THE INFORMAL SECTOR IN SOLID WASTE MANAGEMENT IN DEVELOPING COUNTRIES SUSTAINABILITY EFFECTS OF FORMALISATION CONSIDERING HO CHI MINH CITY – VIETNAM AS AN EXAMPLE

Master's Thesis

THE INFORMAL SECTOR IN SOLID WASTE MANAGEMENT IN
DEVELOPING COUNTRIES
SUSTAINABILITY EFFECTS OF FORMALISATION
CONSIDERING HO CHI MINH CITY – VIETNAM AS AN EXAMPLE

carried out at the
Institute of Waste Management
Department of Water, Atmosphere and Environment
University of Natural Resources and Applied Life Sciences, Vienna

under the guidance of
Ao.Univ.Prof. Dipl.-Ing. Dr.nat.techn. Stefan Petrus Salhofer

by

Florian Scheibe
Matr.Nr. 9840238

Vienna, 3rd February 2006

_________________________________



ABSTRACT

Abstract
Solid Waste Management systems and the general condition for solid waste management in
developing countries differs remarkably from industrialised nations. The fast ongoing urbanisation in combination with economic development leads to rising amounts of waste the waste

management systems have to deal with. Due to limited financial resources and organisational
constraints the ability of the formal waste management system to react to this development is
limited.

One distinctive feature of waste management systems in developing countries is the existence
of an informal waste management system that exists parallel to the formal structures. Most of
the informal actors are socially deprived people who have discovered waste as a source of
income. The informal character of this activity sets limits to the development of the service
they provide for waste management.

The following paper aims to describe waste management systems in developing countries
with a special emphasis on the distinction between formal and informal activities. The situation and developments in Ho Chi Minh City, Vietnam are taken as an example to evaluate
ways towards the formalisation of informal actors and the integration of this workforce in the
formal waste management system. Furthermore, positive effects of a formalisation are stressed.

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THE INFORMAL SECTOR IN SOLID WASTE MANAGEMENT IN DEVELOPING COUNTRIES

Zusammenfassung
Die abfallwirtschaftlichen Rahmenbedingungen sowie die Abfallwirtschaftssysteme in Entwicklungsländern unterscheiden sich maßgeblich von denen industrialisierter Nationen. Wirtschaftliche Entwicklung und rasante Verstädterung führen zu immerzu steigenden Abfallmengen. Die Fähigkeit der Abfallwirtschaftssysteme auf diese Herausforderung zu reagieren
ist durch begrenzte finanzielle Mittel und institutionelle Schwächen limitiert.

Eine Besonderheit in Entwicklungsländern ist das Vorhandensein eines informellen Sektors in
der Abfallwirtschaft, der parallel zu den formellen Strukturen existiert. Die meisten Akteure

in diesem Sektor sind sozial benachteiligte Personen, die den Abfall als eine mögliche Einkommensquelle erkannt haben und ein informelles Entsorgungs- und Verwertungssystem
betreiben. Der informelle Charakter dieser Tätigkeit begrenzt jedoch die Entwicklungsmöglichkeiten dieses Systems.

Diese Arbeit beschreibt Abfallwirtschaftssysteme in Entwicklungsländern im Allgemeinen,
mit einem Schwerpunkt auf der Unterscheidung zwischen formellen und informellen Strukturen. Die Situation in Ho Chi Minh City, Vietnam, wird als Beispiel herangezogen um Möglichkeiten für die Formalisierung und Integration von informellen Akteuren in der Abfallwirtschaft zu beschreiben, sowie die Vorteile solcher Maßnahmen zu unterstreichen.

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ACKNOWLEDGEMENTS

Acknowledgements
I want to express my deepest gratitude to various people who have made this work possible.
First of all I want to thank all the staff of CENTEMA for their warm welcome and their assistance during my time in Vietnam, special thanks to Van, Trang, Thach, Thanh and Mr. Viet.
You made me feel at home in HCMC. The other important partner in Vietnam was ENDAVietnam, thank you all for your generous help. Not to forget Joost van Buuren, who made the
contact with CENTEMA. My time in Ho Chi Minh City wouldn’t have been the same without
my housemates Joe, Luca and Joice and my “Vietnamese Family”.

Furthermore I would like to thank my supervisor Stefan Salhofer for guiding me through the
work for this thesis, his positive encouragement and his most valuable advice.

I think if any of us honestly reflects on who we are and how we got here, we discover a debt
to others that spans written history. The work of some unknown person makes our lives easier
everyday. I believe it's appropriate to acknowledge all of these unknown persons; but it is
even more necessary to acknowledge those people we know have directly shaped our lives.

I want to thank my mother for trusting me to do the right thing, even if she disagreed. Thank
you for the freedom you gave me, for your love and also for calling me back on track when
necessary. Without you and Robert I wouldn’t have finished my studies yet ;-). Thanks to my
father for believing in me.

Family includes for me not only my relatives. My life wouldn’t be what it is without my
housemates, the mg34 collective, and my closest friends, especially Reini, Tom and Chris.
Thank you for enriching my live with your fellowship. Let’s go on like this, we are a good
team. Special thanks to wordsmith Paul for linguistic levelling.

