Solid Waste Management and Recycling

80 MOSES M. IKIARA, ANNE M. KARANJA AND THEO C. DAVIES

Larger firms tend to charge higher rates and to have higher turnovers Medium and
large firms have monthly turnovers ranging from Kshs 700,000 to Kshs 2.5 million
(US$ 9,350-35,000) while their charge for a monthly service is about Kshs 500 (US$
6.70). Larger firms concentrate on clients like institutions and industries but also high
and some middle-income residential areas, which pay higher rates. The fact that resi-
dents in an area are not obliged to contract the private firm offering solid waste
collection to other residents in the locality has had serious implications on the cost of
the service. Because of it, private firms tend to have few widely scattered clients in
different residential areas. The firms charge the few scattered clients as much as Kshs
800 per month to ensure profitability. This high price discourages potential clients and
leaves pockets of residences not provided with services. These expensive providers
are able to secure the upstream market by offering consistently high quality services.
During the fieldwork, households in these up-market residential areas indicated that
the private solid waste collection services were affordable. Because of effective
demand, therefore, large firms are able to charge high rates and can sustain their
services.

Small and some medium-sized firms use competitive pricing so that the charges are
determined by the size of bulk load for large generators, the level of competition in the
area, and in some cases by the distance of the area from the premises of the service
provider (Esho, 1997). Because of greater competition, small firms offer a service that
is 60 percent cheaper on average than the service offered by the larger firms. In the
lower income areas into which small firms are increasingly venturing, intense compe-
tition has driven monthly charges to as low as Kshs 100 (US$ 1.3). ‘Brief case’ compa-
nies in fact charge as low as Kshs 50 for a monthly service, despite widespread
willingness among residents to pay substantially higher prices. In a recent survey, for
instance, 47 percent of the residents paying less than Kshs 100 per month were willing
to pay more than Kshs 200 while 50 percent of those paying Kshs 300-400 were
willing to pay as much as Kshs 800 (US$ 10.6) (Esho, 1997). In the absence of official
rate setting the tremendous open competition prevents private firms (particularly the
smaller ones) from fully exploiting this opportunity, reducing their economic
viability.

Table 4.4. Relative sizes of private solid waste

collection firms in a survey carried out in Nairobi

Firm

Average charge

(Ksh/month) Size of clientele

Turnover/month

(Ksh/month)

Bins (Nairobi), large

DRDS Ltd., medium

Small firm

500

500

200

5,000

1,400

500

2,500,000

700,000

100,000

Source: Esho (1997).