South Africa's circular economy could be a lifeline for its mass unemployed
South Africa’s economy is having a tough time. The country is struggling to escape the effects of the global financial crisis and mining companies – one of South Africa’s key economic sectors – are laying off workers in response to falling commodity prices.
While the country has invested R1tn (£507m) in new infrastructure to deliver better public services, latest figures show a 25% unemployment rate, with significant job losses in the manufacturing, finance and utilities industries.
Those finding it hardest to secure jobs are young people (more than half of 15 to 24-year-olds were unemployed in 2014), black Africans, women, the less educated and those with no prior work experience.
“Unemployment remains our single greatest economic and social challenge,” says Hermann Erdmann, CEO of REDISA (the Recycling and Economic Development Initiative of South Africa). He believes the creation of green enterprise linked to the circular economy offers a real opportunity to help reverse this.
“South Africans are an entrepreneurial nation and it is only through developing this spirit and growing sustainable SMMEs (small, medium and micro-sized enterprises) that the economy and job creation targets will be met,” says Erdmann. “It is essential for incubation-style initiatives to lead the way.”
Since its inception in 2012, REDISA’s government-backed national waste tyre project has diverted more than 125,000 tonnes of used tyres from landfill into new supply chains by subsidising the collection and recycling process. The initiative is supporting 190 SMMEs and says it has created 2,505 new jobs across South Africa – mainly for individuals and small entrepreneurs.
“Before REDISA existed, South Africa had a [waste tyre] recycling rate of 4%. We have been able to increase that to 19% by the end of 2014 and are well on our way to increase that [further] by the end of 2015,” says Erdmann.
The model works on the basis of producer responsibility. A weight-based levy is charged on tyres manufactured in or imported into the country – this funds the necessary infrastructure to recover waste tyres and further research and development for innovation.
REDISA is currently working with two universities to explore new technologies for waste tyres and is assessing the potential to extend tyre life through the use of an environmental rating system. But the real success story has been the scheme’s ability to economically empower poorer South Africans. According to company statistics, 98% of the 2,505 jobs created by REDISA have benefited previously disadvantaged individuals. In addition, 41% of workers are 18-35 year olds and 37% are women.
“[We] have been able to put 80% of revenue collected from the waste management fee back into local communities by creating a market for the handling of waste,” says Erdmann.
A new bottle-to-bottle plastic recycling plant, officially unveiled in Johannesburg earlier this year, is also set to deliver social benefits. The facility, which will eventually divert an additional 22,000 tonnes of post-consumer PET bottles from landfill, is helping Coca-Cola to close the loop on its drinks packaging.
According to PETCO, the industry body for PET recycling in South Africa, the new facility will benefit the local value chain. Some 1.5bn post-consumer PET bottles were recovered in 2014 – equating to a national 49% recycling rate – supporting 44,000 informal income opportunities.
Casper Durandt, Coca-Cola South Africa’s senior technical operations manager and chairman of PETCO, says when the plant is running at full capacity over the next two years it will generate thousands of new income opportunities at the collector level.
“We have been actively promoting jobs for women in this sector together with Coca-Cola’s 5by20 initiative,” he says. “We have to collect an additional 14,000 tonnes of PET bottles per year. As this is done by hand, we need approximately 15,000 people to collect an average of 930kg per year. These jobs by default will go to jobless male and female workers that migrate to become waste harvesters.”
He adds that while the company’s main focus has been to develop formal collection systems through co-operatives, this has also resulted in the emergence of a large, successful informal collector base. “Collection and sorting of recyclables in South Africa offers a fairly unique opportunity for a labour-intense solution which does not require a high level of skills.”
It’s early days for South Africa’s emerging circular economy and, according to Alex Lemille, founder of Cape Town-based sustainability consultancy Wizeimpact, the process of starting a new venture is still seen as challenging among South Africans and is very much dependent on cultural background and skills level.
“From an African viewpoint, the shift towards a sharing economy is a western world dilemma. Here, it is part of people’s way of life. Seeing waste as a resource that can be sold or reused, shared transportation or goods ‘as a service’ for subsistence has always been around here.”
He suggests one way forward is to start giving circular economy startups a strong sense of social purpose – something he feels is currently lacking. “An economy based on a more collaborative, caring and human approach could well benefit South Africa,” he says. “We want to create value-centred circular ventures that truly benefit people. Where, for instance, social enterprises are the norm not the exception.”
Lemille is encouraged by what he calls “a new kind of gold” – the “born free” generation who have grown up in a post-apartheid South Africa.
“Talking to these young people is a real breath of fresh air,” he says. “They are dynamic, hopeful in their common future, technology-savvy and problem-solvers. They believe in changing their country for good. They could really make the difference and cement the rise of the entrepreneurial spirit here.”