Interdependencies of stakeholders in e-waste management
This is the third of a series of four articles on the e-waste value chain in Bangladesh, shedding light on how the e-waste value chain is structured, who the actors are, and what functions are performed by whom
Informal and formal systems of e-waste management in Bangladesh are highly interdependent on each other for the collection, treatment and disposal of e-waste.
The formal or informal sector of e-waste management cannot singlehandedly perform all the value-additive activities of the e-waste management chain. For instance, the informal sector does not have the capability of recycling e-waste properly. Furthermore, the formal sector is not capable of collecting both household and industrial e-waste by itself.
The majority of e-waste is collected by informal channel actors, which would have been otherwise difficult or impossible to channel in the recycling process.
Since a significant portion of household e-waste is not separated at the source and discarded as mixed waste, it moves to an informal channel where products are not categorised as hazardous or non-hazardous. Moreover, only a few companies in Bangladesh discard their e-waste in a formal way.
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Most of the local companies trade their cast-off to vangari and small-scale traders in the informal sector. This is because companies are not legally obligated to move e-waste into the formal channel. Despite the informal channel's mammoth supply of e-waste, value extraction from that e-waste has never been a maximum due to their incapability of recycling in a scientific way.
The formal channel has the capacity for scientific recycling, but its area of operation is confined to industrial e-waste only. Formal channel actors are compelled to get multi-party stage approval by reporting to law enforcement and monitoring committees/agencies about e-waste categorisation (i.e, hazardous and non-hazardous) prior to further treatment, recycling and trading.
Thus, the formal sector of e-waste in Bangladesh does not have any option other than depending on the informal sector to supply a large chunk of household and industrial e-waste (which are not otherwise accessible) to keep their recycling function operational at a large scale.
If it was legally permissible for formal channel actors to accept informal channel-led e-waste supply, a large scale of e-waste recycling in a scientific way might not be possible in the short run due to the limited number of formal channel actors.
The coexistence of both channels and their interdependency is also evident in the way the formal and informal channel actors perform the treatment functions. Household e-waste is collected mostly by different actors of the informal channel.
Thus the initial sorting, cleaning and separation of parts/components are done at the informal stage before feeding it to the formal channel for further trading and recycling. Thus, to some extent, the informal channel's actors complement the formal channel's treatment activities through their value-adding activities.
On the flip side, the informal channel actors are solely dependent on the formal channel actors (e.g, local and foreign parts/components and scraps traders/recyclers) for trading their collected e-waste directly or after partial dismantling.
At the informal stage of treatment, the vangaris (informal channel actors) are not only involved in the initial separation but also in manual dismantling and open burning to recover precious materials (e.g, gold, silver, copper) from the discarded products.
Though vangaris have little or no systematic infrastructure or training for material recovery, they can recover precious metals and gold from e-waste up to certain stages of dismantling.
However, they are not capable of recovering the maximum amount of gold from e-waste liquid, which is otherwise recovered by formal recyclers with state-of-the-art technologyor infrastructure.
Residuals of inadequately dismantled e-waste are thus disposed of in the environment by the informal channel resulting in both environmental degradation loss and economic loss.
The vangaris are highly dependent on each other for completing their e-waste management functions. They either collect e-waste for further trading or for trading after material extraction. They are huge in number but very small in size, capacity and resources.
Very few of them have enough funds or the capacity to store and process large amounts of e-waste. Due to this, they often compete and/or collaborate to run their business. Though they compete with each other to get a good supply of e-waste, in many cases the instant availability of funds is the only decisive factor that helps get big supplies.
On the other hand, due to the shortage of storage space, many vangari shops must wait to retrieve e-waste from their clients until the existing stocks are moved forward to the chain.
Information flows, capital and storage capacity inadequacy work as obstacles to seize on further value additive opportunities in the e-waste value chain. Thus, in many cases, vangaris co-exist in the market through coordination rather than competition by sharing their capacity and resources.
This implies that the trade-based informal channel actors have neither the self-sufficient capacity nor the financing system to manage e-waste alone without the presence of formal channel actors.
At the formal stage, the treatment and trading of e-waste in Bangladesh are subject to the approval of the law enforcement committee. The entire approval process stated by traders in the formal channel is complex and bureaucratic. Lack of financial/social support for further investment, burden of complex legal bindings and consequent delay due to the bureaucratic process of getting treatment approval are forcing the formal channel to depend on the informal channel for e-waste supply.
The sole dependence on the supply of informal channels and the resulting insufficient monetary return is threatening the survival of formal third-party recyclers or traders.
Formal channel e-waste management in Bangladesh is trade-based, almost nothing is managed, supported or financed by the government, private organisations or consumer-provided recycling fees. The recycling cost is solely financed by the circulating fund that is generated through trading among formal and informal channel actors.
Though e-waste formalisation is highly dependent on comprehensive public-private efforts, Bangladesh has yet to approve and implement a specific e-waste law and has not established a single recycling plant to manage its e-waste.
Therefore, despite the diminutive efforts made by third-party recyclers or traders in the formal channel, severe shortfalls are expected to exist in the struggle toward the formalisation of e-waste management in Bangladesh.
Manufacturers' liability to manage end-of-life electronic products is not restricted by any law or policy yet in Bangladesh. They voluntarily take back electronic products from customers not for the purpose of recycling but with the intention of promoting upselling and providing warranty services.
Manufacturers only recycle the portions of take-back products, which have a high probability of value extraction. One possible reason for the manufacturers' apathy toward recycling is the low yields from the recovery process.
Recycling of the collected e-waste neither yields a sufficient recovery of secondary materials nor can the materials be used directly for further production. A large portion of the returned products are thus traded directly with informal channel actors. This implies that the manufacturer groups depend on the informal e-waste management actors to some extent.
The complex, multi-party, multi-stage and interdependent e-waste management system in Bangladesh is undoubtedly adding economic value and environmental benefits on several fronts, but multifaceted problems and challenges are embedded within the system.
The importance of informal and formal actors' roles and their interdependence toward value creation is undeniable but redundant in many cases where disintegration among those value addition functions is explicit. A comprehensive approach minimising such redundant and disintegrated functions of formalisation is thus needed.
The last article of this series will provide an evidence-based prescriptive model of integration between formal and informal channels that can work as a first step toward the mitigation of the disintegration problems of e-waste management in Bangladesh.
Nasrin Akter is a professor at the Department of Marketing, Faculty of Business Studies, University of Dhaka.
Muhammad Ismail Hossain is on leave from DU and currently working as Dean of Academic Affairs, Monash and UoL LSE Program at UCB.
Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the opinions and views of The Business Standard.
