RECYCLING ENTERPRISES SUPPORT PROGRAMME

Waste is first of all an economic concept – implicit in the word is the fact that resources are not being used

efficiently. There is an economic loss every time resources are utilised in a way that results in them being

discarded as waste. If resources can be saved, recovered or used more efficiently, there is a net economic

gain. The Waste RDI Roadmap 17 - UNEP, 2013

• BACKGROUND

• LEGISLATIVE CONTEXT

• PROGRAMME APPROACH

• CONCEPTUALISATION

• CONSULTATION

• SOLICITATION

• IMPLEMENTATION

• NEXT ACTIONS

• IMPLICATIONS

BACKGROUND

• Based on the 22 August MINMEC resolution

• Objective of establishing 2 recycling

companies per province.

• Tasked to the Department’s Waste

Management Bureau

• The RESP aims to offer support to new

entrants in the recycling economy from

historically disadvantaged groups

• RESP to be implemented over a 2 year

period

LEGISLATIVE CONTEXT

• Section 6 and 13A (2)b of the Waste Act

• Linked to goal 3 of the National Waste Management Strategy

– “Grow the contribution of the waste sector to the green economy.”

Sound Waste Management

(Waste Hierarchy)

Empowerment of previously

disadvantaged individuals

Job Creation and SMME

development

Industry Waste

Management

Plans

PROGRAMME APPROACH

Conceptualisation

Consultation

Solicitation

Implementation

• Conduct research and establish status quo

• Develop the Problem Statement

• Determine scope and resource requirements

• Draft a National Concept Document

• Consultation with the Provinces for support, coordination and inputs.

• Engagement with relevant business support and funding agencies.

• Determine strategies to fast track the selected participants to medium to large

enterprises..

• Development of a uniform framework for identification, selection of participating

businesses for development and support

• Draft Terms of Reference and Call for Proposals

• Perform adjudication process for shortlisted companies.

• Consultation with the Provinces for support, coordination and inputs.

• Engagement with relevant business support and funding agencies.

• Development of a uniform framework for identification, selection of participating

businesses for development and support.

• The total value of waste in SA minimum of ZAR 25 billion (DST, 2013).

• SA’s population and economic growth has a direct link with waste generation

• As advances in production processes increase, so do the consumption rates of urban citizens

and their relative standards of living.

• Most HDI entrepreneurs operating at lower levels at the recycling value chain

• Opportunities for improving may not reside in the already well developed markets (i.e. glass, paper, plastics and cans).

• The real potential lies in unexplored markets for (tyres, e-waste, organic waste, construction & demolition waste, obsolete cars, etc.)

CONCEPTUALISATION: STATUS QUO

“Waste recycling rates in South Africa are yet to reach

maturity, joblessness and unemployment rates are steadily

increasing yet the material contribution of the previously

disadvantaged communities in the waste economy remains

woefully inadequate.”

CONCEPTUALISATION: PROBLEM STATEMENT

CONCEPTUALISATION: RECYCLING VALUE CHAIN

Waste

CollectionEnergy

Recovery

Waste

Transfer

Waste

Processing

CONSULTATION: STAKEHOLDER ENGAGEMENT

The stakeholder engagement process is a continuous

feedback loop

CONSULTATION: INCEPTION MEETINGS Engagements with the Provinces have commenced and engagements will culminate into a consolidated

National Concept Document that will be informed Provincial initiatives.

NO. PROVINCEMEETING

DATEOUTCOME/PROGRESS

1. Eastern Cape 30/10/2015

The Inception Meeting took place in East London, Eastern Cape and was well represented. Possible waste streams

have been identified, with a option for more. A question of linking with the existing SMMEs or cooperatives was raised

for the project to consider. A follow up meeting will be held with Economic Development colleagues as they could not

attend the meeting at that time.

2. Free State 30/11/2015 The Inception Meeting was held on the 18th November 2015, in Sandton as FS Officials will be in Gauteng at the time.

3. Gauteng 03/11/2015

The Inception Meeting was held in Pretoria with GDARD but follow a need for a follow up meeting including the

Economic Development officials has been identified, as they could not be at the meeting the took place on the 3rd

November 2015. The Officials from Economic development had an urgent engagement that they needed to attend to,

hence they will be hosting the next meeting.

4. KwaZulu-Natal 23/11/2015 The Inception Meeting was held on the 23rd November 2015 in Pietermaritzburg, KZN.

5. Limpopo 09/11/2015

The Inception Meeting took place on the 9th November 2015, in Polokwane, Limpopo. The Economic Development

Section of LEDET was represented. A proposal was made to host a special Working Group 9 meeting or National

Meeting to look at a National Companies approach to the initiative, as the provincial initiatives will be affected by

availability of waste volumes and major off takers. The Province is concerned that this programme should be driven at a

National Level. This requires consultation.

6. Mpumalanga 20/11/2015 The Inception Meeting was held on the 20th November 2015, in Mbombela Municipality, Mpumalanga .

7. North West 28/01/2016A presentation was done at the Provincial Waste Officer’s Forum Meeting that was held on the 19th November 2015.

The actual inception meeting took place on the 28th January 2016.

8. Northern Cape 05/11/2015

The Inception Meeting took place in Kimberly, Northern Cape and there was well representation from the province and

DEA / Waste Bureau. The Department of Agriculture was also part of the meeting, however, a follow up engagement

may be required with Economic Development Department.

