Why Nigeria’s Leather Industry Must Be Revitalised: As the nation looks inwards to generate additional revenue from the non-oil sector, Kingsley Alu writes that there is need to revitalise the country’s leather industry A recent report by Chemonics International Inc. showed that Nigeria imports close to 20 million pairs of shoes yearly despite its manufacturing capacity which could meet local demand and even produce for export. A sub-sector assessment of the Nigerian leather industry by the report also disclosed that the country’s neglect of this all-important sector has seen her losing out on the $72 billion global leather industry and trailing behind less endowed countries on account of her dependence on oil. It noted that with long- term investment, Nigerian stakeholders could potentially share what may develop into a $104 million market for Nigeria over the next ten years. “This increased market will be accompanied by a substantial increase in the industry’s employment level,” the report said, noting that increase in disposable income was fuelling international demand for high quality leather shoes, jackets, handbags and upholstery. While observing that the market for leather products was growing steadily at three per cent per annum, the report pointed out that although developed countries are the major consumers of finished leather products, they export the bulk of raw hides traded globally to developing countries for processing. “These value-adding developing countries, who are unable to keep up with the demand for tanned leather and finished leather products, are constantly seeking new sources of supply and are looking to West Africa as a potential source. “Nigeria already has a thriving export market; the skin of Nigeria’s Red Sokoto goat commands a premium in the international market, especially from Italy. All of the resources for tanning and producing leather products are available locally, including a large domestic and regional animal population. With strategic utilisation of these resources, Nigeria could greatly increase their market share of the global leather and leather goods market,” it said. In conclusion, the report advised that the manufacturing industry needs more sources of quality inputs if it hopes to fully utilise its manufacturing capacity for leather products. It also added that leather products industry has tremendous potential to generate foreign exchange and create employment, especially for women, in Nigeria. According to the chairman of the Nigerian Tanners Council (NTC), Alhaji Lawan Sule Garo, the leather industry has continued to generate employment for the old and the young, particularly, in the North-West part of Nigeria. LEADERSHIP Sunday findings showed that in Kano, tannery remains the largest, and in fact, the most efficient industry. The industry employs over 25,000 people directly; and thousands of Nigerian youths are engaged on a daily basis as ad-hoc workers. One major factor that makes the industry vibrant is the availability of the major raw materials—hides and skin, which are produced in large quantities, particularly, in the northern part of the country. Also, the large supply of hides and skin from neighbouring Niger Republic, Cameroon and Chad and constant importation of semi-processed leather known as wet blue from Senegal remain an added advantage to the industry in Nigeria. It is also on record that Nigeria produces and exports high quality leather to Europe and other parts of the world. On its part, the Association of Leather/Allied Industrialists of Nigeria (ALAIN), estimates the finished leather goods sub-sector to have an annual turnover of more than N640 billion ($4 bn) with a capacity of generating more than two million jobs in 2014 if concerted efforts are taken to increase their production capacity. In Aba, a major production centre of the Nigerian shoes, bags and belts among others, about 30 million bags and wallets are produced per annum for export and 50 million per annum for local consumption. Also, over 20 million belts are produced per annum for export and another 30 million per annum for local consumption. According to ALAIN, the estimated foot wears produced all over Nigeria is in the region of 260 million pairs per annum and represents over 65 per cent of the footwear market. CHALLENGES Patronage Of Foreign Goods According to Senator Enyinnaya Abaribe, during the 2nd edition of the Made-in-Aba Trade Fair, the National Assembly is putting finishing touches on a bill that would ensure the patronage of made-in-Nigeria products by enforcing compliance to the policy. The proposed bill, he maintained, would focus on patronage of products that Nigeria has the capacity to produce. Abaribe believed that a radical transformation of Nigeria’s industrial base by providing adequate facilities to support the efforts of indigenous producers to boost economic growth is the only way local producers can be encouraged. “We need to be able to create wealth and employment by patronising local producers to reduce crime in the society. If we neglect our domestic goods and continue to patronise foreign ones, there is no way that foreigners will see us as talented,” he said. Abaribe also argued that reliance on imported goods at the expense of quality goods that were locally produced would not allow the nation’s economy to develop. According to him, if given adequate patronage, indigenous producers would help to create employment for the youth and wealth for the country. He said the only way the local industries could thrive was if they were patronised by the government and the Nigerian public. “We’ve been telling policy makers to stop the importation of finished leather and allied products into Nigeria so that we can produce for Nigeria. We want to make sure that those who are involved in the procurement process of government can come here and see that some of the things they want to go and buy outside are actually produced here. What we have here are quality products that can match the best standards anywhere in the world,” he said, while disclosing that the leather industry in the country was already choking under stiff competition from cheap foreign made goods, especially from China, which were not by any means superior. In the same vain, Senate President, David Mark was of the view that Nigeria’s membership of the