use of the production capacity impossible.

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