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Ethiopia's Leather Industry in depth analysis

Tigrai Online
May 02, 2012

Ethiopian Leather prokucts in Addis Ababa marketEthiopia’s leather industry is showing considerable promise – or at least India, one of the world’s fastest growing economies, seems to think so.

Last September, two Indian development institutions – the Central Leather Research Institute (CLRI) and the Footwear Design and Development Institute (FDDI) – promised to use technology to make Ethiopia’s leather industry “globally competitive” before 2016.

That might sound ambitious, but Ethiopia boasts the largest cattle population in Africa and the government hopes to pull in $206 million from exports of value-added leather items this fiscal year, a considerable leap from the $104 million generated last year. And according to Pittards Ethiopia Tannery at the end of 2011, up to 40,000 pairs of leather gloves are ready for export to the US.

It is worth pointing out, however, that these claims should probably be taken with a pinch of salt. The government in Addis Ababa tends to silence troublesome media types who dare to suggest that behind closed doors all might not be fine. This means independent analyses of Ethiopia’s economic situation are difficult to come by, and the business press often acts primarily as a vehicle for state propaganda.

Potential and problems

Nevertheless, if there is some degree of truth behind the optimistic forecasts, there are reasons to be hopeful.

African exports frequently suffer from no added value, with nations exporting raw materials and importing finished products. The export of leather-based goods such as gloves could help buck this trend.

Solomon Getu, Managing Director of Crystal Tannery and one of the most senior figures in the industry, claims that demand for leather footwear both globally and domestically has vastly increased the potential market for Ethiopian products.

Ethiopia has a comparative advantage in the leather sector, but there also numerous factors impeding its development.

Getu, for example, points out that levels of state bureaucracy and a lack of trust between government and commerce means the atmosphere is still not business-friendly. Imported equipment, for example, often gets held by customs for three weeks at a time, risking the loss of foreign contracts.

The leather industry in Ethiopia also faces a lack of capital inputs (such as leather-treating chemicals) as well as labour shortages. And many businesses also still see exports as being for the benefit of the state rather than their own profit margins.

Production problems include poor information, such as between shoe manufacturers and leather producers concerning how much raw leather will be made each year. As such, demand frequently outstrips supply and few companies have any sense of product development strategies which could avoid lengthy delivery times from tanneries to manufacturers and the fluctuations in prices that such time lags cause. These are areas that India’s CLRI and FDDI hope to address.

This is all coupled with the fact that electricity, telecoms and transport infrastructure across the country is poor. Although the Ethiopian government has some of the most sophisticated online monitoring software in the world, its usage for anything more than censorship is limited.

Source: Think Africa Press

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