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THE INFORMAL SECTOR IN SOLID WASTE MANAGEMENT IN DEVELOPING COUNTRIES

Table of Contents
List of Tables........................................................................................................................VIII
List of Figures ......................................................................................................................VIII
List of Pictures.....................................................................................................................VIII
List of Abbreviations and Acronyms....................................................................................IX
I

Introduction ...................................................................................................................... 1
I.1
I.2

II

BACKGROUND ........................................................................................................................................... 1
OBJECTIVES OF THE STUDY AND RESEARCH METHODOLOGY ..................................................................... 2

Characteristics of Solid Waste Management in Developing Countries ...................... 3
II.1
TYPICAL ELEMENTS OF SWM IN DEVELOPING COUNTRIES ................................................................... 4
II.2
WASTE GENERATION ............................................................................................................................ 5
II.3
WASTE COMPOSITION ........................................................................................................................... 5
II.4
THE ACTORS IN SWM IN DEVELOPING COUNTRIES ............................................................................... 5
II.4.1 Formal Waste Management ............................................................................................................ 6
II.4.2 The informal private sector ............................................................................................................. 7
II.5
RECYCLING ACTIVITIES IN DEVELOPING COUNTRIES ............................................................................. 7
II.6
PROBLEMS OF SWM IN DEVELOPING COUNTRIES ................................................................................. 9
II.7
PROBLEMS OF CONVENTIONAL SOLUTIONS ......................................................................................... 10

III The informal sector and the informal economy .......................................................... 12
III.1
DEFINITION ......................................................................................................................................... 12
III.2
CHARACTERISTICS OF THE INFORMAL SECTOR ................................................................................... 15
III.3
AUTHORITIES AND THE INFORMAL ECONOMY ..................................................................................... 16

III.4
INFORMAL WASTE MANAGEMENT SYSTEMS ...................................................................................... 18
III.4.1
General characteristics ............................................................................................................ 18
III.4.2
Importance of the Informal Sector for Waste Management...................................................... 19
III.4.3
Problems of Informal Waste Management actors .................................................................... 21
III.5
FORMALIZING INFORMAL WASTE MANAGEMENT ACTIVITIES .............................................................. 22
III.5.1
Reasons for formalisation......................................................................................................... 22
III.5.1.1
III.5.1.2
III.5.1.3
III.5.1.4

III.5.2
III.5.3
III.5.4

Ecological dimension .......................................................................................................................... 23
Economical dimension ........................................................................................................................ 25
Social dimension ................................................................................................................................. 25
Institutional dimension ........................................................................................................................ 25

Ways towards formalisation ..................................................................................................... 26
Constraints for the involvement of the Informal Sector............................................................ 27
Successful examples for formalisation...................................................................................... 28

IV Solid Waste Management in Ho Chi Minh City.......................................................... 30
IV.1
GENERAL INFORMATION ABOUT HCMC ............................................................................................ 30
IV.2
GENERAL CONDITIONS FOR WASTE MANAGEMENT IN HCMC........................................................... 31
IV.2.1
Quantities of MSW in HCMC ................................................................................................... 31
IV.2.2
Composition of MSW in HCMC ............................................................................................... 34
IV.2.2.1
IV.2.2.2

Types and contribution of sources....................................................................................................... 34
Composition at the sources.................................................................................................................. 35

IV.3
FORMAL SOLID WASTE MANAGEMENT .............................................................................................. 36
IV.3.1
Organisational Framework ...................................................................................................... 36
IV.3.1.1
IV.3.1.2
IV.3.1.3

IV.3.2

Institutional Framework in Vietnam.................................................................................................... 36
Institutional Framework in HCMC...................................................................................................... 37
Budget allocations ............................................................................................................................... 38

Collection and Transfer............................................................................................................ 40

IV.3.2.1
Primary Collection .............................................................................................................................. 40
IV.3.2.2
Secondary Collection .......................................................................................................................... 43
IV.3.2.2.1 Rendezvous Points ......................................................................................................................... 43

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TABLE OF CONTENTS
IV.3.2.2.2 Transfer Stations ............................................................................................................................ 45
IV.3.2.3
Secondary transport............................................................................................................................. 46

IV.3.3

Recycling Activities .................................................................................................................. 47

IV.3.3.1

IV.3.4

Source Separation................................................................................................................................ 48

Disposal.................................................................................................................................... 48

IV.3.4.1
IV.3.4.2
IV.3.4.3

Details of the major Landfills.............................................................................................................. 49
Problems of the operating sanitary Landfills ....................................................................................... 50
Future waste treatment projects........................................................................................................... 51

IV.4
INFORMAL SOLID WASTE MANAGEMENT IN HCMC .......................................................................... 52
IV.4.1
Structure of the recycling system in HCMC ............................................................................. 53
IV.4.2
The informal workforce ............................................................................................................ 54
IV.4.2.1
IV.4.2.2
IV.4.2.3

IV.4.3
IV.4.4
IV.4.5
IV.4.6

V

Itinerant buyers ................................................................................................................................. 54
Informal waste collectors ................................................................................................................. 56
Scavengers........................................................................................................................................ 58

Waste Shopkeepers ................................................................................................................... 60
Middlemen ................................................................................................................................ 61
Recycling factories ................................................................................................................... 61
Problems of the informal recycling system............................................................................... 62

Sustainability effects of Informal Sector integration .................................................. 64
V.1
ASSESSMENT SCHEME FOR ALLIANCES ............................................................................................... 64
V.1.1 Actors and Alliances...................................................................................................................... 64
V.1.2 Alliances and sustainable development......................................................................................... 65
V.2
INDICATOR SYSTEM ............................................................................................................................ 66
V.2.1 Environmental goals and indicators ............................................................................................. 67
V.2.1.1
V.2.1.2
V.2.1.3

