What you need to know about the circular economy

Deputy Representative, United Nations Industrial Development Organisation (UNIDO) Kenya Lynette Luvai. [Courtesy]

At a time when the globe is grappling with mounting environmental challenges amid dwindling natural resources, the concept of circularity, or simply put circular economy, is emerging as a transformative solution.

To adopt it however, stakeholders need to well understand this concept, the benefits, and challenges in its uptake.

Rachel Kibui spoke to Deputy Representative, United Nations Industrial Development Organisation (UNIDO) Kenya Lynette Luvai on understanding circularity.

In simplified terms, what is circularity?

Circularity is an emerging production and consumption model where waste is used as a resource, products/goods are utilised for as long as possible, applying the 3Rs principles (reduce, reuse and recycle/repurpose), and the use of primary materials is minimised.

The goal is to create a closed-loop economic system that benefits business, society, and the environment. Circularity involves a shift from the traditional model of ‘take-make-use-dispose’, to a system that keeps materials, products and by-products flowing in loops within a single enterprise or between enterprises.

Circularity is therefore an economic system that promotes the exchange/trade of materials or by-products, aiming to eliminate waste generation at source, mitigate resource depletion, and finally place the country on a net-zero trajectory towards meeting its commitments under the Paris Agreement.

Why is circularity important, especially in the context of industrial development?

Industrialisation in general has always been associated with heavy reliance on primary raw material extraction for production and value addition, bringing with it pollution. We now live in a world where critical materials for production are ever declining, while health concerns and negative environmental impact from pollution and waste are growing.

Circularity is a solution that can tackle the environmental and health impact of industrial development while enhancing the competitiveness of businesses and creating new opportunities for green jobs. Circularity promotes sustainable growth by maximising the efficient use of resources and minimising waste.

By encouraging reuse, recycling, and regeneration of materials, circularity reduces environmental pollution, lowers production costs, and extends the life cycle of products and raw materials. It not only enhances resource security but also builds economic resilience and helps industries to align with global climate and sustainability goals. This creates long-term value for businesses, society, and the environment.

What sectors or value chains do you consider most critical for circular economy interventions in developing countries, and why?

The Industrial Development in Kenya is heavily reliant on the agricultural sector, which contributes quite heavily to the country’s Gross Domestic Product (GDP) and employment. But it is also the sector which adversely affects the environment through Greenhouse gas (GHG) emissions at more than 30 per cent of all the total GHG emissions generally. It is therefore a good starting point for the application of circular solutions and business models to reverse GHG emissions, reduce high post-harvest losses and transform agricultural waste residues into more useful products.

In Kenya, for example, banana and beef are key sectors in terms of creating employment & livelihood opportunities, and addressing food security challenges; and this is why UNIDO has been focusing on these value chains in Nyamira County (banana) and Laikipia County (beef). There is so much waste from these two value chains, and such is the potential for advancement of circularity along them. In Nyamira, for example, UNIDO has been implementing a programme on training banana farmers and cooperatives on waste utilisation options and opportunities.

Today, farmers and cooperatives in Nyamira county can produce fertilisers (organic), fibres for textile products, braids, compost manure, among other products. The beef sector, on the other hand, has wide potential from leather products, to ornaments, manure and other products. UNIDO has provided technical assistance to farmers and slaughterhouse operators in the beef value chain to manage waste and embed food safety measures as a way to reduce food loss and food waste.

How is UNIDO working towards promoting circularity

Last year, several United Nations Agencies in Kenya, comprising UNIDO, FAO and IOM, in collaboration with the national and county Governments of Nyamira and Laikipia, developed a Joint Programme (JP) to promote circularity in the banana and beef value chains.

The programme aims to support and reinforce interventions targeting food security, post-harvest losses, reintegration of waste and linkage of producers to markets, resulting in improved incomes and sustainable livelihoods.

It focuses on creating opportunities through enabling producers to harness the potential in circular and sustainable farming and business practices, while strengthening producers’ resilience to climate change and increasing their capacity to transition to carbon-neutral agri-food systems.

In the era of devolved government system. How are you leveraging on devolution to work with county governments towards promoting the circularity industry?

Leveraging the County Aggregation and Industrial Parks (CAIPS), we work towards contributing to improved food and nutrition security, climate change mitigation and enterprise competitiveness by creating opportunities in, and enabling producers, Micro, Small and Medium Enterprises (MSMEs) and other private sector investors to harness the potential in circular and sustainable production and value addition practices, while strengthening their resilience to climate change and their capacities to transition to carbon neutral agro enterprises.

What are the main barriers to implementing the circular economy, and how can these be overcome?

Circular Economy, being a relatively new concept, is not well understood by critical players and actors such as consumers, policy makers and financial organisations. On the market side, some consumers have low regard for circular products, often feeling they may be inferior or of low quality (for example, recycled, repurposed, or remanufactured products). This perception affects the penetration of circular products into mainstream markets. Secondly, many financial institutions have no confidence in circular business models (often feeling that they are too risky to finance), partly because of a limited understanding of these business models. This means that circular entrepreneurs are not able to access funding to start up or scale their innovative ideas and business models.

Thirdly, the policy and regulatory environment for circular products and goods is not fully developed. For example, the cost of production for circular products tends to be much higher compared to similar linear products. The cost of collecting, processing and transforming plastic waste into final products can be higher than just importing virgin plastic products.

Also, the technologies for application in the circular production systems are not fully developed or mature, and the cost is mostly prohibitive. Lastly, a whole ecosystem of policy-related factors, including skills, is either absent or at formative stages.

There is a need to continue educating all actors to appreciate the importance of transitioning to circular business models. Awareness programmes need to target consumers, policy makers and financial institutions among other key actors. Policy and legislative frameworks should be formulated to help address some of the gaps such as skills, technology, green finance, market barriers, information, and measures to support fiscal incentives.

How is UNIDO supporting countries and the country in integrating circularity into national industrial and environmental policies or strategies?

Through the Joint Programme, UNIDO, FAO, and IOM are working with the government of Kenya to develop a circular economy policy framework to support the country to become an early and successful adopter of the green transition.

At the county level of Nyamira and Laikipia, guidelines for integrating circularity principles in Banana and Beef value chains are being developed. We hope to replicate the results from these exercises in other value chains. Looking ahead, what strategic priorities or emerging trends is UNIDO focusing on to scale up circular economy practices beyond Laikipia and Nyamira?

The circularity model being piloted in Nyamira and Laikipia is built around four important pillars for successful programme implementation, including a grant facility, capacity building, market access, and enabling policy & regulatory environment. We intend to work closely with national and county governments to develop joint programmes anchored on these pillars.

Further we will collaborate with county governments to ensure that the circularity model is integrated into their County Integrated Development Plan (CIDPs). Through participation in these processes, we hope to ensure that the national and county government allocate funding for co-financing circular economy initiatives and the roll-out of circularity models in all counties.