9. Western Cape 10/12/2015 The inception meeting took place in Cape Town at the Provincial Office.

Messages from the Provinces

“People are excited to start up the collection of recyclable materials however the issue is how to

transport them….there are little to know recycling facilities in the area”

“Many people are selling scrap metal to transporters that are cheating them”’

“Most of the waste is being exported”

“We should look at combining a number of existing players”

“We do not want any more white elephants”

“Certain provinces such as the Eastern Cape and KZN are able to get multiple projects funded.”

CONSULTATION: FUNDING & DEVELOPMENT SUPPORT

The RESP team have engaged with;

o Transaction advisors,

o Development Finance Institutions and;

o International Donor Agencies

• All with the aim of bolstering the Programme with the required

support participating recycling and waste management

enterprises through their initial start-up and growth phases.

CONSULTATION: FUNDING MODEL

• Create a Special Purpose Funding

Vehicle for Recycling Start-ups

– Combination of Grant Funding

(DEA or Donor Agencies),

– Debt from Development Finance

Institutions, Private Equity or

Enterprise Development Funding

– Optimise debt vs. equity ratio (more

equity, less debt)

– National & Provincial Government,

including Municipalities to provide

long term off take contracts as well

supply side in terms of access to

MSW and waste collection

contracts

Messages from the DFIs

“’They would not be a sole funder, there would need to be a level of funding from the

entrepreneur”

“’DFI would look for a developmental return (waste treatment, job creation)”

“The big deal is the entrepreneur would need to have access to raw material”

“The challenges are not so much the funding but more the marketable products”

“The drivers for recycling of beverage cans are: sustainability of markets, value of the can,

infrastructure, networks, and that they are cheaper to use”

“The success of the plant would be determined by four factors: baled bottle supply, secure

throughput [production], a sufficiently high selling price, and an adequate yield [ratio of input to

output]."

SOLICITATION: RFP

• RFP drafted and advertised for 4 weeks from the 12

February 2016 until 4th March 2016.

• The RESP received a positive response whereby

202 expression of interest has been received

followed by 183 interested parties who have applied

to the programme. (19 enquired but never utilised

the opportunity)

• Out of the 183 applications 11 expression of interest

was submitted by consultancy firms within the

industry who offers a variety of services. This leaves

172 applications for consideration

• A total of 33 proposals relate to the operations of

Buyback Centres/Co-operatives or Material

Recovery Facilities. This type of application falls in

line with the functions of the Environmental

Programmes Branch

RECEIVED 202

ENQUIRIES ONLY 19

CONSULTANTS 11

PROPOSALS FOR ASSESSMENT 172

SOLICITATION: ENGAGEMENT PROCESS

Phases Key Skills / Key Tasks Parties Involved

Funding Arrangement • Business plan development and financial modelling

• Transactional Advisory Services

• Networking activities and marketing knowledge to identify deal opportunities

• Monitoring other potential sources including invitations to co-invest or RFP from private sector/ governments

•DEA (WMB)

• DFIs

• DTi

•Provinces/LED

Candidate Screening •Analytical skills and deep business understanding

•Valuation expertise (DCF, multiples, LBOs, etc) and sector know-how

•Discussions with prospective partners, management, or industry experts to select projects with high probability of success

•DEA (WMB)

• DFIs

• DTi

•Provinces/LED

Due Diligence •Ability to achieve a comprehensive understanding of the company’s key characteristics

•Risk management and investment skills to identify and mitigate major risks and potential fatal flaws / deal breakers

•Leveraging local network to acquire thorough knowledge of accounting, legal and tax environment

•DEA (WMB)

• DFI

• DTi

•Provinces/LED

Review Committee •Presentation of the opportunity to the Review Committee

•Involvement of members of the Review Committee begins and remains throughout the entire engagement process, including initial review, evaluation

and approval of funding requests into Recycling Co.

•DEA (WMB)

• DFI

• DTi

•Provinces/LED

RESP INTEREST BREAKDOWN BY PROVINCE

RESP APPLICATION BUDGET REQUIREMENTS EXPRESSED

START-UP REQUIREMENTS TOTAL

No monetary value reflected in proposals (R-) incomplete info 86

Applications between R1 and R500 000 9

Applications between R500 0001 and R1 000 000 5

Applications between R1 000 0001 and R3 000 000 26

Applications between R3 000 0001 and R5 000 000 14

Applications between R5 000 001 and R10 000 000 7

Applications above R10 000 000 25

RESP BUYBACK CENTRE/COOPERATIVE OR MRF’S

PROVINCE TOTAL

Eastern Cape 1

Gauteng 9

KwaZulu-Natal 6

Limpopo 3

Mpumalanga 4

North West 2

Northern Cape 1

Western Cape 4

Expression with capabilities to serve multiple provinces 2

TOTAL 32

IMPLEMENTATION: NEXT ACTIONS

• Finalisation of the adjudication process regarding the RESP RFP.

• Presentation and report back meetings to the 9 Provincial MECs

• Draft and sign Agreements with Funding Institutions

• Finalise funding packages and other support mechanisms for the

Programme

YO SHOMA

NDO LIVHUWA OBRIGADO