V.2.2

Waste minimisation............................................................................................................................. 67
Reuse and Recycling ........................................................................................................................... 69
Cleaner disposal .................................................................................................................................. 70

Socio-economic goals and indicators............................................................................................ 70

V.2.2.1
V.2.2.2
V.2.2.3
V.2.2.4
V.2.2.5

Better co-ordination............................................................................................................................. 70
Financial viability................................................................................................................................ 71
Safe and secure employment ............................................................................................................... 72
Clean and healthy urban environment ................................................................................................. 73
Legitimacy........................................................................................................................................... 73

V.3
CASE STUDY HCMC .......................................................................................................................... 74
V.3.1 Informal private waste collectors.................................................................................................. 74
V.3.2 Informal Waste Collectors in District 3 ........................................................................................ 74
V.3.2.1
V.3.2.2

V.3.3

Informal waste collectors in District 11........................................................................................ 77

V.3.3.1
V.3.3.2

V.3.4

Environmental issues........................................................................................................................... 75
Socio-economic issues......................................................................................................................... 76
Environmental issues........................................................................................................................... 79
Socio-economic issues......................................................................................................................... 79

Recycling chain ............................................................................................................................. 80

V.3.4.1
V.3.4.2

Environmental issues........................................................................................................................... 81
Socio-economic issues......................................................................................................................... 82

V.4
SUMMARY OF THE RESULTS ................................................................................................................ 84
V.5
COMPARISON OF THE RESULTS............................................................................................................ 85
V.5.1 Comparison district three and eleven............................................................................................ 85
V.5.2 Comparison private collectors and recycling chain...................................................................... 86

VI Conclusions ..................................................................................................................... 88
References ............................................................................................................................... 90
Appendix I: City map of Ho Chi Minh City ........................................................................ 97
Appendix II: Classification of non-hazardous solid waste ................................................. 98
Appendix III: HCMC waste generation data ...................................................................... 99
Appendix IV: Composition at the sources ......................................................................... 100
Appendix V: Location of the landfill sites.......................................................................... 102
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List of Tables

TABLE 1: COLLECTED AND TREATED DOMESTIC SOLID WASTE PER CAPITA ........................................................... 33
TABLE 2: RENDEZVOUS POINTS (CP. DONRE, 2003)............................................................................................. 44
TABLE 3: CAPACITY OF THE MAIN LANDFILLS (SOURCE: SWMD, 2004) ............................................................... 49
TABLE 4: SUMMARY OF INDICATORS (CP. GRAFAKOS ET AL., 2001) .................................................................. 68
TABLE 5: SUMMARY OF ASSESSMENT RESULTS ...................................................................................................... 84

List of Figures
FIGURE 1: TYPICAL ELEMENTS OF A SOLID WASTE MANAGEMENT SYSTEM IN LOW- OR MIDDLE-INCOME COUNTRIES
(CP. ZURBRUGG, 2003)....................................................................................................................... 4
FIGURE 2: TYPES OF ECONOMIC ACTIVITIES AND INTERRELATIONSHIPS (CP. CENTENO AND PORTES, 2003)... 13
FIGURE 3: THE PROCESS OF INFORMALISATION (CP. CENTENO AND PORTES, 2003) ......................................... 16
FIGURE 4: THE WASTE HIERACHY (CP. VAN BEUKERING ET AL., 1999) ............................................................ 24
FIGURE 5: QUANTITY OF MSW (1992 - 2003) (CP. DONRE, 2003) ....................................................................... 31
FIGURE 6: FORECAST OF THE AMOUNT OF MSW TO 2010...................................................................................... 33
FIGURE 7: SOURCES OF MSW IN HCMC (CP. NGUYEN K., 2003) ....................................................................... 34
FIGURE 8: COMPOSITION OF MSW IN HCMC (CP. LEMNA, 2004)....................................................................... 35
FIGURE 9: ORGANISATIONAL STRUCTURE OF THE ENVIRONMENTAL MANAGEMENT SYSTEM IN HCMC (CP.
NGUYEN K., 2003; NGUYEN T., 2005) ........................................................................................... 38
FIGURE 10: FINANCING OF THE SOLID WASTE MANAGEMENT SYSTEM IN HCMC (CP. MASAUDA ET AL., 2004) 39
FIGURE 11: COVERAGE AND DISTRIBUTION OF THE COSTS FOR SWM.................................................................... 39
FIGURE 12: COLLECTION SYSTEM.......................................................................................................................... 41
FIGURE 13: PARTICIPATION OF FORMAL AND INFORMAL ACTORS IN THE RECYCLING SYSTEM ............................... 53
FIGURE 14: POSSIBLE ALLIANCES IN URBAN SOLID WASTE MANAGEMENT (CP. GRAFAKOS ET AL., 2001).......... 65
FIGURE 15: ALLIANCE IN DISTRICT 3 (CP. DOSTE, 2002) ..................................................................................... 74
FIGURE 16: ALLIANCE IN DISTRICT 11 (CP. DOSTE, 2002) ................................................................................... 78
FIGURE 17: ALLIANCE IN THE RECYCLING CHAIN .................................................................................................. 81
FIGURE 18: COMPARISON OF THE SUSTAINABILITY EFFECTS .................................................................................. 85

List of Pictures
PICTURE 1: LOCATION OF HCMC IN VIETNAM (SOURCE: CNN, 2005).................................................................. 30

