How to Start a Profitable Plastic Recycling Business in Nigeria: A Step-by-Step Guide

Ogaga Benson

Nigeria is Africa’s most populous nation, with an estimated population of 226 Million people and 3.75%/Year. Similarly, Nigeria’s plastic usage is also growing exponentially. According to the UN, plastic consumption in Nigeria increased by 116% from 578,000 tons in 207 to 1.25 million tonnes in 2022.

The increasing population of Nigeria, coupled with rising plastic consumption and the growing call for recycling due to the hazards of plastics to the environment, makes this the perfect time to start a plastic recycling business in Nigeria.

In this comprehensive guide, you’ll learn step-by-step how to start a profitable recycling business in Nigeria.

Why Plastics?

High Demand: The demand for plastics is increasing due to their multipronged usage, ranging from packaging to construction, electronics, automotive, furniture, kitchen equipment, clothing, and footwear. As the demand increases, most manufacturing and packaging companies are forced to look for already-used plastics to buy and recycle since, in most cases, they’re more affordable than producing new ones

Readily Available: The probability of seeing a plastic material lying around a few minutes walk outside your house is very high. Plastics are so readily available because they’re used to package a wide range of materials.

Types of Recyclable Plastics

Plastics are a wide range of synthetic or semi-synthetic materials that use polymers as a main ingredient. There are various types of plastics; the common plastics recycled in Nigeria are;

PET: PET is a clear, strong, and lightweight plastic widely used for packaging foods and beverages, especially carbonated soft drinks, juices, and bottled water. Common examples include Carbonated Drink bottles, Table Water Bottles, and Flexible Microwave-able food packaging.
HDPE: High-density polyethylene (HDPE) plastic is used in a wide variety of applications, including plastic bottles, milk jugs, shampoo bottles, bleach bottles, cutting boards, and piping. Common examples include Used body cream bottles, High-Density Pipes, and Used groundnut oil kegs.
LDPE: Low-density polyethylene (LDPE) is used to make grocery bags, food wraps, squeezable bottles, and bread bags. Common examples include Pure water nylon, Drink packaging nylon, and Clear nylon wrap, which are used to preserve/protect food and packages.
PP: PP is used in various packaging forms. It is widely used to make pallets, bottle lids, jars, yogurt containers, hot beverage cups, and food packaging. Common examples include Transparent plastic (Takeaway) plates, Hard plastic cups, and fan milk yogurt containers.
ABS: ABS is used in computer keyboard components and LEGO bricks. It is also commonly used to make plastic faceguards for wall sockets and protective housing for power tools. Common examples include Okada helmets, Plastic toys (Lego), and most Electronic Coverings.

How to Start a Plastic Recycling Business in Nigeria

Starting a recycling business goes through these eight steps;

Step 1: Conduct Market Research

According to Havard Business School, Market research gathers information about customers and the market to determine a product or service’s viability. Comprehensive market research for a recycling business in Nigeria will include the following;

Local Market Analysis

Your marketing research should answer these questions;

What’s the quantity of plastics available in your area?
How are the plastics currently recycled?
Are there gaps in the current method of recycling plastics that you can fill?
What would be the current plastic collection routes?
Are there cultural or community peculiarities in collecting plastics?
What’s the overall disposition of the community to plastic recycling?

Competitor Analysis

Your marketing research should answer these questions;

Who are the other businesses in your area collecting used plastics
Where do they get them from?
After gathering the plastics, who do they sell to?
What is their pricing model?
What are their unique selling propositions?
What are their strengths or weaknesses?
Are there any service delivery gaps you can fill?

Market Feasibility:

After getting your local market analysis and competitor analysis, you’ll use insights from them to determine if;

Is plastic recycling profitable in your area?
Is the location ideal, or do you need a new location?

The market feasibility helps you determine how to structure your pricing and which pricing model to use.

Step 2: Write a Business Plan

A business plan is a document that details a company’s goals and how it intends to achieve them. It makes a case for the soundness of your business. After completing your market analysis, you should write a business plan for your plastic recycling business.

A detailed and comprehensive business plan helps you think through the business. It also helps you raise funding – if you need to – most investors would require a business plan that convinces them your recycling business is worth investing in.

