Sample Business Plan: Solid Waste Collection and Recycling in Nigeria

This is a sample business plan for the setup of a solid waste management and recycling plant in Nigeria. The solid waste management business in Nigeria which encompasses; collection, disposal and processing has been described as having a lot of potentials because of the huge problem of waste disposal, collection and management in Nigeria. The industry offers a lot of opportunities for local investors but the enabling environment for converting the so called “waste to wealth” opportunity has been challenging the growth of the industry. In this plan, we would be looking at the general business opportunities in the industry, setup requirements and a miniature first year sales projection.

Overview of Waste Management in Nigeria

Waste management refers to the collection, disposal and handling of waste products such as; refuse or garbage, effluents, industrial solid wastes, electronic wastes, hazardous materials and other unwanted material set aside for disposal by their former owners or users. Common items often discarded off as waste include; paper, organic materials (rotten fruits, vegetables, rotten meat, bones, spoiled food etc), wastes from factories, plastic, torn clothes, used metal scraps, electronic wastes such as; old TV sets, dead fridges, radio, gas cylinders and many more.

It is well known fact that all humans have things they discard off from time to time. It doesn’t matter the city you find yourself, there will always be need to remove any item we have used but no longer serves its purpose or is harmful to us if it remains in use. In a country of over 200 million people of which 90 million plus reside in towns and cities, the sheer amount of these waste products is very enormous and noticeable. Some of Nigeria’s cities are giant display of refuse and filth which can cause disease and illness besides also constituting an environmental nuisance but it can become a major source of income as well.

What is the State of Waste Management in Nigeria?

The waste management business in Nigeria is still evolving as there are many challenges that operators face which are borne out of the unique business environment from which they operate. The Nigerian environment for instance makes it difficult to convince people to pay for refuse disposal. A lot of people are unwilling to pay to dispose refuse and even when they do, they are only willing to pay extremely low amounts. This can be discouraging for operators who are unwilling to lower their prices because the cost of running this business is very high. Secondly, there is the challenge of policy implementation. Most states and local governments struggle to implement environmental policies which would force compliance from citizens and consequently encourage patronage of refuse collection businesses. People intending on investing in refuse collection and recycling may also struggle with power supply and other operational cost challenges. Diesel cost for powering generators and trucks are quite high plus the unpredictable nature of revenue collection. This is no easy business to do if you are not tough.

Waste management facts at a glance;

Item/parameter	Details
Refuse generated	Between 32 to 35 million tonnes is produced yearly
Major Nigerian cities affected	Lagos, Aba, Onitsha, Abuja, Jos, Abakaliki, Lokoja, Kaduna, Port Harcourt
Refuse Management System	A few states like Lagos and FCT operate PPP model whereas others are wholly run by the various state governments
Application and use	Most waste are destroyed through incineration and combustion rather than recycled and processed into bio products
Recycling and Reuse	Waste recycling and reuse or processing of waste materials into industrial products is poorly utilized in Nigeria because of low investments, poor technology and lack of political will from government to implement programs and policies that support them

Be that as it may even at this stage, waste management is still a very big and untapped business in Nigeria and there are opportunities for new people to come into the business.

Business Opportunities in Waste Management and Recycling in Nigeria

Nigeria is heavily challenged environmentally by such things as poor drainage, poor hygiene, difficulty in evacuating solid wastes, crowded towns and shanties, high amounts of industrial and commercial activities and poor town planning. Naturally with all these and Nigeria being a heavily populated country should lead to massive production of solid wastes.

A lot of products in Nigeria is improperly disposed as waste namely; paper, rotten food, wooden objects, clothes, metal parts, plastic objects, inorganic wastes, effluents from factories, glass bottles and tyres to name a few. All these waste products can be recycled or processed rather than incinerated or piled up in a dump to be destroyed occasionally as it is largely practiced in Nigeria.

Waste management in more organized countries is a highly lucrative business to do. The ROI is high and very encouraging but the same cannot be said in Nigeria although some opportunities exist.

Firstly, waste is capable of being converted to wealth through recycling and processing to create a range of products such as; biogas, ethanol, organic fertilizers, paper pulp, recycled plastic and even tar for road construction. But these opportunities have not been properly exploited by investors – you won’t blame them because the enabling condition for their investments to reap profit is largely absent.

•          Plastics Recycling
•          Biogas
•          Ethanol Production
•          Liquid CO2 Production
•          Organic Fertilizer production
•          Paper pulp production
•        Among other uses

Secondly waste management in Nigeria can be lucrative as a fee paying service under a public-private partnership arrangement (PPP). The country’s cities and towns have large population of people with refuse disposal needs and fee collection model in refuse collection for PPP operators can be a lucrative option when optimized by key stakeholders. This model which has been introduced in some cities is largely as a private sector led fee collection service to limited success. Government can completely hands off from this and enable private individuals operate the business of collecting and handling refuse with appropriate legislation.

What are the Challenges of Waste Management in Nigeria?

•          Low fee collection
•          High running costs
•          Inconsistent government policies
•          Difficulty by government in implementing environmental policies and legislation
•          Poor perception of the public on waste management in Nigeria
•          Poor road networks and flooding
•          Delay in receiving payments

How much does it Cost to Start a Waste Collection/recycling Business in Nigeria?

That would depend on what you want to specialize in. if you are intending on collecting plastic waste and used cans for recycling you will only need a small parcel of land, capital to purchase the used recyclable materials from scavengers (at least 1,000,000 naira) and packaging materials. If on the other hand you register for PPP with government, license fee, you will need a refuse collection truck, operating costs for 3 months among other expenses.

First Year Sales Projection

In this sample projection, we’ll assume that a refuse collection company with startup capital of 17 million (including collection truck, office space and refuse processing unit) operating a single truck operating in a busy part of a city such as Abuja and also engaging in collection and sale of recyclable materials. We’ll assume that the collection company generates at least 42,000 naira daily. Besides refuse collection, the company will generate revenue from sale of collected plastic bottles and metal cans in trucks which would amount to 1 full truck each per week at 120,000 naira per truck.

Gross Revenue	24,600,000
Gross Profit	19,900,000
Operating Expenses	12,600,000
Profit before Tax	7,300,000
Taxation	2,190,000
Profit after Tax	5,110,000
Retained Earnings	5,110,000
ROI	30%
Payback Period	3 to 4 years

Other Related Sample Business Plans

•         Sample Business Plan on Electronics Shop in Nigeria
•          Business Plan for Kiddies Toy Shop in Nigeria
•          Sample Business Plan for Baby Shop in Nigeria
•          Sample Business Plan for Security Service in Nigeria

Paul Onwueme is a professional Business Plan writer since February 2014, has achieved respectable results with his business plan writing service with several of his clients securing funding and leaving positive feedback about his writing service. You can connect with him via phone: 0803 206 4106 or email: paulonwueme@gmail.com