PICTURE 2: SLUM AREA ALONG A RIVER (PICTURE BY ENDA-VIETNAM).............................................................. 34
PICTURE 3: WASTE READY FOR COLLECTION IN A SMALL ALLEY ........................................................................... 41
PICTURE 4: WASTE COLLECTION FROM WATERWAYS (PICTURE BY ENDA VIETNAM)........................................... 42
PICTURE 5: HANDCARTS WAITING AT A RENDEZVOUS POINT ................................................................................. 44
PICTURE 6: RECYCLABLES READY FOR SELLING IN FRONT OF A TRANSFER STATION.............................................. 45
PICTURE 7: WASTE WORKERS LOADING A COMPACTOR TRUCK AT A RENDEZVOUS POINT ..................................... 46
PICTURE 8: TRUCK DUMPING WASTE AT GO CAT LANDFILL .................................................................................. 49
PICTURE 9: LEACHATE PUMPED FROM GAS COLLECTION WELL (PICTURE BY CENTEMA) .................................... 51
PICTURE 10: ITINERANT WASTE BUYER IN A SMALL ALLEY .................................................................................. 55
PICTURE 11: DOOR TO DOOR COLLECTOR RUMMAGING FOR RECYCLING MATERIAL .............................................. 56
PICTURE 12: STREET SCAVENGER .......................................................................................................................... 58
PICTURE 13: SCAVENGING BY BOAT ON A CANAL IN HCMC (PICTURE BY ENDA-VIETNAM) ............................... 59
PICTURE 14: SCAVENGER RECOVERING PLASTIC AT A TRANSFER STATION ............................................................ 60
PICTURE 15: WORKER IN A PLASTIC RECOVERY FACILITY (PICTURE BY CENTEMA)............................................ 62

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LIST OF ABBREVIATIONS AND ACRONYMS

List of Abbreviations and Acronyms
Abbreviations:
CBO

Community Based Organisation

DCs

Developing Countries

DPSC

District Public Service Company

HCMC

Ho Chi Minh City

IS

Informal Sector

ISWM

Integrated Solid Waste Management

MSW

Municipal Solid Waste

NGO

Non Governmental Organisation

SWM

Solid Waste Management

VND

Vietnamese Dong (1 € = 20,000 VND)

Acronyms:
CENTEMA

Centre for Environmental Technology and Management

CITENCO

City Environmental Company (Ho Chi Minh City)

DONRE

Department of Natural Resources and Environment

ENDA

Environmental Development Action in the Third World

ILO

International Labour Organisation

OECD

Organisation for Economic Cooperation and Development

PC

People’s Committee

SWMD

Solid Waste Management Division

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INTRODUCTION

I

Introduction

I.1 Background
Human activity has always created and will always create waste. In big cities around the
world Solid Waste Management (SWM) is an especially important and complex task for the
municipalities to deal with. In Developing Countries (DCs) the fast ongoing urbanisation and
sometimes high economic growth rates put additional pressure on the development of suitable
solutions to deal with the ever rising amounts of solid wastes.

The general conditions for solid waste management in developing countries differ remarkably
from those in industrialised countries in various fields. First of all, the financial resources to
be invested in solid waste management and urban development are limited. Additionally differences in the social and cultural framework must be mentioned. Also amounts of waste created and the characteristics of waste are different from industrial countries. High tech solutions for SWM are mostly not affordable and in most cases not appropriate to the situation in
DCs. Therefore the solution of SWM problems in those countries requires different approaches than in industrialised nations.

A special feature of SWM in developing countries is the existence of an informal solid waste
management system existing parallel to the formal structures. The informal sector (IS) is
mostly engaged in recycling activities. Most of the informal workers are driven by poverty,
lack of education and other options of employment. Therefore, this recycling activity is predominantly driven by economic considerations and not by environmental awareness.

Ho Chi Minh City (HCMC), the biggest city in Vietnam, is a good example for a fast growing
city in a developing country that faces serious problems with developing its SWM system.
The rapid growth in terms of population and economic activity is placing an increasing burden on the already poor environmental infrastructure.

A significant feature of SWM in HCMC, as in most other DCs, is the mutual existence of two
systems, the formal solid waste management system and an informal recycling system. The
formal system faces many problems due to financial, technical and institutional weaknesses.
The informal system closes the gaps left by the formal system and provides collection services and engages in recycling. But the informal actors work under hard conditions and often
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THE INFORMAL SECTOR IN SOLID WASTE MANAGEMENT IN DEVELOPING COUNTRIES
face harassments and a negative attitude towards them. Despite the contribution to the waste
management of the city, the efforts of the IS are not recognised or supported by the city authorities.

This paper is focused on the activities of the informal sector, its present and potential contribution to waste management systems in developing countries, and ways to improve the situation of informal actors.

I.2 Objectives of the study and research methodology
The objectives of this study are to identify and characterize the contributions of the informal
sector for solid waste management in developing countries in general and in HCMC in particular and to find out whether an integration of the informal sector in the formal waste management system, and therefore a formalisation of these actors, can have positive effects on
sustainable development. Different research methods were used to reach these targets:

The first part of this thesis comprises a literature review to obtain information about the general characteristics of solid waste management in developing countries. The second chapter
presents a literature review about the informal sector in general and its activities in solid
waste management in DCs. Additionally this part discusses the advantages and problems of a
formalisation of informal actors and presents successful examples of formalisation.

