Street Surfers - The governance of waste

Executive Summary

The roadmap for South Africa (SA) to achieve efficiencies and a comparative advantage in the waste management industry includes five main pathways, being:

1. Policy setting and enforcement to ensure local waste contributor accountability. 
2. Process innovation at the base-of-the-pyramid (BoP) labour level to increase throughput and productivity.
3. Investment in technology for economic growth.
4. Governance of the waste value chain.
5. Achievement of a national system of innovation to realise a comparative advantage in waste management and repurposed raw material production.

The above is in furtherance of several SDGs and in specific SDG1 No Poverty and SDG 12 Responsible Consumption and Production.

Technologies employed by wastepreneurs and waste management centres (WMCs) in South Africa are explored. Currently, there are about 100,000 wastepreneurs that collect and manually haul waste to WMCs. WMCs collect waste at source at business premises or from wastepreneurs through buyback programmes, which WMCs recycle, rework or sell as repurposed raw material, for example food waste is recycled into compost or plastic hospital drip bags are repurposed as raw material for school shoes. Wastepreneurs and WMCs are part of the same vertical waste supply chain that was birthed as a direct result of establishment of waste management policy.

The sophisticated waste policies in place in SA are rarely enforced and the limitations of these policies fail to hold all waste contributors accountable. Wastepreneurs do not equitably share in the benefits of the waste supply chain nor do these policies enable a national system of innovation to develop with comparative advantages for SA. 

Waste is an outcome of industrialisation and ironically industrialisation is the solution to waste disposal.

1. INTRODUCTION

SA is a developing country with the highest gini coefficient and an unemployment rate of 32.7%. It is the 169th most populous country, however SA is the 12th largest greenhouse emitter with a comparatively high rate of waste generation for a developing country. SA aims to reduce carbon emissions by 42% by 2025 and an identified pillar is the reduction of total waste to landfill.

The commercial waste market was created as a direct result of waste management legislation, thereby forcing organisations to seek solutions to their waste problem. Thus, policy turned previously worthless waste into a valuable commodity. The WMCs commercialised waste collection by establishing onsite sorting plants at businesses or at waste collection centres. The wastepreneur emerged as an informal labour sector through the waste buyback programmes offered by WMCs. 

Wastepreneurs are at the base of the pyramid (BoP) and to earn $16.72 they must collect 100 kilograms of waste, meaning wastepreneurs live below the poverty line of $2.15 a day. Wastepreneurs fulfil a specialised logistics role in waste sorting and collection. The service they provide is an important complementary asset in the waste value chain, yet they do not earn a living wage. 

There are three potential solutions to the value sharing challenge of wastepreneurs that can uplift them from extreme poverty by increasing throughput:

1. Policy creation that holds all waste contributors responsible for waste management and that will naturally create collaboration with wastepreneurs;
2. Through innovation in wastepreneur transport and communication between waste contributors and wastepreneurs; and
3. The state remunerating wastepreneurs in the waste removal role they play that are the responsibility of municipalities.

With scientific research into waste reduction systems, i.e., fungi that consumes oil, worms that ingest plastic, waste centres can commercialise these scientific finds to reduce waste that cannot currently be recycled or to create efficiencies in the established waste management process. Meaning, through Schumpetarian product innovation and Usharian process improvements the result will enhance the achievement of responsible consumption and production. 

1. PATHWAYS TO MASTERY 

There are five pathways that SA is to follow to achieve a comparative advantage in the waste management industry:

2.1 Policy Setting and Enforcement 

South African waste policy setting was due to international pressure as a UN member and a signatory to various international agreements. The National Environmental Management: Waste Act (NEM:WA) created a more consolidated waste legislation landscape and it provided for the drafting of the National Waste Management Strategy (NWMS) that sets out national policy and strategic objectives for the waste industry in support of the SDGs. The NWMS is founded on the principles of a circular economy that addresses the avoidance, reusing and recycling of waste. It embraces the need for innovation in product design, production, packaging, consumption and re-use as raw materials in other production processes. 

