How Kabadiwalla Connect built a business model around informal waste picking
This week, Citiscope is looking at three startups and social enterprises that are using technology to make cities work better. All spoke at the New Cities Foundation’s recent conference in Montréal. Read the other profiles here.
Last year, when the waters receded after what had been Chennai’s worst floods in a century, the city’s devastated streets were left with mounds of garbage.
The rubbish had spilled over from the Adyar and Cooum rivers, threatening to cause a public health crisis due to the rotten and hazardous materials that were now decaying in the open air. The flood had partly been the result of a poorly maintained drainage system, and the garbage didn’t help. For the citizens of this Indian coastal city, this came as yet another reminder that their waste management system was in shambles.
In India, 90 percent of all garbage goes to waste, in spite of laws that mandate the processing of recyclables. The country’s landfills — and rivers — are filling up fast. But Siddharth Hande, founder of Kabadiwalla Connect, thinks Indian cities already own part of the solution to better waste management.
“Kabadiwallas” are small neighborhood shop owners who are part of a vast and informal recycling industry responsible for handling about one-third of India’s recyclable waste. They buy paper, glass and other materials from waste pickers who collect them from individual households and businesses. The waste is then sorted and sold again to middlemen before ending up in the hands of larger facilities to be reprocessed.
Kabadiwalla Connect runs its own waste management facility in Chennai, essentially bypassing the middlemen — and allowing kabadiwallas to sell their waste at higher prices. The company aggregates, sorts and resells the materials in high volumes directly to the processors at a profit. A smartphone app allows the small dealers to request a pickup from the company; another one helps consumers locate the closest kabadiwallas and arrange for a waste picker to come to their house or business. Operating as a collection center, Hande says, “provides an opportunity for more decentralized, cheaper and more efficient ways of managing the flow of materials in the city.”
The idea took off after Hande won a grant from the World Economic Forum to map and survey Chennai’s kabadiwallas. A former spatial data analyst, Hande believed these businesses were underestimated as key actors in the recycling chain, but he needed data to prove it. “Nobody really sees them as [part of] a mainstream conversation about how to manage our waste properly,” he explains.
Hande and his team have identified about 1,200 kabadiwallas so far. What they found contradicted the image of marginalization and poverty usually associated with scrap dealers. While a majority of them earn US$150 to US$300 each month, a surprising number of kabadiwallas — around 25 percent — make more than US$740 a month. That’s a small fortune in India, where the median income hovers around US$650 per year. The survey also revealed that 70 percent of kabadiwallas already used smartphones, which opened doors to using mobile technology to build a business model.
Kabadiwalla Connect now handles around five tons of materials each month, but needs to reach 35 to 40 tons in order to become profitable. It’s also running a small design studio, Upcycle, to explore ways to reuse recycled materials. Hande thinks a lot more data are needed to truly understand Chennai’s informal recycling ecosystem, and enable the company to reach its goals. Research, he says, plays a crucial role in launching a social enterprise by helping entrepreneurs take time to study untapped markets, and look at poverty-related issues under a different lens.
“We’re so focused on the binary of informal versus formal,” he explains. “We need to think about larger issues, like efficiency and equity.”