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The social businesses to turn Egypt’s black skies blue

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Iris Boutros

Iris Boutros

It’s that time of year. Black skies over Cairo and all over Egypt’s Delta mean the rice farmers are burning their straw. They will be burning about four millions tonnes of rice straw these recent weeks so they can prepare their fields for the next planting season.

While we’re all struggling a little bit harder to breathe, more than we already do from our world famous air pollution, it’s important to keep in mind that there are known solutions to the problem.

Also keep in mind that the alternatives to burning rice straw are profitable, in some cases very profitable.

Literally, farmers are setting ablaze tens to hundreds of millions of Egyptian pounds worth of inputs, while we are choking on the polluted air. This includes a potentially $15 million dollar active carbon industry. And that is just one commercial use of rice straw.

Rice straw is an input into many commercial products. Commercial uses range from the simple to the highly sophisticated. So do their profit margins. Many profitable businesses have developed elsewhere. Some of these businesses produce industrial inputs that Egypt spends much foreign currency to import from abroad made from the same rice straw that is burned on Egyptian fields. The rice straw that when burned turns our skies black and makes it harder for us to breathe.

The key to making these businesses work is the development of social enterprises, those that deliver blended value. Social enterprises make financial returns, but also have an impact socially and/or environmentally. In the case of rice straw, it is easy to see this blended value. Social enterprises could create the market for rice straw’s commercial value rather than having it wasted when burned,damaging our environment and our health. Egypt needs social businesses that can produce this blended value.

Terms like ‘social enterprise’ and ‘blended value’ make some Egyptian business-types wince. I have seen it. The serious businessmen, and among them especially the financiers, can look bored or confused immediately when you bring up social investments.

As one financier said to me, “I like to keep my business and my charity separate. They accomplish different goals.”

The thing is, accomplishing some social goals is better done through a private sector business model or some sort of private sector-inspired hybrid than could ever be achieved through charity. Not all social problems can be solved this way. But other countries have increasingly taken advantage of these approaches to solve many. Egypt, however, has capitalised very little from the vast array of successful ventures.

The bias shared by some, including some local financiers, is that social enterprises are not profitable or financially sustainable. So they bucket them all as charity and ignore them as viable business investments.

The truth is that the term social enterprise does cover a lot of types of ventures, some no different than any other type of ‘regular business’ with big profit potential. It also includes others where the more emphasised goal is the non-financial impact. With rice straw, I would argue Egypt and its businesses need both types of social enterprises.

Take one of the simplest ‘up-cycle’ ideas for rice straw, a shade textile. The shade textile is made exclusively from rice straw and solves a very real problem farmers have, working in the sun without much shade. The textile can be made to create shelters at no or low-cost, which creates a real value for farmers. One social entrepreneur has put the instructions for making the textile and the shade shelter online. She has also highlighted the health and environmental risks that would be reduced by incorporating these structures.

While this type of venture does not generate a great deal of profit, it perhaps does something more important. It creates a value for the rice straw. While doing so, it solves a problem for the farmer from the rice straw that he has considered so useless that he prefers to burn it even though it is against the law. If enforcement were to occur, it would be very easy to penalise him.

The benefit to more profit-oriented businesses is that the rice straw will have a value to the farmer. He might less prefer to burn it. Any business that uses rice straw as an input needs to have a reliable supply. If farmers burn rice straw, that is not possible. When the farmer sees more value in rice straw, trading rice straw as an input is more possible.

Higher value use of rice straw includes: alternative energy, livestock feed, soil enrichment and composting, mulching, mushroom production, chemicals and other extract production, construction materials, and paper. And it can also be used to make baskets and mats, which is undoubtedly what some think of when they hear ‘social enterprise’ and rice straw.

Some products are important for farmers, while some are important for everyone.

Take active carbon. This is a product that is used in waste water management, sugar refining, and paint industries. Or natural fibre plastic composites used profitably to make furniture, marine decking and consumer goods. These are all made with rice straw.

These are inputs Egypt imports to satisfy domestic industrial demand made from the very rice straw that is burned. The active carbon market demand in Egypt is between 5,000 and 10,000 metric tons a year. One tonne of active carbon imported from China sells for around $1,500 dollars. It takes two tonnes of rice straw to make one tonne of active carbon. Egypt will burn close to four million tonnes. That is potentially a $15 million market that is set ablaze, while polluting Egypt’s environment and making the simple task of breathing more difficult.

Social enterprises can help these types of profitable businesses by increasing the value of rice straw so it does not go to waste. One of the most effective ways to ensure the supply of rice straw is available for use in other products is to make it important to farmers as well. This is the benefit that can come from the development of social enterprises.

A potato storage structure is exactly one of these social entrepreneurial solutions. Farmers have a problem storing potatoes because they don’t have storage structures. Very few companies are willing to make an affordable version for them. Often times, they end up piling up boxes of potatoes in their own homes. This is also why it has been more difficult to buy potatoes on the local market lately.

Architects from Montana State University have developed a very good prototype already in use in Kenya for potato storage made from straw. The basic design allows for better insulation and a natural storage structure that meets a very real need for farmers. Once covered in plaster, it is not recognizable as a structure made from straw.

Kenyan farmers are lining up waiting for these storage structures. It’s unlikely many of them will be burning much straw.

These are also exactly the type of ideas that evolve into solutions for other social problems, like housing. Where in Kenya, they are also exploring the use of these straw bale structures for addressing the housing shortage. The Montana State architects have build straw bale homes in the US.

Straw bale has been used to make gorgeous structures, very luxurious looking homes in England and Argentina. Straw is an excellent building material for places with extremely cold winters and hot summers providing an effective and cheap source of insulation.

Social entrepreneurial ideas that solve farmers’ problems are the best way to ensure farmers do not burn rice straw. That is the kind of supply assurance needed for all enterprises building their businesses on the use of rice straw. Included are those businesses that could capture some of that $15 million active carbon market.

Social enterprises are different and that’s not because they mix business and charity. It’s because they make good sense and are often the missing links to solving social problems and making ‘regular businesses’ more profitable, especially in Egypt. They are also a great deal more open about information and their approach. In some cases, ideas shown to be successful elsewhere can simply be copied with appropriate adjustments to create great value. These are the social enterprises that could turn Egypt’s black skies blue.

About the author

Iris Boutros

Iris Boutros

Iris Boutros is an economist and strategist. She focuses on growth, impact investment, and decision-making. Follow her on Twitter @irisboutros


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