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Zab report

  1. 1. The Informal Solid Waste Sector In Egypt: Prospects for Formalization Table of Contents1. Background....................................................................................3 1.1. Introduction ................................................................................................................ 3 1.2. Purpose of the Study .................................................................................................. 42. Methodology...................................................................................5 2.1. Selection of Field Site ................................................................................................ 5 2.2. Questionnaires ............................................................................................................ 5 2.3. Sampling .................................................................................................................... 6 2.4. Data Collection........................................................................................................... 7 2.5. Profile of Respondents ............................................................................................... 73. Solid Waste Collection and Recovery..........................................8 3.1. Collection And Transportation ................................................................................. 11 3.2. Recovery of Primary Materials ................................................................................ 16 3.3. Contractual Agreements for Collection and Transportation .................................... 234. Trading Enterprises....................................................................26 4.1. Trading networks...................................................................................................... 27 4.2. Complementary Activities ....................................................................................... 285. Small Scale Recycling Industries...............................................29 5.1. Type and Growth of Recycling Industries ............................................................... 29 5.2. Trading Networks: Suppliers and Customers........................................................... 316. Labor............................................................................................35 6.1. Labor in Collection and Transportation ................................................................... 37 6.2. Labor in Recovery of Primary Materials.................................................................. 38 6.3. Labor in Trading Activities ...................................................................................... 39 6.4. Labor in Recycling Industries .................................................................................. 41 1
  2. 2. 7. Workplace....................................................................................42 7.1. Workplace for Sorting and Recovery ....................................................................... 43 7.2. Workplace for Trading Activities ............................................................................ 43 7.3. Workplace for Recycling Industries......................................................................... 448. Transportation.............................................................................46 8.1. Transportation for Collection and Recovery ............................................................ 47 8.3 Transportation for Recycling Industries ................................................................... 489. Capital..........................................................................................50 9.1. Capital for Collection and Recovery ........................................................................ 51 9.2 Capital for Trading Activities .................................................................................. 51 9.3. Capital for Recycling Enterprises ............................................................................ 5310. Conclusions and Recommendations..........................................55 10.1. Conclusions .......................................................................................................... 55 10.2. Total Magnitude of Solid Waste Activity in the Informal Sector ........................ 55 10.3. Recommendations ................................................................................................ 56 10.4. The Future of Solid Waste Systems in Egypt ...................................................... 57 2
  3. 3. The Informal Solid Waste Sector In Egypt: Prospects for Formalization1. Background1.1. Introduction The informal sector around the world, as in Egypt, is an undisputedly large and growing phenomenon in economic, social and political arenas. The informal sector has been, and continues to be, a dynamic sector of the economy, providing employment and income generating opportunities for hundreds of thousands of individuals. The role of the informal sector in development continues to be an issue that is extensively and intensively debated around the world. Academics, national planners, international organizations, development practitioners and policy makers have all engaged in this debate. The role of the informal sector and small-scale enterprises in the industrialization of developing countries is a critical point in the debate. The design and implementation of different intervention programs in the informal sector have varied across time and space. While many argue for the need to formalize the informal sector, others insist that the informal sector is a source of economic vitality and as such its dynamism and potential for growth lie in its adaptability to local conditions. The informal sector in Egypt plays an overwhelmingly significant and vital role in solid waste management and has become an institution in its own right. This sector has been growing over the last three decades. The scope and range of its activities has increased in both depth and breadth as they meet new challenges to meet the increasing demands of a growing city for garbage collection services and linking with a large national market for recovered materials. This informal sector has now created a giant industry, which spreads across the entire nation and provides a partial solution to man-made waste1. As the activities of this sector have been growing in size and diversity, it becomes imperative for us to understand its intricacies, its significance and its vitality. Hordes of people in Egypt make a living of the waste, which the affluent discards. These hordes consist of cleaning staff of municipalities, informal collectors, scavengers from municipal containers on streets, dumpsite scavengers, the roamers, the small middlemen, the large traders, the processors (plastic crushers, aluminum smelters, cloth grinders, paper compactors, etc.) and the re-manufacturers. This creates working and income generating activities for hundreds and thousands of individuals throughout the country, predominantly in the informal sector. The informal sector in solid waste management has been steadily growing in size and scope over the last three decades. During this time, this sector has grown in terms of the volume of waste that it handles and has expanded and diversified the range of its 1 Iskandar, Laila. (Community and Institutional Development, C.I.D.)Waste Management, The Case of the Cairo Municipality: The Informal Sector Recycling Program. Workshop Proceedings on Cost Recovery and Public/Private Partnerships, General Assembly of MEDCITIES Network; Rome, December 1998. 3
  4. 4. activities, to becoming the most innovative and enterprising recyclers in the nation. The recovery and recycling processes that are integral processes in this informal sector allow Egypt to potentially recover about 80% of municipal solid waste, which is one of the highest rates of recovery in the world. The informal settlements where the garbage is collected and sorted have become hubs of activity, generating employment and income for thousands of individuals. Over the years, the garbage collectors in these settlements have expanded their activities beyond the physical confines of their locations, as was traditionally the case. They have developed numerous forward and backward linkages to the national economy, both formal and informal, and have become integrated in trading and manufacturing networks throughout the nation. Their trading partners are spread in a vast network throughout the country. This study focuses on one such group, namely the recyclers of Mokattam, Cairo as the scope of our research was not broad enough to cover the whole of Egypt.1.2. Purpose of the Study The purpose of this study is to establish the credit-worthiness of that sector and their potential role in a demand-driven credit and employment scheme linked to formal lending institutions, donor-driven development interventions and the development of further small and medium enterprises. The study does that by attempting to document the following about the present sector activity:1- Magnitude of the activity in the informal sector for municipal solid waste management in Cairo2- Employment Generation: the number of people working in the solid waste collection and disposal in the informal sector in Cairo3- Volume of trading in primary materials recovered in the informal sector4- Magnitude of small recycling industries5- Turnover of capital6- Potential effects of formalization of that sector on the waste handling services in Egypt. It is our aim to assess the size of enterprises and economic activity in that sector, the credit worthiness of small and medium enterprises in the informal sector, and the potential role formal lending institutions can play in the further development of that economy. Additionally, we will explore the inferences of these issues with regards to formalization of certain sectors of the informal economy, and the impact that policy decisions have on economic growth or stunting of certain vibrant sectors of the informal economy. 4
