Analyzing the Complexities of the PET Market in Ghana: Challenges and Solutions.
Analyzing the Complexities of the PET Market in Ghana: Challenges and Solutions.
We may have recently seen the launch of the 16,000 metric tons per year rPET market by the Mohinani Group that would be set in motion in 2023 here in West Africa across two markets (Ghana & Nigeria). With the introduction of the AfCFTA trade we have seen in the month of July 2020, the pilot of the inter-trade policy by seven (7) countries, there is no better time than to launch such a project.
But the key question still remains, why is the private sector not very enthused, especially other recyclers in the same market? Does the idea of a bottle to bottle scare them? What does that mean for the local PET market and what does it mean for future investment in the rPET space? Is there even enough stock for everyone, and what powerplay would be in place in the coming years?
According to a report from The Global Plastic Action, Ghana generates about 1.3 million tons of plastic per year and less than 2% of this is recycled. However, it’s important to note that this data has significantly changed. To even better break that down for PET alone, most of the data out there is focused on all plastics. It’s important to note that around 95,000 metric tons of PET are produced locally here in Ghana and about 8,800 tons of that are currently recycled. That’s a 9.26% recycling rate for PET locally produced already. This data does not yet capture the total number of PET imported into the country, where is that data? Still hard to find.
The key point here is that the above data is way over 3 years old and does not reflect 2022 data on the current amount of plastic in the value chain. Access to accurate data on recycling and plastic is hard to find and if there is, it’s pretty much old as there is no monthly capture in real time of how much materials flow in as plastic waste daily, and if there is, it’s not readily available. But let’s work with what we have, say the above data is what it is today, which would mean that a little over 90% of PET remains largely uncollected and recycled.
But let’s even dig deeper into the real issue on the ground, and from the recycler's perspective because it does matter. From October 2021 till this month of July 2022, recyclers are seeing an increased difficulty in the access and purchase of PET bottles. But why? If there is so much in the value chain why is access still very difficult for local recyclers? Well, the answer still remains that over 70% of these stocks end up in landfills, drainage, and water bodies and Ghana has no mandatory segregation policy for waste to ensure that these material types are captured before they end up in landfills or unexpected destinations.
The collection of the PET is then left in the hands of, as it has always been, waste pickers who have now metamorphosed into aggregators that are full-time into the collection of PET bottles from landfills, beaches, and communities and in turn sell directly to recyclers. Since 2020, the number of aggregators in the PET recycling space has more than doubled following the sharp increase in the value of PET plastics in the value chain. From the rise of Ghc1,000 cedis per ton, we are now seeing the sale of bottles(unprocessed) selling now at Ghc2,000 cedis per ton.
The rise in the value of PET bottles can be tied to the global rise in bottle prices starting from the 2021 coronavirus crisis. The rise in the price of oil often takes effect on the price of virgin plastics over time which in turn affects the price and demand for recycled plastics, again over time. Another drive in price is the huge demand for recycled plastic for non-food grade applications such as fiber and PET sheets but this despite high price rise due to high demand, recyclers in Europe also are facing high logistic costs in shipping as well as high fuel prices and these offsets the cost.
But one would ask, doesn’t the increase in price mean a good thing for the local recyclers in the sector? Well, it would be a good thing if these prices of the purchase were offered by the local recyclers themselves, but no they aren’t. They are offered by new entries to recyclers from Asia such as China and Turkey who of course own hot washing lines and are able to offer higher purchase prices to aggregators to drive material traffic to their recycling facilities cutting off suppliers to local recyclers who depend on these aggregators. The real problem here is that local recyclers may not be able to compete in a healthy environment just because they do not have the right investment and operate in a highly non-regulated market.
I think to resolve these, there is a need to consider these three key points. There is a need for the set up of an Extended Producer Responsibility and this should be done expediently as there is no defined timeline of roll out in Ghana yet. Although Ghana and Nigeria are leading the discussion on this, more still needs to be done to ensure the first EPR for West Africa comes into play.
The second strategy is for local recyclers to regroup and organize themselves as a union. The recycling industry is an over 40 years old sector and the creation of unions has proved very successful in lobbying and ensuring regulations within the needed market space as seen in developed markets like Europe and Asia.
Finally, there is a need to create what I would call a DCB (District Collection Banks) across every district through the use of the district assembly. The ministry of the environment should work with the municipal assembly to ensure the creation of DCB or in some countries, they are called MRF(Material Recovery Facilities) which would be a point of contact for community members to bring in the recyclable waste for an incentive. This DCB would help aggregators to find the closest drop-off point as some aggregators would have to travel more than 40km to sell recyclables hence the reason for the high cost. Create a DCB that would be managed by a vetted local recycler from an accredited union (this is effective if the second point is implemented). This solution would ensure that clean materials come to the DCB in a cost-effective manner and even more so create equity in the share and access to feedstock within the value chain.
In summary, the recycling space in Ghana is fast growing and even so expected to double by 2025, but this growth needs to be sustained with the needed infrastructure to ensure stability while protecting local businesses and keeping jobs.
As we have seen the launch of a bottle-to-bottle plant in Ghana, it is high time the stakeholders come together, consolidate and more importantly expedite the needed strategies and goals needed to effectively address the plastic pollution problem in Ghana.
