Overview
South Africa’s municipalities generate massive quantities of solid waste, yet they lack the funding and capacity to collect and dispose of that waste effectively. The majority is collected and sent to landfills, without an opportunity to benefit from it.
In October 2015, Pegasys began working with South Africa’s Department of Environmental Affairs (DEA, now DFFE), in partnership with the German Development Cooperation (via GIZ), to develop the Waste Management Near-Term Priority Climate Change Flagship Programme, which seeks to divert waste from landfills in more than 30 municipalities.
The Challenges
South African municipalities are in dire financial straits, and many are unable to deliver basic services to their constituents. According to parliamentary reports (compiled even before the catastrophic impact of the COVID-19 pandemic), 30% of the country’s municipalities ended the 2019/20 financial year in deficit, and 27% faced significant doubts as to their ability to continue as a going concern.
Added to this, considerable funding is required to scale up South Africa’s alternative waste management projects and take full advantage of waste as a valuable material. Total capital outlay requirements for the 30 projects we identified amounted to +US$75 million over a four- to five-year period, which cannot be funded in full by either the municipalities or the national government.
The Solution
Pegasys worked to identify and design interventions to change the value proposition of solid waste in those municipalities, creating an enabling environment for long-term waste beneficiation. Virtually all solid waste that is discarded, dumped or disposed of has value. In our view, waste is not waste; rather, it is an opportunity to extract value. Pegasys formulated financial instruments that will accomplish exactly that.
Together with our partners, we drafted business and implementation plans for alternative waste treatment (AWT) interventions in local municipalities, and designed a climate finance fund to take advantage of the project’s ability to mitigate millions of tonnes of carbon dioxide.
The project focused on three key deliverables:
- Diversion of waste from landfills.
- Reduction of greenhouse gas (GHG) emissions.
- Creation of inclusive, sustainable jobs.
Pegasys’s interventions explored alternative ways of diverting solid waste from landfills, and of supporting municipalities in providing that service. In so doing, our work aimed to support private businesses and initiatives that provide those alternatives by creating an enabling environment underpinned by the appropriate governance, procedures, institutional structures and funding resources.
Pegasys also assisted in developing a Green Climate Fund (GCF) concept note, project preparation facility application, and full funding proposal. These included a programmatic financial model designed to highlight both investment attractiveness to government and financial affordability to the participating municipalities, across the full suite of municipalities and AWT interventions.
This long-term project has rolled out over several phases, each of which aimed to solve municipalities’ own, unique problems. What became increasingly evident as we progressed was that the innovation was not the technical solution – it was the development of a long-term, sustainable waste management strategy for each municipality, across the full value chain.
Michael Vice, Principal
RESULTS
Pegasys developed bespoke climate finance solution for the initial six municipalities, focusing specifically on organic waste. To optimise efficiencies, these solutions were expanded into blueprints that could be applied and adapted across the full suite of 30 municipalities.