  5. 5. 2. Methodology2.1. Selection of Field Site For this study, we selected one of five garbage collectors settlements in and around the Greater Cairo area. All the garbage collectors in these informal settlements serve the residential areas in the city. We selected the Mokattam settlement as the field site for a number of reasons. In this settlement, the initial efforts of the transformation and formalization of the trade of garbage collection took place. The activities in this settlement represent the range of activities and processes that form the entire system for solid waste collection and disposal in the city. These activities range from collection, transportation, and recovery of primary materials, trading and recycling. It is the largest settlement in terms of population and activities. Major endeavors during the 1980s in particular were critical in the development of the trade of garbage collection in the settlement through mechanization, infrastructure development, route extension, and credit programs for small and medium enterprises. Conducting field research in the Mokattam settlement was an effort to gain more insight into the depth and breath of the transformation of the settlement and more critically the entrepreneurial aspect of waste handling.2.2. Questionnaires Three questionnaires were used in this study. Each focused on gathering information about the specific activities that exist within the settlement of garbage collectors. The main activities were: collection, transportation, recovery of primary materials, small and medium enterprise (SME) trading activities and small scale recycling industries. A separate questionnaire was used for each of the following; collection and recovery, trading activities and recycling industries. The process of designing the questionnaire included the participation of individuals from the settlement who had extensive experience with the occupation of garbage collection. Several brainstorming sessions were held to develop the survey instruments. The questionnaires were pre-tested in the field and modified and refined according to the results of the pretest. The information gathered on the collection, transportation and recovery processes was: Collection routes Type and number of households served Volume of solid waste collected Contractual arrangements between the garbage collectors and ‘waahis’ Labor 5
  6. 6. Cost of operation Capital Type and quantity of recovered primary materials Methods of handling Methods and costs of disposal of non-recovered materials The questionnaire on the trading enterprises included information on: Type and volume of merchandise Labor Operating costs Capital Trading networks The information collected on the small scale recycling industries included: Type of recycling activity Labor Operating costs Capital Trading networks2.3. Sampling The samples for the trading and recycling enterprise were drawn from a list of each type of activity located in the Mokattam settlement. Our aim was to select a random sample of 20% of the sampling units for each of the three samples we had of the main activities in the informal sector for solid waste management; collection of solid waste, trading in primary materials and recycling industries. In a survey conducted in January 2000, all the trading (80) and recycling enterprises (228) in the settlement were listed.2 As a result of this survey, we developed a comprehensive listing of all the trading and recycling enterprises in the area. Separate lists were composed, the first for the trading enterprises and the second for the recycling industries. A random sample was selected from each list. This allowed us to draw two representative samples; the first for the trading enterprises and the second sample was representative of the recycling industries. In 1998, the Association of Garbage Collectors for Community Development (AGCCD) conducted a survey of all the residential and commercial units in the settlement. This survey listed the units on each street in the settlement. We used this comprehensive list of all the garbage enterprises in the settlement to select our sample. The sample for the collection and recovery enterprises was randomly selected from a list composed of all garbage collectors’ enterprises in the settlement. We randomly selected about 20% of the list that consisted of 786 enterprises. The garbage collectors’ enterprise refers to the garbage collector, the head of the household, and his family. Collection and transportation of household solid waste is a family 2 Community and Institutional Development, Survey of Micro-enterprise Workshops in Mokattam Neighborhood, 1996 and updated January 2000. 6
  7. 7. business. The head of the family, his wife, children and any of his other dependents all work with him. The family enterprise constitutes the labor that takes care of the collection and sorting of household waste on a daily basis.2.4. Data Collection The fieldwork was conducted from July 1st – July 31st, 2000. Three teams of interviewers were trained to conduct face-to-face interviews with the three groups of respondents. Each team was assigned one of the questionnaires for the three categories of activities in the settlement. The members of the team of 24 interviewers, were assigned to work on one of the three questionnaires (one on collection and recovery, the second on trading activities and third on recycling industries) based on their prior working experience in the settlement as well as their knowledge of specific activities in collection, recovery, trading and recycling cycles that take place within the settlement.2.5. Profile of Respondents The respondents all reside and work in the Mokattam settlement. They are 176 garbage collectors and sorters, 55 traders in primary recovered material, and 60 recycling workshop owners. About 90% of the garbage collectors enterprises surveyed provide direct services to households around the city. Of this group, the majority of the garbage collectors (61%) work on collection routes in middle-low income neighborhoods and 39% collect household waste from high-middle income neighborhoods around the city. They collect and waste from households to the settlement in Mokattam where they carry out sorting and recovery of primary materials. The remaining garbage collectors enterprises surveyed (10%) are roamers i.e. they do not have fixed collection routes but roam the streets of the city in trucks and donkey carts, and collect garbage that has accumulated on the streets or in empty lots. Only three enterprises (2%) purchase the waste from other collectors in the neighborhood or private sector companies and thus only have the sorting and recovery activities. 7
  8. 8. 3. Solid Waste Collection and Recovery The culture-specific aspect about garbage collection in Egypt is that collection systems are regular only if the collector is someone who profits from the recovery and trade of items in the garbage. The system costs less to the user (waste generator) if the collector and recoverer are one and the same, and the system is more environmentally friendly if the collector will benefit from the recovery of items in the garbage (uncontrolled dumping and burning is reduced to a minimum). If the collector profits from recovered garbage he will attempt to protect his profit by collecting directly from his client, i.e. he will want to obtain it from source (door-to-door) and not from the street. If the privilege of recovery and profit from non-organic materials were given to someone other than the waste collector, then the latters input in the system would have to be his labor in sorting. If he were not willing to provide that input, then it would mean that he did not see the inherent value of recovering, processing and manufacturing the recovered items and this would jeopardize the reliability and efficiency of the system. The latter describes the relationship between the formal waste collection companies that are not garbage collectors and the waste that they collect3. The context of poverty in Egypt dictates most of the elements of this system. Importing equipment, training people to maintain and operate it, is no guarantee of comprehensive solid waste management systems reform because it neglects the culture-specific dynamics of solid waste processing and removal in Egypt. Since poverty dictates the system, there will always be a niche where the city council has to operate - namely the public domain. For it is in that domain that scavengers operate, and where private collectors will not venture because the garbage is not lucrative since it comes from low income homes while rich residents are serviced door-to-door. In tourist destinations in Egypt, the rich residents are the hotels4. An in-depth understanding of the complex web of relations and interactions, and as importantly the links between the formal and informal sectors, that constitute the solid waste management system in Cairo today is essential and critical for introducing change and meeting the need to develop this system as it stands today. Interventions and innovations should be considered within this context. The current system of solid waste management in the city of Cairo is a multi-layered and multi-dimensional process that includes a multitude of actors and processes. The first in this chain is the average individual living in one of the residential neighborhoods in the city. Such individuals generate a large amount of waste on a daily basis. This household waste in then collected by the garbage collectors on a daily basis, thus providing a vital and indispensable service to the middle and upper class residents of the city, a service they cannot live without under any circumstances. To date, the informal garbage collectors are primarily the ones who provide this service, in spite of the growth of formal private sector collection companies. The efficacy of including the informal garbage 3 Iskander, Laila., (Community and Institutional Development) Municipal Solid Waste Management – Local Knowledge and National Development: A Case Study from Egypt. Conference Proceedings of the Seventh International Waste Management and Landfill Symposium, Sardinia, Italy, October 4-8, 1999. 1998. 4 Ibid. 8
