Yes, the circular economy is a business model worth investing in

By Catherine Wijnberg

In a recent online poll, 56% of respondents reported that they considered the environment when making purchases, and only 16% stated that they did not. Trends like this provide a very strong signal to corporate leaders that sustainability is the way of the future.

Circular thinking goes beyond the reduce, reuse and recycle focus in the green sector to design out waste altogether. The move towards a circular approach is increasingly visible, and 56 countries from North America, Europe, the Balkans, the Caucasus, and Central Asia recently made a united call to accelerate the shift to a circular economy and greener, more responsible resource use.

This commitment appears well-founded, according to the study by Finnish Innovation Fund Sitra, which states that the circular economy could add as much as three billion euros of value to their nation’s economy by 2030.

South Africa’s alarming waste statistics

South Africa is at the embryonic stage in this journey. According to the State of Waste Report issued by the Department of Environmental Affairs, South Africans dispose of enough municipal solid waste to fill an entire football field 10 metres deep, every day. Only 10% of this is recycled or recovered for other uses, while at least 90% is landfilled or dumped. This highlights both the need for more effective waste management methods and a huge latent opportunity for building circular economy products and services.

Sustainable and radical transformation plans

The African Circular Economy Alliance (ACEN), a government-led initiative of which South Africa is a founding member, is working to align circular economy policies and strategies across the continent. Chris Whyte, the Director of ACEN, recently said: “By embracing circular economy principles in the waste sector alone we could add up to 3% to the county’s GDP. The time to do it is now.”

In addition, the 2020 National Waste Management Strategy has created the exciting potential for new circular business models. National policies such as these play a critical role in driving business and consumer behaviour.

Circular economy and employment

The Global Climate Action Summit is also bullish over the CE’s job creation potential and estimates that over 65 million new low-carbon jobs will be created by 2030. Given the dire jobs shortage in South Africa, this is good news.

Is South Africa ready for this change?

A key requirement for circular economy businesses to thrive is for citizens to play an active role in their consumer and lifestyle choices. Where consumers lead, business will follow, but SA is lagging behind. BrandMapp’s consumer insights research released in mid-2021 found that only 30% of mid-income South African adults recognise the climate crisis as a concern, which does not mirror international trends. According to the study, and not surprisingly given our circumstances, South Africa’s middle-class citizens are more concerned about crime, corruption, the pandemic and government incompetence, so work still needs to be done to build consumer awareness.

What does this mean for business?

Importantly, the five sectors identified for circular economy potential in Africa are food systems, packaging, electronics, fashion and textiles, and the build environment. Each of these sectors is ideally suited to small business and community or township micro-enterprise and show exciting potential for job creation and economic growth.

Conclusion

As South Africa battles the triple threat of joblessness, poverty, and inequality the circular economy provides a powerful business opportunity with the added long-term benefit of positive environmental impact. However, for the circular economy to succeed three components are needed – supportive national policies, viable circularity models, and increasing consumer (and business) appetite. Given the trends, the potential for the large-scale and lasting success of the sector is a real possibility.

Catherine Wijnberg Bio

Cape Town-based Catherine Wijnberg is passionate about radically scaling the success of small businesses as a way to stimulate inclusive economic growth and job creation. Her industry-wide collaboration strategy provides motivation for working together – challenging industry stakeholders to 100x their individual company successes.

Catherine founded Fetola in 2006 with the purpose to build businesses that last. The company's emphasis is on sustainability and women and youth-led, rural & township businesses.

Fetola: Founding partners and Technical Lead to Absa Business Day Supplier Development Awards