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Micro-enterprise Development
for Primary Collection of Solid Waste

Research Background

1.1 Urban governments in many developing countries are facing serious problems with the management of solid waste. Service quality is generally poor, and costs are spiralling, often with no effective mechanisms for improved cost recovery. Two key alternatives to the present impasse are currently favoured: decentralized approaches and privatization. Privatization in particular is considered a viable option, however privatisation proposals are in many cases hurried, ill-thought out, and often based on developed country models which assume a totally different technical, financial and organizational framework, particularly as regards primary collection. The fact that solutions developed for the North are often not appropriate to contexts in the South is nowhere more true than in the case of primary collection. Moreover, social relations characterising primary waste collection in South Asian cities have certain particularities and the potential social impacts of changes resulting from privatization need to be carefully considered - this is seldom done. This research project titled: ‘Micro-enterprise Development for Primary Collection of Solid Waste’ was proposed to identify, explore and disseminate findings about the development of micro-enterprise for primary collection, working from a thorough understanding of existing systems and practices and to locate those in a broader framework of private solutions for solid waste management. Since the privatisation of all or parts of many municipal solid waste systems will take place in the coming years, this research project addresses privatisation mechanisms through involving those who are amongst the poorest and who potentially would be most disadvantaged by such changes.

1.2 The main hypothesis of the project is that moves towards privatisation of primary solid waste collection should be designed from a thorough understanding of the complex interactions between a wide range of existing actors. The objective of the project is to investigate the possibilities of and conditions necessary for upgrading current sweepers’ collection systems (please see section 3.2 for details of sweepers’ system) into forms of micro-enterprise. A secondary hypothesis is that involvement of existing sweepers will improve the efficiency of primary collection. Such an approach will help to sustain and increase sweepers income, and reduce municipal responsibility and expenditure. Additional benefits include reducing socio-cultural disruption, poverty and/or unemployment.

1.3 The research commenced in April, 1996 and data and information has been collected from three cities of South Asia i.e. Colombo (in Sri Lanka), Dhaka (in Bangladesh) and Faisalabad (in Pakistan). In addition, secondary information was collected from some Indian cities. Three local collaborators assist in the local data and information collection and the organization of inception workshops.

1.4 The preliminary literature review conducted suggests that the available literature can be categorized into five broad categories:

1.4.1 Privatization: there is a large body of literature on the privatization of infrastructure and services in order to reduce government’s role, lower the cost and increase the efficiency of collection systems (for example IFC 1995, Cook and Kirkpatrick, 1988, Roth, 1988 and Cointreau, 1994). Much of the literature discusses the mechanisms for privatization, based on the experiences gained in the developed (high income) countries. Rarely is the process of privatization evaluated on the basis of adverse social impacts, these may indeed be worse in low income developing countries and in the absence of social security systems. Recently, some grey literature on privatization in developing countries, discussed holistic approaches to privatization with a growing emphasis on integrated approaches, social privatization and community business (for example Klundert and Lardinois 1995, Batley, 1992).

1.4.2 Public Private Partnership: This category considers the process of privatization in a comparatively broader social context. It discuses ways of enhancing community participation in planning and operation, protecting users rights and even considers community groups as contractors in the delivery of infrastructure and services. Most of the literature suggest ways of integrating private informal activities in primary collection. A greater community share means that the small scale enterprises through informal sectors may also become a part of the overall privatization process (For example Gidman et al, 1995, Schubeler, 1996 and Fernandez, 1993).

1.4.3 Literature on Small and Micro-Enterprises comparatively more relevant to the concerns of the proposed research is from micro-economics and management (Such as Burns and Dewhurst, 1996).