  9. 9. collectors becomes apparent as we recognize the need to continue providing this service. Asthe municipal solid waste system has developed over the years, so have the informal garbagecollectors. They have adapted to the changes in the system over time and have been able toremain in this business. They have demonstrated this capacity over the years and are expectedto continue doing so in the future. They are a critical link in the chain that have to be takeninto consideration and can have an active role in improving the current system. The people working in this informal sector have invested large amounts of money, time,and labor (often unpaid, unrewarded and unrecognized) over the last two decades. Thegarbage collectors, traders and recyclers in the settlement have continued to provide a vitalservice to the residents of the more affluent neighborhoods of the city unceasingly and withoutinterruption. More critically, they have invested in their trade over time. They have invested inbuilding homes in the settlement; in multi-storey permanent structures. They built one room ata time, one wall at a time. They saved some of the income and whenever they hadaccumulated enough savings, they would make another addition to their home, adding theceiling and roofs. They spent years to complete the construction of these homes. They alsohave invested in their fleet of trucks, meeting the requirements enforced by the municipality,but also developing the tools of their trade. They also have invested in their workshops,buying machines for the recycling industries. They have spent considerable time and effort todevelop those links to markets outside the settlement, in both the formal and informal sectors. The informal garbage collectors form a complex dynamic system for the collection andhandling of solid waste in Cairo. They have expanded the scope and range of their activities intrading of primary materials and recycling industries. They now have become a largeeconomic force and a vital part of the national economy. This growing thriving sector hascreated hundreds of jobs as well as wage and income earning activities for a multitude ofpeople in Cairo and elsewhere around the nation. Their linkages with other local and nationalmarkets have made them critical to certain industries. Changes or interventions at any point inthis complex web of activities and trading relations will have repercussions on the wholesystem and the flow of products. While it is imperative to improve the living conditions of theinformal settlement and upgrade the trade of garbage collection, we have to recognize theextent to which they have become integrated into the city life and economy. It is thereforecritical for policy and decisions makers to be fully aware of the extent, intricacy andcomplexity of this system. The following diagram charts the different stages and processesthat form the solid waste management system in Cairo. 9
  10. 10. Flow Chart 1: Waste Flows as Implemented in the Informal Sector Collection of Solid Transportation of Manual Sorting of Organic and Organic Composting Waste from Solid Waste to Non-organic Waste Plant or Households Settlement Waste Municipal Dump Non-organic waste Manual Sorting by Main Classification of Type of Primary Materials Glass Fabric Bones Non- Paper Plastic recycleables Metals Manual Manual Manual Re-Sorting Manual Re-Sorting Sold to Sold to Municipal Re-Sorting by Type & Re-Sorting by Type & Intermediary Intermediary Dumps by Type Color by Type Color Grinding Preparation ProcessCompacted Preparation Processes Processes Sold to Intermediary Traders Sold to Workshops and Factories 10
  11. 11. 3.1. Collection And Transportation In a sample of 176 garbage collectors, Table 1 158 (90%) of the garbage collectors served Quantity of Waste Collected on a Daily Basis 58100 household units on a daily basis. (In tons) Each garbage collector enterprise collects waste from an average of 368 households Number Percentage every day. Of the garbage collectors surveyed and who serve households in Under one ton 40 23 residential areas, about 139 garbage Between 1-2 tons 108 62 collectors enterprises (88%) have one Between 3-4 tons 24 13 route and 19 (12%) operate on two routes. Over 4 tons 3 2 Both routes are in residential areas around Total 175 100 the city. A route consists of a specific path through certain streets in a neighborhood. The garbage collectors pass by the same buildings to collect the garbage from all the apartments in each of the buildings on this route. The remaining 18 (10%) garbage collectors surveyed in the sample are roamers. The roamers collect about 12 tons of garbage from the streets of the city on a daily basis, i.e. each roamer collects an average of two thirds of ton of the garbage strewn around the street of Cairo every day. About 50% of the roamers use donkey carts, and 28% use trucks that have a one-ton capacity while 22% use trucks that have a three-ton capacity. The garbage collectors surveyed provide services to a large and growing proportion of the residents of the city. They not only provide the service to households in specific neighborhoods, but the roamers serve the city in general as they collect waste that would otherwise accumulate on the sidewalks, streets and any other open space around the city. The garbage collectors surveyed work on a total of 173 collection routes in the Greater Cairo metropolitan area, serving over 58,100 residential units. To work on a route, the garbage collectors take on the responsibility of making daily rounds to collect garbage from specific households in the residential areas around the city. They knock on the doors of each household on this route, hauling away the garbage to the settlement. They collect about 375 tons per day of household waste. Each garbage collector collects approximately 1.5 kilograms of garbage per household on a daily basis (375 tons ÷ 58,100 households) thus performing a vital service to urban residential areas. They work 6.4 days per week, thus collecting about 124,800 tons per year (6.4 days/wk. x 375 ton/day = 2,400 ton/week x 52 weeks = 124,800 tons/year). They recover 80% of this tonnage, i.e.124,800 x .80 = 99,840 tons/year, which they trade, prepare as primary inputs for formal industry and re-manufacture themselves. And herein lies the formidable importance of this informal sector to the economy – both formal and informal. Not to mention the critical importance of this particular informal sector to the environment in Egypt embodied in reducing pressure on landfills, and reducing the amount of uncontrolled burning of waste in urban centers and mega cities like Cairo. The majority (94%) operates only one round per day for each collection route. Most of the garbage collectors (62%) collect between 1-2 tons of household waste per day. Each garbage collector and his family, who constitute the majority of workers employed in this endeavor, are responsible for one collection route around the city. On average, each route for the collection of the solid waste from the residential areas includes about 368 households. In essence, each household or family of garbage collectors serves about 368 affluent households around the city. 11
  12. 12. They collect and transport the garbage produced by these middle class households (about 550kilograms per day, i.e. at a rate of 550 ÷ 368 = 1.5 ton/household/day). This is accumulated anddumped in the yard of the garbage collector and his family, where it is sorted and made readyfor the market. This indicates the high capacity of each of the informal sector to handle largequantities of waste on a daily basis. The increase in the number of garbage collectors’ enterprises and corresponding increasingin the number of households served in Cairo over the last thirty years is indicative of thecapacity of this informal sector to grow and expand to meet the increasing demands made on thesolid waste collection system in Cairo during that period. The growth in the population andhousing stock of the Greater Cairo area provide this community with a growing market for theiractivities. It has not been demonstrated that the formal sector has grown with the same speedand responsiveness to the growth of the needs of the city for more efficient waste handlingservices. And again, herein lies a critical advantage the informal sector enjoys over the formalsector: their ability to respond to demand-driven forces faster, and their flexibility in designingsystems that provide customers with market needs. Figure 1: Growth of Garbage Collectors Enterprises 37 40 35 Percentage Growth 30 25 26 25 20 12 15 10 5 0 Before 1970 1970-1979 1980-1989 1990-2000 Year The informal garbage collectors have been able to meet these increasing demands for theirservices to a significant extent. The services provided by the garbage collectors in the Mokattamsettlement have continued to grow over the last three decades. Prior to 1970, the number of newgarbage collectors’ enterprises established in the informal settlement was limited. While only 24garbage collectors enterprises were added before 1970, the rate of growth of the number ofcollectors and enterprises expanded significantly from 1970 to the present. The results of thesurvey indicate that largest increase in the number of newly acquired collection routes (37%)was during the 1980s. This growth trend continues throughout the 1990s (26%). This iseconomic growth at the community level, sector level and national level. It reflects theestablishment of new enterprises, new entrants into the labor force, new trading networks andnew creation of wealth and capital. This investment of capital will be discussed in a subsequentsection, but it is sufficient to note here that if this growth were not profitable, it would not have 12
