This case study uses process tracing to demonstrate how LIWAY partnered with Addis Ababa Cleansing Management Agency (AACMA) to transform the recyclable waste management system in Addis Ababa.

LIWAY’s medium and large enterprise (MLE) team focuses on creating income opportunities for low-income groups through improved performance of medium to large enterprises. Considering the persistent unemployment issue in Ethiopia, LIWAY chose to focus on sectors that have the potential to create a large number of jobs for low-skilled youth, but which were not receiving adequate attention from the public and private sectors. Based on these parameters, the team concluded that ‘recycling’ was a high-potential sector because it could deliver a dual impact of engaging a large number of youth in micro and small waste collection enterprises while nurturing business growth for recycling firms. Furthermore, the city of Addis Ababa had been struggling with waste management challenges, with a daily waste generation of 2,168 tonnes but a recycling rate of only 5%. 65% of the waste ended up in rivers and open streets. The city was looking for solutions that would work.

LIWAY’s market analysis showed that recyclable waste management involves a range of different actors but the most crucial are AACMA, private recycling companies, and waste collectors. There were constraints related to many supporting functions and rules including the social stigma associated with working with waste. However, LIWAY concluded that the most fundamental problem was the input supply, or the waste collection, because that dictates how the rest of the value chain functions. With a vision to influence the entire recyclable waste management system so that the intervention would be scalable, sustainable, and systemic from the onset, LIWAY decided to partner with AACMA.

Together with AACMA, LIWAY engaged in the following activities: (i) designed a domestic recyclable waste supply system through a participatory design process involving various public and private sector stakeholders – in simple terms, the business model was to set up waste collection MSEs who would collect and aggregate paper waste and sell to recycling firms; (ii) following acceptance of the model by the industry, established paper waste collection MSEs and supported them with training, equipment, and storage to set up efficient operations; (iii) developed market linkages between recycling companies and the MSEs and all actors in between; (iv) ventured into plastic recycling so the MSEs could start collecting and earning income from plastic waste in addition to paper; and (v) expanded into Sheger City to scale up the intervention.

The intervention recorded tremendous success. More than 195 MSEs have successfully started to collect and store paper waste and supply to the recycling companies, which addressed the input supply shortage of the recycling firms and created jobs and income at the MSEs. The intervention created income opportunities for 13,876 beneficiaries, primarily through self-employment in the MSEs, and secondarily through wage employment at the MSEs and MLEs. During the first three years, the MSEs generated cumulative sales revenue of ~288 million ETB. In the same vein, recycling companies substituted 20 million USD worth of imported paper with locally sourced wastepaper.

Over time some signs of systemic change started to emerge, which include:

• AACMA coordinating support from other public sector agencies, introducing incentives to waste collectors, and providing capacity building and other support to encourage more MSEs.
• MSEs continuing to expand their businesses into other types of waste. They also moved beyond streets and households and started collecting directly from institutional clients, as well as supplying to recycling firms outside of Addis Ababa.
• Other market actors starting to actively engage in waste management.

Some of the reflections shared in this case study on why the intervention was successful are the following:

• The programme partnered with the right government entity from the beginning of the intervention making sustainability and scale an inherent part of the design.
• LIWAY learned from past experiences – what worked and what didn’t work and utilised that learning to develop a holistic system as opposed to hastily trying out new ideas lacking foundation and evidence.
• The private sector recycling companies were willing to change their sourcing model and LIWAY was able to demonstrate the commercial viability of the new model to ensure their buy-in.
• The intervention addressed information asymmetry in the market, which went a long way in aligning the incentives of the stakeholders.

LIWAY’s current focus is to ensure resilience of the intervention activities it has introduced so far and test the learning from implementation in Sheger City. Nevertheless, the implementation to date presents an exciting learning opportunity for MSD programmes working in countries and sectors with heavy public sector involvement; it demonstrates how to leverage incentives and capacity to design a win-win model for all actors concerned.