Bethelhem Dejene has noticed a growing demand for paper bags. After completing a contracted project, she decided to continue producing paper bags with the same team.

As the founder and CEO of Zafree Papers Plc, a company producing tree-free paper pulp from agricultural waste, Bethelhem plans to begin paper bag production this month. The company also plans to establish a factory with an investment of five million dollars.

The paper bag market is booming, driven by a draft Solid Waste Management Proclamation that bans the import, production, usage, and sale of single-use plastic bags. This shift presents opportunities for companies like Zafree, which started producing paper from banana trees and recycled materials in 2023. The company plans to launch eco-friendly paper bag products to meet the rising demand.

To scale production, Zafree will form partnerships and use recycled paper. The company targets businesses such as cosmetics shops, cafes, and boutiques needing custom-branded packaging. However, Bethelhem says there are obstacles, including high taxes on imported craft paper. She urges the government to reconsider customs duties and exempt the paper bag industry to ease financial pressure.

Bethelhem argues paper bags must be more affordable than plastic to drive adoption. She believes the planned factory will lower operational costs, enabling the paper bag industry to compete more closely with plastic.

Dagem Abebe, CEO of Filla Trading Plc and a veteran in the paper bag industry for the past 10 years, recognises the growing demand. He recalls that, in the past, companies only used paper bags for special occasions and focused more on printing and advertising for marketing.

The company currently supplies 10,000 paper bags per month to 10 regular customers, with prices ranging from 30 to 100 Br per bag, depending on type, size, and quality. The recent surge in demand has led Dagem to apply for a loan from the Development Bank of Ethiopia (DBE) to expand production. However, he says that clients are reluctant to use paper bags due to their high cost, which remains a major obstacle.

Like Bethelhem, Dagem faces problems sourcing quality craft papers, as no local companies produce them. To address this, he plans to build a factory to produce craft papers from sugar cane. While this will require substantial capital, it could resolve the supply shortage, according to him.

Dagem recommends industry players share resources, such as printing, to reduce costs and stay competitive. He says that the cost of imported craft paper has risen by at least 30pc after Birr's devaluation in June last year, further undermining the competitiveness of paper bags against plastic.

However, the industry is increasingly seen as a profitable venture. Bruk Sewmanew, who has been producing paper bags for nearly two years, now trains aspiring entrepreneurs. For the past seven months, he has offered short-term production courses while expanding into the supply of craft paper. He observes that demand for both the products and his four-day courses continues to rise.

“It is harder for people wanting to enter the industry now,” Bruk told Fortune, comparing the current climate to when he first joined. He says importing craft paper requires bulk purchases of at least 600kg, costing 40,000 Br, making entering the industry difficult.

However, imported craft paper has a density of 250g and can carry up to six kilograms per bag, while locally recycled paper has a density of 175g and can carry only up to three kilograms, according to Bruk.

The draft proclamation has impacted Bruk, as his training programme, which previously cost 5,000 Br, has risen to 7,000 Br since news of the bill emerged. The increased demand for his training, along with the shortage of craft paper, led him to raise prices.

“The increase in demand was immediate,” he said.