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Kenya’s raw leather exports hurting local firms

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Continued exportation of leather products is posing a serious challenge to the country’s leather and footwear industry, according to sector players.
Kenya’s lack of competitiveness, lack of capacity and low quality of final products has also been blamed for the low leather production.
Robert Nzioka the director of Zingo Investments – a Kenyan firminvolved in the exportation of finished leather products says the government needs to among other issues correct duty and taxation structure to provide a level-playing field for local manufacturers and importers alike in order to revitalize the sector.
“Leather sector has for a long time received low protection domestically and the government needs to fully implement and correct duty and taxation structure to reflect the exact value chain position and make the local industry competitive and attractive,” he said.
The governmentannounced last month intentions toban exportation of leather products in the next three years in order to promote local industry – a move that has been widely applauded but these concerns still stand in the way of the sector’s resurgence.
Available figures indicate that the country’s exports of wet-blue leather is slightly over 50 per cent, while the country’s annual shoe uptake exceeds 35 million pairs, out of which 95 per cent is imported – frustrating efforts to establish a vibrant leather industry capable of competing with international firms
Industry players have welcomed government’s idea to halt exportation of raw hide to meet a domestic shortage and boost manufacturing of leather goods and products if the market is to compete with economies like Ethiopia.
In the footwear subsector for instance, where competition is largely domestic and based on price, Kenya’s market share has also been eroded by imports of new low-cost leather footwear – believed to be originating from China and India, and Nzioka wants the government to first address these issues by putting in place right taxation measures.
In Kenya, it can be as much as 30 percent more costly to produce a pair of low-cost men’s leather shoes at ($9.44) compared to($7.28) in Ethiopia, according to a report by World Bank.
Kenya’s tanning industry had about 19 tanneries in the 90’s with a capital investment worth Sh3.8 billion, but this changed after the abolition of‘export compensation’ scheme andmarket liberalization, which involved cutting trade tariffs on imported leather and footwear, provoking a surge in cheap imports.
Nzioka wants the government to set up more cottages and train more locals as well as generate capacity and provide financing if it is to revive the sector.
“These concerns need to be addressed and new technologies should be on government’s agenda,” he said.

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