1.4.4 There are very few publications which discuss the role of micro-enterprises in solid waste management (for example UMP, 1996 and Pfammatter and Schertenleib, 1996). This body of literature has made some useful contribution in discussing the need and benefits of supporting micro-enterprises for solid waste recycling and collection. They mainly discuss the formation and structure of micro-enerprises from Latin American experience, where the concept of micro-enterprises is well accepted within municipal institutions as compared to South Asia. However, it is not clear whether the features identified from the Latin American experiences are also relevant for South Asian cities. While, small scale and micro-enterprises in solid waste recycling have been researched, for some time (for example Furedy Christine 1989 and Furedy Christine 1993). The outputs mainly focus on social aspects in different size and types of micro-enterprises. There is very little literature on the policy, planning and institutional aspects to integrate existing micro-enterprises as a privatization strategy in primary collection.

1.5 The research carried out by WEDC aims to provide alternatives for municipal agencies, non-government organizations and donor agencies on the promotion of new micro-enterprises and the protection of existing micro-enterprises for the primary collection of solid waste. This paper, prepared for the electronic conference, is in fact the summary of the research background and its generalized results. It discusses various organizational forms from the existing primary collection practices and discusses their implications for micro-enterprise development. The research will continue until March, 1998 and the final outputs will produce options for the promotion of micro-enterprises through privatization and decentralization strategies.


2. Introduction

2.1 Existing systems of solid waste management in the researched cities share many similarities in primary collection systems. Under the present set-up the municipal corporation employs a large team of sweepers. Teams of sweepers are designated to each councillor’s (or Ward Commissioners) electoral ward. in different areas to perform street sweeping. The councillors ward has been accepted as the municipal unit of operation. There are particular lengths of streets assigned to each sweeper on which a sweeper needs to perform street sweeping. The sweepers perform street sweeping as their official duty and collect household waste as the private work. The collected waste is brought to transfer points, from where it is collected for further transportation. There is usually a field supervisor and sanitary inspector, above each team of sweepers. The sanitary inspectors report to the chief sanitary inspectors and ultimately this hierarchy of solid waste management operation ends up at the level of health officer, who may be a medical doctor. The hierarchy of this system is similar in all the cities studied, particularly the position and mode of operation of sweepers. However, there is a trend to make certain changes made in large cities in South Asia towards the formation of solid waste management department. The municipal function starts from the street sweeping and in the area where the households feel a need for primary collection they have to make informal agreement with the sweepers on duty or a self employed private sweeper. This informal system works very well in the areas which are developed and households are willing to pay a regular amount of money to sweepers for the service provided.

2.2 The primary collection in the South Asian context is the process of waste removal from the houses and transporting it to the nearest transfer point. This is different from the definition of primary collection in developed countries, where the waste is often collected house to house in vehicles and transported to the transfer stations or disposal sites. This paper covers the activities in developing countries which are officially sanctioned and the private (informal) work performed by sweepers because of a number of social and economic factors. Primary collection is perhaps the most important and complex stage in the solid waste management stream in the South Asia due to the following reasons:

  • Municipal corporations in South Asia spend a very large proportion of their operations budget on the primary collection, typically more than 60% of the total operational budget.
  • The workforce involved in the primary collection tasks represents more than 80% of all the municipal employees in solid waste management. In a large city of 8 million people there may be 15000 to 20000 surviving formally or informally in the primary collection work. Most of the staff involved in the primary collection are on low salaries typically between US $ 25 to 50 per month and often belong to the poor and vulnerable class of population.
  • The workforce involved in primary collection often represent the poorest and most vulnerable groups of the urban population. Any strategy to improve the efficiency of the system at the cost of reducing the employment, without any well thought alternative, may adversely effect the poorest of the poor. Ironically, poverty reduction in low income developing countries is very high on the international agenda.
  • Primary collection is important for the health of populations since a poor primary collection means exposed waste in the vicinity and an un-healthy environment.
  • It has been seen that most community initiatives are up to the stage of primary collection. Community contributions to small area based organizations, informal payments to municipal sweepers etc. exist because the community needs a regular and reliable primary collection system and does not like to see waste in the immediate vicinity.

2.3 The process of primary collection in low income developing countries is different from their high income counterparts. The issues to be tackled in order to improve primary collection are different in the two set of countries. For example, while many low income developing countries are struggling to set-up basic services and sorting out cost recovery mechanisms, the high income countries are looking towards the value for money, better management and efficiency gains in the service at a minimum cost.


