Ripple effect: Energia Rubber Tech
For a moment, South Africa seemed to have a working example of how to turn waste into jobs and money. But now the country’s showpiece R500‑million-a-year tyre recycling programme is being liquidated, leaving more than 30‑million old tyres as hazardous waste.
The Recycling and Economic Development Initiative of South Africa (Redisa) started out in 2013 with lofty goals, but has been plagued by controversy ever since. The environment department wanted it to be an example of how to create jobs (10 000 of them) while solving an environmental headache.
Redisa proposed a system in which waste pickers would collect the 30‑million waste tyres, rather than leave them to be burnt or put back on vehicles. The pickers would take the tyres to collection depots, which would then truck them to central processing plants. Most of the rubber would be shredded and used for road surfaces or spongy matting in playgrounds. The rest would be burnt in kilns to power, for example, cement plants.
This would be funded by a levy of R2.30 on each kilogram of tyre sold, based on the principle of “the polluter pays”. Using the R500‑million a year the levy generated, Redisa quickly built 22 tyre collection centres and employed more than 3 000 people.
The idea was that the tyre recycling scheme could be turned into a blueprint for the 37 other waste streams that need to be recycled, so the government can meet its 2022 target of recycling 100% of waste. Critically, it also didn’t cost the fiscus anything.
The world paid attention: Redisa was the runner-up in the World Economic Forum’s Circular Economy Awards in 2015.
But controversy was quick to follow. Pay for the 2 000 waste pickers collecting tyres was capped at R1 500 a month. Their combined annual salaries were half the R7‑million earned by Redisa’s three active directors.
Those directors also owned the majority of shares in Kuyasa Taka, the management company that did most of Redisa’s administrative work. For collecting fees and running operations, it earned an 18% share of Redisa’s income. That translated into R109‑million in the 2016 financial year. Kuyasa Taka also rented office space to the recycling initiative, for R500 000 a year.
By 2016, pressure was mounting. After its quick start, Redisa was nowhere near the goal of creating 150 waste recycling centres to stimulate small enterprises in areas that otherwise had little in the way of a formal economy.
One of these centres, Earth Thread, approached the environment department, saying it had a contract with Redisa but had never been given money. In a lawyer’s letter, it raised a series of irregularities. It noted that Redisa and its management company, Kuyasa Taka, shared an address in Cape Town. They also shared board members and family members. Asking for an investigation, Earth Thread said: “It would appear that the interconnection is of a nature that would suggest that there may be wrongful and/or unlawful complicity between them.”
The department started investigating. A 2016 letter from its director of general waste asked for proof of the jobs created: “We are required to show that these people are getting paid to validate that these are, indeed, jobs.”
It then appointed a forensic investigator, who found nothing illegal happening at Redisa despite not being able to get any information out of Kuyasa Taka. Instead, the investigator received a terse email, saying it was a private company and “we do not make our financial information available other than [as] required by law”.
In the same year, the treasury raised concerns about the R500‑million a year that was moving out of the fiscus and tweaked legislation so that the R2.30 tyre levy would go to the South African Revenue Service. From February this year, Redisa would get its operating funds from a R200‑million allocation given to the environment department as part of the national budget. As with the R1.2‑billion raised from the plastic bag tax, the treasury decided not to ring-fence the money raised by the levy to put into the Redisa tyre recycling initiative.
That tax initially funded the running of Buyisa-e-Bag, a non-profit group focused on creating groups that would help recycle plastic bags. The environment department only got a fraction of the R1.2-billion raised and in 2011 closed Buyisa. The funds are now used for other programmes in that department, such as Working for Water.
Stacey Davidson, a Redisa board member, cites this same example and says that is one reason why the new model for tyre recycling was so important. “We created something revolutionary by creating a model of recycling that doesn’t cost the state anything.”
But the court’s liquidation order threatens this. Davidson says it came as a shock: “We weren’t aware of the court action and we didn’t get any papers. We only got notification on Monday so we are still working through it.”
The environment department tried a similar route last November, when the minister issued a interim directive to take over Redisa. But Redisa took this directive to court and it was overturned.
The minister then withdrew the action, and her chance to appeal, in January. But on February 1 the tyre levy started going into the national fiscus. None of it was paid to Redisa.
Without an income source, Redisa notified its suppliers that it would stop collecting tyres on June 1. It said it would, however, still recycle the stock it had.
The environment department then went to court, asking for a liquidation order to “protect” the recycling assets and any money in Redisa’s three bank accounts. It was granted.
The liquidator was also given special authority to continue operations, but they have ground to a halt.
This comes at a time when Redisa’s blueprint is being extended to other sectors of the economy. The environment department has asked glass and plastic manufacturers to submit plans for recycling the waste that their products create.
This move has been met by opposition, with companies saying it will cost them too much money and will lead to jobs being cut. The example that would have proved them wrong has failed.
The department did not respond to a request for comment.