Turning rubbish into gold

Mostafa Hemdan is making a good living turning rubbish into gold- founding Recyclobekia, one of the first businesses in the Middle East to recycle electronic waste.

He set up the firm five years ago in the garage of his parents’ house in Tanta, a city 56 miles north of capital Cairo.

At the time, Mr Hemdan was an engineering student, and together with 19 other people from his university he had entered an entrepreneurship competition called Injaz Egypt. Up for grabs for the winner was £7,000 to help develop their start up idea.

“I was watching a documentary about electronic recycling, and I realised there was a lot of potential in extracting metals from mother boards – gold, silver, copper, and platinum,” he says. “It was a booming industry in Europe and the US, but no one in the Middle East was doing it.”

It was at that moment that the idea for Recyclobekia was born, and Mr Hemdan went on to win the competition.

The company’s name comes from the Egyptian Arabic words “roba bekya”, which means “old stuff”, and is commonly heard on the streets of Cairo as rag-and-bone men call out for unwanted household items.

Today, the Egyptian businessman employs 20 people across four warehouses, and sells £1.65 million of electronic waste per year.

Along the way Mr Hemdan has overcome challenges including not being able to fulfil orders, overextending himself, and the backdrop of political upheaval and social unrest in Egypt since the Arab Spring.

Starting the business back in 2011, around the time the Arab Spring began, Mr Hemdan first touted for trade by putting an advert in a business-to-business section of global ecommerce website Alibaba.

Recyclobekia’s first order soon followed when a buyer in Hong Kong ordered 10 tonnes of hard disks.

“At that moment, I didn’t even know where I would collect such an amount, but I accepted,” says Mr Hemdan.

Seeking recyclable material, he moved to Cairo, whose 17 million inhabitants produce 15,000 tonnes of garbage per day.

Most of the city’s waste management is run through an informal system that relies on the Zabbaleen, a Christian community of rag pickers who collect rubbish door-to-door, and meticulously hand sort its components to resell plastic, paper and metal.

However, the Zabbaleen do not collect electronic waste, such as old computers or printers. So instead, Recyclobekia collects such products from companies.

To fulfil the first order from Hong Kong, Mr Hemdan realised that he need to raise £10,000, but this was before he won the Injaz Egypt competition.

Instead, to secure the money he needed Mr Hemdan managed to persuade a university professor to give him a loan, in exchange for 40% of the profit from the first sale.

Winning the entrepreneurship competition helped Recyclobekia to secure investment to expand the business, including £85,000 from two Egyptian private investors, Khaled Ismail and Hussein el Sheikh, who both now sit on the company’s board.

“Here’s where the problems began,” says Mr Hemdan looking back. He stresses that “working with a huge capital while you don’t know how to run a company” can lead to mistakes.

Mr Hemdan’s error was to quickly expand the business, and overestimate how much waste he could collect.

Despite partnering with companies to buy their waste, the amount they discarded was much lower than Recyclobekia expected, and in six months it had only managed to gather six tonnes, a lot less than expected.

In order to rectify the situation, Mr Hemdan realised he need to quickly improve his knowledge of an industry that was still very much in its infancy in Egypt. So he flew to Hong Kong to study the work of recycling firms in the Chinese region.

The trip made Mr Hemdan realise that he had to change Recyclobekia’s business model.

At the time it was simply collecting the old electronic items and sending them off to its buyer in Hong Kong. The Chinese firm would then break them apart, separate the materials, and sell them on to other companies which melted down and extracted the individual metals.

Mr Hemdan realised Recyclobekia could be more profitable if it cut out the middle man, and instead did all the dismantling work itself – it could get a better price for waste that had already been broken up and sorted.

So he ended the Hong Kong deal, and instead signed up with a German extraction company. This also reduced Recyclobekia’s shipping costs.

March 25, 2016  Tags: , , , ,   Posted in: Business Growth, Business Win, Green Businesses, Growing Business, Uncategorized, Winning Business

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