http://www.developmentbookshelf.com/doi/pdf/10.3362/1756-3488.2013.016 - Meine Pieter van Dijk <mpvandijk@iss.nl> - Tuesday, July 14, 2015 3:06:16 AM - IP Address:217.122.243.23 Micro-privatization of solid waste collection in Addis Ababa MEINE PIETER VAN DIJK and MESFIN TILAY The discussion about privatization of urban services often focuses on the involvement of foreign enterprises. This contribution deals with micro-privatization, the partial transfer of government responsibility for solid waste collection (so important for the quality of water) to micro-enterprises. What are some of the factors contributing to its results in Addis Ababa, the capital of Ethiopia? Keywords: micro-privatization, solid waste collection, micro enterprises, informality, regulation, Addis Ababa MAny people undertAKe informAl activities to earn a living. these activities take place outside the legal framework and are often driven by the struggle for survival. in many developing countries the role of informal activities has become more important. informality in waste management is a reality and the sector provides jobs and goods and services at affordable prices and in small quantities. it also plays an important role in promoting indigenous entrepreneurship and using indigenous resources. there is a need for a paradigm shift in the way informal sector service providers are viewed. the Addis Ababa city government decided in 2004 that primary solid waste collection should be entrusted to such micro (less than 10 employees and usually informal) enterprises. We studied the results. Informality in solid waste management in Addis Ababa there exists a vibrant informal private economy in almost all cities in the developing world, playing a signiicant role in solid waste management. Integration of the informal activities in the formal sector needs to be facilitated. from the point of view of solid waste modernization, informal activities should be seen as legitimate and useful private actors in the solid waste system; part of the solution, rather than part of the problem. until 2004, solid waste collection in Addis Ababa was a sector open to all who have an interest in engaging in it and often operated by both organized and unorganized groups or individuals, whose main source of income came from other activities: for example daily workers, shoeshine boys, and street children. Collection of waste by the informal sector was carried out in accordance with the needs of households and commercial institutions without any ixed schedule. There was no concern or even awareness from the side of the users about where and how the collected waste was disposed of. this decision was up to the waste collectors. Meine Pieter van Dijk (m.vandijk@unesco-ihe.org) is Professor of Water Services Management at UNESCO-IHE in the Netherlands. Mesfin Tilay is a PhD student at Ethiopian Civil Service University. © Practical Action Publishing, 2013, www.practicalactionpublishing.org doi: 10.3362/1756-3488.2013.016, ISSN: 0262-8104 (print) 1756-3488 (online) April 2013 Waterlines Vol. 32 No. 2 http://www.developmentbookshelf.com/doi/pdf/10.3362/1756-3488.2013.016 - Meine Pieter van Dijk <mpvandijk@iss.nl> - Tuesday, July 14, 2015 3:06:16 AM - IP Address:217.122.243.23 MICRO-PRIVATIZATION OF SOLID WASTE COLLECTION 155 Table 1 Types and characteristics of informal solid waste collectors in Addis Ababa Type Characteristics Informal individuals Collect waste temporarily to complement their livelihood. This job helps to meet their immediate needs. In many cases their service is preferred by households. People involved in this category are predominantly migrants Informal groups These groups are governed by common interest and background. The relations among members are managed more by other interests than solid waste collection. There are usually more than two persons in a group and they collect waste temporarily to supplement their income. They do not use any equipment Informal organized groups More than two persons. They use the job both for business and as a livelihood strategy. They use equipment for their work and are client oriented. Their payment is on a monthly basis and some sort of leadership exists Consequently, waste collectors usually preferred to dump waste in a nearby open space or river rather than transporting it to municipal containers. informal waste collection activities were often haphazardly carried out by individuals and groups on their own initiative with no adequate monitoring by the municipality. therefore, the city government saw the incorporation of informality (fransen et al., 2010) as an intervention in solid waste collection. three types of informal solid waste collectors were important (table 1). in 2004 the city government of Addis Ababa intervened in solid waste collection by institutionalizing micro-enterprises. this was part of a grand scheme of privatizing solid waste management. Subsequently the city wanted to give an impetus to this work, through various means such as