Innovation in Waste Recycling Business in Africa Case Study - Economics Assignment Help

Assignment Task

The rapid ongoing development of Africa is being supplemented with rapid population growth, growing economic activities, and escalating urbanisation, that have resulted in unprecedented augmenting of waste materials. Consequently, this has resulted in enlarging risky waste material sites as the waste pollution generated from these unregulated sites has reached a state of emergency across the African continent. It has been projected by the World Bank Urban Development Report that the volume of waste in this continent will nearly triple to 160 million tonnes per year in 2025, as compared to its generation of waste in 2021, of 70 million tonnes per year. It is alarming that while 19 out of the world’s 50 largest dumpsites are found in Africa, more than 90% of these waste disposals are uncontrolled dumpsites and landfills, and often follows open burning causing environmental (air, soil, water pollutions and impaired biodiversity), health (including child mortality, abnormalities at birth and adult deaths) and economic hazards. Traditionally, African countries’ waste disposal management and recycling has been controlled under municipal governance. However, weak strategic, institutional, organisational structures, and political instability coupled with low budgets, limited skills, low public awareness and lack of political will have led to a mismanagement of waste materials. Moreover, this mismanagement and lack of organisational management, led to informal waste pickers actively recovering valuable resources from the waste at minimal compensation to municipalities and thereby associated private sector companies. According to a World bank estimate, the economic impact of air pollution in Africa is approximately US$114 billion

According to the African Union’s Agenda 2063: “The Africa We Want”, Africa needs to pursue sustainable waste management approaches to ensure its environmental preservation, prohibit further biodegradation and climate-resilient economies within its communities (AU’s Agenda 2063, Goal 7). This requires an urgent attention for recycling wastes rather than dumping or burning waste materials, across African continent. Sadly, while 70-80% of this municipal solid waste can be recycled to produce new products, only 4% of them are currently getting recycled. The Good news is this situation has escalated interests from African entrepreneurs who are building successful businesses from recycling wastes and contributing to local economic prosperity by promoting public awareness and creating employment opportunities. This surge of entrepreneurships promoting competitiveness in the waste management industry in African economies as opposed to the traditional municipality operated industry and promoting economic welfare.

Question 1: 

a) Explain how the Waste Recycling industry gains a natural monopoly under Municipal governance? Consider the characteristics of a natural monopoly in support of your response.

b) How should the equilibrium be determined under the monopoly structure? Justify your answer with appropriate diagram/s.

c) Who are the winners and who are the losers under this market structure?

Question 2: 

a) Explain how with local entrepreneurs this market is gaining competitiveness, moving towards monopolistic competition but not leaning towards perfect competition?

b) How should the equilibrium be determined under the emerging monopolistically competitive structure? Justify your answer with an appropriate diagram/s.

c) Who are the winners and who are the losers under this market structure?

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