How Egyptian startups are turning plastic trash into cash: Egypt is estimated to generate up to 5.7 mn tons annually in plastic waste,according to a UNIDO 2021 report (pdf). And the problem could only worsen: “The plastics market in Egypt is expected to grow at a rate of 10% annually in the next 10 years,” putting Egypt as the largest consumer of plastics in Africa, the report states. In the MENA region, 40% of plastic is mismanaged or uncollected, 54% ends up in landfills, and just 5% is recycled. Local companies have noticed the problem, and are capitalizing on its potential.

Homegrown companies are tapping into the plastics recycling market: Local startups have spotted the potential in our recycling industry, with startups collecting, treating and turning plastic waste into new products. Some have already started exporting these products while others are planning to do so. We spoke with some of these startups, who tell us that more companies are setting up shop and entering the recycling business in Egypt as Egyptians — both on an individual and industry level — are becoming more environmentally aware. There’s potential for Egyptian companies to export, especially with more global awareness and readiness to adopt recycled goods. Yet despite this, VCs are either hesitant or unaware of the potential of this industry, which is in need of their investment.

More startups are entering the space: “There was no ecosystem in 2015, people had no idea what we were doing, but in the last few years there’s been more activity and more startups coming into the scene and creating products from waste” said Yara Yassin (LinkedIn), co-founder of Upfuse, a company that turns plastic waste into bags and apparel. She’s not wrong: there have been a variety of startups entering the recycling space, including Mobikya, Reform Studio, Dawar, Very Nile, TileGreen and Mubun Furniture, to name a few.

Egyptian consumers are more eco-conscious: “More consumers are appreciating Verynile’s work,” says Farah Abdel Baki (LinkedIn), Very Nile’s marketing and communications consultant. In addition to clearing the Nile of 200 tons of plastic waste, the company has partnered with the Egyptian clothing bank to collect plastic bags, which they turn into sellable fashion and furniture.

Abdel Baki goes on to say that she’s noticed clusters of eco-friendly consumers changing the way some businesses operate, “for example some cafes now offer wicker instead of plastic straws.”

This has translated into growth: Upfuse revenues doubled y-o-y in 2022 and the company is putting final touches on a new store in Gouna, scheduled to open in late April, said Yassin. TileGreen, a company that produces construction materials out of recycled plastics, has over the past six months installed floors for corporate offices, including for SODIC, Nestle, Redcon, and Henkel, said co-founder and CEO Amr Shalan (LinkedIn). Meanwhile, Very Nile’s revenues almost tripled in 2022, Abdel Baki told us.

Cue exports: Although always part of their growth strategies, some are now expediting export growth as a means to increase their sales. With all three companies upcycling plastic waste and exporting finished products rather than exporting the plastic waste itself. “We’re starting to get orders from Europe and are focusing a lot on growing in the GCC, because the market is booming,” said Upfuse’s Yassin. Very Nile’s Abdel Baki told us that the company is partnering with a distributor in Europe while TileGreen is looking to capitalize on upcoming climate talks in Abu Dhabi. “We are in talks with several real estate developers in the UAE to roll out different pilots in the run up to COP28,” Shalan told us.

So then why are VCs not taking note? For one, there’s very little information on the wider recycling industry, which is fragmented. “There isn’t real specific data to help us get a figure, but I look to other markets that have numbers as a guide. I believe Egypt is a big market, and there is global demand for high-quality recycled products,” Tarek Roushdy (LinkedIn), founder and Managing Partner at boutique investment outfit UI Investments, tells us. This and the fact that the formal recycling industry in Egypt is in its infancy, has meant many investors are cautious. But Roushdy remains confident in the sector, going on to say that he is already assessing a few other companies in plastics recycling for potential investment opportunities.

Furthermore, quite a few of the investors we spoke to expressed that this is not an industry on their radar. “The industry hasn’t been tested, unlike the metals recycling industry which has been around since the 1930s — so investors are reluctant to back plastics recycling,” says Mohamed Abou Hashish, founder and CEO of Pharos Recycling Company.

But some startups with a proven business model are managing to tap into the investment scene: TileGreen have already received a USD six figure backing from UI Investments and are gearing up for a seed round of fundraising, Shalan told us. Yassin, meanwhile, said that Upfuse has been approached by investors, however wouldn’t disclose who it was or the amount of money they are looking to raise.

Your top green economy stories for the week:

  • Carbon market boost: The EGX will list carbon credits issued by international provider Global Carbon Council (GCC) on its planned carbon market.
  • Alcazar Energy is singing the praises of our renewables sector in the Wall Street Journal.
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