High operation cost killing waste-collection business
Members of the Environmental Service Providers Association (ESPA) have asked the government to give them a tax rebate on imported equipment, particularly trucks, to enable them to support efforts at improving sanitation in the country.
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Such rebate, according to the Executive Secretary to the ESPA, Ms Ama Ofori-Antwi, would help the contractors to augment their fleet, and consequently improve their operations and services.
According to her, the current economic situation, worsened by the depreciation of the cedi, had made it difficult for ESPA members to acquire the needed sanitation equipment and provide the requisite services to its clients.
Giving them a tax rebate on the equipment, however, would make it affordable to members and reduce their operational costs, she stated.
Ms Ofori-Antwi also observed that a rebate and other logistical support would help to financially cushion the contractors who had been partners to the various district assemblies in managing solid waste in the country for over a decade now.
Sanitation equipment
She said available data indicated that the cedi had depreciated by about 23.3 per cent against the dollar since the beginning of the year.
“The implication is that prices of equipment and spare parts have increased by 23.3 per cent on account of the poor performance of the cedi against the dollar alone,” Ms Ofori-Antwi stated.
According to her, a solid waste contractor, for instance, needed GH¢396,000 to buy a new compactor truck that cost US$ 120,000 in January, 2015.
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“As of June, 2015 GH¢516,000 was needed for the same truck at the same price of US$ 120,000, resulting in a price increase of GH¢120, 000,” she said.
“This same scenario applies to the purchase of secondhand vehicles. This is because custom duties are dollar-indexed and the depreciation of the cedi results in escalation in custom duties when the vehicle arrives in Ghana,” Ms Ofori-Antwi stressed.
Similarly, inflation has risen steadily to about 17.1 per cent as of June 2015.
“This implies that the fee private solid waste contractors collect from their clients has lost 17.1 per cent of its value due to inflation,” she added.
“Thus, when inflation increases without a corresponding increase in service charges, private waste management companies lose out and are affected greatly,” she stated.
She again explained that while the prices of goods and services had been increased, charges for the collection of refuse to final disposal sites had remained unchanged.
“Sadly, increases in inflation also lead to employees demanding increases in salaries, which adds to the already precarious situation of the private waste companies,” she added.
Unsustainable conditions
Ms Ofori-Antwi said the current economic condition in the country had increased the cost of doing business for solid waste management companies. “Increasing fuel prices, high inflation and a depreciating cedi in the context of static waste-collection service fees/charges is gradually making the operations of private waste contractors in the sector unsustainable,” she said.
She stressed that despite those increases, the government was yet to make any support available to private solid waste contractors to cushion them against the negative effects of the current economic realities.
“In an environment like this, how can private participation survive by charging the same fees?,” she asked. She therefore called for urgent government support to keep solid waste contractors on their feet.
Way forward
The Executive Secretary said since expanding access to improved sanitation for all was the government’s development objective irrespective of the ability to pay for the service, it should consider subsidising the service (fees/charges) for sections of the public that could not pay the economic rates due to the high levels of poverty.
“Since the effects of poor sanitation and waste management have a telling effect on the general population with their consequential effect on the NHIS, the government should, as a matter of agency, absorb some of the cost for providing the service,” she stated.
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Ms Ofori-Antwi also urged the government to consider deregulating the pricing for solid waste services to allow waste management companies charge economically sustainable rates to recover enough returns for recurrent expenditure and new investment.