Nchimunya Muganya
4 May 2011
The leather industry in Zambia is among sub-sectors that have been identified as priority areas that require special support from both the Government and the private sector.
Seemingly small, the industry has the potential to grow just like others, but there is need for increased investment by the Government and the private sector.
Despite the leather industry being faced with a number of challenges, including inadequate expertise in processing and inferior technology, it has potential to grow and contribute significantly to national development.
Therefore, improved livestock services would contribute to growth of the leather industry.
If properly managed the country’s leather industry has a rich raw material base that would meet most of the industrial requirements.
The status of the leather industry is that out of the total hides collected about 80 per cent are processed into wet blue and exported from Zambia in that form.
About two years ago the Zambia Development Agency (ZDA) signed a memorandum of understanding (MoU) in Ethiopia with the Common Market for Eastern and Southern Africa (COMESA) Leather and Leather Products Institute (COMESA LLPI) to facilitate cooperation.
The move would help in the development of the leather industry in Zambia and the region.
Supply of affordable capital to venture into production of finished goods had remained a challenge in the industry and there was need for Zambian leather producers to learn lessons from their counterparts in Ethiopia.
To strengthen intra COMESA trade, the regional body is working on the rebranding of the leather sector in the region.
The rebranding of the sector would increase and improve the quality of leather being produced in the selected six countries including Zambia while enabling the countries to remain competitive on the international markets.
This will be achieved through the regional leather strategy plan which is currently being developed by the COMESA.
Locally, following the increase in leather exports in the past five years, the Government has put in place a number of measures to spur further growth in the sector.
The measures being executed have no doubt opened up more business opportunities in the sector, with the most recent one being the projected US$1.5 billion imports by Indian firms in the next five years.
A group of Indian investors last week said it would import leather worth $1.5 billion from Zambia in the next five years as a way of meeting the current increasing demand of the raw material in the Asian country.
Delegation leader, Rafeeque Ahmed says that leather demands in that country are increasing hence the need to start importing the product from Zambia where it was readily available.
Mr Rafeeque says that they will work closely with the Common Market for Eastern and Southern Africa (COMESA) to ensure that they build partnerships.
He says that partnerships would facilitate for improvement in the quality of leather being produced through improved technologies and value additional initiatives in the entire value chain.
“India needs extra leather for the production of leather-related products and itÃs for this reason that we want to work hand in hand with COMESA, so we can build capacity among leather producers and if possible we start importing the products, possibly from six COMESA member states which include Zambia,î he said.
With policy support for value added exports of leather and leather products, Indian leather industryÃs annual production is about $7 billion and comprises of finished leather, leather footwear and garments.
Deputy Minister of Livestock and Fisheries Development Albert Mulonga says Zambia’s leather export had progressively increased from $3,35 million in 2003 to $10.81 million in 2009.
Key export markets for Zambian leather products included South Africa, Singapore, Democratic Republic of Congo, Japan, Hong Kong, Malawi and the United Kingdom.
Apparently small, the country’s leather sector had potential to grow if supported with initiatives to further add value on leather and leather products which would earn the country more revenue from leather exports.
He says that there is need for increased investment into value addition technologies following the leather sector policy which indicated the value addition initiatives embarked on in the value chain.
Mr Mulonga says that his ministry, the Ministry of Commerce Trade and Industry and other stakeholders recently validated an action plan for the leather industry in the country which would ensure development and competitiveness of the leather sector.
The implementation of this action plan will surely complement the work to be undertaken under the regional leather sector strategy.
Despite the potential of the sector, there is a magnitude of loss of revenue in the absence of value addition.
The leather sector policy objective clearly indicates the need for the industry to change the current status by embarking on value addition initiative in the entire value chain through investments into new technologies.
Mr Mulonga said Government will embark on a sensitisation programmmes especially for smallholder farmers on the economic importance of hides.
“Farmers need to be educated about the value of hides and skins and provide them with incentives so that they can be able to produce quality hides and skin ,the ministry of livestock development and COMESA are critical in this,” he said.
Outlining practices that hinder the growth of the sector, indiscriminate branding was said to be the issue that required immediate attention.
ECTO-parasites especially ticks, poor nutrition, disease control and animal husbandry practices also have greater potential to reduce the value and quality of hides and skins produced.
To address these issues government is providing effective extension services by establishing livestock service centres, breeding centres and the disease free zones all aimed at providing source of animals for farmers and delivery of services to farmers.
This will undoubtedly improve animal husbandry among smallholder farmers and the benefit will be improved productivity, improved quality of livestock products including raw materials.
“Other incentives to support the further growth in the sector include the zero per cent corporate tax and tax exemption on dividends for the first five years, 100 per cent allowance on capital expenditure improvement and upgrading,” Mr Mulonga says.
Leather Industry Association of Zambia chairperson Chris Spyron said the association would ensure that it developed a vibrant and self-sustaining leather industry to meet stakeholdersà aspirations in the value chain fully integrated within the region.
Mr Spyron says that the association will make sure that the sector meets the demand and surpasses it.
He says that for a long time now the industry was faced with a number of challenges because of the high cost of technologies and input, inadequate skills among smallholder farmers, unstable export prices and variation of quality of raw hides and skin.
“Despite the challenge the leather sector was producing reasonable quality leather and leather goods which are competitive on the regional and international markets,” he said.
He says that the industry had market linkage opportunities to other larger users of leather on the international scene.
The association requires strengthening by expanding its membership to include Small and Medium Enterprises (SMEs) in leather goods and footwear manufacturing which will benefit the industry and the country as a whole.
COMESA assistant Secretary General Stephen Karangizi says that in line with the leather and leather product framework there was need for the development of intra-regional leather trade by linking SMEs to regional markets.
Mr Karangizi says that identification of business opportunities and possible partnership along the value chain was cardinal in the growing of the sector.
He says COMESA’s objective is to develop international leather and leather products trade by linking SMEs to the Indian and Italian leather sectors.
“Introduction of requirements and entry conditions to the Italian and Indian markets will identify potential business match- making,” Mr Karangizi said.
Mr Karangizi said that it was imperative for Zambian players in the industry to take advantage of the open opportunities for trade and investment and urged SMEs to identify potential opportunities for joint ventures.
COMESA region offers great opportunities for joint partnerships, which in turn brings high profit margins and better investment thereby improving the investment climate in its member states.
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Promoting Leather Industry Critical to Nation’s Economic Development