3. Interim Findings

3.1 The literature review suggests that solid waste management in low income developing countries benefit from a wide variety micro-enterprise activities such as informal recycling, but this research found it extremely difficult to define the enterprise and entreprenuership in the primary collection process. It was also important to consider whose entreprenuership was in question. Some basic definitions and identifiable criteria for micro-entereprises are compiled below:

  1. A business, often family based or a co-operative, that usually employs fewer than ten people and may operate informally (IETC, 1996)
  2. Micro-enterprises are generally considered as having a relatively small share of its market, managed by its owners and often independent of outside controls. (Burns, 1996).
  3. Small and micro-enterprises (including entreprenuers) buy inputs at a fixed price but sell outputs at an uncertain price in the hope of obtaining adequate margins. It faces three types of uncertainties: market, customer and aspirational uncertainities. (Storey and Sykes 1996)
  4. A micro and small enterprise is defined as a service delivery or production business, usually low capital intensive and consisting of an individual or up to about 20 persons formally registered or operating informally in an area. (UMP, 1996)

The definitions above assume a certain organizational structure and cover a broad range of activities in the registered and non-registered sectors. This research found it difficult to classify whether certain existing activities were micro-enterprises and/or not. This is more difficult since there was no official policy and registration system in the research cities on micro-enterprise involvement in the primary collection. The following identifiable criteria was developed to define micro-enterprise, however, ‘entreprenuership’ may change from one group to another:

  • the service provider is profit motivated and so the service is charged and non-payers may be excluded.
  • the service is marketed by an individual or a small group to a small area such as a neighbourhood, or group of houses with a total number of units not more than 1000.
  • the service provider will manage the service and invest in the organization, keeping in view all the market risks.
  • the service provider may take the triple role of labour, manager and owner of the enterprise.
  • the service provider has the major role in hiring and firing the workers, fixing their remuneration, negotiating new contracts and sub-contracts.

3.2 Keeping in view the above criteria it was found that municipal and self employed (private) sweepers (waste collectors) are the smallest and fundamental unit of the primary collection enterprise in the study cities. Within this form of micro-enterprise we have identified the following continuum of activity:

  1. Municipal sweepers as wage earners - those who are earning a regular income through permanent or temporary employment with the municipal corporation.
  2. Municipal sweepers doing private work - those who are earning a regular income through permanent or temporary employment but also supplementing their income through private waste collection and other works.
  3. Private sweepers as ‘survivalists’ - those without any municipal job who and work independently. This constitutes the lowest level of micro-enterprise - the ‘survivalist’ sector. The involvement in primary collection is a form of micro-entreprenuership with little prospect of growth and expansion, and is taken-up due to a failure to gain waged employment. Thus, it is a livelihood strategy employed by those with few alternatives in the labour market but with knowledge of and access to work in primary collection through informal institutional linkages and a network of reciprocity and exchange within sweepers’ communities.
  4. Municipal and private sweepers as emerging entreprenuers. In this case sweepers have extensive networks of trust and reciprocity with households or community organizations and use these to ensure exclusive access to private work in primary collection for themselves, their family members and paid workers (or sub-contractors) known to them through their social networks.
  5. Municipal supervisors as emerging entreprenuers - since they give permission to and often manage and facilitate private work by municipal sweepers and in return get payments.

The types (b) to (d) in the continuum were seen as the fundamental unit of micro-entreprenuership in primary collection: the sweeper’s system from the perspective of sweepers themselves. The entreprenuership identified is that of private work, whether it is combined with or exclusive of paid waged work. Further, private work by municipal and private sweepers differentiates itself from just paid waged labour in the following way:

  • the sweeper ‘markets’ himself/ herself’ to users
  • the sweeper negotiates his wages, which are not fixed,
  • s/he is the owner-manager-labour for the work
  • s/he has full discretion to refuse the work, take new work and sub-contract
  • s/he arranges the inputs to produce a service output
  • there are elements of un-certainty analogous to small and micro-enterprises
  • there are evidences of private-personal investment such as buying a donkey cart for waste collection

