Growing Sustainable Business for Poverty Reduction (GSB) in Serbia Stevan Vujasinovic, GSB Broker 27...
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Transcript of Growing Sustainable Business for Poverty Reduction (GSB) in Serbia Stevan Vujasinovic, GSB Broker 27...
Growing Sustainable Growing Sustainable Business for Poverty Business for Poverty Reduction (GSB) Reduction (GSB) in Serbiain Serbia
Stevan Vujasinovic, GSB Broker Stevan Vujasinovic, GSB Broker
27 June 2007, Brussels27 June 2007, Brussels
Why GSB in Serbia?Why GSB in Serbia?
Underdeveloped or disorganized supply chains to enable higher value-Underdeveloped or disorganized supply chains to enable higher value-adding investment;adding investment;
Uneven growth; Uneven growth;
stagnating rural areas, South and border areas of the country, stagnating rural areas, South and border areas of the country, marginalized populations within the informal sector with no or limited marginalized populations within the informal sector with no or limited access to finance and know-how access to finance and know-how
““After-service” for companies already in Serbia looking to expand After-service” for companies already in Serbia looking to expand existing investments;existing investments;
GSB Opportunities to date: Recycling and Waste Management, Food GSB Opportunities to date: Recycling and Waste Management, Food Processing, Biomass Fuels…Processing, Biomass Fuels…
A significant business opportunity exists in the Serbian recycling sector…
Material
Metal scrap (ex Aluminum)
* Adding all currently collected scrap and the total potential household scrapSource: IFC: PEP SE: “Assessment of the Recycling Sector in Serbia and Montenegro”, company interviews, GSB analysis.
Description (sub-segments Avail material* Market size*
• Industrial/construction metal• Vehicles• Abandoned metal waste
312 43.0 mm
Tons, ‘000 Euros, mm
Plastics • HDPE• LDPE• PET bottles
86 37.9 mm
Paper • Paperboard• Office paper• Newsprint
207 14.4 mm
Aluminum21 16.9 mm
• Industrial Aluminum• Used Beverage Cans
Glass • Bottles24 0.5 mm
…but opportunity remains largely untapped with low recovery rates…
*Given the relative development of the Brazilian Steel industry recovery rates are likely to be comparable to SerbiaSource: IFC PEP SE: “Assessment of the Recycling Sector in Serbia and Montenegro”, company interviews, GSB analysis.
Paper
Ferrous metals
Plastics (all types)
PET
Aluminum cans
Glass
>65%
<10%
15%
<5%
<1%
<1%
Current situation in Serbia
Recovery Rate, 2006, %
Paper
Ferrous metals
Plastics (all types)
PET
Aluminum cans
Glass
??*
15%
38%
26%
85%
41%
Best practice emerging market - Brazil
Recovery Rate, 2002, %
…due to weaknesses across the supply chain…
• Households• Industrial
/commercial
Source Separation
Individual collectors
Collection centers
Low-value processors
Who’s involved?
Recycler
Challenges
• Predominantly Roma and other poor
• Municipal waste Co’s
• SME’s
• SME’s • MNC’s• Local and
foreign end users
• No containers• No separation• Low
awareness
• No equipment• No
information
• Insufficient #• Poorly
located• Limited scale
• Limited equipment
• Limited scale
• Lack consistent/quality feedstock to create end products
Outcomes • Low recovery rate
Lower quality / value
• Limited capacity
• Low value capture
• Weak economic viability
• Focus on low value-added activities
• Investments not sustainable – no investment in this part of chain
Source: GSB analysis
Key breakages
Insufficient / non-existent
… and limited competition downstream of individual collectors
SourceSeparation
Individual collectors
Collection centers
Basic processors
High value processor
Source: GSB analysis
Ways to drive additional competition…
• Natural competition due to fragmentation
Competition“As-Is”
• Geographic monopoly
• Price information asymmetry
• Geographic monopoly
• High barriers to entry due to large asset base
• Limited number of players
• Price discovery (SMS) to sell to collection centre with best offer
• Price discovery
• Market entry pressure from downstream processors
• Paying quality/quantity premium to collection centres
• Buying from cheapest collection centre
• Creating incentives for additional processors to enter market
• Integrating upstream to compete against basic processors and collection centres
High Low Low Low
The supply chain AFTER GSB investments
• Increased separation
Source Separation
Individual collectors
Small collection
centers
Large collection
centers
Improve-ments
Recycler
Outcomes
• Better conditions
• Better organization
• Increased number / better coverage
• Better management
• Appropriate scale
• Higher value processing
• Increased interest in final recycling (i.e. manufacturing new materials)
• Improved quality
• Higher recovery rates
• Increased collection
• Increased profits
• Sustainable profit
• Consistent demand for recyclables
• Increased productivity of existing recyclers (e.g. paper)
• Potential for large new investments (e.g. in PET)Source: GSB analysis
Current GSB investments
Creating new GSB opportunity
• Functioning network to supply large collection center
Therefore, work with GSB in:Therefore, work with GSB in:
Greenfield investments in recycling (various materials);Greenfield investments in recycling (various materials);
Forthcoming privatization of municipal waste management companies; Forthcoming privatization of municipal waste management companies;
but also in other sectors where GSB is already minimizing risks and but also in other sectors where GSB is already minimizing risks and adding value in similar ways:adding value in similar ways:
Food processing (dairy milk, fruit and vegetables, meat processing);Food processing (dairy milk, fruit and vegetables, meat processing);
Biomass fuels (sourcing supplies from Bosnia, Montenegro as well as Biomass fuels (sourcing supplies from Bosnia, Montenegro as well as Serbia);Serbia);
or any other sector in which your business can contribute to the or any other sector in which your business can contribute to the achievement of Millennium Development Goals. achievement of Millennium Development Goals.
Further Information:Further Information:
Serbia Investment and Export Promotion AgencyVlajkoviceva 3/V, 11000 Belgrade, SerbiaPhone: +381 11 33 98 550Fax: +381 11 33 98 814E-mail: [email protected]
Stevan Vujasinovic, GSB BrokerStevan Vujasinovic, GSB BrokerUnited Nations Development ProgrammeUnited Nations Development Programme69 Internacionalnih brigada, 11000 Belgrade, Serbia69 Internacionalnih brigada, 11000 Belgrade, SerbiaPhone: +381 11 204 0421Phone: +381 11 204 0421Fax: +381 11 344 4300Fax: +381 11 344 4300E-mail: E-mail: [email protected]