Raw material smuggling has negative impact on leather sector

The executive secretary of Leather Association of Tanzania Joram Wakari said recently that local factories utilise only about 40% of their installed capacity as most of the processed hides are illegally exported outside the country. Tanzania produces about 2.8 million hides annually. Available statistics show that the country processed 1.87 million in the first eight months of last year, according to the association. But local industries were able to purchase about 664,445 pieces in the market, says Wakari.

He said the shortage of raw materials has continued despite the country being endowed with some of the largest livestock populations in Africa. Livestock population in the country includes about 18 million cattle, 13 million goat and 3.5 million sheep. Furthermore, measures instituted to reduce the smuggling of skins and hides seem not to have produced the desired results. The measures taken by the government include the increase in export duty on hides and skins.

Most of the hides and skins are exported to the DR Congo, Malawi and Kenya but only a portion of this trade is recorded by the Tanzania Revenue Authority (TRA). Meanwhile as local leather factories lack raw materials, imports of finished leather products has been increasing tremendously.

A report made available by TRA shows that footwear imported from China increased from 8,599 pairs in 2003 to 33,999 pairs in 2009, a clear indication of the existing and growing demand should local firms be able to serve the market competitively.

‘Imports of footwear have, however, been dominated by cheap non-leather and second-hand products. Imports of genuine leather footwear constitute less than 3% of the total imports,’ Wakari said when reacting to TRA’s report.
Despite the huge potential leather products manufacturing, the sector is dominated by micro enterprises and some few small and medium enterprises following the collapse of large footwear producers in the 1980s and 1990s. However manufacturers still face many constraints in accessing financing from banks, high interest rates, Wakari says.

Source: The Citizen Tanzania