GroFin Egypt Client - El Nour

El Nour – Golden opportunity through waste paper recycling in Egypt

Consider the environment before you print. This request has become so ubiquitous in every day communication that it is easy to assume the world must be using much less paper.

According to a report by global consultancy McKinsey, demand for graphic paper used writing and printing has indeed weakened substantially in North America and Europe over the past five years. But as consumers in developed economies ditch plastic and those in fast-growing Asian emerging economies change their spending patterns, the world is consuming more of other paper products.

According to the latest data from the Food and Agricultural Organisation of the United Nations (FAO), the production of wrapping and packaging paper – which already makes up more than half of global paper consumption – is on the increase and climbed by 10% in 2016. Production of sanitary and household paper is also climbing. This means that total global paper use is still steadily increasing – albeit at a slower pace than before – and recently exceeded 400 million tonnes per year.

The Environmental Paper Network warns that this means that global paper consumption levels remain unsustainable. The Network argues that while developed economies is nearly recycling all the paper they practically can, the amount of paper recycled in developing countries can still nearly be doubled.

In order to maximise the use of recycled paper, developing countries need to implement more robust recycling systems which ensure that recycling mills can get the right kinds of recovered fibres, in large enough quantities, for the specific products they are making.

Small and medium-sized businesses, such as El Nour Company in Egypt, can play a crucial role in establishing and maintaining such systems in developing countries. El Nour Company was established in 2012 at Quesna – Al Monefeya, a governorate to the North of Cairo, to source and trade used and waste paper.

Egypt relies heavily on imported paper to meet local demand, but the devaluation and volatility of the Egyptian pound makes imports very costly. The decision to float the Egyptian currency in 2016, saw it crash by 50% in value against the US dollar, pushing up the cost of all imports to place immense pressure on Egyptian consumers and businesses alike. The price of imported paper in Egypt climbed by an average of 10% per year since 2016, creating a large gap between imported and locally produced paper. Foreign standard printer paper currently costs EGP 70,000 per ton, compared to EGP 17,000 for local paper.

El Nour’s founder, Mostafa Kotb, soon realised the great business opportunity this created for value addition to waste paper to assist paper producers in refining and reducing it to a usable form. In January 2017, El Nour purchased low-capacity machinery to supply local recycled-paper producers with pulp. Kotb had wanted to test the market appetite before investing in high-capacity equipment prior to the purchase of high-capacity machinery. This did not take long – within a month El Nour was already selling its full pulp output with acceptable profit margins.

GroFin Egypt Client - El Nour

The potential for further growth of the business was clear and Kotb injected his personal funds into the business to firmly establish the plant. He approached GroFin to finance the purchase of high capacity equipment to enable the company to screen, sort, and shred used and waste paper on a larger scale.

GroFin provided 27% of the total investment cost in the new plant and helped the entrepreneur to execute formal agreements with local paper producers to ensure a guaranteed market for its products.

“Moving from trading to value-addition in used and waste paper was a challenging task, and one that I could not possibly have undertaken alone,” says Kotb.

El Nour currently sustains 110 direct jobs as well as 50 indirect jobs. It hopes to increase its number of employees to 150 within the next to years, while also contributing to environmental sustainability of the Egyptian paper industry.