How Kenya can carve out bigger share of global leather market

Beatrice Mwasi, secretary-general of Leather Apex Society of Kenya. FILE PHOTO | NMG

By JAMES KARIUKI
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Kenya’s leather industry is showing signs of growth with shoes and other leather products made locally finding their way to international markets. But the industry is grasping with challenges such as

counterfeiting, low value addition and skills deficit.

Beatrice Mwasi, secretary-general of Leather Apex Society of Kenya, spoke to the Business Daily about what the umbrella industry lobby and other players are doing to increase the country’s share of the global market for leather.

The Kenyan market has accommodated footwear and bags branded as ‘genuine leather’ whose buyers end up disappointed due to their short lifespan. How has this adversely affected the leather subsector value chain?

It displaces legitimate business activity where leather product makers lose their market while consumers get substandard products. Counterfeiting leads to loss of potential tax revenue and loss of employment.

What efforts have stakeholders made to reverse this trend and improve the leather business?

The industry is working towards tabling a policy position paper on harmonisation of nomenclature, branding and traceability as a way of curbing counterfeits.

We successfully lobbied for the increase of import duty on finished leather products. This offers local manufacturers the much-needed cushion from being outcompeted by countries that highly subsidise their leather businesses.

The Leather Industry Network Project run by the Centre for Business Innovation and Training (CBiT) jointly with national leather associations in East Africa that is funded by GIZ-EAC, GFA Consulting Group and Africa Leather is creating new world-class products that local workers will cash in to win multi-billion shilling contracts with global retail chains.

We successfully lobbied for the increase of import duty on finished leather products.

What efforts are being made to enhance value addition?

The directive on ‘Buy Kenya, Build Kenya’ is a much welcome boost. To improve quality of products, Leather Apex facilitated the establishment of joint production units that will enable small and medium enterprises (SMEs) to enhance the quality of their products.

We have also been networking with leather companies from the developed world and that has seen cobblers and other leather product makers gain new knowledge on product finishing, branding and marketing.

Communities in Kenya’s arid and semi-Arid lands (Asals) heavily rely on cattle for their upkeep. Development of the leather sector can enhance economic inclusion for these pastoralist communities.

Despite the large livestock population among the pastoral communities, value addition for hides and skins is relatively undeveloped. Most of the producers preserve their hides and skins using sun drying, suspension drying etc., which lead to inferior quality products.

How much is the leather industry worth now and what is its true potential?

Value addition remains low at five percent, costing the country billions of shillings in direct earnings and thousands of job opportunities.

Kenya’s share of the approximately Sh1.5 trillion global market for leather is estimated at Sh14 billion with great potential for growth, if exports of raw and semi-processed hides and skins that constitute over 95 percent of exports worth Sh9.4 billion were optimised.

Further processing of skins and hides could create at least 50,000 jobs and $150-250 million (Sh15-25 billion) in GDP.

Do we have the skills needed to enhance the variety of leather products on offer to the Kenyan and foreign markets?

Once the export-bound leather park is operational, Kenya will require 66,000 skilled workers. The sector suffers from a huge skills deficit as there is no correlation between industry demands and the provision of skills by local institutions.

How has the industry responded to this skills challenge?

A majority of players put their workforce on on-job training. Then there is the growing quality consciousness and strict import quality benchmarks that require the industry to upgrade itself to the best practices being pursued globally. The industry faces stiff competition from cheaper and better-quality imports. To remain competitive, it is necessary to have trained and more specialised technical skills.

Does Kenya currently export finished leather products? If yes, where to and what is their value?

The industry’s main output — wet blue (85 percent), leather crust (nine percent) and finished leather and products (six percent) — is primarily exported to China, Italy and India. Other finished products are mostly exported to the EAC region and other parts of Africa. Others have made their way to USA and parts of Europe, although in small volumes.

There is great potential for even more exports in, for instance, the Kenya-UK economic partnership deal recently signed by the two countries. To fully exploit this potential, however, and export finished leather products more needs to be done to increase our competitiveness.

jkariuki@ke.nationmedia.com