Background and challenge
A leading waste management company in sub-Saharan Africa realised it would need to make some significant investments in market expansion opportunities in order to achieve its five-year growth targets. The company had established itself as a market leader in South Africa, with a track record for helping clients manage complex waste issues, and it had demonstrated its ability to deploy its expertise in neighbouring countries.
South Africa was experiencing a spiralling waste crisis, the result of population growth, increasing income levels and urbanisation, coupled with historical underinvestment in municipal waste facilities. This signalled a number of attractive growth opportunities for the company. In addition, the push to minimise the quantity of waste sent to landfills suggested that investment in new methods of handling waste volume — including primary and secondary recycling and waste to energy — would be another route to business expansion.
Management engaged L.E.K. Consulting to help validate and prioritise these growth opportunities and to articulate a strategy for pursuing the most attractive ones. A central challenge was accurately sizing the South African waste market, including the types of waste that were being generated and the various options being used for collection, transportation, treatment and disposal.
Approach and recommendations
We took a highly complex market that had never been comprehensively profiled and developed a structured market assessment to inform our client’s business decisions. Our approach was to triangulate across all available sources — both publicly available information and internal company data — to create a robust view of current waste volumes by waste type (i.e. municipal, general commercial and industrial, hazardous), material type, industry source and geographical location.
We then turned to estimating waste volume and market value over time by province, type of waste and stage of the value chain, using underlying drivers and the impact of legislative and regulatory changes as inputs. We combined this analysis with our profile of the competitor landscape (both commercial operations and municipalities) as well as with customer feedback on unmet needs to develop a prioritised list of immediate strategic opportunities. We also created a short list of longer-term opportunities in South Africa — including general waste collection and transport, primary recycling, and waste to energy — and articulated the steps for maximising the chance of success.
In addition, we profiled the other countries in sub-Saharan Africa, looking for both industrial and municipal waste management opportunities. Specifically, we profiled industrial waste management opportunities in three countries where planned investment in oil and gas production should generate large volumes of hazardous waste, and where we hypothesised that forecast economic growth would lead to increased industrial activity and related waste volumes.
Within these three countries, we identified municipal waste opportunities in 13 cities where population growth, increasing urbanisation and a growing middle class existed alongside historical underinvestment in municipal waste sites. To inform go-to-market recommendations, we also characterised the current state of infrastructure and the operating and regulatory environments for each opportunity.
Our analysis provided a clear picture of the relative size of different market opportunities, and the company adjusted its growth strategy based on our recommendations. It has also updated its value proposition and has refined its go-to-market approach to be consistent with its new value proposition.