  13. 13. occurred. Therefore it is safe to assume that it reflects an investment that yields a viable rate ofreturn. Table 2 Increase in Number of Enterprises and Households Served Time Frame No of Percentage No of Percentage Enterprises Households After 1990 51 26 13537 24 Between 1980-1989 72 37 19773 34 Between 1970-1979 48 25 15877 27 Before 1970 24 12 8700 15 Total 195 100 57887 100 Figure 2 Increase in Enterprises and Households 120 100 Enterprise Percentage Household 80 60 40 20 0 After1990 Between Between Before1970 Total 1980-1989 1970-1979 The same trend is evident in the growth of the number of households served within theGreater Cairo metropolitan area. The results of the survey show that the 1980s ushered in thelargest expansion in the number of households served. About 34 % of the total number ofhouseholds added since 1970 occurred during the 1980s, while an increase of 24% took placefrom 1991 to the present. This trend is indicative of the expansion capacity of the informalsector to meet the ever-increasing needs of the burgeoning population of Cairo. It is thereforeimperative to examine how best to provide this sector with credit and to institutionalize theiractivities within the framework of national policies in both formal lending sectors, theenvironment and local government administration. Each garbage collector’s enterprise is allocated a certain number of households in theresidential areas around the city. Each collection route consists of a specific number ofhouseholds located on certain streets in the residential neighborhoods. 13
  14. 14. Figure 3: Growth in the Number of Residential Units 34 35 27 30 24 Percentage Growth 25 20 15 15 10 5 0 Before 1970 1970-1979 1980-1989 1990-2000 Year Percentage Growth Approximately 40% serve less than 250 households. The majority (48%) serves between 250-500 households, i.e. they pass by theseapartments to take away their garbage on a daily basis. About 8.5% serve between 500-750 households. Only 3% have more than 500 units on each of their collection routes. A very small proportion of the garbage collectors surveyed (0.7%) serve up to 1000 households on their collection routes. The average number of units served by each garbage collector is about 368 households. Inother words, each family within the settlement that comprises a garbage collectors enterprise,and also a household in their own right, actually serve 368 households in the residential areasaround the city. Table 3: Number of Units Served Number Percentage Less than 250 units 61 39.9 Between 250-500 73 47.7 Between 501-750 units 13 8.5 Between 751-1000 units 5 3.3 Over 1000 units 1 0.7 Total 153 100.0 The garbage collectors in essence perform four main functions: collection, recovery, tradeand recycling. The new formal companies that have been formed by individuals outside thesettlement mostly perform one function only: collection and transportation. The recoveryprocess is carried out only in the informal settlements of Egypt. Sometimes the formalcompanies subcontract with the informal garbage collectors, whereby the former will collect thesolid waste from the households and then proceed to sell it to the garbage collector who willhaul it to the settlement in Mokattam where the recovery process takes place. 14
  15. 15. Currently, the informal sector in the Table 4Mokattam settlement serves two main Type of Neighborhoods Servedcategories of neighborhoods in Cairo, (Based on classification of routes)middle-high income areas and middle-low Number Percentageincome areas. Approximately 61% of High-middle income 68 39their collection routes are in middle-low Middle-low income 105 61income neighborhoods and only 39% arein high-middle income areas. The number of households in each type of varies. About 59% ofthe households are in middle-income areas and only 41% are in high-middle income areas.Most of the households served by the garbage collectors surveyed are in high-middle incomeareas. Although only over one third of the collection routes are located in the high-middleincome neighborhoods, they account for the larger number of households that are served. Thegarbage collectors respond to market and price mechanisms in the manner in which they selectcollection routes and allocate the number of households designated for each route. They tend todesign a smaller number of routes in the higher income areas than the lower income areas. Thisis a response to pricing mechanisms. They can sometimes charge higher service fees in the high-middle income areas. But more essentially, they know they can recover more valuable wastewith potentially greater profits in high income neighborhoods. The ability of the informal sectorto respond to price fluctuations and create market mechanisms to deal with those fluctuations isdemonstrated in the solid waste sector as well as many other informal economy sectors. Figure 4 Types of Neighborhoods Served 39% 61% High-Middle Income Middle-Low Income N i hb h d N i hb h d In addition, they select routes that have a large number of households thus maximizing themoney, and invariably the waste, they collect on a monthly basis, The middle-low income areasprovide the garbage collectors with different pricing mechanisms. To make the collection andtransportation routes in these areas more viable, they have to add more routes as they chargelower fees and recover waste of lower market value. The contractual basis for the right toservice Cairene neighborhoods is summarized below: The contractual basis on which local authorities engage the informal sector operators differs from the one by which they engage the new private sector companies which have penetrated the solid waste sector recently. The new companies purchase tender documents, bid competitively, sign a contract with the Cairo Beautification Authority and get their contract fee from the same Authority. They are not left open to the risk of some residents 15
  16. 16. paying for the fee-for-service and others not doing so. The informal sector operators, on the other hand, have to pay a deposit ‘insurance’ to the Cairo Beautification Authority up front, in return for the right to service a specific number of apartment blocks. They have no guarantee that these blocks are all inhabited, that residents will pay or that they will recover their cost. Thus they are forced to live off the recovery of recyclables, trade them and re- manufacture them. The average monthly service fee Table 5 collected from each household served by the Monthly Service Fee garbage collectors is L.E.2 per month. This Number Percentage includes both high-middle and middle-low income areas. The majority of the garbage Less than 2 pounds 41 25.0 collectors receive between L.E.2-4 per Between 2-4 Pounds 114 69.5 month. The monthly income derived from Over 4 pounds 9 5.5 fees paid by households varies according to Total 164 100.0 the number of households each collector serves. In addition, the terms of the agreements between the waahi and the garbage collector determines how much of this monthly fee that latter gets to keep. Profit sharing schemes in the informal sector are based on historical, traditional and indigenous verbal contractual agreements. In recent years, formal private collection companies have become licensed to service new middle-income neighborhoods in Cairo. These concentrate on commercial and institutional waste generators and informally sell the waste they collect to the garbage collectors who recycle it5. This saves the private collection companies the extra cost of transporting the waste to the outlying municipal dump. Most of the private collection companies do not have the capacity to carry out the sorting and recovery processes that are undertaken in the yards of the households of the garbage collectors in the informal settlements. Selling the garbage they collect from households and residential units to the garbage collectors allows these companies to profit from the hauling business. As the garbage itself has little value to the formal private companies, they save on the costs of disposal by selling it to the garbage collectors, who haul it the extra distance to their homes for sorting and recovery. What is perceived as unprofitable in the formal sector economy is perceived as valuable by the informal sector.3.2. Recovery of Primary Materials Solid waste recovery and re-use in Egypt is based on the single most important motive for such behavior: economic motivation. Be it the garbage collectors of Cairo, or the residents of cities, towns and villages all over the nation bartering their non-organic waste, the strong driving force behind the recovery and re-use is the financial incentive. It follows, therefore that any plan to recover uncollected municipal waste, need only devise schemes that will compensate people for the recovery of that item. Most of the income generated by the garbage collectors is from the sale of primary materials that are recovered from the garbage, such as paper, plastics, rags, metal 5 Assaad, Marie and Moharram, Ayman. The Role of NGOs in Solid Waste Management. Cairo, 1994. 16
