12

Integrating the informal

Waste:
the challenges
facing developing
countries

sector for improved waste

management
In many cities of the developing countries, the informal sector plays an important role in managing
municipal solid waste. The informal recovery of recyclables from the solid waste system reduces
overall solid waste management costs for municipalities. Millions of Euros are saved annually in the
process. Apart from this, informal sector waste management activities also helps municipalities
achieve recycling objectives and reduce use of precious landfill space.

Dr Sanjay K Gupta bottom of the waste trade pyramid are the

Independent adviser and consultant1 waste pickers who engage in the free collec-
tion of waste from municipal garbage bins,

W
aste management systems in the streets and dumps. Above them are the itin-
cities of many developing coun- erant scrap buyers who purchase
tries could not be managed with- small quantities of waste (plas- “Many more
out the informal sector: waste pickers, scrap tic, paper, glass, metals, etc.) tonnes of recovered
collectors, traders and recyclers. The Inter- from households. In several coun- materials come via
national Labour Organisation (ILO) defines tries, households also sell their re- informal channels
informal sector waste workers as individu- cyclable waste to itinerant buy- in the cities than via
als or small and micro-enterprises that in- ers in street shops. Between the formal channels.”
tervene in waste management without be- waste collectors and the reproc-
ing registered and without being formally essors are various levels of traders, including
charged with providing retailers, stockists and wholesalers, many of
waste management serv- whom are not registered as businesses. The
ices. This sector is of- trade gets more specialised as it moves up
ten not officially recog- the pyramid. At every successive level, waste
nised and acknowledged, is sorted more specifically; the finer the seg-
yet its members contrib- regation, the more value is added. Where city
ute significantly to the waste collection systems are efficient, some
waste management of cit- of the players may be missing or combined.
ies, by collecting, sort- Materials recovered by the informal valorisa-
DR SANJAY K GUPTA ing, processing, storing tion sector are sold into the industrial value
Dr Gupta is an independent and trading waste mate- chain. In a recent development, waste picker
consultant, working with rials in the recycling val- cooperatives have been formed by informal
international organisations, ue chain. Many more sector workers in many countries with the
including NGOs, public
bodies and private sector on
tonnes of recovered ma- help of non government organisation and
informal sector livelihood terials come via informal donor agencies. These workers undertake
and integrated solid waste channels in the cities than some formal work under contract to a mu-
management issues. He is via formal channels (Ta- nicipal authority, while also being involved in
an expert on the recycling ble 1). In most developing informal recycling, thus in this respect, mak-
value chain. He has a PhD
from Jawaharlal Nehru
countries, 15-20%2 of the ing their role semi-formal.
University, New Delhi. He waste generated is man-
has written several papers aged by the informal sec- Providing environmental
published internationally on tor, providing financial and economic benefits
waste issues. He is an elected and environmental bene- Many studies indicate that the informal sol-
core committee member
of Collaborative Working
fits to municipalities.
Group (CWG) for solid waste In most developing coun- 1
Dr David Wilson, Independent Waste and Resources Management
tries, the informal recy- Consultant and Visiting Professor at Imperial College London, provided
management in Middle and valuable feedback on this article at different stages.
Low Income Countries based cling sector is structured 2
These figures refer only to recyclables material retrieved and sold to
in Switzerland. scrap dealers by informal sector waste pickers and not necessarily the
like a pyramid. At the total waste collection, which is often higher than the referred 15-20%.

www.proparco.fr
 13

TABLE 1: WASTE RECOVERY RATE IN SEVEN CITIES

Belo Horizonte Canete Delhi Dhaka Managua Moshi Quezon City
(Brazil) (Peru) (India) (Bangladesh) (Nicaragua) (Tanzania) (Philippines)
Tons per year
recovered all 145,134 1,412 841,070 210,240 78,840 11,169 287,972
sectors
Percent recovered 0.1% 1% 7% 0% 3% 0% 8%
by formal sector
Percent recovered 6.9% 11% 27% 18% 15% 18% 31%
by informal sector