World Trade Organisation (WTO) should be reviewed for a quick take-off of its industrial sector. “Let us ban all that we can ban. The World Trade Organisation (WTO) should not hold us down in economic slavery,” he said. He also called for a radical transformation of the Nigeria’s industrial base by providing adequate facilities to support the efforts of indigenous producers to boost economic growth. He further urged relevant agencies of government to create adequate awareness on the need for introduction of policies that would enable local initiatives to thrive. Cost of raw materials Imports The cost incurred in the importation of chemicals such as chrome, sodium sulphade and dye stuff has continued to have negative impact on the leather sector. As the chairman, Nigerian Tanners Council (NTC), Alhaji Lawan Sule Garo observed in a recent interview, “If government can take decisive action, we can have those chemicals produced in the country. We hope the Eleme Petrochemical and other refineries in the country can be resuscitated—they are all sources of raw materials, not only for the leather industry but a good number of manufacturing ventures in the country. “The federal government should also encourage research institutes to produce chemicals. It is not healthy that we import over 80 per cent of the chemicals that we use. Things should be put in place to sustain the leather industry. Leather products are hot cake in the international market, if the government gives adequate attention to it, leather will come to surpass oil in foreign earnings.” High Interest Rates Garo also stated that investors who have the urge to join the business are often discouraged because of unfriendly interest rates introduced by financial institutions that are not even ready to grant loans to local industrialists. “Imagine a situation where financial institutions, in their bid to scare us away and continue their romance with the importers, impose far-reaching interest charges of 22 to 25 per cent. We understand that the government is giving out about N100 billion grants to revive the textile and cotton sector, we want such gesture to be extended to the leather industry considering its strategic position to economic development in the country,” he said. He also observed that the Export Expansion Grant (EEG), an incentive from the Nigerian government given to the non-oil exporters has encouraged the exportation of finished leather products to Europe and other continents. The grant, as extended to other manufacturing sectors, ranges from 10 to 30 per cent discount, depending on the kind of goods being exported. For instance, in the leather industry, the crust and finished leather attract about 20 to 25 per cent grant. However, there have been allegations that some corrupt officials in the Nigeria Customs Service (NCS) are frustrating government’s efforts to sustain these policies as the NCS officials hardly honour the Negotiable Duty Credit Certificate (NDCC) following which the minister of industry, trade and investment, Olusegun Aganga, assured that the federal government was currently reviewing the Export Expansion Grant (EEC) to remove all the bottlenecks. Cost of Transportation of finished products The cost of transportation of finished products is another teething problem confronting the leather industry. Poor road networks and the absence of a rail system make the movement of finished leather products slow and cumbersome. The rail transport system in the country is yet to be modernised and this makes the delivery of goods to take longer than necessary. Environmental Problem According to Sule Garo, most of the leather manufacturers have elected to put in place primary treatment plants within their premises to ensure the treatment of polluted water before disposing it. “We want the state and federal government to build secondary treatment plants which will be self-sustainable to factory owners.” Under Utilisation According to findings by the Centre for Research and Development, a non-governmental organisation (NGO), not more than five of the 41 tanneries that operated in Kano were functioning. A representative of the centre, Malam Muhammad Bello, who made this known during an interactive session with stakeholders in the leather industry in Kano, said the few existing tanneries were operating at 60 per cent capacity. Power Supply Experts contend that this is one of the reasons the finishing of shoes and garments in Nigeria was always poor because, the work is done manually instead of using machines and this is the competitive advantage the Asian countries have over us. They argued that until the manufacturers of garment and shoes in the country begin to use the right tools in production, good finishing will remain a mirage, adding that the manufacturers need power to run their machines. The machines are not hand driven but electricity powered, therefore. Government, they insisted, should explore alternative ways of providing electricity for manufacturers. Way Out Sule Garo advocated for the need for long-term financial budget and single-digit loans. “If we can get long-term loan packages, people can go into manufacturing of shoes and bags with available raw materials—when this happens, it will add value to the growth of our local economy by creating more job opportunities and to a great extent, reducing the problem of insecurity,” he said. According to him, there is no substitute to infrastructure. There is no half way to government providing infrastructure. We need to implore government to do what they have to do if they are serious. Industry watchers also believe that investment in technical assistance aimed at actors in leather value chain in the form of access to modern tannery equipment and shoe manufacturing machines will result in improved quality of tanned and finished leather and increased potential to access global markets through appropriate networks. They were also of the view that franchise production agreements could be entered into between industrial tanneries and shoe manufacturers which would boost the productivity of MSME leather producers and create over 500,000 jobs across the value chain, particularly for youths and women.Original link Read More goo.gl/ZqvjdN (y) ✍comment ☏share
Posted on: Sat, 01 Nov 2014 21:44:43 +0000
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