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AfricaMoney | October 18, 2017

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Zimbabwe launches leather sector strategy

Zimbabwe launches leather sector strategy

The COMESA website reports that the Government of Zimbabwe has taken new measures to curtail the exportation of raw hides and skins in order to boost the leather sector in the country which has suffered a lot of setbacks in the last 10 years. Industry and Commerce Minister Professor Welshman Ncube said the strategy constituted a private-public platform for action and is expected to make the country’s leather sector a vibrant and internationally competitive industry. He said efforts are being made to add value, because the leather sector was presently failing to absorb all raw hides and skins that are produced.

 “More hides are being exported from Zimbabwe in their raw form, instead of being exported at least in the first stage of value addition that is the wet blue stage. For example in 2011, 5 440 tonnes of raw hides including crocodile skins worth $28 million was exported,” he said. Professor Ncube added; “The average value of leather and leather products exported globally in 2010 was $184 billion of which hides, skins and leather made up $27 billion. Of this amount, 40 per cent of the value was exotic leather. In 2011, only 2.2 million pairs of footwear of all types were produced while four million pairs of mainly cheap synthetic shoes were imported essentially making us net importers of footwear,”

The minister said the strategy was therefore aligned to the Industrial Development Policy and the National Trade Policy that were in line with his ministry’s mandate under the Medium Term Plan (2011-2015).

“It provides a clear roadmap resulting from agreements between each of the value chain stages. The analysis was based on market led approaches that holistically considered economic and social issues together with cross cutting and enabling factors such as policy, access to finance and extension services,” he said.

Prof. Ncube said history had shown that resource rich countries tend to grow slower than economies without substantial natural resources adding that stakeholders need to defy this historical background as a Zimbabwe is a resource-rich nation and make the country the industrial hub of Southern Africa.

“The manufacturing sector reached its peak last year when it achieved an average capacity utilisation of 57 percent. However, it is disheartening that this year the general performance of the manufacturing sector has again fallen down to 44 percent in general and around 30 percent for the leather sector with availability and cost of electricity being one of the impediments to attain maximum capacity utilisation,” Ncube said.

Prof. Ncube said the major objectives of the leather strategy includes improved access to finance throughout the value chain so as to buttress the sector players’ cash flows, improved market intelligence of all enterprises and stakeholders and improve quality and collection of hides and skins.

He said Government through the Ministry of Industry and Commerce had been requested by COMESA to come up with a National Leather Sector Development Strategy crafted within the confines of the regional leather and leather products strategy. Speaking at the same occasion, Secretary-General Sindiso Ngwenya said COMESA would continue to promote the economic transformation and growth of the region’s economies through deeper and sustainable integration anchored on building industrial competitiveness through the development of national and regional clusters.

He said the Secretariat is working to promote value addition in the leather value chain as a mechanism of boosting job creation and intra-trade through the promotion and development of clusters in the leather sector.

“Building the productive capacities is an essential element for enhancing competitiveness to boost regional and international trade. It is in this context that COMESA is putting in place mechanisms to unlock value in sectors such as agriculture, industry and services, which are dominated by SMEs,” he said.

He added; “We have however observed that the SMEs are constrained by inadequate skills, use of inappropriate technology and limited access to finance. To this end, the COMESA Secretariat is supporting Member States in a holistic manner: addressing policy issues through strategy formulation and capacity building of SMEs in the leather, textile and cassava value chains.”

Mr Ngwenya said this intervention will help to strengthen regional value chain by supporting SMEs to participate in International Trade Fairs in the region adding that 30 SMEs drawn from 8 COMESA countries participated in the All Africa Leather Fair.

In the period 2001-2012, COMESA’s leather value chain experienced a positive performance, in particular with regard to the primary segments of the value chain, which all grew significantly.

“In particular, COMESA’s stock of goat skins increased by 28.6%, whereas at world level the same segment declined by 4.2%. In comparison, negative trends were recorded in the production of light bovine leather, which declined by 3.7 million square feet, and in the export of raw hides and skins and light bovine, with a loss of US$67 million and US$55 million respectively,” Mr Ngwenya revealed.

He further said the overall market potential of COMESA leather can grow from an estimated value of raw material of US$378 million to an estimated value of US$ 875 million for fully finished leathers, which represents a value addition of roughly US$500 million or about 150% of the value of raw materials.

“If all the raw hides and skins are transformed into finished goods like footwear, garments and other leather goods, the industry would balloon to USD2, 5 billion from the present value of USD450 million,” Ngwenya echoed.

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Source: COMESA

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