Source: CWG-GIZ / Scheinberg et al., 2010

id waste management sector is more ac- er are EUR 571, which in many cities is
tive and effective in recovering and val- more than that same worker earns in a
orising resources than the formal one in year (CWG-GIZ, 2010).
low- and middle-income countries. The rea- By engaging in recycling activities, the
sons for this are as follows: first, the infor- informal sector also creates environmen-
mal sector usually works in the recovery and tal benefits for the municipal authori-
recycling of valuable materials, while the for- ties, helping them to reach recycling tar-
mal sector focuses on collection and dispos- gets and save precious landfill space. It
al; second, the informal sector achieves high- also reduces the extraction of raw mate-
er recycling rates. Although operational costs rials and returns secondary raw materi-
are often higher than in the formal sector, als to the production cycle, resulting in
the high revenues from materials result in a less energy being used for recycling proc-
much lower cost per tonne, in most cases a esses than for production processes with
net benefit. Informal valorisation businesses primary raw materials. Moreover, infor-
only extract, process, and sell those materials mal sector recovery scores considerably
that have a high intrinsic value and on which better than formal recovery in terms of
they can make a profit. All informal valori- reduced fossil energy use. This is because
sation activities along the entire value chain many informal activities rely on human or
are profitable. The informal sectors in Cluj animal muscle traction, rather than on mo-
(Romania), Lima (Peru), Lusaka (Zambia), torised transport.
Pune (India), Quezon City (the Philippines)
and Cairo (Egypt) together make a net profit A source of livelihood
of about EUR 130 million (CWG-GIZ, 2011). for millions of people
The large profit is able to sustain or add val- The informal recycling sector provides a
uable income to sustaining about 73,000 in- livelihood to millions of people in devel-
formal sector workers in these cities. oping countries, who survive on in-
The informal recovery of recyclables from
the solid waste system reduces overall solid
waste management costs for municipalities FIGURE 1: COST SAVINGS OF WASTE PICKERS
(Figure 1). If material is recov- FOR MUNICIPAL WASTE COLLECTION AND DISPOSAL,
BY CITY
“The informal ered through door-to-door collec-
recovery (...) reduces tion by the informal sector, this Average Contribution Per Year (Millions)
overall solid waste material no longer needs to be €18

management costs collected, so all expenses – collec- €16 € 15.76 m

for municipalities.” tion, transport and disposal – are €14

€ 14.47 m

reduced according to the amount

that is recovered. The savings on transport €12

depend on the point at which the material €10

is removed from the waste stream for recy-
€8
cling. If material is recovered at the dispos-
al site, transport costs are not reduced, but €6
disposal costs are reduced. Millions of Euros €4
€ 4.2 m

are saved in the process. For example, Del- € 2.2 m

€2 € 1.47 m
hi (India) saves around EUR 6.7-7.5 million
€ 63 000
annually. A study conducted in six cities of €0
developing and emerging markets suggests Cluj-Napoca
(Romania)
Lusaka
(Zambia)
Pune
(India)
Quezon City
(Philippines)
Cairo
(Egypt)
Limo
(Peru)
that most of the avoided costs are for col-
lection. The average avoided costs per work- Source: CWG, GIZ, 2010