Enforcement has been strengthened by the creation of the Green Scorpions to ensure compliance on land and the Blue Scorpions in respect of water management. In addition, the Carbon Tax Act was enacted to combat climate change and to hold organisations accountable in line with the polluter pays principle.

Even though waste management policy in SA is sophisticated there are areas of improvements that could lead to a more cohesive industry, including: 

• Consolidation of all fragmented legislation. Draft legislation is out for comment, however it does not address the fragmentation challenge.
• The success of the NWMS depends on the implementation on a local and provincial level, by the private sector and at an individual consumer level.

2.2 Process Innovation at BoP Level

Freeman (1995) mentions, in a globally connected world, national, regional and firm-based systems of innovation that are linked to formal institutions of science and education are essential. What is omitted is the inclusion of the BoP labour providers. Wastepreneurs innovated a low-cost waste removal system, albeit inefficient and labour-intensive, in a manner that would not have been possible in the formal sector due to strict labour legislation and cost constraints. Pairing Freeman’s “nether-regional systems of innovation” and the Listian concept of labour innovation with the BoP labour provided by wastepreneurs as a supplier of “goods'' for the WMCs the importance of that link in the chain as a foundation of a national system of innovation becomes evident. Extrapolating the BoP labour provision to other sectors, it could be deduced that informal sectors can innovate and solve challenges faced by firms. As such, in the waste industry the interdependencies of technical innovations (by WMCs) and organisational innovations (by wastepreneurs) were critical to establish an efficient supply chain and by recognising the interdependency on wastepreneurs as part of the chain resource allocation can improve productivity on a national scale.

Society in SA expects the state to deal with their waste. Meaning wastepreneurs are providing a service to society on behalf of the state without being rewarded for this service by the government. Should investment be made by the state, NGOs and/or social enterprises it could massively improve throughput, ensuring all residential and business waste is collected. For example, OX trucks (robust battery powered delivery trucks) could be deployed to wastepreneurs with a mobile app that enables communication between households, businesses and the wastepreneur to arrange for collection of waste. In turn, this would mean WMCs could deal with more waste, speeding up the system and enabling WMCs to achieve efficiencies of scale. It would reduce waste to landfill and levels of poverty (SDG 1) as wastepeneurs’ productivity would increase and commensurate their remuneration. The positive unintended consequence will be more responsible consumption and production (SDG 12).

2.3 Investment in Technology for Economic Growth

If SA is to achieve exponential nature of economic growth, innovation in productivity enhancements are required. However, if it is to catch up its social capabilities, as mentioned by Abramovitz (1986), resources will have to be allocated to education and organisational strengths to catapult SA into a leader in the waste industry. As technological improvements are incremental, local processes that are costly, organisation-specific, time-intensive and difficult to exchange, it is important to ensure local firm and industry-wide learning to enhance adoption of technology-specific capabilities to reduce the risk of uncertainty and to achieve superior performance. 

The IPAT identity indicates the relationship between environmental impact, population, affluence and technology. Since one cannot address the total population nor the affluence levels easily, the only real level to reduce environmental impact is through technology, hence the reason for the emphasis on technological innovation in the waste industry. 

Therefore, investment in technology for science, design, general consumer education and innovation to enhance productivity, product and process innovation is required to achieve economic growth and national competitiveness. 

2.4 Governance of the Waste Value Chain

Based on the view held by Guiliani et al (2005), the waste value chain should be governed to ensure an inclusive supply chain. Technical skill and knowledge transfer mechanisms, innovation at a process, product, functional, intersectional levels or the create collective efficiencies are elements that can be part of a well-governed waste value chain. The governance system should ensure the production and steering of knowledge and information in the system is linked to the various actors in the system to create technological advancements and innovation. 

Porter and Kramer (2006) advocate a move from corporate social responsibility to a shared value model whereby social enterprises are empowered to be sustainable businesses and become important members of the economy. The wastepreneurs are in essence a social enterprise to themselves and should be recognised and included in the value sharing model. If they can be empowered, educated and their technical skills improved they can turn into small-scale businesses.

Fairness in the supply chain will prevent the exploitation of wastepreneurs due to their lack of bargaining power. 