  17. 17. and glass. These are discarded by residential units around the city but can be re-used for otherpurposes either through sale or manufacturing6. Another critical aspect of informal sector activity, be it in the waste sector or other sectors, isthat it is essentially a family business. Each and every member of the family is involved in thisbusiness either as a truck driver, a collector or a sorter. Most critically, the women and girls inthe family are the sorters. They are the ones, who amidst their daily household chores ofwashing, cleaning and cooking, manually sort the garbage that is deposited in their yards. Theydo this on a daily basis. In this connection, we propose that a closer look be taken at source separation of waste toaddress the efficiency of the recovery process as well as the health hazards that hundreds ofwomen and girls are exposed to in their daily chores. During the sorting process, the garbage issorted into its organic and non-organic components. The organic waste is fed to the animals,sold to other breeders in the settlement or sent to composting plants and municipal dumps.However, animal breeding has dropped significantly over the last two decades and iscontinuously on the decline. The spread of composting plants offers other options to dispose ofthe organic waste. The high rate of recycling in Egypt is a function of the intensive and multi-layered sortingprocess that takes place in the informal settlements where the garbage collectors are located. Theintricate, detailed and sophisticated system of classification of the recovered primary materialsthat the informal sector has developed over time allows them to re-use up to 80% of themunicipal solid waste. This system of classification has evolved over time and is constantlybeing revised and refined as the technology in the recycling industries has developed. Over thelast two decades, an increasing number of usages have evolved for more and more of theprimary materials. As such needs arise and the appropriate technology is adopted, both in theinformal and formal sectors, the garbage collectors have been able to come up with theappropriate differentiation of the main primary materials by type, size, usage, texture, color. Thenon-organic waste is then sorted into different categories of materials, primarily plastics, paper,glass, metal, fabric, bones and non-recyclables. Another sorting process is then undertaken tosort the different sub-types of each of the main categories of materials. Sorting is done accordingto color, size, shape and potential use or re-use of the materials. These re-sorted and reclassifiedmaterials are then sold to intermediary traders. These traders will in turn either sort or processthese materials so that they can sell them to other customers for resale or manufacturingpurposes. The primary recovered materials are sold in formal and informal markets and to largeindustrial plants throughout the country. The recovery process is the crux of the efficiency ofrecycling of solid waste. It should, at the very least, be maintained, but also enhanced as weimprove the design of solid waste management systems in the city in general. Materials thatcannot be recycled or resold are hauled to the municipal dumps. The efficiency of sorting andrecovery reduces the amount which ends up in controlled dumps and sanitary landfills. Approximately 85% of the solid waste collected by the informal garbage collectors isrecycled while only 15% is considered unusable “rabbish” i.e. residual waste. The women and6 Iskandar, Laila. (Community and Institutional Development, C.I.D.)Waste Management, The Case of the CairoMunicipality: The Informal Sector Recycling Program. Workshop Proceedings on Cost Recovery andPublic/Private Partnerships, General Assembly of MEDCITIES Network; Rome, December 1998. 17
  18. 18. girls in the settlement sort the garbage on a daily basis into 16 different categories of materialdepending on the type, usage and method of recovery. See Table 6 for the listing and volumerecovered for each kind of recovered material. All the recovered primary materials are sold tointermediary traders in the settlement or traders located in other informal and formal marketsaround the Greater Cairo area and throughout the nation. Table 6 Primary Recovered Material Type Volume Percentage Per Week Iron 1.2 0.05 Nylon Bags 3.3 0.13 Copper 3 0.13 Soft plastic 6.6 0.3 Animal Bones 6.6 0.3 Aluminum 8.8 0.4 Transparent Plastic 16.5 0.7 Cloth 23 1.0 Broken Glass 27 1.1 Paper 36 1.5 Tin 95 3.9 Cardboard 99 4.1 Rabbish 366 15.3 Nakdah7 477 20.0 Organic Waste 478 20.0 Glass 753 31.3 Total 2400 100 Trucks are used to transport the non-recyclables to municipal landfills on a monthly basis.The majority (61%) use the trucks provided by the Association of Garbage Collectors forCommunity Development (a local non-profit organization located in Mokattam) for that specificpurpose. Only 6% use rental trucks and the rest (33%) use their own trucks to haul thesematerials to the municipal dumps. The average cost for each time they transport one truck-loadof “rabbish” to the landfills is L.E.30. On average, the garbage collectors have to clear theirworkspace about 6 times per month, bringing the average annual cost of disposing of the non-recyclables L.E.2,160. This expense constitutes a cost that Cairenes pass on to the garbagecollectors, as it is not covered by the monthly service fee that the residents pay. Thus, in essencethe informal sector subsidizes the formal sector i.e. the poor subsidize the rich. The cost is evenmore exorbitant to the informal sector when health hazards, lack of industrial safety anddisabilities are calculated in the cost of collection and recovery.7 Nakdah consists of wide variety of items that do not have specific uses for recycling. This category includesarticles such as toys, vases, artificial flowers, spoons, forks, and miscellaneous objects run by small motors. 18
  19. 19. Figure 5 Means of Transportation of Non- Recyclables Municipal Dumps 6% Association Truck 33% 61% Private Truck Rental Truck Based on the results of our survey of the sorting process, the garbage collectors report thatabout 20% of the total garbage they collect is organic waste. This organic waste is either fed tothe animals (for the minority who are still raising pigs), sent to the composting plant or tomunicipal dumps (if and when these are available). The organic waste residual waste is removedfrom the workspace four times per year. It is either transported to composting plants or tofarmers in the Delta. The average annual cost of that activity is LE.1, 620.Each of the primary recovered materials is handling according to its potential uses8.Plastic: The most commonly recycled item in garbage, it includes food containers, mineralwater bottles, black garbage bags, medicine bottles, etc. Each is sorted by type and color. Theintermediary or informal traders specialize in handling the different kinds of plastic. Thus onetrader will specialize in mineral water bottles, another in food containers, a third in trash bags,etc. a. Food containers, oil containers and household items: These are cut in half manuallyusing a big pair of industrial-size scissors, sorted by color, washed in boiling water and potash ina huge tub with a burning furnace underneath, left to dry then put through the funnel top of theplastic crusher and packed in sacks awaiting sale to merchants who act as middlemen betweenthe plastic crushers and the manufacturers. Manufacturing of plastic takes place in the garbageneighborhood as well. These microentrepreneurs evolved a few years after the inauguration ofthe first credit scheme and were largely self start-up small businesses using locally designed andmanufactured technology available in the informal sector of the economy in Egypt. Start upcapital came either from the sale of the wifes gold earrings, a piece of furniture, a T.V. set,credit from loan sharks or the sale of a small plot of land still owned back home in the homevillage in Assuit.8 Iskandar, Laila. Mokattam Garbage Village. Cairo, Egypt. Printed by Stallion Graphics, Heliopolis, Cairo, 1994 19
  20. 20. b. Black Plastic Bags: These are washed manually in a big container with soap andwater, left to dry on a clothes line and put through a plastic crushing machine which transformsthem into beads. These are in turn re-manufactured into black shopping bags or trash bags. c. Mineral Water Bottles: The lid and label are peeled by the women in the family, thenthe bottle is cut into half using manual industrial-size scissors, then crushed using the sameprocess followed by the food container plastic crushers except for the separation by color sincemineral water bottles all come in the same clear blue color. Animal Bones: Animal bones are collected and sold to middlemen who re-sell them for fodderand to glue manufacturers.Glass: This component continues to be sold to manufacturers outside of the community but thecommunity does produce a handful of glass middlemen who would buy from garbage collectorswho went out on the garbage route and sorted the glass into according to type, size and color.Intermediary traders specialize in handling these different types such as medicine bottles, beerbottles, etc. The following flow charts illustrate the complex and extended web of relationshipsamong the informal sector operators in the field of waste and between them and the formalsector of the economy. A close look at that flow indicates the inextricable links between the twoeconomies – formal and informal. It becomes apparent that a dis- equilibrium in one link in thechain can potentially disturb the entire chain. Backward and forward linkages between theformal and informal economies are critical factors to examine by policy makers, formal lendinginstitutions, economists and market analysts. 20