The sweeper’s system of primary collection is basically a set of three verbal agreements:

  • between sweeper and the households
  • between sweepers and his supervisor (if he is a municipal sweeper)
  • between sweeper and fellow sweepers
The clients are households who are generators of waste. They are most likely to need their waste privately collected, when such a service is not available through local authorities. The households made an agreement with sweepers to collect waste against a certain agreed payment supplemented by un-agreed tips, gifts, food etc. The sweeper also needs an informal permission from municipal supervisor to perform private work and also agree to pay regularly a proportion of his private earnings. The third agreement is among fellow sweepers not to compete with each other and do not offer services in each others territory. Sometimes, the rights to perform private work are exchanged, bought and purchased among sweepers. However, the sweepers system provides an essential service to the middle and high income groups or where a market exists (for further details of sweepers system see Ali, 1997, Beall, 1997 and Streefland, 1979). The system has the advantages of no overhaeds so low cost, direct benefit to the poorest of poor and flexibility. However, it has the disadvantage of not being operational where there is no market or users could not pay (for example some low income or remote areas). There are also problems in regulating the service, since the users deal individually with sweepers and so could not negotiate area based tasks, such as transporting waste out of the area, not burning the waste etc. The entreprenuer in this type of system is clearly the sweeper.

3.3 The second broad category of potential micro-enterprises emerge when people organize themselves and collectively hire a waste collector. As compared to individually hiring the sweeper or a family member disposing of waste at a transfer point, this system is not very common. The study cities have shown three types of mechanisms in this type of systems:

3.3.1 A group of households collectively recruiting a person for primary collection, fixing a minimum fee and paying individually to the collector: The system operates because of the sweepers entreprenuership on one hand, and social obligation on the other developed because of collective effort to ensure that the sweeper gets regular payments (including non-agreed discretionary payments and gifts). Generally, there is an activist or a group of activist (not registered as an NGO) supporting such initiatives. The main advantage of this type of system over the individual hiring of sweepers is the regulatory role of the group or activist. The function of the so called regulatory body are to select the sweeper, introduce him/her to the household and make sure that the households pay the regular amount to the sweeper. Such systems have also been observed in some low income areas, where previously no system was operating. There are a few implications for the development of micro-enterprises for primary collection of this system:

  • Such initiatives show the beginning of a positive change in community attitudes where households decide to take initiatives rather than waiting for the government to come and do the work, thus opening up markets for the micro-enterprises of primary collection. Secondly, the households agree to pay a regular amount to sweeper. This change means that the households (the users) have accepted the service and its payments. Such a change in the households attitudes demonstrates a shift from considering primary collection as a government service to which there is entitlement, to a service in which there is cost sharing involved. Sweepers are seen therefore as private service providers and micro-entreprenuers.
  • Sweepers enjoy such a system since it gives them security of work through peer pressure and an emerging market for waste collection service in the area.
  • Sweepers also like the regular and minimum payments assured by the activists.
  • In general, such an arrangement is helpful in their work since the houses are located in a single vicinity and sweepers do not have to walk to collect waste from scattered houses.
  • Since the sweepers receive the payments directly from the households, they are still left some room for negotiation of higher rates or charges for additional work.

The Sweeper’s work could be regulated because of a small but guaranteed market. For example ask sweeper to carry waste to a disposal place, sweeper accepts such demand, if not the work and income from the whole group of houses is at risk.

From the management perspective there are benefits from household’s perspective, since households are paying directly to sweepers. Relationships of trust are developed which ensure co-operation towards an effective service and relatively secure livelihood.

