Source: ‘Shun exporting raw hides, maximise on value addition’ | The Herald July 18, 2018
Prosper Ndlovu in LUSAKA, Zambia
Zimbabwe and her peers within the Comesa region should stop exporting raw hides and scale up value – addition initiatives in order to benefit from the $130 billion global leather industry, says Mr Nicholas Mudungwe, programme coordinator for the Africa Leather and Leather Products Institute (ALLPI).
The Comesa region has huge potential on the supply side of the leather production sector, producing about 11 percent of the livestock globally, in addition to offering a huge market for finished footwear products, he added.
In an interview here ahead of the Heads of States Summit scheduled for today and tomorrow, Mr Mudungwe, said Zimbabwe and Comesa at large have a huge potential to leverage on the leather sector to grow their economies faster and create more jobs.
“When you look at the leather sector globally, it is an industry valued at $130 billion. However, despite our importance as Comesa in terms of livestock production, in terms of production of finished products we are very small. Our participation globally is around three percent and why are we not able to realise optimum benefits? It’s because there are a number of constraints,” he said.
“Many countries are focusing on production of raw hides and exporting them. But what we are saying is that if raw hides are processed into finished leather products, we stand a good chance of generating more income and jobs.
“If you look at the value chain threshold, say you have a skin, which is worth $30 and you add value, it will go up to $360 because value addition around it is twelve-fold. Let me simplify it, a skin of 30 square feet can give you 10 pairs of shoes and if you sell a pair at $30-$40, you get up to $400 through value addition.”
Mr Mudungwe said the major disadvantage for Zimbabwe and her regional peers over the years is that the countries have been exporting raw hides to countries such as China or Italy among others, who process these raw materials into high value products.
“If you look now at the Comesa region in terms of the market, the demand for footwear is almost 400 million pairs per annum. If we then say as Comesa, let’s focus only on 20 percent of that 400 million, that is about 80 million pairs and that can create 80 000 jobs. So, we are saying that if we internalise our raw materials we add value, create jobs in the region and save foreign currency,” he said.
Mr Mudungwe, a Zimbabwean-born technocrat, said it was ironic that despite Comesa’s abundant livestock resource, the region was, at the moment, importing footwear worth $1,6 billion coming from the rest of the world.
“So, we are losing forex and losing jobs, but if we internalise the resource we stand to create jobs, save foreign currency and other multiplier effects because when you are manufacturing leather you use chemicals, electricity, water and transport.
“What it means is that the initial investment target of 80 million pairs can have multiplier effect to the rest of the economy. In addition the enterprise will start paying taxes to governments and therefore support fiscal position of the country,” he added.
Mr Mudungwe said the ALLPI was working with member states to design their value chain strategies as well as assisting with implementation having identified the key constrains such as skills gaps, equipment and lack of horizontal and vertical collaboration of stakeholders.
“So, we are supporting member states and we had done that for Zambia, Zimbabwe, Malawi, Ethiopia, Uganda and Eritrea. We are supporting these SMEs to work as clusters, It’s a holistic approach. We are also brining in the academia for research purposes. In our processes we are bringing in the academic, public and private sector to collaborate,” he said.
The institute is a specialised agent of Comesa established in 1993, to support development f the leather sector in the region. It has offices in Addis Abba and has footprint across the region.