US$100bn leather industry left untapped …shoe manufacturers cry

shoe factory; Shutterstock ID 203844652; PO: david-today

Despite a booming shoe and other leather works industry in the country, it is sad and surprising to learn that not even a single leather tannery exists to supply these small businesses with leather – leaving them at the mercy of importers.

The situation is even more worrying if a critical look is taken at the millions and billions some economies are making from this industry.

According to the United Nations Industrial Development Organisation (UNIDO), leather is one of the most widely traded commodities in the world, with an estimated global trade value of approximately US$100billion per year.

The North American Meat Institute (NAMI) states that the US hide, skin and leather industry exported more than US$2.04billion in cattle-hides, pig-skins and semi-processed leather products in 2016.

In Africa, the International Trade Forum Magazine also states that leather and leather goods is estimated at over US$60billion a year; and trade experts say the market is far from saturated, as they believe in the next decade demand for leather raw materials (hides and finished products) may exceed supply – making the leather industry one of the most lucrative business sectors in years to come.

A report by the Bank of Industry (BoI) states that in neighbouring Nigeria the leather industry generates about US$700million annually with limited support, and has the capacity to create about 700,000 direct and indirect jobs.

In Ethiopia, leather exports generated US$121m in revenue last year – a 12% increase on the previous year, African Business Magazine has said.

And according to World’s Top exports, global sales of leather shoes-exports by countries in 2016 amounted to US$50.5billion, with Africa exporting just one percent of the amount – a far cry from the 48.5 percent owned by Asian countries.

The above revelations show that there are enormous opportunities for the leather industry in Ghana; hence, deliberate efforts must be taken by government and the private sector to take advantage of them.

Effect on shoe manufacturers

The sector that is suffering most from the absence of a leather tannery in the country is the shoe manufacturing industry. Shoe-making is a business that is fast growing in the country, especially in the Ashanti regional capital Kumasi – which has become the hub of shoe-making and other leather works in the country.

Speaking to one of the leading shoe manufacturers in the country, Horseman Shoes, its CEO Tonyi Senayah said the situation is really hampering the activities of players in the sector.

“We normally rely on large importers for leather. And because we buy from them, the prices are tied to the exchange rate – which makes them very unstable. In addition to that, we don’t have a constant supply of quality leather. So, we are left with no option other than to buy only what is available in the market, whether quality or not – and that affects the quality of the shoes, too,” he said.

The same sentiment is expressed by another shoes and bags manufacturer, Giddins – whose CEO, Gideon Denzo, said the lack of a tannery has led to increased cost of production, thereby affecting their competitiveness with foreign shoes, as some of them tend to be cheaper than those produced locally.

He also lamented the situation’s effect on the quality of shoes produced in the country, as producers are always at the mercy of importers who do not always bring in good quality leather.

The shoe and other leather manufacturers are therefore calling on government and the private sector to set up a leather tannery that will readily supply them with raw materials for production.

Opportunity for livestock sector

When asked why he thinks the private sector has not expressed interest in establishing a tannery in the country, Tonyi said it can be primarily attributed to inadequate livestock production in the country.

“I remember I spoke to someone from the Association of Ghana Industries (AGI) who was interested in setting up a tannery in Ghana. But he said after making a market survey and analysis, he saw it would be difficult to get raw material locally as there is significant shortfall in the livestock market,” he said.

This creates a very huge opportunity for the youth who are battling with unemployment, as well as other investors, to consider the livestock sector as a potential area of investment, since there will be a ready market should any investor answer the call to set up a tannery in the country.

Opportunity for One District, One Factory

The Akufo-Addo-led government has promised to establish a medium- to large-scale factory in every district of the country, in a bid to drive the country toward industrialisation. This initiative, government has said, will be led by the private sector.

Investors are therefore encouraged to see the great opportunity that exists in the untapped US$100billion leather industry, and consider setting up a tannery to support the country’s infant but booming shoe industry.

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