Private Sector & Development

 14 Integrating the informal sector for improved waste management

Waste: formal waste picking and recycling (Ta-

the challenges
facing developing ble 2). It is estimated that nearly 15 million BOX 1: SWACH - A WASTE PICKERS’ COOPERATIVE
countries
people are engaged in waste management IN PUNE, INDIA
activities in the informal sector. In many Solid Waste Collection and Handling, or officially, SWaCH
cities, the informal waste sector provides Cooperative, is India’s first wholly owned cooperative of self-
more livelihoods than the formal waste sec- employed waste pickers/waste collectors and other urban poor.
tor. Waste pickers’ earnings also vary widely It is an autonomous enterprise that provides front-end waste
management services to the citizens of Pune. SWaCH is authorised
among regions, in terms of the type of work
by the Pune Municipal Corporation (PMC) to provide door-to-door
they do, and between women and men. Al- waste collection and other allied waste management services.
though waste picking is the lowest paid part The scope of SWaCH includes collection, resource recovery, trade
of the recycling chain in many places, these and waste processing. Currently, through its 1,867 members,
workers often earn more than the minimum it provides services to the population of over 1.5 million people
of Pune. SWaCH bridges the garbage gap between people’s
wage. In Brazil, for example, data collected
doors and the PMC collection points. It offers total solutions
shows that 34% of waste pickers earn 1 to 1.5 for wet garbage and dry garbage, while enabling the waste
times the minimum wage, and 54% of them pickers and collectors to keep their livelihoods and get trained
earn 1.5 to 4 times the minimum wage. to carry out their work professionally and in an occupationally
However, work in the informal recycling sec- safer way. The integration of the waste pickers through
SWaCH has helped to reduce waste disposal by more than
tor is usually insecure, and carried out under
20%. For the PMC, the cost of engaging with the informal
appalling health and occupational safety con- sector is much cheaper than engaging with private sector.
ditions, sometimes inhuman. Waste pickers
face great risks of injury, especially those who
work at open dumps: they may be run over by
trucks or become the victims of surface sub- (Box 1). In Bogota (Colombia), the Appellate
sidence, landfill slides and fires. They are also Court struck down the exclusive right over
exposed to great quantities of toxic fumes at waste to a municipal waste contractor and
the disposal site. It is generally accepted that restored the right over waste to the street
morbidity among waste pickers is higher than waste pickers.
among formal waste collectors. Mobilising the informal sector entails mu-
nicipalities establishing direct contractu-
Mobilising and formalising al or covenant relations with informal sec-
the informal sector tor organisations. But to facilitate this, the
Attitudes of municipal authorities towards informal sector needs to or-
the informal sector differ from place to ganise itself into coopera- “The role of
place: in some places there is hostility, in tives or other legal or semi- municipalities is critical
others indifference, and in some places they legal structures. For efficient to mobilising the
are regarded as a useful part of the waste waste management, it is informal sector.”
management system and are given the op- more appropriate and eco-
portunity to enhance their livelihoods. The nomical to use the existing structures of
role of municipalities is critical to mobilis- the informal sector or to modernise it. For
ing the informal sector and organising the example, Brazilian municipalities partner
informal valorisation sector. with waste picker cooperatives, giving them
The first way to upgrade the informal sector the right to receive recyclables collected by
would be to integrate waste pickers into di- the municipality and to rent recycling cen-
rectly collecting waste at source, with a right 3
Waste Concern was founded in 1995 with the motto “ Waste is
over recyclables and a guarantee of regular a Resource”. Later Waste Concern Group was formed to achieve a
common vision to contribute towards waste recycling, environmental
access to waste. In 2006, the Pune Munici- improvement, renewable energy, poverty reduction through job creation,
pality granted waste pickers the right to col- and sustainable development. Waste Concern Group is a Social Business
Enterprise (SBE) comprising both “For Profit” and “Not-for Profit”
lect waste and a service fee from households enterprises.

TABLE 2: INFORMAL AND FORMAL LIVELIHOODS IN SIX CITIES

City / Indicator Cairo Cluj Lima Lusaka Pune Quezon
Total no. of livelihoods in informal waste sector (persons) 33,000 3,226 17,643 480 8,850 10,105
Total employment in the formal waste sector (persons) 8,834 330 13,777 800 4,545 5,591
Ratio of persons working in the informal sector to those 3.7 9.8 1.3 0.6 1.9 1.8
in the formal sector
Average informal workers’ earnings (EUR/year) 2.721 345(1) / 2.070 1.767 586 1.199 1.667
Represents actual earnings from about 50 days of labour per year of €345 multiplied by 6 for purposes of comparison with other cities.
(1)

Source: CWG-GIZ, 2010

www.proparco.fr
 15

tres. In Bangladesh, Waste Concern3 and a ery. Consequently, disposal rates will drop,
few other NGOs train waste pickers in or- allowing for savings in transportation and
ganic waste recycling (composting). The landfill operations. Many forms of waste
pickers sell the compost to a large fertiliz- valorisation are found in different combi-
er company. nations: personal or commercial reuse, re-
Informal workers have limited general busi- use with repair, recycling, and composting.
ness knowledge, and are often socially dis- In all these scenarios, municipalities make a
advantaged. For this reason, policy changes net gain and can therefore reach higher re-
need to consider the specific circumstances cycling and landfill diversion rates quicker
of the informal sector. Municipalities could than with their conventional systems.
provide waste pickers with identity cards and
health insurance schemes; they could also
support them in establishing cooperatives or
SMEs, and provide them with training.

