Chemicals play a pivotal role in the development of economies worldwide. More than 100 000 chemicals are known and work is underway to discover more chemicals. However, chemicals are associated with toxicological effects on human health, safety and environment. Many people have died due to exposure to chemicals. Flora and fauna has suffered dire consequences of chemical exposure. One of the main causes of the burgeoning chemical crisis has been the business model of paying for chemical quantities. For many years, chemical suppliers have been paid for the volumes of chemicals that they supply to chemical users. This has motivated them to produce and pump more chemicals onto the market. Consequently, there has been no incentive to save chemicals. In recent years, a new world order has been coined, which changes the paradigm of rewarding chemical quantities to one where performance is the cost driver.
What is chemical leasing?
Developed by the United National Industrial Development Organisation (UNIDO), chemical leasing pays for the services and functions of chemicals rather than the quantities supplied. Under chemical leasing, both the supplier and user of chemicals have the same goal of reducing chemical consumption and fostering efficiency. The application of chemical leasing has been demonstrated in electroplating, painting, agriculture, metal finishing and other chemical intensive sectors. Payments have been related to number or units electroplated, unit of area painted, area of land that has been fertilised or fumigated. Therefore chemical suppliers can no longer sit in their laurels and ignore chemical leasing.
How has chemical leasing been received in developing countries?
The implementation of chemical leasing in developing countries started at a lukewarm level as many stakeholders were not sure whether chemical leasing would take them out of business or not. Furthermore, the traditional approach of materialism and wanting to see stockpiles of chemicals became a hindrance to adoption. Lack of technical capacity to implement chemical leasing was also a major challenge. However, concerted efforts by development partners such as UNIDO, National Cleaner Production Centres (NCPCs) and private sector companies enabled chemical leasing to gain global relevance. Many developing countries started to adopt chemical leasing after seeing it being demonstrated in other organisations and those organisations reaping the practical benefits of chemical leasing. Early sceptics have been quashed by the quintessential evidence that chemical leasing makes business sense.
Why do big chemical companies dread chemical leasing?
Leading Sub-Saharan Africa consulting experts, Toxiconsol t/a African Sustainability Consultants carried out research and interviews with some major chemical suppliers in order to find out why they struggled at first to embrace chemical leasing. Many reasons were cited including the following:
- “There is a belief that chemical leasing will take chemical companies out of business”
- “There is a belief that the business benefits of chemical leasing take a long time to be achieved”
- “There is concern that in some sectors like food and beverages, altering chemical models could affect food safety”
- “There are fears of chemical leasing leading to loss of jobs in the chemical value chain”
These beliefs remain unproven and are myths that selected organisations have. Through exposure, awareness and training on chemical leasing, these perceptions were changed and more companies realised that they could run chemical leasing alongside other service portfolios related to chemicals management. Realising that large chemical manufactures can no longer rely on bulk chemical suppliers, there has been a shift in the way of doing business. Due to increased awareness on sustainable development, green consumers are no longer rewarding chemical companies for the bulk of their chemicals but for the functions of the chemicals.
Case Studies of chemical leasing in Zimbabwe
In Zimbabwe, chemical leasing is in its infancy in most industrial sectors. In the year 2020 two training workshops have been carried out in Zimbabwe to sensitise stakeholders about the importance of chemical leasing and how it can be implemented. Through this interaction, a leading paint company has embarked on chemical leasing and is being paid for the area painted instead of the amount of paint supplied. The company is the first in Zimbabwe to adopt chemical leasing in its service portfolio.
The organisation has implemented chemical leasing for its commercial and residential clients, where clients no longer have to pay for the volume of paint supplied but for the area covered. The paint manufacturer form Zimbabwe is maintaining ownership of the paint whilst driving efficient utilisation of the chemical paint. It is hoped that other paint producers can also follow suit and gain practical experiences of mainstreaming chemical leasing in their operations. Another case study from Zimbabwe is the payment of cleaning services based on the area that has been cleaned instead of the paying for cleaning chemicals.
What policies and strategies are required at national level to steer chemical leasing forward?
In order to drive the implementation of chemical leasing forward, there is need for adequate policy support and strategies that result in scaling up. Although demonstration projects have been done in different parts of the world, they remain anecdotal. Proper policy interventions are needed to steer chemical leasing. Among the mechanisms that can be implemented include Safe Chemicals Management Policies that have stronger regulations on chemicals. This will ensure that companies find chemical leasing relevant. It is also necessary to include chemical leasing in national laws. From a policy perspective, countries must avoid subsidies on chemicals such as industrial chemicals, fertilisers and other chemicals. These subsidies lead to the proliferation of chemicals and discourage the efficient utilisation of chemicals. It is very difficult to promote chemical leasing when there are subsidies on chemicals. The true cost of chemicals and the externalities caused by chemicals should be laid bare in order for stakeholders to start taking chemical leasing seriously. Awards such as the Global Leasing Awards also help to raise awareness on chemical leasing. These awards should also be done at national level in order to ensure that chemical leasing is scaled up.