2.5 Achieving a National System of Innovation

External sources of knowledge and the interconnectedness of systems are steadily more important to innovation. The connectivity of the organisation with the external sources can affect the speed of innovation in the firm and the system. And Porter (1990) argued that the role of a country in a sector achieving a competitive advantage is stronger than ever.

Throughout history countries have developed different innovation systems based on their distinctive social, economic and technical changes present within their economies. These national and regional innovation systems are an important part of innovation for firms, as firms are part of this larger symbiotic ecosystem. Therefore, one cannot apply the innovation system of one country to another country. There needs to be local innovation and if technology is adopted it needs to be adapted to fit the particular innovation system within a country. In addition, Collier and Venables (2007) global value chain model can be applied at a macroeconomic level to the waste industry in that it is not merely the collection, recycle and repurposing of waste, but the complementary inputs and activities, skills development and technology innovation that will improve the reaching of scale, scope and productivity. 

Cohen (2010) as cited by Coad et al (2014) states that over time the commercial success of countries, organisations and sectors depends on the capabilities, know-how and technical skills available to capitalise on technological innovation. Tacit knowledge is transferred face-to-face, making the establishment of regional waste enclaves with preferential tax treatment essential. List (1841) cited by Freeman (1995) emphasised that the function that governments play in the coordination and the setting long-term policies, especially as national and regional systems of innovation remain essential despite globalisation. This remains true for waste management as a matter of national importance since government influences the sustainability of the society, environment and economy regulation of the waste industry and incentives for participants to collaborate and allocate resources to waste avoidance, reduction and recycling is a key component to ensure innovation.

An important step as per Bell and Pavitt (1993) is for the government to commence a programme to ensure a steady supply of waste scientists and engineers through tertiary education and research and development centres in order for SA to create local solutions for local problems that will lead to economic benefits and a national system of innovation. In turn the knowledge produced will aid in advancement of fit-for-purpose policy setting and the linking of knowledge in the system.

SA is located far away from developing countries. As Baldwin (2012) notes, supply-chain trade is more sensitive to distance than final-good trade and the smaller size of the economy is a deterrent to trade with the rest of the world. Having said that, the generation of raw material from waste could be an excellent source for exports as there are relative benefits provided. There is international, national and regional support for products from waste in terms of policy relaxation to stimulate the industry and trade.

Should the improved productivity levels be achieved in the national ecosystem of innovation there will be an improvement in total factor productivity. 

1. DISCUSSION AND CONCLUSION

Policy setting is not the main challenge in SA, it is the enforcement of regulations where focus is required to reach reduction targets by 2025. The creation of the Green and Blue Scorpions have been a good measure, however, they need to be fully resourced to ensure compliance on a national scale. There is a lack of impetus to mobilise financial resources on a national level to address infrastructure challenges, research and technological advancement. Only when the private sector can benefit or when there is a vision at an association level are investments are made into the sector. The effective tax rate of the carbon tax is the 9th lowest out of 26 countries rated and even though certain organisations actively reduce their carbon footprints as good corporate citizens, others rather pay the carbon tax.

According to Pavitt’s Taxonomy both technologies interrogated above are supplier dominated and for WMCs to reach scale it must combine the increased throughput by the BoP complementary assets and economies of scale and scope. 

Guilianian governance of the waste supply chain is needed to correct existing inequalities and to hold society and the government accountable. The lack of bargaining power by wastepreneurs could be countered by the lobbying voice the growing WMCs and other stakeholders in the waste industry could garner.

SA lags in technological enhancement, however, there is an opportunity for innovation to solve local waste challenges and to even become an exporter of technology, raw materials recycled from waste and new products manufactured from waste. 

There are several other frameworks and concepts that are to be linked to the waste management sector described, for example sustainable socio-technical transitions that can transform the industry and that are to be read with the above in further exploratory writings.

It is the key to a light carbon footprint, to reduce climate change as per the definition of sustainable development being meeting the needs of the current generation without compromising the needs of future generations.

#governance #sustainability #municipalgovernance

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