MWASI: Silver lining in pandemic for leather sector

The Covid-19 pandemic has led to a slowdown in international trade, resulting in a shortage of many products and exposed vulnerabilities in supply. But it also unveiled an opportunity for local manufacturers to increase production and showcase their products to first-time users.

For the leather industry, there is also a chance to explore new forms of leather and skins other than that of cattle to include goats, sheep, pigs, camels, rabbits, crocodiles, ostrich and fish. Kenya produced a mere 2.6 million bovine hides last year ­— 3.5 million goatskins, 2.4 million sheepskins, 500,000 camel hides and 1,000 crocodile skins.

Footwear, automobile seats, clothing, bags, book bindings, fashion accessories, furniture and accessories such as watch straps, tabletops and notepad covers, most of are imported as secondhand goods. Kenya could contribute more to the African leather sector from 3.5 per cent despite having the third-largest livestock production with 17.5 million cattle, 27.7 million goats and 17.1 million sheep.

Covid-19 has also exhibited the world’s overreliance on imported products that can be made locally. For instance, our annual demand for leather shoes is 15 million with the local industry making 3.5 million pairs in 2016. But with the pandemic and questionable hygiene standards associated with secondhand items, importation of shoes and other apparel has been halted, increasing local demand.

The leather industry contributes 1.5 per cent of gross domestic product (GDP) with trade volumes worth Sh14 billion and employs 22,000 workers, mostly in the micro, small and medium enterprises (MSMEs). Under the ‘Big Four Agenda’, the country intends to build the industry three-fold to trade volumes of Sh50 billion by 2022 with manufacturing contributing 22 per cent of GDP, up from 15 per cent.

The government and other stakeholders must circumvent the challenges in the industry, including poor quality of hides and skins, limited value addition, unfair competition from imports that has led to less manufacturing, reduced absorption of local products and poor quality leather.

The pandemic has particularly hit tanneries, which depend on exports for 90 per cent of sales. To correspond to the new market dynamics, most of these establishments now operate at 10-15 per cent capacity, which has led to massive job losses. The movement restrictions have, despite government assurances that cargo can move smoothly across regions, seen massive delays and, in some cases, a halt in supplies.

This has made it difficult for MSMEs to access finished leather for creating products and, for medium-sized industries such as tanneries, led to lack of access to raw materials. MSMEs have suffered decreased demand due to the suppression of the hospitality and tourism industries.

Acceleration of demand of local products is necessary as the citizens shy away from imports. The 35 per cent duty on imported leather products and the presidential directive for procurement of local footwear for the disciplined forces, which can be extended to schools, should be maintained. Besides stimulus to boost capacity, the industry can explore new markets courtesy of bilateral and multilateral trade deals.

Ms Mwasi, an innovation and management specialist, is secretary-general of the Leather Apex Society of Kenya.