3.3.2 The group of households collectively hiring and jointly paying the sweeper: In this system communities or householders also take the initiative, but here the sweeper is hired collectively and households payments come through an activist, community group or non-government organization rather from individual households. The organizer performs this work on a voluntary or non-profit basis but sometimes receives costs, grants or subsidies from external agencies. The organizers also act as a regulatory body, and a stronger ‘regulatory’ mechanism develops, since the regulator not only facilitates the system but also undertakes some financial controls. This system has most of the benefits of Type (a) system, particularly in terms of willingness to pay and acceptance of the system. All such benefits are positive for the development of markets for the micro-enterprises. In such systems the micro-entreprenuership from the sweepers point of view changes to a `paid labour’ situation. The sweepers also loses the benefits of direct negotiation with the households over regular payments; however they still hold the opportunities of payments against additional work and tips. The micro-entrprenuership from sweeper’s perspective is beginning to reduce as compared to individual hiring of sweepers. When it comes to invest in the system, the sweepers are usually reluctant to invest since the risks are higher and ownership of the system is divided. The community group sometimes becomes the ‘pseudo entreprenuer’, particularly when they keep a share of the income as their ‘savings’. They are reluctant to invest in such a system and always look towards external sources of funding.

3.3.3 In this system an individual or group starts the collection service as a business and takes all the risks and investments. The role of entrepreneur clearly transfers from sweeper to comparatively larger scale contractors, who may be employing a number of sweepers. The sweeper’s role clearly becomes that of labour. These systems operate at a larger level, units are bigger, generally comprising many lane and typically between 500 to 1000 collection units in the study cities. The entreprenuer keeps the operations at a level which he could manage individually, without much external dependency and interference. The sweeper is now a monthly salaried person with few prospects of some extra income. It has all the basic benefits of Type (b) systems, particularly in relation to willingness to pay, acceptance of the system etc.

There are some important implications for micro-enterprise development in this system. Firstly, the entreprenuer is now a small scale contractor and not the sweeper. Secondly, as the size of the contract expands the key difference is the sweepers become labourers and reflect some of the features of sweepers system, in the cyclic order. Means if the size of the unit further increases, the sweeper may start acting as in the type (a) system. Thus a major implication for the so called large scale privatization and an important issue whether it will bring any improvement to the system or not. Thirdly, a contractual relationship with the municipal (official) authority is beginning to develop and the municipal official may start to think how to streamline and integrate such initiatives.

3.4 In all the above systems, the role of the government or municipal bodies is negligible. Most of the above systems operate as there is no official system for primary collection. The systems studied in the research cities have also developed because of poverty on one hand and the need for such a service on the other hand. Since, all these systems have developed spontaneously and the major impetus is the extra income so they operate in those areas where households are willing to pay. However, willingness to pay does not only depend upon the income group but other factors as well, such as need for the service, who is providing service and what is the role of the household in hiring and firing the service provider.

Such systems work well as long as the size of the operation is small and property rights (i.e. roles, responsibilities and incentives) are clearly demarcated. As the units start multiplying or becomes larger there usually arises the need for a more central body and that is the point where the role of the government or municipal institutions become important. Thus a major challenge to the micro-enterprise development is to provide an equitable and regulated service to all income groups and at the same time preserve the benefits of those groups (such as sweepers) who have been traditionally benefited by providing the service.


4. Analysis

4.1 From the five types of systems discussed above, the size of the work in terms of number of units has come out as an important variable. The sweepers’ entreprenuership in terms of investment, perceived security and risk taking is quite well developed, when they are independently dealing with households as in type (a) systems. Entreprenuership reduces when the unit of work expands and the ownership starts to divide as we see from type (b) to (d) systems.

4.2 Municipal and private sweepers, both male and female, were interviewed in all the study cities. They were asked about their interest in possible micro-enterprizes and working with NGOs or working with large scale private contractors. It was found that most of the sweepers consider their municipal jobs as a very secure way to earn a livelihood. In most of the cases they worked for several years as daily wage earners and temporary sweepers in the hope of getting a permanent appointment. The security and status of a regular job is the main reason for their interest to continue the official job. In addition to job security, sweepers also have opportunities to negotiate jobs for their sons, daughters, wives or husbands, which provide them longer term securities. The current markets for primary collection is not developed enough to provide sustainable security to vulnerable sweepers group. However, if sweepers are not considered as an integral part of the future privatization strategy, there may be adverse social impacts from the change.