  21. 21. Flow Chart 2The Product Flow for Glass and Paper GLASS PAPER Sorted Sorted Into Into Thick Office Broken Whole Paper Paper Glass Glass Sold to Sold to Sold to Internal Sold to Internal & Intermediaries External Intermediaries Compression Sorted by Sorted by Informal Workshops in Color Type Traders & Settlement WholesalersSold to Large Scale Sold in Other Formal Formal SectorFormal Sector & Informal Markets Factories inIndustrial Plants Across the Nation 10th Ramadan 21
  22. 22. Flow Chart 3Product Flow for a Plastics Sub-Type --- Hard Plastic Hard Plastic Manually Sorted by type/texture Sold to Manually Intermediary Sorted by color Traders Sold to Intermediary Washing Traders Sold to Intermediary Crushing Traders Sold to Formal & Informal Traders Granulating and Manufacturers Sold to Formal & Pelletizing Informal Traders and Manufacturers Sold to Sold to Formal Intermediary Industry for Traders Manufacturing 22
  23. 23. 3.3. Contractual Agreements for Collection and Transportation The relationship between the wahiya and the garbage collectors was, and in some cases still is, an informal contractual agreement. They had traditionally cooperated to provide their services to households around the city when the system had no or limited government regulation. As the municipal system of solid waste started to change during the late 1980s and into the 1990s, the relationship between the wahiya and the garbage collectors also underwent some changes. During the 1980s, the Cairo Cleansing and Beautification Authority (CCBA) was created to regulate the solid waste management system in the city through the creation of licenses for the collection and removal of waste. Only private, registered companies were considered eligible to bid for such licenses. This prompted the waahis and the garbage collectors to form private companies with the assistance of the consultants firm Environmental Quality International. The waahis continue to have the responsibility of organizing the work on the collection routes and the garbage collectors provide their labor in exchange for the garbage, which generates most of their income. The majority of the waahis and garbage collectors have formed companies that can bid for, and be granted, licenses from the CCBA. Most of these companies are owned by the waahis9. The companies build on the arrangements that had existed between the waahis and the garbage collectors. However it has enabled them to continue working in this trade as they now meet the licensing requirements of the CCBA, while hauling the garbage continues to be worked out between the waahis and the garbage collectors. The companies pay the licensing fees to CCBA and collect the service fees from the households. Partnerships, mergers and contractual agreements regulate, in an informal but equally binding manner, informal sector activity. The pattern of relations between the garbage collector and the wahi has changed from the traditional arrangement where the waahi only has the right to the service fee. During the early 1990s, the CCBA started to grant licenses to private companies that are owned by both the waahis and the garbage collectors. These companies were registered in order to meet the new licensing requirements enforced by CCBA. These companies allow the wahiya and garbage collectors to participate in the CCBA bidding process. Some of these companies are jointly owned by both the wahiya and the garbage collectors, other are owned by the garbage collectors alone, but the wahiya independently own the larger proportion of such companies. The institutional and contractual arrangements between the wahiya and the garbage collectors have changed over time. This yet again demonstrates the ability of the garbage collectors to adapt to new changes in the market and the regulation of their trade. As they operate in the informal sector, they have capitalized on the adaptability and flexibility that is particular to that sector in general to reach agreements that serve their purposes. Depending on who actually collects the user fees from the household, the garbage collector and the waahi share the proceeds. The only standard feature of this system is that when the waahi collects the service fees from the households, he pays the garbage collector a certain amount of money every month. When the garbage collector collects the service fees from the residential units, he in turn pays the waahi a specified amount of money every month. The amount paid by the waahi to the garbage collector or the garbage collector to the waahi varies according to the nature 9 Environmental Quality International, The Zabbaleen Environmental And Development Program: An Evaluation, Cairo, 1997. 23
  24. 24. of the agreement between the waahi and the garbage collector. The amount of money that is paidby one party to the other is determined by the nature of the relationship between the two parties.Agreements to share the service fees are informed by a number of factors; The proportion of the hauling costs that each party to the agreement will share The proportion of the cost of the vehicle that each party will pay, if the wahi has helpedthe garbage collector to acquire the trucks Who provides the labor for the collection of the garbage from the households Who provides the labor for the transportation of the garbage from the residentialneighborhoods to the settlement The terms of these agreements are made between each waahi and garbage collectorindividually. There is no standard form for these agreements but there are multiple formulae forsuch agreements. Agreements are reached based on the historical relationship between anyparticular waahi and the garbage collectors he deals with. In addition, as the system for collectionand transportation changed over time, so have the factors that have informed such agreements. The average monthly payment from the Table 7garbage collector to the waahi is Responsibility for Fee Collection fromapproximately L.E.140 per month. The Householdsgarbage collector pays a fee to the waahi Number Percentagewho has the concession to collect the Waahi 87 50garbage from the households. By Garbage Collector 49 29participating in the licensing and bidding Both 32 19processes implemented by CCBA, thewahiya and the garbage collectors can be granted license to collect the garbage fromneighborhoods around the city. The licensing fee paid to the CCBA secures the right of thegarbage collector to get the garbage from those residential units. Based on who actually collectsthe service fees from the residential units, payments are exchanged between the waahi and thegarbage collector. The minimum payment made by the garbage collector to the waahi is LE50 permonth when the fomer collects the fees from the households. The maximum payments is L.E.400per month. On the other hand, the waahi pays the garbage collector an average of L.E.110 permonth, when the former collects the fees from the households. The minimum payment made by thewaahi to the garbage collector is L.E.10 per month and the maximum is L.E.350 per month. Thisdual pattern of payment between wahiya and garbage collectors is a function of several factors.One of these factors is historical arrangement between each party. The fees paid by the waahi andgarbage collector are based on the informal positions of financial power between the wahiya andthe garbage collectors. Traditionally, only the wahiya had the right to collect the service fees,while the garbage collectors lived off what they could make from the garbage itself. With thechanges in the current system, some of the garbage collectors have recently acquired the right tocollect the service fees. This has resulted in new patterns between the wahiya and the garbagecollectors. The critical factor in this relationship is who has won the concession for the right to thecollection routes. These concessions are awarded through binding processes conducted by the localmunicipal authorities. These individuals, in turn, tend to have more power over setting the formulafor sharing the service fees collected between the wahiya and garbage collectors. The second factoris the provision of labor for the physical collection and transportation of the garbage. The garbagecollectors generally provide the labor and most of their income is generated from the sale of theprimary materials. The wahiya still appear to have a stronger bargaining position vis-à-vis the 24