building a partnership among all the relevant actors (formal and informal enterprises) and a campaign under the motto ‘clean and green Addis’, and it became convinced that the task of primary solid waste collection should be entrusted to micro-enterprises. Similar initiatives to allow more space for private operators are analysed in oduro-Kwarteng and van dijk (2008). Methodology All types of informal/formal micro-enterprises were in operation in 2009 when this study was conducted. this offered an opportunity to look at all arrangements and to get a good understanding of the process of formalization and micro-privatization in Addis Ababa waste collection. data came from secondary and primary sources and data collection involved both quantitative and qualitative techniques; 160 microenterprises participated in the survey, about 35 per cent of the total number. A questionnaire was used and 10 sub-cities were selected as sample areas. Stratiied random sampling was employed for the survey. five Kebeles (the lowest level of administration, below the sub-city) were selected from each sub-city. the selection of these areas took into account the characteristics of the area, and key considerations were whether the settlements were planned or unplanned, population Waterlines Vol. 32 No. 2 April 2013 http://www.developmentbookshelf.com/doi/pdf/10.3362/1756-3488.2013.016 - Meine Pieter van Dijk <mpvandijk@iss.nl> - Tuesday, July 14, 2015 3:06:16 AM - IP Address:217.122.243.23 156 M.P. VAN DIJK AND M. TILAY density, and income level of the inhabitants. Sampling was done to ensure all of the various types of micro-enterprises within a particular area were represented. fifteen focus group discussions were conducted with different stakeholders: oficers from the local government, technicians at the local government level, truck drivers, heads/owners of private micro-enterprises, workers in private microenterprises, workers of cooperative micro-enterprises, and household groups. twenty-eight key informant interviews were held with representatives of the public sector at different levels (at the city council level, the sub-city level, and local oficials) to obtain data on solid waste collection and to get their views on solid waste collection through a public–private partnership arrangement. Initiation: the role of the public sector Governments at all levels need to be involved in creating the framework in which a great multiplicity of partnerships can develop and be effective. to understand the challenges in the formalization process of solid waste collection by micro-enterprises in Addis Ababa, the interventions made by public sector were considered from the point of view of initiation and institutionalization. of those interviewed, 38 per cent said that they became involved in operating solid waste collecting by the initiative of local government. local governments would reorganize existing informal waste collecting enterprises to become formal micro-enterprises. Interviews with local oficials also revealed that micro-enterprises received various types of support from local government oficials in their formation and registration process. For instance, at the Kebele level, oficials randomly delivered a letter asking the community to collaborate with organized micro-enterprises who wish to engage in solid waste collection. this was done spontaneously in the absence of any guideline and/or policy framework. At the end of 2009 there were 288 private and 328 cooperative micro-enterprises active in this sector, the latter were private, usually informal, companies forced to become cooperatives. interviews with micro-enterprises revealed that there was little direct interaction between the collection teams and the municipality. each micro-enterprise had to do its own marketing and collect its own fees. Private irms individually bear the cost of billing and collecting user charges. the informal solid waste collecting enterprises devised all kinds of strategies to reach new clients. Other developments also led the city government’s Sanitation, Beautiication and parks development Agency (SBpdA) to reorient its service provision scheme. According to interviews with oficials from SBPDA the process of formalization of solid waste collection micro-enterprises was stimulated by the growing concern of the city administration that it would not be possible to eficiently handle solid waste management tasks itself. Various internal and external factors (unemployment, increasing service demand, cost reduction strategy of the city, and donor perspectives) have compelled the city authorities to change their policies concerning informal refuse collection, from neglect or repression, to tolerance or active support. this paved the way for the gradual withdrawal of the city government from the primary collection by appointing the micro-enterprises (figure 1). April 2013 Waterlines Vol. 32 No. 2 700 600 500 No. of MEs http://www.developmentbookshelf.com/doi/pdf/10.3362/1756-3488.2013.016 - Meine Pieter van Dijk <mpvandijk@iss.nl> - Tuesday, July 14, 2015 3:06:16 AM - IP Address:217.122.243.23 MICRO-PRIVATIZATION OF SOLID WASTE COLLECTION 157 400 300 200 100 0 0 2002 2004 2006 2008 Figure 1 Involvement of micro-enterprises in solid waste collection services Institutionalization: no orderly authorization process At the beginning authorization of micro-enterprises in Addis Ababa took place through various agencies with different modalities. Secondary sources from city government ofices conirmed that initially the authority to promote formalization of micro-enterprise was given to the trade and industry Bureau and to the microand Small Scale enterprise development Agency (mSSedA). the SBpdA followed up the work technically. focus group discussions with various workers revealed that micro-enterprises secure their licences from different sources. licensing procedures were based on the type of micro-enterprise. private commercial micro-enterprises got their licence from the sub-city’s trade and industry Bureau and were expected to pay tax to the city government. Cooperative micro-enterprises were receiving their licence from the MSSEDA in the Kebele with the approval of the cooperative ofice, and they were tax exempted. other enterprises got their licence from the city’s Health Bureau. Some have received a licence from the trade and industry Bureau, a work permit from the sub-city and an agreement from the Kebele level. in some cases the community provides authority to micro-enterprises to work in their neighbourhood area. Some workers are migrants or street people with no oficial residency and lack an identiication card, which does not allow them to work with public ofices. In such cases the community provided them with support and negotiated with the Kebele. Some micro-enterprises have a written agreement with the Kebele, given by the waste management team. Some obtained temporary work permits from local governments or do not have anything written but only an oral agreement with the Kebele. Still others use training certiicates that have been given by the government and nGos as a licence and consider themselves authorized to do the job. until 2009, receiving different types of licences from different sources, all private commercial micro-enterprises, cooperative micro-enterprises, and informal groups were working side by side in the solid waste collection system. Waterlines Vol. 32 No. 2 April 2013 http://www.developmentbookshelf.com/doi/pdf/10.3362/1756-3488.2013.016 - Meine Pieter van Dijk <mpvandijk@iss.nl> - Tuesday, July 14, 2015 3:06:16 AM - IP Address:217.122.243.23 158 M.P. VAN DIJK AND M. TILAY Interviews with local government oficials revealed that although primary solid waste collection was handed over to micro-enterprises, the institutional arrangement was public ownership and private operation. As the ownership of the service belonged to the public sector, the public sector remained responsible for indirect provision. Given these institutional arrangements, the legitimacy of microenterprises is challenged in many ways. focus group discussions with owners and workers revealed that, initially, the government tried to force private commercial enterprises to be organized under the auspice of mSSedA rather than assisting them as independent entities. this is against the will of most of the micro-enterprises who prefer to operate as a private irm. Moreover the oficial capital requirements are a barrier for enterprises to become legitimate. As stated in the guidelines for microenterprises engaged in solid waste collection and transportation, they are expected to have the necessary equipment (AACG, 2004). registration for tax purposes is not a viable option for some informants as the sector appears to them as unstable. thus, the cost of registration coupled with the perceived irregular and erratic nature of the business discouraged them from becoming legitimate. Studies have estimated that full compliance with all regulations could mean closure of business. in latin America the cost of remaining legal varied between 17 and 70 per cent of annual proits of the unit. In Bujumbura (Burundi) it was estimated that the revenue of micro-enterprises would be reduced by 48 per cent if all regulations are strictly enforced. The institutionalization of the micro-enterprises was not conined to the promotion of eficiency of solid waste collection. Rather its focus was on boosting employment. in this regard, the government has a city-wide plan to deploy about 10,000 unemployed people in the solid waste collection sector. Accordingly, each Kebele has its own targeted quota and each Kebele oficial is held accountable for the number of people it organized. micro-enterprises were asked about the level of agreement they have on ‘the public sector’s role as enabler’: 30 per cent of the surveyed enterprises agree that public sector could be a facilitator, while 35 per cent disagree; 28 per cent of them are neutral (7 per cent no answer). micro-enterprises