Harsh operating environment killing the leather industry

Bthere Merit Ibe [email protected]

Despite Being one of the largest producers of leather and finished leather products in Africa with an expected turnover of $1 billion by 2025, Nigeria the leather industry is crawling below average, due to import difficulties, poor customer base, failed policies and broken value chain activities.

The industry, which is expected to be a game-changer for the economy by improving the country’s foreign exchange earnings, driving growth and creating jobs, is currently hampered by a difficult environment.

Although the Director General of the Nigerian Institute of Leather Technology and Science (NILEST) Zaria, Muhammad Yakubu, recently said that Nigerian leather product exports amounted to around $800 million between 2018 and 2019. , they then fell to $650 million in 2020 due to COVID-19.

With the projection that by 2025 the export revenue of leather products will reach $1 billion, the DG said, Nigeria had already crossed half of $650 million to $800 million this year.

He said the total trade in leather products is currently between $300 billion and $400 billion globally, Nigeria could account for 15-20% or reach $20 billion by 2025.

Yakubu revealed that every week more than 20,000 pairs of shoes and different high quality leather materials are exported to African, Asian and European countries from southeastern, southwestern and northern regions of Nigeria.

Yakubu lamented the high cost of imported processing materials, which he said was responsible for the skyrocketing prices of most Nigerian leather products compared to foreign products.

“For example, now you can get 1 square meter leather that costs around $5. But, by the time you add up the production costs, the processing cost can reach around $30.

“So you might end up buying imported leather rather than buying leather processing materials.”

Yakubu predicted that Nigeria could achieve a high level of leather production in the world if science and technology were given special attention, especially in the area of ​​manufacturing.

“Our local industries must be revived and SMEs must be helped with capital and training, similar to what exists in Asian countries.”

Taking the leather industry of Aba as a case study, the industry, which is located in Abia State, is made up of producers of shoes, bags and trunks, occupying about 14 clusters across the market including Powerline, Imo Avenue, Bakassi, Aba North Shoe Plaza, Omemma Traders and Workers, ATE Bag, Nwogu Avenue and Ochendo Industrial Market.

Chief Blessing Enweremadu, Vice President, Intergovernmental Relations, Aba Chamber of Commerce, Mines and Agriculture (ACCIMA), who spoke specifically on Aba’s leather industry, applauded the state of the industry, saying that Aba’s leather industry was known as a major producer of shoes and leather products.

He estimated that there are over 400,000 people employed in the industry. No matter how one esteems it, the Aba leather industry provides jobs, creates wealth and tax revenue for the government.

“It’s a very big industry. Most of the time we have problems with data, but there are too many people involved in leather production here. This is not something any government can afford to ignore.

“If the population of the private sector is 1 million, the leather industry takes about 400,000.” He lamented the lack of raw materials, which are mainly leather and hide. “They cannot continue to produce without raw materials, which is leather.

“We don’t have the hide and skin. The government supports them in the area of ​​loans and grants to help them upgrade to boost the industry. On several occasions, they had invited SMEs to obtain loans and grants to help them modernize.

“Most of us don’t wear foreign shoes anymore. Aba’s industry is doing well.

Enweremadu suggested that creating a government-owned leather industry will go a long way. “The government plans to create more clusters in various locations in Abia State.

“There are machines for production. The state governor, Dr. Okezie Ikpeazu, imported many machines through the people who traveled to China for training, which he sponsored to learn skills and add value. Some prefer to use the manual. But if they need equipment at any time, they know what to do and where to go. ACCIMA will ensure that they are directed to the right place.

“We can look for them in China, Europe, Italy and the government is ready to support them for duty free.

On patrinise, he said, “Our military and paramilitary patronize these products. The problem is that they don’t respond to the command. We encourage more young people to join us, so that we can meet the challenge of producing more goods.

“We export most of our shoes. Just that they export them and rebrand them as made in Brazil or Italy, which is wrong. The idea is that most Nigerians do not like to patronize Nigerian products. The mentality is bad. We should be proud of our products here. They are proud of foreign shoes. They are brought back here and sold at a higher rate.

It is an irony that Nigeria exports hides, goats and cowhides to Europe, but leather manufacturers import them from China and various parts of Africa.

Stakeholders believe that as much as revenue from export products to tanneries, this deprives Aba shoemakers of the quality raw materials needed to produce finished shoes, bags and trunks.

From his different perspective, the Chair of the Lagos Chamber of Commerce and Industry (LCCI) SME Group, Daniel Dickson-Okezie, noted that the leather industry is the backbone of the economy. nationally and just as other sectors have challenges, it also faces various challenges hindering its growth.

He asked why the country matters when there are companies doing business here. “This has been a major challenge for the industry in Nigeria. The Aba industry is flourishing in the production of shoes and leather materials, with machinery and materials. They are doing well and are ready to do business.

“The question is to what extent are we leveraging value addition to improve this sector to subsequently improve our export earnings.

“Most of our leather goes to Italy and Spain, which are the biggest manufacturers of leather materials. According to the 2021 report, our Nigerian leather production accounts for approximately 71% of goods destined for Italy and Spain.

“This means that we are still behind in terms of adding value in the leather industry. Nigeria could develop a thriving leather industry in a place like Aba in Abia, but we still need to leverage the performance to improve the export of finished products.

“The main function is to create an environment conducive to business prosperity. Import reduces sales and turnover and Nigerians have the mentality that the best leather materials come from Italy, Spain, Brazil and others.

“The government must encourage our local producers. When the government imports what we have domestically, it means our local producers are competing with those foreign countries under unfair circumstances.

“The environment is not encouraging. Access to funds is a major setback for businesses here. The basic idea behind financial inclusion is the availability of funds.

“If a state government develops the vast tract of land with equipment, SME loans, gets investors and calls the place a leather village, that will make a difference, not to mention other issues like taxes. multiple, poor power supply, among others.

The Nigerian mindset of not buying Nigerian made products needs to be changed. Our military shoes, belts and leather accessories must be purchased here to encourage our local production.

Dr Nathan Owhor, a development expert, chastised government policy failure, which has been a major cause of the industry’s slow growth.

“Policy failure has been a blight on the economy.

“They issued an executive order, called 003. It was aimed at solving the problem of clientelism. This means that all parastatal public bodies would be encouraged to patronize locally produced goods. That’s what the executive order is supposed to address. And if that had been taken seriously, today’s story would have been different for us in the leather business.

“As we always say management is supposed to lead by example. So if they see these policies as a solution to a problem, then you start the implementation from the top. Lead members of the Federal Executive, to ensure they occasionally wear made in Nigeria. There should be a law to support it.

“Legislators will also obey the Order. Then you see, most of it all comes through implementation by the Nigerian Army, Police, Air Force, Navy and other paramilitary forces like Customs, Immigration, Federal Highway Traffic Safety Commission, Civil Defense, Unity School and NYSC.

Leather accessories from all these organizations are enough to provide 50% boost and market to local producers in Nigeria, but implementation has been a problem.

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