A typical business plan for a plastic recycling business in Nigeria should contain the following sections:

Company Goals & Objectives: In this section, you will clearly state what the business aims to achieve. It’s best to make the goals SMART (Specific, Measurable, Achievable, Relevant & Time-bound) and divide them into long and short-term goals.
Market Research & Feasibility Studies: A summarized version of your market research and feasibility studies from step one will be placed here. When writing this section, keep it as brief as possible and state the key points. Use Data from authoritative sources in this section.
SWOT Analysis: In this section, you will summarize your business strengths, Weaknesses, Opportunities available or opening up, and threats facing the business. It’s always better to compare your business with your local competitors—this helps contextualize your points.
Financial Projection: In this section, you’ll use different data visualization charts to show the expected financial performance of your recycling business. When writing this section- ensure you’re as realistic as possible and have appropriate charts – make the charts interactive if possible. It’s essential to pay close attention to this section – especially if you intend to raise money from investors.
Marketing Strategy: This section will explain how you intend to obtain and sell the plastics. You should include the marketing cost and expected returns from marketing efforts.

Step 3: Secure Funding

After writing a comprehensive, in-depth, and convincing business plan, the next step is to secure funding from the following channels:

Personal Savings: Starting your business with savings is the fastest and easiest method. With your funds, you maintain complete ownership and control of the company, and there are no repayments or interest rates. However, you also bear 100% risk for the business. Except in a few cases, your starting capital will be little, and you risk running out of money before the business starts making a profit.
Friends and family: Getting startup capital from friends and family is fast and sometimes easy. You have a more flexible payment plan, but it also strains your relationships, especially if you cannot pay back at the stipulated time or at all.

Bank Loans: Start-up funding from bank loans can take a while to secure because you need to meet the eligibility requirements. The interest rates are usually higher, the payments are structured, and there’s the risk of asset seizure on refusal to pay. However, you have access to more considerable sums of money and prompt repayment, and you can build your credit with the bank, so you can borrow much more when you want to expand.

Co-operative societies or thrifts: Securing funding from cooperative societies and thrifts is quick and more accessible than getting a loan from a bank. They have lower interest rates and sometimes offer a supportive community to leverage for marketing and amplifying your business reach. However, they also have lower loan amounts, and you might need to attend functions and meetings and pay regular dues.

Step 4: Acquire Equipment and Machinery

After securing a location, the next step is getting the necessary equipment, such as a weighing scale, jumbo bags, binding ropes, wheelbarrows, etc.

For plastic recycling, you’ll need equipment to clean the plastics and remove all the remnants from the plastics before bailing and packaging.

In cases where startup funds are limited, you can buy the essentials, start and buy the non-essentials as profit starts coming in, or rent/lease the essentials until you can buy yours.

Step 5: Secure a Location

After securing funding, the next step is to get a secure location for your business; when choosing a location, you should consider the following factors;

Proximity to customers: Choose a location close to plastic users, such as schools, restaurants, churches, etc. This will make it easier for them to drop off and reduce the transportation cost and stress if you have to collect it from them.
Accessibility: Choose a location with good roads. This is important, especially during the rainy season. A waterlogged road can be a disadvantage.
Security: Choosing a secure location is paramount because, in most cases, you will need to store the plastics you collect for days or weeks.
Competition: If possible, choosing a location closer and more easily accessible to plastic users than your competitors is Ideal; this will give you an edge over them.
Cost: The location’s cost will impact the business’s profitability. Choose an area within your price point so the cost of the location doesn’t eat up your profit.

Step 6: Hire Employees (Optional)

After choosing a location and setting it up, you’re ready to start operations. Depending on your outfit’s scale and availability, you can consider employing staff to implement some activities like security, accounting (payments, record keeping, etc.), Operations (plastic collection, cleaning, sorting, bagging, packaging, etc.), and management. Sometimes, the same person can function in multiple roles.

Keep employee numbers as minimal as possible until your business becomes profitable enough to pay salaries comfortably. You can also explore other forms of remuneration, such as daily wages and commission-based payments.

Step 7: Promote Your Business

At this stage, your plastic recycling business is already operational. You need to promote it so people know your services and can patronize you. Closely implement the marketing strategies you stated in your business plan, ensure your Segmentation, Targeting, and positioning are correct, and fill the gaps you identified in your competitors’ marketing. Adapt what works and discard what doesn’t.

Keep in mind that marketing thrives on testing. You must keep testing to find what works for you; after finding what works, you still need to test ways to improve it. For this circle of testing and optimization to work, you need to implement accurate measurement strategies. Remember, what you don’t measure, you cannot optimize.

Conclusion

In this guide, we’ve covered everything you need to start a plastic recycling business in Nigeria. We’ve mentioned why you should start a plastic recycling business and the different types of plastic and outlined the steps you need to take to start a profitable plastic recycling business in Nigeria.

While this guide provides a comprehensive overview, it is essential to seek personalized guidance on starting your own plastic recycling business in Nigeria.