Nairobi garbage collection business; a preserve of well-connected clique

By Frankline Sunday

Sometime in 2006, Benson Hugi and his two brothers had a business idea that promised to be a thriving enterprise.

The opportunity lay in waste management and going by the number of residential estates coming up in Nairobi, it seemed prudent to the three to start a business in waste collection.

Soon, however, it became apparent to Hugi and his business partners that they had waded into unwanted territory.

Unfair competition, extortion and intimidation saw their young company Triple Brothers Refuse Collectors close shop with millions of shillings in investments having gone down the drain. “We collected garbage from residential estates in Nairobi, including South C, Nairobi West and Lavington areas,” explained Hugi.

“The harassment that we received from several quarters made the business environment difficult,” he explained. Studies estimate that the average Nairobi resident generates between 0.3kg to half a kilogramme of solid waste each day.

Unknown to many, however, this waste has cumulatively created a multi-million shilling industry over the years, which is firmly in the hands of cartels that seem to operate above the law.

Data from World Bank estimates that global cost of solid waste management stands at USD $205.4 billion (17.6 trillion) annually.

This figure is expected to double over the next 20 years particularly with developing countries spending more than five times what they are currently spending on solid waste management.

The bulk of this money is spent by local and central governments worldwide in clean up budgets and environmental management programmes.

However, much more is made from the recycling of plastics, metal and synthetic fibres, which are often sold back to producers of the raw materials to produce new wrappers, bottles or assorted industrial products.

In Kenya, waste management and recycling is said to be a lucrative industry that mints millions each day for those who have established a strong presence in the business over the decades.

In the past, garbage collection was firmly in the hands of the Nairobi City Council, which collected 90 per cent of the waste generated in the city.

Residents of the city paid waste collection levy, which was factored in water bills and a metal bin was provided to collect household waste and then emptied at least once a week.

However, several amendments into the city by-laws between mid-80s and early 90s saw this charge dropped and Nairobi City Council had to provide these services funded by dues from other sources.

Thousands of jobs

This soon proved unsustainable as the demand for municipal services grew and the council slowly abandoned the role of waste collection particularly in rapidly growing estates.

In order to salvage the situation, the government adopted a public-private partnership (PPP) model where business entrepreneurs would bid for tenders to collect and transport household waste and drop it at Dandora dumpsite.

At first, the PPP model seemed to work efficiently, with bidding open to anyone, who had the interest and capacity to venture into the business of waste management.

Entry costs were low, the then city road network was in relatively stable condition, which meant less maintenance expenses on trucks and earnings were guaranteed. The model also had the potential to create thousands of jobs for unemployed youth.

Buoyed by incentives from the local government, the business was very profitable and early entrants reaped massive returns and expanded their fleets often within a short time.

With time, however, businessmen with close ties to the then very powerful city council administrators, politicians and former council officials sought to have a slice of the pie and soon bid for waste collection tenders.

This marked the turning point in the growing industry of solid waste management, which saw the now multi-million industry come under the control of a handful of business magnates and city politicians.

Frustrating experience

The outlawed sect Mungiki, which was at the time fast spreading it’s tentacles un-checked into virtually all aspects of the city’s informal economy soon joined the party.

With orgy of extortion, intimidation and violence, the group took over the Dandora dumpsite, which remains firmly under its control to this day. Today, the business of waste collection in the city still remains locked out to many, who have the capacity and potential to develop effective systems to improve the dilapidated city waste management system.

According to a local businessman in the city, who wishes to remain anonymous, dealing with the Nairobi County Council on waste management matters is often a complicated and frustrating experience.

“Getting into the business of waste management in the city is virtually impossible because you face numerous hurdles right from City Hall,” he explains. “I went to get a permit for waste management but was taken through a lengthy and bureaucratic process and at each stage, I was asked for a bribe. Eventually, I gave up.”

The city council is said to provide a long checklist to bidders, which includes a fleet of trucks specifically designed to collect and transport garbage. At the same time, one is expected to have a staff of professionals with branded uniforms and trained in waste collection and disposal.

You have to contend with random inspections from council officials, who are accused of extortion and meting out hefty fines that lead to losses and eventually bankruptcy.

In contrast, companies that are affiliated to the cartels do not go through such stringent rules and are said to operate in blatant disregard of Nairobi City County by-laws.

Most of them have trucks that are dilapidated and un-roadworthy spewing garbage as they go with some dumping in un-designated sites in secluded parts of the city.

“Since these companies are large and have the financial muscle, they raise prices for garbage collection and transportation and price out anybody who tries to venture into their space,” notes Mr Hugi.

“In addition, residential estates, which have committees will often have members compromised to ensure that all the garbage in that estate is collected by one company.”

This is relatively easy to do considering the fact that many of these residents do not have hard and fast rules about tendering; hence one waste collection company can have an informal tender for waste disposal for several decades.

At the city council, these businessmen are also said to collude with council authorities to stymie the efforts of new operators, who would want to register waste management companies.

Nairobi County Council, however, denies the existence of cartels that control the waste management business in the city.

According to Mr Isaac Muraya, Nairobi City County’s deputy director of environment, the process of tendering is open and fair to all and no such cartels exist.

“There has to be minimum requirements before you get a permit because we need to make sure that if you are bidding for a tender to manage waste, you actually have the capacity to perform that service effectively,” he explained.

Mr Muraya added that the PPPs are working effectively and will be scaled-up as time goes by and more demand for waste management services increases.

“We are even looking at a zoning system where the county is divided into 18 zones and we shall have franchises handling each zone,” he says.

This, however, is not going down well with operators of small waste disposal companies, who state that the new system will give cartels an unfair advantage and a free hand to monopolise the trade.

Development partners

“We appreciate the concern of smaller players in the industry and some have complained to us and we have suggested that they pool resources and form consortia to compete with the big companies.”

The social, economic and environmental cost of poor waste management in the country has been telling particularly in Nairobi, which has been expanding with unregulated residential areas.

Clean up efforts of environmental waste in Nairobi alone have cost the tax payer billions of shillings as the local government has been unable to manage the waste generated forcing it to approach development partners. The 30-acre Dandora dumpsite remains the only disposal site in the city. It was filled to capacity more than ten years ago and efforts to decommission it have hit a wall.