Tanzania misses out on its leather

Agri-Business 

Monday, February 03, 2014 

EAST AFRICAN BUSINESS WEEK, KAMPALA, UGANDA

BY KENAN KALAGHO

(HIDES AND SKINS: The leather industries are deficient of raw materials forcing investors to shun the sector top File photo and Botttom is the Executive Secretary of the Leather Association of Tanzania Photo By Kenan Kalagho)

Tanzania ranks second after Ethiopia in availability of hides and skin needed for the development of leather manufacturing industries that could play a role in creating job opportunities and boosting the country’s economy.  Joram Wakari, the Executive Secretary of the Leather Association of Tanzania talked to Kenan Kalagho of East African Business Week.
Below are excerpts:-

Qn: Why has there been low investment in leather industry in the country despite the fact that we rank second after Ethiopia in raw materials availability?
Answer: The leather industry in the country has the total installed capacity of 74.2 million square feet, but most of Tanzania hides and skins are smuggled to neighbouring countries like Kenya, leaving our few industries with a lack of raw materials. In that scenario with little availability of raw materials on the market, investors shun away from investing and or expanding their leather industries.

Qn: What is the government doing to counter this and help in getting raw materials to local industries?
Answer: The government has done a lot. First it imposed a 20% tax on the export of hides and skins in the country followed by a 40% tax increase in 2007 and by 2012 the tax was increased to 90%.
This halted the export of hides and skins overseas and as of 2012 only 19.4 million square feet of hides were exported. Yet still, local leather industries suffered the same fate.

Qn: Do we have the market for our hides and skins?
Answer: Yes we do have the market and most of our hides and skins are exported to the Far-East countries of Pakistan, India and China.
There is need however to build our own capacity in producing the finished leather which could create a lot of job opportunities and improve the country’s economy rather than exporting our leather in a semi-processed form.

Qn: What are the challenges facing the leather industry in the country?
Answer: There is lack of hides and skins because most of the raw materials are exported illegally through our ports and border posts.
This is alarming because it denies the country taxes and job creation. Besides the competition for local industries in order to get the best hides and skins, there is also cheating on weight and price of leather at the international market for the exported leather.

Qn: What needs to be done in improving the leather industry in Tanzania?
 Answer: Only small scale industries are involved in leather manufacturing and that by 2011 only 6 percent of fine leather products were exported outside Tanzania because of price sensitivity in the country.
There is a missing link between tanning and leather manufacturing industries because one hide is able to produce up to 20 pair of shoes which would be able to employ many Tanzanians.

Qn: Anything else?
Answer: We need to exploit the industry in order to make sure that we consume what we produce.
For example, in 2012 the country imported 31,000 pair of leather shoes and in 2011 around 42,000 pairs of leather shoes were imported while only less than 3 percent pairs were discovered to be of pure leather.
This means that we import poor quality leather while we have the best quality raw materials in the country, thus making the country lose in both forex and employment opportunities.