The next part presents a case study about the solid waste management system in Ho Chi Minh
City. This part is based on the outcomes of the fieldwork conducted in HCMC from January
to June 2005, where data about SWM in HCMC was gathered. Personal communication and
various site visits to clarify the collected data were carried out. This field study was important
to get a picture of the situation in HCMC. It includes a description of the general conditions
for SWM in HCMC, the description of the formal and informal SWM system and presents
examples for the integration of informal actors in the formal waste management system.

In the last chapter an assessment scheme for alliances in solid waste management is used to
compare the examples for formalisation of IS actors with the informal recycling system concerning their contributions to sustainable development.

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CHARACTERISTICS OF SOLID WASTE MANAGEMENT IN DEVELOPING COUNTRIES

II Characteristics of Solid Waste Management in Developing Countries
Dealing with the wastes created by the dwellers is one of the most important tasks of every
municipality worldwide. Despite differences in the amounts of wastes and their composition,
dependent on various factors, every human activity creates waste, which can, if not properly
managed, pose risks to environment and heath. Especially in urban areas of developing countries proper waste management poses an especially great challenge for the responsible bodies.

Urbanisation is a worldwide phenomenon in the recent decades, especially in low income
countries. While in high income countries 70 percent of the population live in urban areas and
the growth rate is just 1 percent, the average annual growth of the urban population in low
income countries was 3.3 % between 1990 and 2003; 30 % of the population lived in urban
areas in 2003. (cp. WDI, 2005) The growth rate of 3.3 % leads to a doubling of the population
in about 24 years. That means, given a constant population growth, that the urban population
of low income countries will double in the next 23.5 years.

Especially in the rapid urbanizing cities of the developing world, problems and issues of Solid
Waste Management are of immediate importance. While this problem has been acknowledged
by most governments, the rapid population growth in cities, caused mainly by migration to the
cities, often overwhelms the capacity of the municipal authorities to provide even the most
basic services. (cp. ZURBRUGG, 2002)

Urbanisation often takes place in the formation or expansion of slum areas or squatter settlements that grow organically and lack any planning. The resulting narrow and winding streets
are often not accessible for garbage collection with trucks and therefore the collection service
in those areas is often insufficient, leading to improper disposal on the streets or in vacant lots
which often transform into illegal open dumps. (cp. MEDINA, 2000)

Despite high expenses for waste management (30 – 50 percent of municipal operational
budgets), only about 50 – 80 percent of the refuse is collected. (cp. MEDINA, 2002) The need
for waste evacuation often resulted in the formation of informal collection services, independent from the formal system.

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II.1 Typical elements of SWM in developing countries
According to ZURBRUGG (2003) a typical waste management system in a low-income country contains the following elements:
•

Household waste generation and storage

•

Reuse and recycling on household level

•

Primary waste collection and transport to transfer station or community bin

•

Management of the transfer station or community bin

•

Secondary collection and transport to the waste disposal site

•

Waste disposal in landfills.

Recovering and recycling activity usually takes place in all stages of the system and is widely
undertaken by people working in the informal sector, so called “waste pickers” (cp. ZURBRUGG, 2003). The interrelationship of the different actors is visualized in Figure 1.

Figure 1: Typical elements of a solid waste management system in
low- or middle-income countries (cp. ZURBRUGG, 2003)

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CHARACTERISTICS OF SOLID WASTE MANAGEMENT IN DEVELOPING COUNTRIES

II.2 Waste Generation
Globally, waste generation rates per capita vary remarkably. One of the main determinants is
the economic standing of a country. Rising incomes are related to rising amounts of waste
generated, but it is important to mention that there are significant differences between rural
and urban areas. Rural residents often produce less waste per capita than dwellers in urban
areas. (cp. ZURBRUGG, 2003) The process of accelerated population growth, urbanisation
and the economic growth in many low income countries will lead to a booming amount of
waste the municipalities will have to deal with. (cp. MEDINA, 2002)

In general the waste generation rate in developing countries (0.4 – 0.6 kg/cap/d) is remarkably

lower than in industrialised countries (0.7 – 1.8 kg/cap/d). (cp. ZERBOCK, 2003)

II.3 Waste Composition
Waste in cities of developing countries characteristically has a high organic content (usually
more than 50 %) and a high share of inert material such as ashes and earth. This composition
leads to a high density and moisture content of the waste. These physical characteristics lead
to limited treatment options (e.g. incineration seems, due to high inert and moisture content,
not an option) and limited appropriateness of highly sophisticated equipment used in developed countries. (cp. ZURBRUGG, 2003) Not only the amount of waste generated, but also
the composition is dependent on the income of the residents. Therefore in high-income areas,
especially in the city centre, the content of packaging materials like plastics, glass, metal and
paper is relatively higher. On the contrary in low income areas the content of organic and inert
materials is generally higher due to the higher consumption of fresh fruits, vegetables and
unpacked food.

II.4 The actors in SWM in developing countries
It is typical for developing countries that, besides the formal waste management, an informal
sector contributes remarkably to the solid waste management. The formal structures are often
not able to serve all households of the cities and their engagement in recycling activities is
typically low. This lack of service quality and the free market potential in the recycling business are the basis for the activities of informal actors.

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THE INFORMAL SECTOR IN SOLID WASTE MANAGEMENT IN DEVELOPING COUNTRIES
This section introduces aims to clarify the distinction between formal and informal waste
management because in most situations the boundaries between the formal and informal sector are blurry. Many enterprises operate in a kind of ‘grey zone’, where characteristics of both

sectors apply. Furthermore there are strong commercial connections between the entrepreneurs in the waste chain.

