Marginally better news30 November 2004
The leather sector in Zimbabwe has faced extreme difficulties over the past few years. The last month or so, however, has seen a marginal improvement. Unable to buy fighter aircraft from western sources, due to sanctions, the government turned to China. The aircraft were provided at a price: the Zimbabwe market had to be opened to Chinese imports, including footwear. An avalanche of cheap footwear, at a fifth of the retail price of shoes produced in Zimbabwe, brought domestic tannery and footwear plants to a near standstill. The public flocked to buy 'Chinese', a move hailed by government: in part because it reduced the volume of chemicals and spares imported by the leather sector from the west. Consumers, however, soon fell out of love with Chinese origin footwear. Poor wear characteristics negated the advantages of low cost and demand for locally produced leather and footwear has risen. Tanneries and footwear plants are, however, low on raw material and chemical stocks. Holdings were allowed to run down during the consumer honeymoon with cheap imports. Foreign exchange for the import of essential chemicals and components remains difficult to come by, to put it mildly, and there is a time lag between ordering and supply of necessary imports. Added to this, executives have become exceedingly wary of embarking on any financial commitment without strong evidence that government trade policy is now aimed at sustained support of domestic manufacturing rather than hindrance. In short, it will take a little time for the leather sector to get back to something approaching normality. Nevertheless there is one pleasing development. The Zimbabwe leather sector succeeded recently in persuading the government to lift import tariffs from 40% plus Z$50 per pair to 60% plus Z$50,000 per pair. While this may seem incredible, the realistic black market buying rate has moved from a near 1:1 to the pound sterling at independence to near Z$10,000 or more to the pound today. In real terms Z$50,000 is now all of £5.