In the bag: Recycling keeps EcoPlastic going despite COVID-19
I had an idea to look for what I can do for myself with all the plastic bags scattered everywhere in the country.Habamungu Wenceslas, Entrepreneur behind EcoPlastics
EcoPlastic, a recycling business in Rwanda, collects 88 tons of plastic waste every year and turns it into new plastic bags, tubing, and sheeting. Habamungu Wenceslas, the entrepreneur behind EcoPlastics, recognised the business opportunity when Rwanda passed a law banning the use and importation of plastic bags. “I had an idea to look for what I can do for myself with all the plastic bags scattered everywhere in the country,” he says.
Habamungu approached GroFin for financing in 2017 to purchase new equipment to expand EcoPlastic’s production capacity. By the end of 2019, he had managed to grow the business’s sales by over 400% compared to its early years of trading in 2010 and 2011. But when COVID-19 struck earlier in 2020, EcoPlastic was forced to close completely for two weeks and the impact of the pandemic on its customers suddenly saw the business’s sales plummet.
Our main customers were also forced to close. Some – like hotels, restaurants, and the airport – were still closed in November last year.
Habamungu says COVID-19 has also made it more difficult and costly to import raw materials.
Trucks have to stay on the border for several days due to compliance checks and this has increased transport costs by 10%. Luckily, part of my business does not require imported raw materials so production could continue – although at a lower level.
As part of our efforts to support our SME clients, GroFin developed a specially designed Resilience Tool Kit to guide them in protecting their revenue and reducing their expenses. We assisted Habamungu in conducting a rigorous cashflow stress test to gauge the expected impact of the pandemic on four aspects of his business: demand, supply chain, staff, and finances. We also provided him with a COVID-19 ESG Framework to better protect his staff and customers from infection.
Our advice has helped EcoPlastic’s employees avoid COVID-19 infection so far. The business was able to cut cost and maintain all its staff. Today, the business succession plan is well established. Habamungu’s wife has 40% shares and is familiar with the company’s activities.Richard Tambineza, GroFin Rwanda Investment Manager
Following a grant from the Investing for Employment (IFE) facility that the business has benefited from, EcoPlastic was able to constitute enough cash flow to introduce innovation in its production lines. The company has now installed its own printing line (a service previously imported from Kenya) to provide branded packaging materials at affordable prices and within a short period. EcoPlastic also installed a studio to manufacture the plates that will be used in this new printing line.
As a result, EcoPlastic has retained its existing clients and gained new ones, especially public institutions involved in the agriculture and healthcare sectors. This has increased the monthly average sales by 88% in Q1 2021.
Habamungu says GroFin has not only provided him with moral support during this difficult time but also helped his business to remain profitable. For example, GroFin advised him to shift some production teams to work at night when electricity costs are lower and to focus on acquiring more local plastic waste as raw material rather than relying on imports.
Instead of losing confidence, we continued to focus on marketing strategies and how we can expand our collection areas. It made me realise that even if we are in difficult times, we will resume and grow the company.
EcoPlastic directly employs 52 people and supports another 35 who collects plastic waste for recycling. Despite the setbacks caused by COVID-19, Habamungu chose to retain all his employees and continued to pay their full salaries.
Nzeyimana Fidele has been working as an accountant at EcoPlastic for more than two years. He supports his spouse, two young children and a domestic worker. Nzeyimana says the pandemic has already cost some members of his extended family their jobs.
We are forced to make some contribution to support them as our family and this comes as food prices are increasing due to supplies issues caused by COVID-19.Nzeyimana Fidele, Accountant for EcoPlastic
He says he feels very lucky to have been able to keep his job at EcoPlastic despite the crisis.
It made me happy. I cannot explain the joy that I feel. There is hope.