One of the key components of the flagship projects in the “Vision 2030” is to make Kenya a middle-income country, and the manufacturing industry provides a good platform for industrialization.
According to a World Bank report, Apparel and Textile Industry, there is need to improve the performance of leather industry to create more job opportunities and growth in the country.
The report released October 2015, further indicates that despite Africa owning a fifth of the global livestock population, the region account only 4% of world leather production and 3.3% of value addition in leather.
Global demand for leather and leather products is growing faster than supply. This in itself is an opportunity for Africa including Kenya to grow the industry to meet the demand. The region has natural strengths and it risks missing out on opportunities in an expanding global market if quick actions are not taken into consideration.
“Kenya’s textile and apparel sector has the potential to grow, increase its contribution to GDP, and serve as a source of gainful employment for its fast growing, young population,” said Diarietou Gaye, World Bank Country Director for Kenya.
What is ailing leather industry in the country?
Reviving the leather industry in Kenya will not only cause an upsurge in exports and jobs, but will also create a viable and sustainable industry to propel the country toward inclusive prosperity.
The report points out three factors that are hindering the growth of Kenya’s leather industry: (i) the high cost of domestically sold leather and leather inputs (including 25% duty on imported inputs); (ii) the high cost of labor; and (iii) the high cost of electricity.
The inflow of cheap and new leather and non-leather footwear imports from China and India and the growth of the cheap second-hand (mitumba) have further crippled the industry. A pair of new leather shoes locally produced, for example, costs approximately $20 while mitumba are as low as $5. Many Kenyans also have a perception that mitumba shoes are of higher quality compared to local new shoes.
Scarce design and process skills have been highlighted as other challenges killing the industry. Kenyans, who opt for second-hand products also believe they are more stylish and unique in style. Local information indicates that people especially women want unique products which are not flooded in the market. Thus, mitumba products become even more attractive.
Currently, the report says that most Kenyan leather is produced and sold as a commodity with little quality or design differentiation. Kenya’s leather exports consist of semi-processed tanned “wet blue” leather (89 percent), raw hides and skins (5 percent), finished leather (2 percent), and leather footwear and handbags, travel ware, and other leather products (4 percent). Up until the imposition of an 80 percent export tariff on raw hides and skins in 2009, raw hides and skins accounted for more than 25 percent of Kenya’s total leather exports.
Is there any hope for Kenya’s Leather industry?
Maria Paulina Mogollon, Finance and Private Sector Development Specialist, is quoted by World Bank saying that “Kenya’s capacity to capture this opportunity could be boosted by better institutional collaboration, tackling constraints related to the supply of raw materials to increase production and quality; improving productivity and innovation through better skills and technologies, and by enhancing access to markets locally, regionally, and internationally.”
Kenya leather industry should exploit low value-added leather footwear, for domestic and regional markets; high value-added specialty products, targeting US and EU customers; and finished leather, targeting the Chinese and EU markets, analysis suggests.
The report proposes three key strategies for Kenya’s leather industry to grow, increase its competitiveness, jobs and income:
Promotion of the dynamic restructuring of the leather industry. This entails the launch of a stakeholder-driven leather industry strategy implementation process; strengthening of the Kenya Leather Development Council (KLDC), and improvement of the regulatory framework to reduce production costs and safeguard the environment.
Increasing access to markets and inducing greater demand for Kenyan leather & leather products. This requires creation of a leather marketing entity and a design of a transparent public procurement policy.
Build quality and standards. This necessitates improvements of the production processes, formation of leather product development accelerators, a leather industry park, skills improvement, and increased enforcement of quality standards for imported leather products.
Even as Kenya continues to push its industrialization vision, the government should insist on environment conservation. Leather industry is a heavy polluter as effluents produced by the tanneries have negative impact on soil, air and water.
Kenyan government should force producers to internalize environmental and social costs associated with sustaining the sector, including most importantly, water resource clean-up, long term health care, and natural resource replenishment costs.
This will ensure that even as Kenyan pushes its agenda towards the accomplishment of vision 2030, environment and human health are taken into high consideration to achieve a developed and healthy nation.
Image Credit: Crazy Kenya