II.4.1 Formal Waste Management
The formal waste management comprises of two different sectors, the municipal government
and the formal private sector.

Local municipal governments are charged with controlling the living conditions and public
health. Therefore, urban authorities around the world interpret their mandate to deliver services including sanitation, waste removal and disposal. That gives them formal responsibility
for solid waste management, including the implementation of laws and regulations and the
operation of the system. This responsibility is generally assigned to a special department. (cp.
VAN DE KLUNDERT and LARDINOIS, 1995)

The municipality is responsible for collection, transport, transfer, processing and disposal of
solid wastes. The growing demand for service caused by rapid, unplanned urban growth and
rising waste generation rates can often only be faced insufficiently by the local authorities.
The authorities often realize their problems and try to improve the services provided. According to ZURBRUGG, 2002 local authorities in Asian cities see their main challenges to be unclear responsibilities due to a multitude of responsible agencies working in the same municipal boundaries, lack of communication within the authorities and with stakeholders, infrastructure and resource problems and the lacking skills of municipal workforces.

Parts of the operational business in the responsibility of the municipal government are sometimes subcontracted to private firms. Those form the private formal waste management sector.

This sector comprises of registered private sector corporations, institutions, firms and individuals. They usually have official business licences, an organized labour force governed by
labour laws, some degree of capital investment and generally modern technology. They are
involved in a wide range of waste management activities, ranging from waste collection over
resource recovery to landfill operation. The formal private actors can have contracts with the
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CHARACTERISTICS OF SOLID WASTE MANAGEMENT IN DEVELOPING COUNTRIES
municipality to fulfil several services such as collection or disposal for a fee, purchase the
right to perform services and keep the profit, or have contracts with individuals or businesses
to perform services. Furthermore, they can purchase recovered materials from the municipality or collectors. (cp. VAN DE KLUNDERT and LARDINOIS, 1995)

II.4.2 The informal private sector
The existence of poverty in combination with a rising accumulation of recyclables in richer
areas and the often insufficient collection services in poor areas of the cities has led to the
formation of an informal waste management sector. The cities’ poor, who see waste rather as
a potential source of income rather than as waste, take over a part of the burden of the municipal waste collection by sorting out the recycling materials in richer areas. On the other
hand, part of the waste collection in poorer areas, not served by the formal collection system,
is conducted by informal waste collectors who themselves often separate recycling materials
from the waste stream. The recyclables recovered by those actors are traded and processed in
a chain of, mostly also informal, waste shops and recycling facilities.

Informal activities, in contrast with the formal sector in waste collecting and recycling, are
often driven by poverty, and are initiated personally and spontaneously (and sometimes haphazardly) in the struggle for survival (although some enterprises, especially the ones engaged
in recycling activities, manage to make considerable profits). (VAN DE KLUNDERT and
LARDINOIS, 1995)

II.5 Recycling activities in developing countries
As mentioned above the role of the municipality in recycling is mostly negligible; most of the
recycling activity is carried out by informal sector actors. These actors are
•

scavengers, who rummage the waste in different public and semi-public areas for resalable material,

•

itinerant waste buyers who purchase recyclables directly from households or

•

collection crews who sort out the valuable materials while their waste collection activity.

The reprocessing is carried out by a network of informal and semiformal waste shops and
recycling systems. All these actors are further described in chapter IV.4.1 under consideration
of Ho Chi Minh City (HCMC) as an example.
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The motivation for recycling in developing and industrialised countries is rather different. In
the latter recycling is undertaken by the formal sector, driven by law and a general public
concern for the environment with often considerable expenses. On the contrary, in developing
countries the recycling activity is driven by poverty and the need to create an income for deprived people. (cp. ZURBRUGG, 2002)

Consequently, the choice of materials to collect is in the first place determined by the value of
the waste, and in the second place by their ease of extraction, handling and transport. Paper,
metals and plastics, sorted out as early as possible in the waste chain, therefore attract most
attention. Nevertheless, the recovery rate in low income countries is fairly high, because of
the urgent need of the informal actors for incomes. Generally the recycling work is conducted
in a very labour intensive manner for low incomes. The main motivations here are not environmental considerations but the creation of employment for the poor. (cp. VAN DE
KLUNDERT, 1995; ZURBRUGG, 2002)

Despite the fact that compostable materials represent a much bigger percentage than other
recycling materials, such as plastic, paper and scrap metal, their reuse by the informal sector
is fairly limited. Sometimes leftover food is collected by itinerant farmers to feed their livestock, but these are small scale, limited activities, not comparable with the informal recycling
system for not compostable waste that has evolved in most urban areas in developing countries.

Large scale operations for the composting or the biological pre-treatment of wastes do not
take place in noteworthy dimensions. According to FRICKE et al., (2005) the main reasons
are the costs for treatment and therefore the price of the final product which cannot compete
with industrially produced NPK-fertiliser and the bad image of waste compost due to quality
problems. Furthermore, the used technology is mostly inappropriate because it is taken over
from industrialised countries and therefore not suitable for the requirements in technological
and financial dimensions.

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II.6 Problems of SWM in developing countries
ZURBRUGG (2002) identifies four typical problem areas for SWM in developing countries:
•

Inadequate service coverage and inefficiencies of services:
Due to limited financial resources to cope with the increasing amount of waste, the
municipality often serves only a limited part of the urban population. This limitation
of services is often caused by financial limitations due to inadequate waste fees levied

from the households and insufficient funds from the central municipal budget. Furthermore inefficient institutional structures, organizational procedures or deficient
management capacity in combination with the use of inappropriate technology contribute to the inefficiency of the services in general.

