Investor’s take on plastics ban, fakes

What you need to know:

  • As the country ponders the right move on plastics, another problem is being fought—presence of counterfeit chemical products on the local market, such as fake pesticides.

Tanzania is currently weighing in on the impact of banning the use of polythene materials—a ubiquitous feature of Tanzanian market and life. Despite mounting environmental concerns, experts have cautioned that the banning of plastics could come with repercussions on businesses, consumers and even jobs.

As the country ponders the right move on plastics, another problem is being fought—presence of counterfeit chemical products on the local market, such as fake pesticides.

But, what do investors in chemical products say? In this interview, Dr Markus Kramer, president of BASF – a German producer and marketer of chemicals – speaks to BusinessWeek Reporter Syriacus Buguzi, uncovering what lies ahead as his company looks forward to investing in Tanzania. Excerpts:

Question: Dr Kramer, your company is investing in compostable plastics. Are you trying to leverage the local market in Tanzania where the government is now intending to ban the use of plastics?

Answer: Yes, absolutely, and we have developed a product […pulls out sample…]…to replace traditional plastic bags.

Before moving to that, what’s your experience in other countries on how plastics are handled?

The consumer in Asia and Africa is disposing plastics differently as compared to as we do in Germany or Switzerland. In our countries, plastics don’t end up in the environment. We take care of it. We collect it and at the end of the day it’s getting burnt because it has certain value. So, we burn it to produce heat or something else. But also, we must be careful about how we talk about plastics. There is nothing wrong about plastic bags. They only become a problem when people throw it away to the environment. Unfortunately, this [throwing into environment] is happening in Asia, China and Africa. It’s not an issue environmentally in Europe. This is because stuff don’t end up in the environment.

So, how can this product you are showing me work here in Tanzania?

We developed a plastic that is compostable. It is biodegradable. So, after like four to five weeks, depending on the atmosphere around and the conditions, it decomposes and disappears. It’s a chemistry product that is friendly to the environment. When you touch it, it feels like plastic but it’s biodegradable.

How optimistic are you that your innovation is going to work here in Tanzania?

We are working on it in Kenya. We are only waiting for approval from Tanzanian authorities. For it to work here in Tanzania, a standard has to be formulated. So, we need approval for it to be available in the market. We are hoping it’s going to be permitted. You see, innovations in chemistry, sometimes take long to technically be called innovations. An innovation can only be called innovation when it’s successful in the market. This, ours is still only partially an innovation. We have such plastic bags and other stuffs in Europe, so this product which hasn’t been successful in the market yet because of legislation is at a higher chance of being successful because users have no other choices in future.

How practical is it here?

Using this in Europe would be different because of differences in humidity conditions compared to Tanzania. For Tanzania, the most important aspect to look at would be how the technology works. When you have a colder climate, it takes longer time to degrade. In Asia, they began using polystyrene which does not degrade. This is a big issue in other countries. So, we do believe there are big opportunities for this new product in the Southern Hemisphere, especially around the Equator. In a country like Tanzania, it’s also about applying chemistry properly.

Let’s talk about counterfeits. We know it’s a global problem that may also be affecting your business. Do you have figures of how it costs you at group level?

The economic damage for the country is huge and this has to be addressed.

Is it possible to quantify that economic cost?

It’s very difficult. You need to first detect the counterfeit. Take an example. The impact is felt on farmers’ productivity when you talk of pesticides. The efficiency that a farmer is looking for is compromised. We don’t have specific data yet.

The worst case is when a farmer growing coffee beans for instance, uses pesticides to increase productivity or to save the coffee beans on the tree. Let’s say now a farmer uses counterfeit pesticides that do not have substance in it and the entire harvest is gone, nothing saved, only cost. This is the worst case that you can now see.

Do you see the need to invest more in tackling this problem?

Exactly, but what we can always do is invest in our product. This is one that we can track and trace such that we always know that at any given point in time, where our product is in the supply chain. This needs to be practised in a country like Tanzania. But regulation and importation are key. This is because most of the products used here in Tanzania are imported. In this case, I think Tanzania still has a long way to go in regulation.