stated the reasons behind the poor facilitation role of the public sector: they got no response to their queries, appeals are not heard, and no fair response is given to micro-enterprises. moreover, rules and regulations are not respected and the future is unpredictable. upcoming new regulation does not address the problems of micro-enterprises and is too bureaucratic. micro-enterprises and the public sector do not trust each other. this made the solid waste collection business unpredictable, which eventually made the business unattractive. micro-enterprises were asked about their freedom of decision. the survey showed that 22 per cent considered that they do not have any freedom to decide on matters; 31 per cent said they have little freedom; while 29 per cent have some freedom to decide (12 per cent no answer). Also regulation is changing without the consent and willingness of the partners in question as decisions are made unilaterally. April 2013 Waterlines Vol. 32 No. 2 http://www.developmentbookshelf.com/doi/pdf/10.3362/1756-3488.2013.016 - Meine Pieter van Dijk <mpvandijk@iss.nl> - Tuesday, July 14, 2015 3:06:16 AM - IP Address:217.122.243.23 MICRO-PRIVATIZATION OF SOLID WASTE COLLECTION 159 Interviews with other stakeholders focus group discussions with households brought out that in due course microenterprises active in solid waste collection in Addis Ababa have received recognition from the community. Community leaders suggested that micro-enterprises were providing more effective and responsive services than provided before by the public sector. interviews with owners of private micro-enterprises revealed that households and other users appreciate the service. Interviews with city oficials conirmed that despite improvement in the collection service, micro-enterprises were unable to provide the level of service that was needed. private micro-enterprises concentrated on better-off clients and worked in the more accessible areas. the ability to pay by the households determines the engagement of private micro-enterprises in solid waste collection. Cooperative micro-enterprises were less successful than private micro-enterprises. in depth interviews with owners of micro-enterprises revealed that the relations between micro-enterprises before 2004, when the informal scheme was dominant, took the form of conlicts, competition, and collaboration. There was an opportunity for all kinds of micro-enterprises to work freely and exchange experiences. Gradually, in the period 2005–2008, when the private micro-enterprise scheme became dominant, conlicts developed as private micro-enterprises created a competitive environment through price reductions, better quality services, and improvement of the workers’ discipline. focus group discussions with workers from micro-enterprises revealed that there were two major groups of workers. The irst group involves newcomers to the city. Some still have their own farm in the rural areas and are casual workers. they work for a short period of time and leave when they see other opportunities. the other group involves local people. the attitude of these workers depends on whether they work for a cooperative or a private micro-enterprise. those who are organized as cooperatives are reluctant to do a good job as they get minimum rewards. the majority of the workers in the cooperative micro-enterprises were women and because there was no adequate material support they were sometimes forced to use their back to transport the waste from the households to the transfer stations. Moreover during the ield work it has been observed that facilities have deteriorated and working conditions worsened. poor savings led to poor maintenance and no replacement of equipment under the cooperative arrangement. Similarly workers from private micro-enterprises claimed that such enterprises were not favoured as they swindled money that belonged to the workers. the rapid changes in policies made waste-collecting micro-enterprises lose conidence and made them more dependent on the public sector. Two types of contract arrangements were used sequentially: the franchise contracts in the period 2005–2009 and the contract-out arrangement after 2009. Contracting-out became the new mode of solid waste collection after 2009. unlike franchising and open competition, where private agents collect fees directly from users, in a contractingout arrangement the local governments pay the contractors according to the volume (m3) of solid waste collected and hauled to the municipal skip. local government Waterlines Vol. 32 No. 2 April 2013 http://www.developmentbookshelf.com/doi/pdf/10.3362/1756-3488.2013.016 - Meine Pieter van Dijk <mpvandijk@iss.nl> - Tuesday, July 14, 2015 3:06:16 AM - IP Address:217.122.243.23 160 M.P. VAN DIJK AND M. TILAY contracts-out solid waste collection service delivery to micro-enterprises to collect waste from the households, transfer it to the municipal skips at the designated place and keep their respective