  25. 25. garbage collectors and appear to receive the larger proportion of the income generated from theservice fees. The amount of payment from waahi to garbage collector and vice versa is determined by: Size and magnitude of the market (the number of households served) Income levels (the service fees collected from each household) Links between customers and service providers (who collects the fees) Labor (who collects the waste from each household) In some cases, the waahi uses his own workers (individuals that he pays directly and are notaccounted for among the solid waste workers i.e. they are not accounted for in this survey) tocollect the solid waste from the households and accumulate it at a specific location outside thebuilding. The garbage collector then hauls it from that spot to the settlement in Mokattam. Inothers, the garbage collector is responsible for collection of the waste from the households andtransportation to the settlement in Mokattem. Both the garbage collectors and the wahiya have theright to the service fee. In some cases, the garbage collectors collect the fee from the residentialunits. In such cases, the garbage collectors have to pay an agreed upon amount to the waahi. If thewaahi collects the service fee from the residential units, then he has to pay the garbage collectorsoperating on those routes a certain proportion of the fees collected. The amount paid by one partyto the other is agreed upon between them prior to working on the collection routes. The changes inthe regulation of the municipal solid waste management system made by the municipal authorityover the last two decades have resulted in some changes to the nature of the traditionally informaland verbal contractual agreement between the wahiya and the garbage collectors. Table 8 Monthly Payments made by Wahiya and Garbage Collectors Payments Made By Waahi Payment Made by Collector To Garbage Collector To Waahi Number Percentage Percentage Number Less than L.E.100 per month 15 36 31 44 Between L.E.100-200 per month 16 38 31 44 Over L.E.200 per month 11 26 9 12 25
  26. 26. 4. Trading Enterprises Trading and manufacturing networks have grown to cover the whole country from Alexandria to Aswan. The industry has spawned its own dealers, its own centers of production and recycling, and its own business culture of credit, trade and finance. A thriving informal sector which recovers, trades in, processes and re-manufactures plastic, scrap metal, paper, cardboard and bones10. After garbage collectors sort the primary materials are sorted into the main primary materials and then sorted again into the sub-categories of these materials, the garbage collectors sell these materials to intermediary traders. Some of these traders are based in the settlement while others come from different parts of the city as well as country. Most of these traders are part of the informal sector, but a significant number of formal sector traders are increasingly attracted to this large and lucrative market. The intermediary traders will mostly buy the bulk of the materials accumulated by the garbage collectors on a weekly basis. The informal traders in the settlement generally specialize in one type of material such as glass or plastic. In some cases, they are even more specialized as they focus on certain sub-categories of these materials such as plastic water bottles for re-use or crushed plastic containers for recycling. The traders who are based in the settlement store these materials in warehouses scattered around the area. On average, it takes about a week for them to accumulate quantities that are large enough to sell to their customers. These customers are mainly traders from other markets around the country, and in some cases large manufacturing plants. They have developed a large network of customers who rely on their proven ability to deliver the required materials on a regular basis. More often than not, the agreements made between these trading partners are verbal agreements to which they all adhere. In general, there is a demonstrable inclination toward specializing in one or the other kind of recovered material. The most crucial factor in decisions about organizing this work and making tangible profits is the sorting activity. The sorting activity requires space and technical expertise. This is supported by the results of the survey that demonstrate that there is a high degree of specialization in the trade of recovered materials among the micro enterprise traders in the settlement. Of the 55 traders surveyed, approximately 37 traders (67%) specialize in only one type of recovered material such as rags, 14 traders (25%) trade in two types of recovered material e.g. colored glass and whole glass and only 4 traders (7%) trade in three types of material, mostly different kinds of plastics based on color and reuse. There are seven main categories of primary recovered materials in which the intermediary traders in the settlement deal in; glass, plastics, paper, metals, rags, bones and nakdah. Most of these categories are composed of several components, for example: 10 Iskandar, Laila. (Community and Institutional Development). The Informal Sector: A Dynamic Force in Municipal Solid Waste Management. Workshop Proceedings of the Friends of the Environment Association (FEDA), Earth Day Meeting, Cairo, 1997. 26
  27. 27. Glass: broken pieces of glass and whole pieces of glass, then sorted by color and then according to whether they can be refilled. Paper: sorted into thick heavy paper referred to as carton and other paper such as office paper and computer printouts. Plastic: divided into whole pieces and broken pieces, then sorted by color, type, shape, e.g. HDPE, LDPE, PET, … Most of the intermediary traders surveyed Table 9 worked in plastic (30%) and paper (29%) trading. Distribution of Trading Activities Metal traders in general, such as tin, aluminum Type of Material Number Percentage and copper accounted for 22% of the traders Plastic 17 30 surveyed. This concentration on these materials Paper 16 29 reflects two main factors, (1) the amount of these Glass 5 9 materials that is recovered from the garbage (See Tin 11 20 Table 6 Primary Recovered Material), and (2) the Aluminum 1 2 expansion in the recycling industries that are Rags 4 8 based on these materials (See Table 13 Growth in Animal Bones 1 2 Recycling Industries).4.1. Trading networks Most of these traders have arrangements with the garbage collectors to purchase specific kinds of materials. On average, each trader contracts with 26 suppliers who are mostly located in the settlement and in other areas around the city. The majority of these traders Table 10 (40%) have up to 25 suppliers from Suppliers to Intermediary Traders within the community and only 9% Number Percentage have over 50 suppliers. These Less than 25 suppliers 40 73 intermediary traders contract, on an Between 26-50 suppliers 10 18 informal basis without written Over 50 suppliers 5 9 agreements, to purchase certain types of recovered primary materials from the garbage collectors. They generally make daily rounds to haul these materials to their storage locations within the settlement, as the garbage collectors do not have enough space to accumulate up to 16 types of recovered materials for one week. The intermediary traders, in turn, accumulate the recovered material and sell larger quantities to their buyers on a weekly basis. Ownership of warehouse space counts as an asset for enterprises in trading in the informal sector. It is uncounted capital but still capital without title which cannot be used as collateral vis a vis formal lending institutions. On the other hand, the majority of these traders (84%) have one or two Table 11 customers to whom they sell Customers of Intermediary Traders accumulated volumes of the Number Percentage merchandise. Most of their customers One buyer 22 40 are either recycling workshops in the Two buyers 24 44 settlement or large traders from More than two buyers 9 16 outside the community or large-scale plants and factories in industrial areas such as 10th of Ramadan and 6th of October Cities. Approximately 58% of the customers of the intermediary 27
  28. 28. traders are located outside the settlement and are spread throughout the country. The intermediary traders in the settlement have been able to develop extensive links with the national economy, trading with partners as far south as Sohag. The spread and outreach of the informal economy reverberates across trading networks nationally.4.2. Complementary Activities In addition to collection and storage, other complementary activities are Table 12 undertaken during this process of trading in Supplementary Activities to Trade primary recovered materials. In most cases, Number Percentage the intermediary informal trader in the Sorting 46 84 settlement will collect certain kinds of Preparing 13 24 materials only such as glass, plastic, tin, Compressing 5 10 copper, since most of these traders specialize in only one kind of material. These materials are sorted according to type and color, either on the premises of the garbage collector or in the warehouse in the settlement. Different arrangements are made depending on the volume of the primary material. In some cases, these workers throw out some material that they consider not appropriate for re-sale. For example, this happens with certain types of metals that are considered too small or copper wires still covered with plastic or whole glass are sorted according to color, then according to type and size. The intermediaries will then sell each of these types to traders from outside the settlement whom specialize in certain types of glass only. A similar process takes place with paper. It is sorted according to type, e.g. newspapers, office paper, computer paper and thick paper. Each type is then compressed separately and sold to specialized traders or large scale manufacturing plants. This process is also carried out for plastic, where is it sorted according type, size and color. Each type is processed separately and sold as cut pieces of plastic or as washed, palletized or granulated plastic. This high degree of specialization is coupled with the flexibility of the informal sector. Market differentiation dictates the need for such sophisticated sorting activity and therefore the informal sector is highly responsive to market demands. 28