•

Limited utilisation of recycling activities:
The recycling of not compostable recycling materials from municipal solid waste
(MSW) is often well developed by the activities of the informal sector although those
activities are seldom recognised, supported or promoted by the municipal authorities.
Despite the great recovery potential of organic waste, that often contributes more than
50 % of the total waste amount, reuse activities in that field are still fairly limited.

•

Inadequate landfill disposal:
Financial limitations often lead to more or less uncontrolled dumping of MSW. Another reason for inadequate disposal is inappropriate guidelines for siting, design and
operation of new landfills, which are often from high income countries, hence not
suitable for the local conditions. Another aspect is the often poorly trained personnel
who, in combination with the points mentioned above, causes the degeneration of
technically sanitary landfills into open dumps. Additionally it will become more and
more difficult to find sites to build new landfills in adequate distance to the cities, because the dumps directly affect the population and therefore raise resistance to the
construction of new dumps. Also the construction of landfills located in greater distances from the cities implies higher transfer costs as well as higher investments in infrastructure.

•

Inadequate management of healthcare and hazardous waste:
Treatment strategies for hazardous waste often rely on incineration technology, which
is rather expansive. Hence hazardous waste is often mixed with municipal waste and
dumped at landfills.

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II.7 Problems of conventional solutions
MEDINA (2002) found that the solutions commonly proposed to face the problems in SWM
in developing cities have several shortcomings: Despite high expenses for waste management
the collection rates are fairly low. The management systems are often centralized and undiversified, ignoring the different needs of the heterogeneous neighbourhoods within each city.
The decisions are made from the top down, without or with little community participation.
Frequently advanced technology and equipment is imported from industrialized countries.
The solutions are furthermore only focussed on the formal sector and ignore the possible contributions from the informal sector. Those conventional approaches often fail because there
are profound differences between industrialised countries and developing countries.

The main differences between western and developing countries affecting solid waste management are in terms of income, standard of living, consumption patterns, institutional capacity and capital available for urban investments. Contrary to industrialised countries with a
relative abundance of capital and high labour costs, developing countries have an abundance
of unskilled inexpensive labour and a scarcity of capital. Therefore, solutions using high technology and saving labour are less effective than labour intensive low-tech solutions.

One good example for the failure of technology transfer is the investment in western style
compactor trucks. The narrow and often unpaved roads, especially in poor districts, are often
not accessible for modern collection vehicles but easy to service by pushcart. Additionally the
physical characteristics of the waste, with its high density and moisture, often make compression vehicles obsolete. Collection and transfer trucks which are able to achieve compression
rates of up to 4:1 in industrialized nations may achieve only 1.5:1 in developing countries (cp.
ZERBOCK, 2003). Therefore the effect of compaction is not proportionate to the high investment and maintenance costs for those vehicles.

Despite these negative preconditions, over 60 % of the loans granted by the World Bank for

improving SWM in developing countries between 1985 and 1996 were used to purchase
compactor trucks. Other advanced technologies that are likely to fail are incineration and invessel composting. Despite the largely negative experience in the use of those technologies
conventional solutions still favour the transfer of such technology and equipment. This trend
remains because solid waste management companies from developed countries tend to transfer the solutions and technologies that work well in their countries to developing nations,
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without considering the local conditions. Not only do those solutions fail to work well, the
conventional solutions often have a negative impact on the informal refuse collectors and
scavengers and are therefore not socially desirable. (cp. MEDINA, 2002)

One possible alternative approach to improve waste management services in developing
countries is the increased integration of the informal sector into the formal waste management
system instead of investing the scarce financial resources in inappropriate high tech solutions.
Therefore, it is first necessary to analyse the characteristics of the informal sector, its potential
benefits for solid waste management and approaches for integration into the formal system.

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III The informal sector and the informal economy
III.1 Definition
The term ‘informal sector’ was first introduced by the International Labour Organisation
(ILO) in its Kenya Mission Report in 1972. The ILO employment mission report on Kenya
found that migration from the countryside to the city did not result in urban unemployment. It
concluded that if the modern (formal) economic sector does not provide enough job opportunities, rural migrants and urban dwellers alike find employment in small-scale and microlevel production and distribution of goods and services. These activities form the informal
sector in developing countries. The primary objective of informal activities is generating employment and income; they are usually conducted without proper recognition from the authorities and escape the attention of the administrative machinery responsible for enforcing
laws and regulations. (cp. ILO, 2005)

FEIGE (1990) states that the informal economy is a part of the underground economies. He
defines the informal economy as follows: „The informal economy comprises those economic
activities that circumvent the costs and are excluded from the benefits and rights incorporated
in the laws and administrative rules covering property relationships, commercial licensing,
labour contracts, torts, financial credit and social security systems.”

In the Encyclopaedia of Political Economy CROSS (1998) states that: “The informal sector
(IS) describes economic activity that takes place outside the formal norms of economic transactions established by the state and formal business practices but which is not clearly illegal
in itself. Generally, the term applies to small or micro-businesses that are the result of individual or family self-employment. It includes the production and exchange of legal goods and
services that involves the lack of appropriate business permits, violation of zoning codes, failure to report tax liability, non-compliance with labour regulations governing contracts and
work conditions, and/or the lack of legal guarantees in relations with suppliers and clients.”