working zone clean. for micro-enterprises this meant more cost since they had to adapt to the new arrangements. for example Kokeb enterprise in nifas-silk lafto sub-city started its business in 2001 as a private enterprise and in 2004 it was forced by local government to change to a cooperative; again in 2005 it gained the freedom to work as a private micro-enterprise and in 2009 for the second time it was forced to change into a cooperative, when the government decided to insist on providing support to cooperatives only. moreover, focus group discussions with owners of private commercial enterprises revealed only a minimum of collaboration between the public sector and microenterprises. poor coordination between different levels of government was often mentioned by the micro-enterprises, which resulted in poor performance of the waste collection micro-privatization process (Harper, 2000). micro-enterprises had limited relations with the city administration bureaus and reasonably fair relations with their respective Kebeles. They have a quasi-oficial linkage with the City Sanitation, Beautiication and Park Development Agency. Moreover decisions are less transparent even among different levels of government. What they are doing is conlicting with each other most of the time. Interviews with local oficials revealed that part of this lack of transparency among public sector ofices arises because there are various interests within the public sector, implying different motives for government intervention. This consequently led to conlicts of interest between them. local governments, despite being overwhelmed by various strategies coming from the top, are unable to accomplish these tasks successfully. in the meantime as they are responsible for local issues, such as cleaning up their vicinity, they can hardly address the interests of city oficials and the community as well. Conclusion Involving micro-enterprises as service providers must be tailored to speciic local circumstances. the dynamics of solid waste collection reform in Addis Ababa are predominantly dictated by the relation between the local administration, communities, and the micro-enterprises. the question was how new opportunities created by formalization were taken up by communities and micro-enterprises and how the authorities in the framework of micro-privatization used them. micro-enterprises in Addis Ababa city waste collection contribute tremendously by exploring opportunities that are appropriate to the milieu of the public sector and the community at large. Waste collection micro-enterprises in Addis Ababa exist because of public demand for the service, poverty, high unemployment, and industrial demand for recyclables. none of these factors is likely to disappear in the foreseeable future. Although policies at higher levels of government deinitely produced an overall climate conducive to the rise of micro-privatization, the fate of the micro-enterprises is largely determined by the reforms undertaken at local government level. April 2013 Waterlines Vol. 32 No. 2 http://www.developmentbookshelf.com/doi/pdf/10.3362/1756-3488.2013.016 - Meine Pieter van Dijk <mpvandijk@iss.nl> - Tuesday, July 14, 2015 3:06:16 AM - IP Address:217.122.243.23 MICRO-PRIVATIZATION OF SOLID WASTE COLLECTION 161 Strictly speaking, there is no clear strategy set for these micro-enterprises at that level. That prevents the full economic beneits being reaped from using the market. micro-enterprises working in solid waste collection in Addis Ababa felt the unpredictability of the city authority as a business partner due to frequently changing policies and unbalanced regulations while the latter accused the micro-enterprises of violation of health and environmental standards. the study shows the continued power of the state and its agents to shape the developments in this domain. the policy at national level recognized the need to develop micro-enterprises, but it was not clear what precise role the micro-enterprises are to play in solid waste management. References AACG (Addis Ababa City Government) (2004) Waste Management Collection and Disposal Regulations of the Addis Ababa City Government, Addis Ababa, ethiopia: Berhanena Selam printing. fransen, J., van dijk, m.p. and Kassahun, S. (eds) (2010) Formalization and Informalization Processes in Urban Ethiopia: Incorporating Informality, maastricht: Shaker. Harper, m. (2000) Public Services through Private Enterprise: Micro-privatization for Improved Delivery, rugby, uK: practical Action publishing. oduro-Kwarteng, S. and Van dijk m.p. (2008) ‘performance of private companies involved in urban solid waste management: evidence from three cities in Ghana’, in Jones, H. (ed), Access to Sanitation and Safe Water: Global Partnerships and Local Actions – Proceedings of the 33rd WEDC International Conference, Accra, Ghana, April 2008, loughborough, uK: WedC. <http://wedc. lboro.ac.uk/resources/conference/33/oduro_Kwarteng_S_GHA.pdf> Waterlines Vol. 32 No. 2 April 2013