GOVERNMENT,MARKET AND COMMUNITY IN URBAN SOLID WASTE 267
Reuse, recovery and recycling of inorganic waste: outcomes
Similar materials form the basis of the recovery and recycling chains in both
Hyderabad and Nairobi, glass, paper, plastic and metal being important categories in
both cities. However, the complexity of the commodity chains differs substantially
between the two cities. In Nairobi, the level of specialisation is more limited than in
Hyderabad. This reflects the lower levels of demand and profitability for recycled
materials there, which do not allow wholesalers to specialise in one material but
require them to spread risks by dealing in several types of materials, whereas in
Hyderabad, wholesalers commonly specialise.
Differences in profitability are also reflected in the structure of demand for waste
materials among recycling units. In Nairobi, only one large-scale company (several
hundred workers) buys any given material, thus gaining a monopoly over pricing and
amounts traded. This has led to large fluctuations in price, and a current dip in demand
for waste materials from Kenya itself. The only exception is scrap metal, in which
small enterprises also have a role in the recycling. However, Asian traders are
currently driving up prices of scrap metal, which may lead to a lack of profitability
among small metal recyclers In Hyderabad, in contrast, a large number of mainly
small companies (7 out of 10 have less than 50 workers) buy waste materials for
producing new goods. They show an average profit level of 10 percent.
Although the recycling enterprises operate on the formal side of the law, the whole-
salers supplying them usually operate on a borderline. In both Nairobi and Hyderabad,
they require licences to operate, but can also manage through informal payments to
inspectors and police monitoring activities. The itinerant buyers and waste pickers
supplying the wholesalers and dealers operate completely informally, and are vulner-
able to harassment and ‘unlawful payments’ by police and others because of this. This
reduces the profitability and productivity of their activities.
In both cities, recycling enterprises using recovered materials do so on the basis of
technical and economic considerations. In both cities, waste materials are combined
with virgin materials to produce higher quality end products. Reductions in the price
of virgin imported plastic have led entrepreneurs in Nairobi to change the composition
of their inputs. Similarly, in Hyderabad, imports of higher quality paper from abroad
can lead to a smaller demand for domestic waste paper. In the Nairobi case, the vulner-
ability of the trading and recycling chain is greater than in Hyderabad, because of the
monopoly of one recycling enterprise there per material. The size and differentiation
in the market for waste materials in India provides more of a buffer for such fluctua-
tions. This implies also that these factors remain important for the level of productivity
within these enterprises. As there is no external subsidy (which could be the case if the
contributions to environmental aspects were recognised), it is the trade-off between
cost and quality which makes entrepreneurs decide whether or not to keep using
secondary materials.