Focus article by Matt Tudball
LONDON (ICIS)--Tanzania’s government has recently issued a notice of a total ban on plastic bags by the 1 January 2017, while a new excise duty on plastic bags in Kenya is soon to come into force, both of which could have serious impacts on the polyethylene (PE) markets in the region.
“Previously the excise duty [was thought to be] on any PE film, but now [it is] only on shopping bags. Within two-to-three weeks it should come in to effect,” a trader said, speaking earlier in September.
On the 18 August, the Tanzanian Permanent Secretary in the Vice-President's Office said "all activities that involve the importation, production, sale and use of plastic bags and sachets will be banned" with effect from the beginning of 2017, local news agencies reported.
The Allafrica news organisation website stated on 19 August that the government has given a four month grace period to "owners of plastic bags manufacturing factories to take specific steps by investing in an alternative bags and plastic waste recycling facilities."
This trend follows an increasing number of East African countries looking at ways to control the use of plastic bags in the region.
Some countries such as Rwanda have already banned the use of plastic bags outright, while others are using duties to try and stem the rising tide of discarded bags that are flooding their open spaces and having a detrimental effect on the environment.
In the Kenyan government’s 2016/2017 budget in June, it was announced that an excise duty of 120 Kenyan shillings ($1.18) per kg will be imposed on plastic bags, though vacuum plastic bags for packing foods, juices, tea and coffee are not subject to excise duty.
This duty will hurt the converters who use high density polyethylene (HDPE) to make carrier bags as they are the ones to pay the duty rather than the PE producers exporting material to the country.
However, with the new duty effectively adding over $1,000/tonne to the cost of conversion, the demand for HDPE film into Kenya could drop significantly.
Exactly how the new duty will impact the market waits to be seen, but it could result in producers having to offer increasingly lower prices in order to compensate for the duty when it begins.
“The issue of excise duty on plastic bags has yet to be resolved. Nothing has been gazetted as yet,” a converter in Kenya said on Wednesday.
Kenya imported around 101,000 tonnes of HDPE in 2015 according to data from ICIS Consulting, though how these imports are impacted by the duty waits to be seen.
The moves by countries in the East African Community (EAC) to ban outright or limit the use of plastics goes hand-in-hand with the encouragement to seek a greener alternative to plastics and to improve recycling in the region.
Rwandan MP Patricia Hajabakiga, a member of the East African Legislative Assembly (EALA) introduced a bill in August to regulate the use of plastic material in the EAC, pointing to countries such as Rwanda, Uganda, Burundi and Tanzania who have all taken steps to curb the use of plastics within their borders.
At the same time, she told Rwanda’s The New Times, the bill, entitled East African Community Polythene Materials Control Bill, 2016, would look to encourage the use of biodegradable material within the EAC.
With a greener outlook being pushed by members of the EALA, this could also lead to innovation within recycling.
Speaking at the 3rd ICIS African Polymers Conference in Nairobi last month, Hasit Patel, managing director at Platinum Packaging, part of Ramco Group, discussed how his company has been recycling plastic waste and turning it into fence posts for irrigation channels for farmers within Kenya.
Despite the success of such initiative use of recycled material, Patel said there still needs to be much more work done around the ease of collecting the waste product in the first place.
“The biggest recycling challenge is collection the huge amount of packaging that’s out there”, he said.
Along with collection, another challenge facing any recycling initiative in Kenya is perception, as highlighted by a fellow speaker, Mr Mukesh Shah, CEO of Kenya’s Acme Containers.
“One challenge is perception – if customers see recycling facilities, they automatically assume the converter is using recycled material in its products,” he said, adding that the quality of the recycled material is also not sufficient to meet buyers’ needs.
Therefore, the end-user market needs to change its views on recycling plastics before it can gain ground in Kenya.
However, with the new excise duty in Kenya, and Tanzania’s total ban looming, the plastics industry in East Africa may find itself looking at greener alternatives sooner rather than later as more and more countries seek to crack down on the use of plastics in the region.