4.3 Current institutional attitudes were assessed through discussions with senior officers and institutional trend with the changes in primary collection. Municipal institutions responsible for solid waste management in Colombo, Dhaka and Faisalabad have no experience in privatization or community participation in solid waste management. The Local Government Engineering Department, Bangladesh has involved NGOs in solid waste management for the cities of Maymensingh and Sylhet. and our discussion with the representatives of LGED reveals that this trend is going to increase in future. In Colombo, because of a number of past interventions in the housing sector, the Community Development Councils (CDCs) are in place in most of the low income areas. Sweepers in Colombo, also mention about CDCs and the possibility of a contract with them when they talk about enterprises for the primary collection. In general, present institutional attitudes for micro-enterprise development are beginning to form and their future direction will depend upon how privatization initiatives in all these cities are put into place and what may be the role of the existing sweepers’ system in the future privatization initiatives.

4.4 Based on the discussion of Type (a) system, it is quite clear that service provision for primary collection, depends upon the payments made by households to sweepers. In small scale contractors (Type c), the same theory applies, as long as the payments are equivalent to the charges by sweepers (on-going rates) for such a service. The small scale contractor makes a profit when he expands the size of the work, explore and develop new markets, through technological interventions and utilizing social pressure and personal influence with the municipal corporation. The small scale contractors researched in Karachi and Dhaka, were living in the same area where they provide collection service and both of them have good connections with the municipal councillors in the area. Sweepers and small scale contractors, because of their entreprenuership, demonstrate clearly their capability to acquire service charges from households. In the primary collection programmes initiated by NGOs, acquiring payments may be a problem because:

  • NGOs in-capabaility to act or activate entreprenuership
  • Household perception of NGOs
Those NGOs which successfully take the role of a facilitator and develop entreprenuership have few problems in acquiring charges from households. Our discussion with households revealed that at present households are not willing to pay the municipal appointed waste contractor unless they have an assurance about better service.


5. Conclusions

Based on what was discussed in the preceding sections, the following conclusions can be drawn:

5.1 The sweepers’ system of waste collection and charging money is a common private practice in all the study cities. This system could be classified as a private solution initiated by the community against in-adequate solid waste management and a solution to the absence of primary collection systems. Overall, the sweeper system represent a significant part of the informal economy in waste management. Future plans for the privatization of solid waste management must understand and integrate the on-going private practices in future strategies.

5.2 It is unlikely that with the existing operation of the municipal corporations, the sweepers system could be transformed into the independent micro-enterprises. The sweepers foresee a number of risks associated with independent enterprises of primary collection. Further, municipal sweeper get flexibility of work, security and additional income from their existing municipal job supplemented with their private work. Thus two basic pre-requisites for sweepers’ micro-enterprises are the opportunities for additional income and security of work.

5.3 Micro-enterprises for primary collection have greater prospect of development in middle and high income areas of the study cities. They could also be developed in developed low income areas, where residents would like to have a reliable and regular system. In fact low income areas could be considered as emerging markets for sweepers, where incremental changes could be made, from no system to some sort of system and then gradually improving the system.

5.4 The prospects for micro-enterprise are greater with a better institutional context and recognised community representation. As we have observed in Colombo, sweepers are more interested in the formation of micro-enterprise and propose that they could be initiated through officially recognized Community Development Councils (CDCs).

5.5 The team of sweepers and municipal supervisors operate in the form of an autonomous unit within the large scale municipal operation. The way through which this arrangement works within the overall system reflects the potential of transforming itself into a micro-enterprise. The municipal supervisors and sweepers have a thorough understanding of the area and the families living in it. In addition there is a great deal of social capital in the form of mutual trust and understanding. While governments in developing countries trying to reduce the size of the public organizations by offering early retirements and golden handshakes to their employees, sweepers-supervisors micro-enterprises could be a possible and viable alternative.



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Contact information
Dr Mansoor Ali
Water, Engineering and Development Centre (WEDC)
Loughborough University
Leics LE11 3TU
UK.
Fax: 01509 211079
e-mail: s.m.ali@lboro.ac.uk
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Contact: Hari Srinivas - hsrinivas@gdrc.org