Piles of garbage. Extended power outages. Water cuts. Choking clouds of black smoke from rice burning in the Delta. To most people, these unpleasant aspects of life in modern Egypt represent environmental disasters or systemic failures. To a rising cohort of ecologically oriented entrepreneurs, these problems represent a business opportunity.
“When things are dysfunctional, that’s the opportunity. When things aren’t working, that’s when there is an opportunity for new businesses to be created,” said entrepreneur and investor Con O’Donnell at a panel discussion hosted by the Cairo Climate Talks on Tuesday. “We have a lot of things that are not working very well, and that means there is a lot of opportunity. If you see that there is demand for better services and better products, then you will find people willing to fill in the gap and create something new.”
“Ecopreneurs” working in fields like alternative energy and waste and water management are able to thrive despite — or even because of — difficult conditions in the market, explained Ahmed Huzayyin of Cleantech Arabia, a foundation aimed at advancing sustainable technologies in the region. “Luckily enough, they also solve the social problems,” he added.
“We are providing services related to energy, materials, water,” said Huzayyin, explaining that Egypt’s growing population has led to an unfilled and rising demand for these services. “On the business opportunity side, and even in growth, this is a very good opportunity. So it is somehow ironic that these market failures in energy, water and material actually created this high demand.”
“For instance, I was very excited whenever the power was going out, because it means more money, right,” Huzayyin said. “I walk around and I see garbage accumulating on the street, and I think, ‘the price is going down for Mahmoud.’ It’s a happy scene for me.”
Mahmoud, in this case, was Mahmoud Galal, co-founder and general manager of bio-energy firm Dayra, which recycles agricultural and municipal waste into industrial fuel. According to Galal, not everyone he met shared Huzayyin’s enthusiasm for his plans to turn trash into treasure.
“When we started collecting agricultural waste, we started in Beheira, in the Delta. The people said, ‘Are you crazy? Collecting rice straw and cotton stalks? We don’t care about it. We will burn it’,” Galal recalled.
As his venture succeeded, Galal said he also succeeded in winning over skeptics. As a result, some of the waste that once contributed to Cairo’s notorious black cloud now helps power factories, reducing their consumption of fossil fuels.
“After four years now, we pay near to LE100 for every ton. We create jobs. We now have more than six suppliers in this one governorate. So it’s creating a new culture when you open up a new market,” Galal said.
Despite Dayra’s success, Galal cautioned against expecting that every good idea will necessarily turn into a viable business. He himself launched three previous projects: turning Nile weeds into animal feed, turning Nile waste into biogas and turning waste into paper. Despite successful prototypes, each business failed, prompting him to consider a turn to a corporate job. A last-minute change of heart led him back to another business idea: recycling agricultural and municipal waste for fuel, and then to a meeting with the Italcementi group.
“After two meetings, I got my first contract, which was for LE1 million,” Galal explained. “And then you start to believe in it. Success, it’s a failure story. It’s a trial-and-error method.”
Eco-entrepreneurs are also subject to many of the same problems that plague local start-ups of all stripes. One such problem is a lack of investors. There are only “a handful” of venture capitalists in Egypt, O’Donnell said. “And two of them don’t have funds anymore, so there’s less than a handful,” he added.
That doesn’t mean start-ups should give up, O’Donnell asserted — just that they need to think globally, even if their businesses are firmly rooted in the local market. “There are something like 120 venture capitalists in the region. And there are thousands across the globe. Don’t limit yourself to looking exactly at the local landscape. Money is a commodity. It’s out there and investors are looking for opportunities wherever they are.”
The systemic dysfunction that creates market opportunities for eco-entrepreneurs can also make it harder for them to operate, Huzayyin added. One example is the lack of data about market sizes, conditions and potential opportunities.
“I am a researcher and entrepreneur in the field of sustainable development. Our main challenges are, number one, lack of information,” Huzayyin noted. “For example, for solar pumping. There is a document in the government somewhere that gives you the location of every pump that is pumping water from underground. Imagine if you are working in solar pumping, and you know these pumps with their ratings.”
The problem, Huzayyin said, is that the people who have access to information hoard it in the hopes of making money in the private sector, while making data freely available is not a priority for the government. “It is there, but it is not publicly available,” he maintained.
Despite these setbacks, the experts on the panel believe there are many opportunities for green businesses that come up with products and systems to fill in the gaps left by failures of state management, help people and businesses work more efficiently, or find a way to create something useful or beautiful out of materials that are currently being wasted.
“As traditional investment fails, you start to look for alternatives. And I do believe that these businesses generally are very profitable, and they have the capacity to attract capital,” Huzayyin said. “It is because of these failures that start-ups and entrepreneurship in Egypt are getting big right now.”