How the circular economy eliminates waste and pollution

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CIARAN RYAN: There’s [been] a lot of discussion in recent years about the circular economy – the idea that one reduces waste by recycling and reusing and other such measures. South African manufacturers are having to contend with several challenges at once, not least load shedding and pressure from our trading partners, such as those in the European Union, EU, to reduce carbon emissions. These are challenging times indeed for manufacturers.

To explore this further, we’re joined by Amith Singh, national manager for manufacturing at Nedbank. Hi Amith. Could you explain what is meant by the circular economy, and manufacturing’s role in it?

AMITH SINGH: First and foremost, thank you for having me on. The circular economy is a term that been utilised pretty often, and more predominantly in the EU. Let me start off by simplifying what the circular economy is.

Very simply put, the circular economy eliminates waste and pollution, circulates products and materials, and regenerates nature.

Now this is how things should have been done, I think, for years in the past – and it hasn’t. So we are challenging the traditional way of doing things and doing things in a more environmentally responsible way.

How does manufacturing play a part in this? I think we’ve got to understand that manufacturing plays a massive part, as we are [a] big consumer of electricity. If you look at the South African context, electricity is presently generated by coal – which obviously emits greenhouse gases – and particular sub-sectors within manufacturing.

Manufacturing includes – if you have look at cement, iron and steel production – extremely energy-intensive businesses and energy-intensive operations. As such, naturally you would find a lot of pressure on manufacturing to make a sharp U-turn in order to evolve and remain relevant in the future, because we all want to be sustainable.

So there has been a lot of work done from a government policy perspective – industry master plans, strategic plans. They have created a clear intent to increase investment in manufacturing and provide opportunities to the circular economy.

The circular economy opportunities lean towards localisation, energy efficiency, greenhouse gas emissions, renewable energy, waste reduction, and recycling, which is extremely important.

If you also have a look at the Ipap [Industrial Policy Action Plan], it also makes reference to various of these matters – localisation, energy efficiency and so on. So there’s a big responsibility on manufacturing to make that sharp U-turn and be more sustainable over the future.

CIARAN RYAN: Just explain: what is Ipap?

AMITH SINGH: Very shortly, Ipap is the Industrial Policy Action Plan, the government’s 10th Industrial Policy Action Plan. It’s a plan put together on how to reinvigorate various sectors within the South African economy with a specific focus on manufacturing.

CIARAN RYAN: Okay. Now, the European Union is kind of leading the charge towards a just transition, and it is also South Africa’s most important trading partner. What are South Africa’s plans for moving towards carbon neutrality, and are they realistic?

AMITH SINGH: Great stuff. Great question. I think we must first understand how important the EU is.

If we have a look at the year 2020, South Africa’s exports to the EU increased by 30%, and that’s a total of one-third of our manufactured goods [that] actually goes to the EU.

The EU is also the world’s largest investor – 40% of all foreign direct investments in the year 2020.

So the EU is important and ultimately we’ve come to learn that the EU is developing the rule book for sustainable financing.

If we look back again, historically there has been a misconception that sustainability does come at the cost of profitability, and there was a United Nations report that was released that categorically disproved this and proved that sustainability does not come at the cost of profitability.

So South Africa’s plans to move to more carbon-neutrality is actually co-financed by the EU, which is why SA exporters of high carbon-emission products such as steel, iron and chemicals can now make worthwhile investments and transitions from fossil fuels into alternative energy sources. That’s contributing towards the circular economy.

CIARAN RYAN: Okay. Now talk about Nedbank. You’ve a number of financing solutions particularly focused on the manufacturing sector. Are these solutions aligned with the South African Government’s National Development Plan 2030, which has placed [the] just transition to carbon neutrality at its core?

AMITH SINGH: Yes. Again, as something that’s true to Nedbank’s core, being the ‘green’ bank, carbon neutrality is just not a buzzword for us. It’s at the core of what we do. It forms part of our values and we really do take this very seriously. Maybe it’s as a result of our being the green bank, but it’s a happy coincidence.

Let me just start off by saying I think it’s more than just the financing. It’s about understanding the business, understanding the nuances of a particular business. This is done by knowing our clients in detail and understanding their strategic plans and intents in moving forward.

Our offering is typically designed to overcome obstacles. We want to unlock opportunities that lie within moving to sustainable energy.

Ultimately we see it as a great opportunity to revive the economy within the manufacturing space, and we understand the importance that manufacturing plays for the greater economy, for job creation, for society.

Hence our funding solutions to this particular sub-sector are aligned to government plans, and are put in place to reinvigorate the sector.

CIARAN RYAN: Amith Singh, we are going to leave it there. Amith is the national manager for manufacturing at Nedbank.

Brought to you by Nedbank Manufacturing. 

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