Tuesday, July 27, 2010

Bill Gates, Warren Buffet: Invest in Waste Management

Waste, Garbage, Trash, Refuse, these words don’t interest many people, but when you two of the wealthiest people on the planet with an acute sense of investment own shares in two of the biggest waste management companies in America; it certainly draws attention. According to an article on Barrons online, Bill Gates owns 15% of republics share and Warren Buffet has picked up 2.8%.

The Waste Management business is unique in many ways. Firstly it is not affected by the up’s and downs of the economy, after all people have to eat and drink and they need to dispose their waste requiring services of either private or public sector players. Secondly there will always be a demand for cheap raw materials (scrap paper, plastic, metal etc) to produce new goods for packaging or consumption in various industries such as the construction industry. Thirdly waste management services are something that you cannot do without. How long will you have your waste stockpiled in your house, what will you do to treat it, where will you dispose of it, these are just some of the reasons why the industry continues to grow and flourish.

Waste management in the developing countries is similar but relies much more on the sale of recyclables. Take for example India, where waste management is mostly unorganized and the industry is mostly informal.
There are a few private players, but majority of the collection, treatment and disposal is done by the informal sector which relies heavily on the sale of recyclables to generate an income. Bankers at most are unwilling to finance projects at the grass root level due to a lack of knowledge about the industry and its informal state. The government is limited to providing lip service and sending its officials abroad to study waste management procedures.

Waste management as a industry has tremendous potential, there are many investment opportunities that lie in this sector both here in India and abroad. We have only begun scratching the surface of the waste management industry in India to unleash its true potential. Let us hope that the decision makers start making tough decisions and put a practical plan in place to reform and bring investment to the industry.

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