THE AFRICAN BUSINESS FORTUNE MAGAZINE ISSUE #006 The African Business Fortune Magazine | Page 13

THE AFRICAN BUSINESS FORTUNE - MANUFACTURING

Poor quality products, exports hurting Kenya’s leather sector

By Monica Muema

C

ontinued exportation of leather
products is posing a serious
challenge to Kenya’s leather and
footwear industry, according to sector
players.
Kenya’s lack of competitiveness,
lack of capacity and low quality of final
products has also been blamed for the
low leather production.
Robert Nzioka the director of Zingo
Investments – a Kenyan firm involved
in the exportation of finished leather
products says the government needs
to among other issues correct duty
and taxation structure to provide a
level-playing field for local manufacturers and importers alike in order to
revitalize the sector.
“Leather sector has for a long time
received low protection domestically
and the government needs to fully
implement and correct duty and taxation structure to reflect the exact value
chain position and make the local industry competitive and attractive,” he
said.

The government announced last
month intentions to ban exportation
of leather products in the next three
years in order to promote local industry – a move that has been widely applauded but these concerns still stand
in the way of the sector’s resurgence.
Available figures indicate that the
country’s exports of wet-blue leather
is slightly over 50 per cent, while the
country’s annual shoe uptake exceeds
35 million pairs, out of which 95 per
cent is imported – frustrating efforts
to establish a vibrant leather industry
capable of competing with international firms
Industry players have welcomed
government’s idea to halt exportation of raw hide to meet a domestic
shortage and boost manufacturing of
leather goods and products if the market is to compete with economies like
Ethiopia.
In the footwear subsector for instance, where competition is largely
domestic and based on price, Kenya’s

market share has also been eroded by imports of new low-cost leather footwear – believed to be originating from China and India,
and Nzioka wants the government to first
address these issues by putting in place right
taxation measures.
In Kenya, it can be as much as 30 percent
more costly to produce a pair of low-cost
men’s leather shoes at ($9.44) compared to
($7.28) in Ethiopia, according to a report by
World Bank.
Kenya’s tanning industry had about 19
tanneries in the 90’s with a capital investment worth Sh3.8 billion, but this changed
after the abolition of ‘export compensation’
scheme and market liberalization, which
involved cutting trade tariffs on imported
leather and footwear, provoking a surge in
cheap imports.
Nzioka wants the government to set up
more cottages and train more locals as well
as generate capacity and provide financing if
it is to revive the sector.
“These concerns need to be addressed and
new technologies should be on government’s
agenda,” he said.

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