Partnering with the private sector BOX 2: PRIVATE SECTOR WASTE MANAGEMENT IN
COIMBATORE, INDIA
In the context of privatised waste collection
services, collaboration between the infor- In Coimbatore, waste is collected door-to-door every day by the
local authority, whereas transport, composting, processing and
mal sector and the formal waste collection landfill is the responsibility of a private company called UPIL
sector is possible. Waste pickers can partner for a period of 25 years. Its revenues come not only from landfill
with waste collection enterprises or vice ver- site fees, but also from the sale of the compost and recyclable
sa. For those who are not engaged in recy- materials collected. Since then in Coimbatore, waste pickers are
cling, a partnership with the informal sector no longer allowed access to landfill sites and the door-to-door
collection system is starting to squeeze out the informal waste
would reduce the volume of waste collected picking from public spaces. In this city, a third system also exists,
and would cut their transport costs. In Bra- run by the Indian Tobacco Company (ITC), a large industrial
zil, for example, the private sector delivers re- conglomerate that operates three paper mills in India. To feed its
cyclables to informal sector recyclers, while paper mills, in 2010, ITC introduced a new system for collecting
informal recyclers make arrangements with waste paper directly from more than 20,000 households. Because
it is positioned well upstream in the process, this system also cuts
formal recycling enterprises, processors and off the source of supply for waste pickers and scrap dealers. This
waste buyers (Scheinberg et al., 2010). example shows that waste is perceived as much as a recoverable
In some cases, conflicts may arise with the resource as “just rubbish”. The rivalries between these systems
private sector. For the private contractor or are more than straightforward economic competition. They
enterprises engaged in collection on payment raise questions concerning the distribution of resources and the
definition of rights of ownership to the materials, to avoid them
of paid-per-ton disposed at the landfill, the being monopolised by a single operator. Here informal sector
informal sector waste collection becomes a waste pickers are not only displaced but also overall recycling and
competitor and cuts into their profits. These recovery is anticipated to be much lower than what it could have
firms have an interest in collecting the larg- been with the integration of waste pickers in the formal system.
est possible quantity of waste to increase (AFD, 2010)
their revenues (Box 2). In this context, they
may be inclined to develop strategies to ac-
cess waste at the earliest possible stage or to
prevent the informal sector from collecting
waste. In such a situation, the public sector
should either help integrate the informal sec-
tor to work with the formal sector or ensure
that contracts for private sector operators are
designed in a way that ensure the informal
sector has access to and the right to waste.
Regularising and integrating informal re-
covery into the overall solid waste system
could enhance recyclable recovery rates
and reduce overall solid waste management
costs. Generally, policies that facilitate the
integration of the informal sector will result
in an increase in the rate of material recov-

References /Cavé, J., 2010. Waste management in Coimbatore (India): friction between public policy and private-sector initiatives, AFD – Working paper n°104,
Laboratoire Techniques, Territoires et Sociétés (LATTS), CNRS. December / CWG-GIZ, 2010. The Economics of the Informal Sector in Solid Waste Management. CWG
Publication Series No 5. available at http://www.cwgnet.net/prarticle.2010-11-04.5920431459/prarticle.2011-03-30.0366272418 / Gerold, A. 2009. Integrating the
Informal Sector in Solid Waste Management Systems. Basic Aspects and Experiences. GIZ. / Scheinberg, A., Wilson, D.C., Rodic, L. 2010. Solid Waste Management in
the World’s Cities. Published for UN-Habitat by Earthscan, London.

Private Sector & Development