South Africa’s collection and recycling system is often described primarily in terms of its weaknesses: uneven service delivery, infrastructure gaps, policy complexity, high transport costs, volatile material prices, limited recycling capacity in some areas, and the persistent challenge of linking collected material to reliable end markets. These constraints are real, but they do not tell the full story. The country already diverts significant volumes of recyclable material from landfill, supports thousands of livelihoods through recovery activities and maintains secondary material markets that continue to develop. This is not a system that is failing across the board. It delivers meaningful outcomes, although those outcomes remain uneven and have not yet reached their full potential.
The reasons for this uneven performance are rooted less in a lack of capability than in the way the system has evolved. Many parts of the value chain work well individually, but they do not always operate as a connected and coordinated whole. That fragmentation is partly a result of how South Africa's recycling economy has developed over time. It was not built as a single, coordinated national system. Municipal waste services, private recycling businesses, informal collection networks and community-based initiatives evolved alongside one another, often in response to very different local needs. As a result, some parts of the value chain have become highly developed, while others remain constrained by infrastructure, distance, market access or financing. The outcome is a system with strong individual components, but gaps between them limit what the value chain can achieve collectively.
Mandatory Extended Producer Responsibility (EPR) has fundamentally changed the way the sector thinks about what happens to packaging after it is used. Producers are now directly accountable for post-consumer outcomes, creating a stronger focus on how collection and recycling systems are funded, measured and managed. At the same time, the first five years of implementation have shown that achieving a target is only part of the story. As a Producer Responsibility Organisation (PRO), Petco has visibility across the value chain. We see what producers place on the market, what collectors recover, where material begins to lose value, what recyclers are able to process, and where demand may be weakening. That perspective makes it clear that our role cannot end with funding individual activities. We must understand how the system functions as a whole and identify where interventions can deliver the greatest impact.
One of the clearest lessons has been that recycling is often discussed as though collection is the primary challenge. In reality, collection is only the starting point. Once material has been recovered, it still needs to be aggregated into viable volumes, sorted to the required quality, stored safely, transported cost-effectively and ultimately processed into products with sustainable market demand. When any one of these steps weakens, the effects ripple throughout the system. A recycler facing weak demand may reduce purchasing. A buy-back centre constrained by working capital may slow material intake. A collector operating in a remote area may have access to recyclable material but no practical route to market. What appears to be a collection challenge is often the result of pressure elsewhere in the value chain.
This interconnectedness is also why the economic and social dimensions of recycling cannot be separated. Collectors depend on reliable buyers. Buy-back centres depend on sufficient throughput and viable margins. Recyclers depend on consistent feedstock and stable markets for their products. Manufacturers, in turn, need a compelling business case to incorporate recycled content into their production processes. Livelihoods exist throughout this ecosystem. Their sustainability depends on the value chain remaining active, functional and commercially viable. When one part of the system weakens significantly, the impact extends far beyond recycling tonnages. It affects businesses, jobs and communities whose livelihoods rely on material continuing to move through the system.
Liquid board packaging (LBP) provides a useful illustration of this principle in practice. When Petco introduced the LBP scheme in 2023, collection and recycling rates were still in single digits, and the economics were not yet strong enough to pull material through the system without additional support. Simply encouraging greater collection would not have addressed the underlying constraints. Waste pickers and collectors needed to understand the value of the material and know where to sell it. Buy-back centres required sufficient volume and confidence in future demand before accepting it. Municipalities and landfill operators needed to be engaged, while recyclers required a more reliable supply of feedstock before meaningful investment and processing could occur. By 2025, collection and recycling rates had increased to approximately four times their 2023 levels. However, the most important lesson is not the growth rate itself. The real lesson is that progress was achieved by addressing multiple interconnected constraints across the value chain rather than focusing on collection in isolation.
That experience continues to reinforce a broader insight. Where market fundamentals are already strong, the role of a PRO may be to strengthen connections, reduce friction and help the system scale more effectively. Where those fundamentals are not yet in place, interventions need to be more deliberate and sustained until sufficient volumes, infrastructure and market demand exist to support long-term growth.
That is the difference between supporting a recycling project and strengthening a recycling system.
Even with the progress we have made, there is always value in reflecting on what is working, where the system is still under pressure and what we need to do differently in the next phase. As we look across the value chain, these are some of the questions we continue to ask ourselves:
South Africa is at a unique point in its circular economy journey. Circular economy strategies, EPR implementation and broader waste management reforms are advancing simultaneously. Together, they create a significant opportunity not only to improve existing systems, but also to shape a more integrated and resilient future. The immediate challenge is not to replace what currently exists. Rather, it is to connect it more intentionally: infrastructure with demand, policy with implementation, and inclusion with operational performance.
Global circular economy narratives are often shaped by highly industrialised economies, where the primary challenge is introducing circularity into mature and highly formalised systems. South Africa has drawn valuable lessons from these approaches, particularly when developing policy frameworks and EPR mechanisms. However, the country's starting point is fundamentally different. Circularity in South Africa does not need to be created from scratch. It already exists in practice. Over more than two decades, the PET value chain has demonstrated that a functioning circular system can be developed and sustained locally. Strong end markets have established recycling capacity, and a mature collection and processing network has created a foundation on which further progress can be built. Importantly, this success has been shaped not only by formal industry structures but also by an established informal recovery sector that remains central to material collection and recovery.
The opportunity, therefore, is not to replace these dynamics with imported models. It is to strengthen, integrate and scale what is already working. The key lesson from more industrialised contexts is not that their systems should be replicated. Rather, alignment matters. Policy, infrastructure, financing, market development and accountability mechanisms are most effective when they work together toward common outcomes. In South Africa, that alignment must be built around local realities, where formal and informal systems are deeply interconnected and where material recovery is driven by both environmental objectives and livelihood needs.
This is where leadership becomes critical. The next phase of transition will not be achieved through regulation alone, nor through isolated projects. It requires practical alignment across stakeholders, systems and incentives. The question is no longer whether South Africa has the ingredients for a circular economy. It does. The real question is whether those ingredients can be brought into closer coordination so that a system that already delivers meaningful outcomes can deliver them more consistently, more inclusively and at a far greater scale.
Other Petco news
