Uba Godwin posits that investing in plastic recycling is a viable and profitable business
The Central Bank of Nigeria (C.B.N) is presently disbursing the sum of N26billion intervention fund for small and medium enterprises (SMEs). The scheme called the Agriculture and Small & Medium Enterprises Investment Scheme (AGMSMEIS) was pooled together by banks and is set to provide funding for small and medium scale businesses in Nigeria.
There is rapid increase in the population of Nigeria. From the data available to us the present figure is estimated at over 180million as the end of 2015 and increase from about 140million people as at 2006 census. As the human population continues to increase, the quantity of solid wastes generation also increases. With rapid increase in population within urban cities there is need for efficient and modern technology for the management of wastes. Recycling of waste plastics is one of the best technologies to avoid environmental air pollution from burning the plastics.
The proposed project is deemed necessary considering the rapid increase of virgin resin materials from between N7,500- N8,500 per bag of 25kg in June, 2015 to between N19,700 and N20,500 per bag of 25kg bag of resin in the period of June 2016. The proposed project will produce recycled plastic products that will now complement with the virgin materials to reduce costs of raw materials in production of various types of plastics.
Plastic recycling (also known as regrind) is the process of recovering scrap or waste plastic and reprocessing the material into useful products, sometimes completely different in form from their original state. Since plastic is non- biodegradable, recycling it is a part of global efforts to reduce plastic in the waste stream, especially the approximately eight million metric tons of waste plastic that enter the earth’s ocean every year. This helps to reduce the high rates of plastic pollution.
Plastic recycling includes melting down plastic water/ soft drink bottles and then casting them as plastic chairs and tables. Plastics are also recycled during the manufacturing process of plastic goods such as polyethylene film and bags. A percentage of the recycled pellets are then re-introduced into the main production operation.
This proposed project will therefore
â€¢ Collect waste plastics from the public via scavengers
â€¢ Treat & Recycle the waste plastics
â€¢ Utilise the treated recycled wastes in production as well as
â€¢ Bag and Sell off the recycled plastics granules to other plastic production plants
Investors can engage some youths into gathering of the wastes and sell the wastes plastics to the recycling plant for a price.
The proper recycling of plastics will go a long way in reducing the level of environmental effect caused by blockage of drainages by non-degradable plastics such as water bottles, PET Bottles from soft drinks and other beverages. When one looks closely at some drainage channels and lagoons within Ogun and Lagos State, lots of blockages is caused by waste plastics.
The main economic advantages of this project, Reduction of Municipal Solid Wastes, Increase of value added refuse; Reduction of environment and social problems at the disposal site; Utilisation of Municipal Solid Wastes to generate domestic and commercial plastic products, Improvement of Municipal Solid Wastes management services and Creation of employment opportunities for Nigerian young graduates.
The Project could be located anywhere in the country. It is advisable to locate the project in areas where raw materials (waste plastics), is in abundant. Urban and commercial areas should be considered. For instance from records, Ogun state Waste management Authority, over 3,000tons of wastes are generated within the state on daily basis; while in Lagos over 9,000metric tons of wastes are generated on daily basis. There are tendencies of further increase as the two states record rapid increase in population on daily basis.
The project could be embarked upon by individuals, corporate organisations, and state & local governments.
Apart from the basic required raw materials, we took adequate cognizance of other relevant factors like availability of electricity, transportation and manpower and market for the products.
The major target markets are plastic producing companies. There are many plastic companies that are readily available to purchase the recycled products.
The demand for recycled plastic materials is very high. The demand has been on an increase. From our research the increase in demand is as a result of the increase in the virgin resin materials. Due to high exchange rate( from N190/ $ to N350/$ between June 2015 to June 2016, the price of resins jumped up from between N9,000 and N9,500 per bag of 25kg to N19,000 to N19,500 per bag of 25kg. The demand for raw materials for production of plastics has a correlation with the total demand for plastics. The higher the quantity of plastics demanded, the higher the quantity of raw materials (including recycled raw materials) required to sustain production.
Based on our records, plastic products enjoy nationwide demand and patronage. In fact it is one the fastest selling consumer goods in the country today. This is because of the nature of the usage of the product. For instance, whenever there is a need to buy other consumer goods, the first step is to buy a plastic material. Its demand has a relationship with the level of demand for the raw materials required for their production.
The product is demanded all year round and is not affected by season particularly in most industrial packaging.
Based on our Research, there are about four major companies that are into waste nylon/plastics recycling plants in Nigeria.
For the Plastic Recycling plant, we require the following machines:-
Machine Qty. Reqd.
Cleaning machine 1
Drying machine 1
Crushing Machine 2
Laundry Drier 1
Palletizing machine 1 set
The machines will be procured, installed and test-run for prospective investors on demand. The production process is very simple as follows:-
â€¢ Heat the Machine
â€¢ Feed the waste plastics
â€¢ The machine will automatically crush the waste plastics
â€¢ Wash the ground plastics
â€¢ Then the drying machine will dry automatically.
â€¢ The products are then packaged in 25kg Bagco super bags and ready to be sold or used in the factory
Financial implication and investment appraisal
The takeoff cost of this project varies depending on the level and capacity the promoters intend to run.
The actual cost will be established via the feasibility studies, putting into consideration the location of the proposed project
Financial analysis carried out indicated that the project is very profitable. The raw material is almost zero cost comparing to the income from the processed wastes. The income in the first year is N1.05billion which increased to N1.9billion. The cost of production is N566.0million in the first year and N940.05million in the 5th year of operations.
The cash flows is very impressive and the payback period is between and 1 and 2 years of operations. The return on investment is 285% within the first five years of operations.
For details on preparation of comprehensive & bankable feasibility studies/ report, sourcing & installation of quality & durable machines; Recruitment & Training, Sourcing of Investment funds, please contact the writer.
Global Trust Consulting,
56, Ishaga Road (1st floor), Surulere, Lagos
Tel: 08034494437, 08023664368