  29. 29. 5. Small Scale Recycling Industries Recycling industries in Egypt have expanded, diversified and increased in number over the last 15 years. The 1980s ushered in a move towards investing in recycling workshops in the Mokattam settlement. Initiatives to start such endeavors were supported by external funding and technical assistance. After that first phase, the establishment of recycling industries has gained momentum and expanded to be the second largest employment generator in the informal settlement. These recycling workshops rely on the primary material sorted by the garbage collectors and sold through intermediaries. They are their raw materials from the settlement. They also rely on the inhabitants in the informal settlement for their labor. However, these recycling workshops have also become a magnet for youth from other parts of the city. The recycling workshops employ the largest number of workers from other communities. Some of these workers commute to the settlement on a daily basis, while others have relocated and now live in the settlement. The size, scope and activities of the recycling workshops vary. Some specialize in a particular step of the recycling process, having invested in only one machine. Others have larger investments and undertake a multi-step process in the recycling of certain types of primary materials. The recycling workshops produce both final products and intermediary products. Their clients are located throughout the country, seeking the output. The final products are destined to end up in the markets around the city. The intermediary products are sold to larger workshops and often to large-scale industrial plants in and around Cairo as well as those around the country, such as the 6th of October, the 10th of Ramadan, Alexandria, and Suez.5.1. Type and Growth of Recycling Industries The growth in depth and breadth of recycling industries in the informal sector has soared over the last few years. From 1996 to 2000, the number of workshops in the settlement increased by approximately 29% during these four years. The largest increase was in the cutting tin and pelletizing workshops, while the number of washing and sorting plastic workshops fell by about 25%. Some of the workshops have expanded to include more than one step in the plastic recycling process. In July 2000, there were 228 micro and small scale recycling enterprises in the Mokattam settlement that employed 1435 individuals from various communities. In 1996, there were 163 workshops that employed 1002 workers. The recycling workshops in the area created approximately 30% new job opportunities during this four-year period. The total invested capital in these enterprises was L.E.3,080,650, of which and equipment cost was L.E.1,805,350 was allocated to the acquisition of equipment. The average amount of capital invested in recycling workshops was L.E.13,800 of which L.E.7700 (56%) was allocated to cover the cost of equipment. The average number of workers employed in each of these workshops is 6 individuals. The largest number employed was 20 workers.11 29
  30. 30. Figure 6 Growth of Recycling Enterprises 1996-2000 Percentage 140 Growth 100 Number of 228 Enterprises 163 0 50 100 150 200 250 1996 2000 Table 13 Growth in Recycling Industries12 Type Number in Number in Percentage 1996 2000 Growth Plastic Crushing Machines 44 65 32 Washing & Sorting Plastic 8 6 -25 Plastic Granulation 6 15 60 Cloth Grinders 16 17 6 Paper Compacting Machines 15 19 21 Cutting Tin 11 29 62 Washing Tin 2 2 0 Pellletizing Machines 6 11 45 Other Plastics 8 7 -13 Injection Mold 27 44 39 Aluminum Smelters 20 13 -35 Total 163 228 29 With the advent of paper compactors, also part of the micro enterprise scheme, assemblinglittle bits of paper and packing them into large, square bales of paper gave birth to a new categoryof product for traders and recyclers. Paper is compacted and sold to traders and manufacturingplants in the formal sector. Examples of recycling manufacturers of plastics are those who produceclothes hangers, pitchers, ice cream spoons, lollipop sticks, and the like. A thriving market for12 Based on a Community and Institutional Development survey conducted in the Mokattem settlement in January1996 and updated in January 2000. 30
  31. 31. such products exists in low income neighborhoods in Egypt and is actually very active in its trading outlets in the south (Upper Egypt)13. The micro enterprise credit scheme began in 1986 introduced cloth grinding machines which consist of two cogs moving anti-clockwise and crush the cloth into cotton stuffing for mattresses and pillows and the like. These machines are powered by electric power that is becoming more and more costly every year, especially in view of structural adjustment programs. The crushed cloth makes its way to low income, informal markets and does not conform to high quality control or hygiene standards. A couple of years into the recycling experience, locally designed aluminum smelters began dotting the neighborhood. These were not even purchased from outside the neighborhood. Rather, they were designed, manufactured and installed manually by the entrepreneur himself and required negligible start-up capital since they simply involved a deep furnace powered by diesel fuel, a few antediluvian tools to poke the aluminum down into the bottom of the furnace, and a giant size ladle to pour the molten aluminum into square molds locked into place with a single hole at the top to receive the molten aluminum. After allowing this product to set, the mold would be opened up into two parts, with one falling back as a flap and the solidified aluminum rectangle would be picked up using metal tweezers and placed in piles, then rows of piles to cool down. This technology was home grown and the implements were very basic. Dark smoke emitted from a pipe attached to the furnace and it would have been too much to expect people engaged in the survival game of recycling to design a system that would reduce or remove these emissions. Thus there is a pressing need to provide technical support and credit to allow these entrepreneurs to develop and adopt appropriate technology, avoiding negative side effects. The same ubiquitous, industrial size scissors appeared here again in recycling tin, to separate the tops of aerosol cans from the can. The can part was flattened using a heavy, handmade flat hammer and the flattened tin was tied up in bunches of fifties and hundreds in anticipation of tin middlemen. Those who bought the flattened tin used another indigenous technology to clean it and process it for manufacturing. That technology involved a barrel filled with boiling water and potash, sitting on top of a small furnace. The washed tin would then be placed in a drum into which holes had been pierced and mixed with ash to ensure the thorough elimination of rust and dirt from the recycled tin. That drum was hooked to an electrical power source and rotated as soon as the switch was turned on. Bits of rust, dust, dirt and ash would fall out of the holes in the rotating drum and onto the ground below the drum. The end product -- clean round, oval, square, rectangle pieces of tin - would be sold to manufacturers who used it to make paint cans and a number of other items14.5.2. Trading Networks: Suppliers and Customers 13 Iskandar, Laila. (Community and Institutional Development, C.I.D.)Waste Management, The Case of the Cairo Municipality: The Informal Sector Recycling Program. Workshop Proceedings on Cost Recovery and Public/Private Partnerships, General Assembly of MEDCITIES Network; Rome, December 1998. 14 Ibid. 31
  32. 32. The micro enterprise and small scale recycling workshops in the settlement predominantly relyon the informal network of garbage collectors and intermediary traders within the settlement topurchase their raw materials. The Table 14recycling workshops have on average Suppliers of Raw Materialsthree suppliers each. In this case, Number Percentagesuppliers are those individuals who Garbage Collector 8 13provide the workshops with the Internal Trader 14 24necessary inputs. The owner of the External Trader 8 13workshop contracts, on an informal Multiple Sources 30 50basis, with the garbage collectors(usually three) who will provide him with the raw material needed for his workshop. Theseagreements are usually verbal and informal but explicitly define the roles of each; the garbagecollector is the supplier of the raw materials and the owner of the workshop is the purchaser. Theprice and quantity provided are agreed upon and the commitment of each party is clearlyunderstood. This implies that the 55 trading enterprises surveyed reflect the involvement of 165other individual garbage collectors in weekly transactions in this informal market. The size and volume of this market is central to the high percentage of recovery andrecycling of solid waste in Cairo. The web of transactions allows for the re-sale and re-use ofabout 80% of the municipal solid waste. These transactions cut across the boundaries of thesettlement as well as the formal and informal markets. They link traders and producers throughoutthe nation. Only 13% of the workshops rely exclusively on suppliers from other informal andformal markets outside the settlement. About 50% use multiple sources in order to buy theirinputs, using both sources within the settlement and around the country. These workshops formlinkages to the national economy, both in the informal and formal sectors. They have transactionswith other traders from all over the nation and deal with a sizeable market and volume of trade.The impact of any changes to the current waste handling system of Cairo will have resoundingeffects that will reverberate in markets throughout the nation. Table 15 Customers: Buyers of Primary Materials (M) Number Percentage Trader in Settlement 15 25 External Trader 19 32 Workshops 4 7 Factories 8 13 Multiple Outlets 14 23 32