It is essential to distinguish informal and illegal activities. While illegal enterprises deal with
goods or services which are defined as illicit by a society, informal activities mostly deal with
licit goods (see Figure 2). Therefore the basic difference between formal and informal activities is not dependent on the character of the final product, but on the manner in which it is

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produced and/or exchanged. (cp. CENTENO and PORTES, 2003) The interrelationship between formal, informal and criminal enterprises is visualized in Figure 2.

Process of Production and
Distribution

Final Product

Economic Type
formal
informal
criminal

licid
illicid
Formal
D

B
C

A
E

Criminal

Informal

F

A: State interference, competition from large firms, sources of capital and technology
B: Cheaper consumer goods and industrial inputs, flexible reserves of labour
C: State interference and disruption, supplies of certain controlled goods
D: Corruption, "gatekeeper's rents" for selected state officials
E: Capital, demand for goods, new income-earning opportunities
F: Cheaper goods, flexible reserves of labour

Figure 2: Types of Economic Activities and Interrelationships (cp. CENTENO and PORTES, 2003)

Figure 2 not only visualizes the distinction between formal, informal and criminal activities
but also stresses the connections and interactions between those sectors. The informal economy has various links with formal enterprises due to business contacts, such as the delivery of
goods and raw materials to formal enterprises. Additionally formal enterprises often subcontract activities to informal sector enterprises to save labour costs. Informal enterprises on the
other hand often use formal companies as sources for capital or technology. Therefore, the
informal sector is usually integrated in the economies of developing countries and plays an
important role for the economic stability (see Chapter III.3).

The motivation for small businesses to avoid formality can be explained by the high ‘costs of
formality’: complex, time consuming and expensive regulations which are easier for larger
firms to fulfil and almost impossible for small businesses to observe. Therefore, staying informal reduces the operating costs of the informal sector and creates a competitive advantage
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relative to large firms. This cost reduction can be seen as ‘informal subsidies’, which counterbalance the economies of scale, the formal subsidies and the political preference for larger

firms. On the other hand informal companies are forced to stay small to avoid detection and
lack legal protection for their investment. Those factors create disincentives for growth and
capital investment. (cp. CROSS, 1998)

In regard to the optimization strategies informal sector enterprises differ remarkably from
formal employers: Due to high costs for formal labour imposed by the state, formal firms seek
to substitute capital for labour and gain economies of scale. Informal sector enterprises evade
the regulatory costs for labour and avoid insecure (due to lack of legal protection) capital investment, they substitute labour for capital and try to stay small enough to gain ‘economies of
flexibility’. Especially in developing countries, which often have a surplus of (cheap) labour
but lack of capital, this is a promising strategy. (cp. NAS and JAFFE, 2004; CROSS, 1998).

Between the two poles ‘formal’ and ‘informal’ a ‘semi-formal’ economy exists. It comprises
activities that are partly regulated because state officials have traded in a certain degree of
control over the informal activities in exchange for recognising and legitimatising them. Thus
collective taxis, street vendors and garbage collectors often have unspoken or sometimes explicit permissions to carry out their activity without being fully integrated into the formal system. (cp. CROSS, 1998).

The most widespread way of defining the informal sector is a reverse approach: to define
what it is not. Namely that is:
•

The formal economy, which provides officially regulated and protected jobs.

•

The criminal economy: While the activity of the informal actors itself, meaning the
conduction of a business is often semi-legal or illegal, the product or service itself is
widely considered legal.

•

The care economy: A large hidden sector of the economy, in which work without a
payment of wages is provided within a household.
(cp. WIKIPEDIA, 2005)

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III.2 Characteristics of the Informal Sector
The ILO (2005) states the following characteristics for informal sector activities:
•

Informal sector enterprises usually employ fewer than ten workers, mostly immediate
family members.

•

The informal sector is heterogeneous: major activities are retail trade, transport, repair
and maintenance, construction, personal and domestic services, and manufacturing.

•

Entry and exit are easier than in the formal sector.

•

Capital investment is generally minimal.

•

Work is mostly labour intensive, requiring low-level skills.

•

Workers learn skills on the job.

•

The employer-employee relationship is often unwritten and informal, with little or no
appreciation of industrial relations and workers’ rights.

•

The informal sector works in conjunction with, rather than in isolation from, the formal economy. It has increasingly become integrated into the global economy.

The informal sector can be seen as a reservoir for workers who, for various reasons, cannot
find entry into the formal economy. It provides job opportunities for the cities’ poor and reduces unemployment and underemployment but those jobs are mostly low paid and job security is poor. Other characteristics of the informal sector are low levels of productivity and a
low capacity for capital accumulation for informal sector enterprises. (cp. CENTENO and
PORTES, 2003; GDRC, 2005)

The size and with it the role of the informal economy is dependent on the general economic
situation. Its size increases during economic downturns and periods of economic adjustment
and transition. Estimations about the size range from 4-6 % in high income countries to over
50 % in low income countries (cp. GDRC, 2005). Therefore the statement of VAN DE
CLUNDERT (1995) “Although small-scale in itself, the informal sector is operating on a

large scale” is especially true for developing countries. For many citizens in low income
countries the informal sector is not only an important employer but is also the major source
for affordable goods and services (cp. CENTENO and PORTES, 2003)

CENTENO and PORTES (2003) describe the informal sector as follows: “Activities conducted in this sector regularly challenge, bypass, or ignore the dictates of alleged ‘strong’
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