Keeping it simple, transparent, efficient & backing it all up with AI—is helping this recycling company make money

Plastic waste is everywhere in Nigeria. The streets are littered with lightweight plastics and metallic parts. The culprits are regular citizens who discard trash with little regard to how and where, and even the decrepit waste collection trucks can sometimes be seen trailing garbage in their wake.

In the absence of strong environmental policies or government infrastructure, there has been a proliferation of privately-owned companies that make money by removing this waste from the streets. It’s a competitive and tough business, but one company has developed a model that has seen it expand rapidly.

Scrapays started with a simple premise: any company that relied on its own collection infrastructure was going to struggle to make money.

“Without a central collection point, the amount spent on logistics might be higher or equal to your business profit,” explained Scrapays co-founder, Boluwatife Arewa.

So Scrapays came up with a system that offers the most efficiency.

The waste distribution chain begins with a waste producer who places a pickup order that a collector receives. The collector weighs the items at the pickup point and pays the producer accordingly. Next in the chain are the agents, who usually collect trash from more than one collector and take it to the place where it will be processed.

Technology enables the company to maintain a stakeholder network. Scrapays provides a quick code (USSD) platform for waste producers and collectors.

“A significant number of players in the recycling business do not use smartphones, so the USSD makes it easy for them to interact with our system,” Arewa explained.

The low-tech mobile messaging service allows them to place pickup orders, track earnings and make payments from their mobile wallet; earnings can be transferred directly to a local bank account and withdrawn as cash.

While the quick codes may be simple to use, a fully integrated artificial intelligence framework enables agents to value items and make payments to collectors within a short timeframe. The system receives inputs automatically from a wide variety of sources to keep valuations up to date.

“The app we created for our agents has an internet of things (IoT) system,” Arewa said.

Arewa showed that the incentives each person in the chain gets depend on the type of material recovered, the time of year, and the forces of the local and global markets.

“Over the past three weeks, the price of metal has been increasing with everyone recovering metal earning more,” While metal appreciates, “the price of cartons is decreasing,” he added.

He explained that the price fluctuations resulted from the ongoing rainy season in Nigeria. To ensure transparency, the company’s system provides recent prices of recyclables, including plastic, aluminium, metals, and PET bottles.

“The payments are not fixed; stakeholders are rewarded based on how much value they bring to the chain,” said Arewa.

One of Scrapays’ agents, a commercial tricycle vendor, makes around 1.3 million Nigerian naira (US$3,000) every six weeks from selling the vehicle’s packaging materials — cartons, plastic stretch wraps, and light metals. Previously, she paid people to dispose of them.

Some agents set up multiple collection locations and help retrieve up to 4 tonnes of waste from the environment each month.

“When people see us making money from waste, they want to join too,” said Ndidi Achonye, a waste collector in Lagos.

Arewa founded the company together with fellow geoscience coursemates Tope Sulaimon and Olumide Ogunleye while the three were still undergraduates at the Federal University of Technology Akure, in Southwest Nigeria.

They initially named it Panti, a Yoruba word for waste. Currently operating in five states in Nigeria, including Lagos, Scrapays’ business model has, like the company, evolved significantly. Importantly, by connecting everyone in the recycling ecosystem and making pricing, collections, and payments more transparent and reliable, the system they’ve developed incentivises the waste producers themselves to recycle and helps collectors make more money.

According to Arewa, Scrapays collectors’ network has grown by 25% on a month-on-month basis.

“Our agents have autonomy over their activities. We only provide them with the technology and infrastructure to do it in a scalable manner,” he said.

The company also leverages its multi-use platform—USSD, mobile apps, and web—to generate profit from app subscriptions as well as in-app transactions, boosting its primary earnings from facilitating the recycling value chain.

Investors and organisations that give out grants are very interested in Scrapays’ business model. It is the only waste management company chosen for the latest Google Black Founders Fund.

A little-known additional revenue source for the company is carbon credits. The company has joined the international carbon trading system and is making money by taking carbon out of the atmosphere.

In an article published by ESI Africa, Jean-Paul Adam, a director at the United Nations Economic Commission for Africa (UNECA), was quoted as saying, “A well-structured carbon credit system can allow African countries to protect at-risk resources and generate income from the protection of those resources.”

With growth and increased credibility, it might be expected that the company would push to establish branches right across the country. However, Scrapays is segmenting its expansion very strategically. It is looking to expand one Nigerian state at a time while expanding to other countries not only in Africa but also in Latin America and Southeast Asia-that face similar waste problems to Nigeria’s.

Story Credit: Kate Okorie by bird story agency