• Overview of the Leather/Footwear Sector

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 Overview of the Leather and Footwear Sector  [top]                                              

Text from: Theo van der Loop, Institute of Social Studies (ISS), The Netherlands, Addis Ababa, 1/2003 Clothing and Footwear in the African Industrialisation. The case of Ethiopia, clothing.doc 336 KB

Production capacity of hides and skins
Ethiopia has a major comparative advantage in the raw materials sector needed for the leather sector which makes it in principle very appropriate for leather product exporting: Ethiopia has the largest livestock production in Africa, and the 10^th largest in the world. Ethiopia’s livestock population is currently estimated at 35 million cattle, 21 million sheep and 16.8 million goats. Annually it produces 2.7 million hides, 8.1 million sheepskins and 7.5 million goatskins.[1] This comparative advantage is further underlined by the fact that the cost of raw hides and skins constitute on average between 55 to 60% of the production of semi-processed leather (Kiruthu 2002).

These data are provided by LLPTI and ETA. Muchie (2000: 539) provided slightly different estimates for the late 1990’s: 30 million cattle, 24 million sheep and 19 million goats, while CSA (2002) provided diverging figures for 2000/01, especially in the case of skins: 35.4 million cattle, 11.4 million sheep and 9.6 million goats.

Types of enterprises
In 1995/96 the various surveys of CSA gave a rather complete picture of the types of enterprises in the leather sector. It indicates clearly that in terms of numbers the cottage and handicrafts establishments in leather and shoe production dominate. It so happens that 1995/96 was also the year in which the number of large and medium-scale establishments (the 10+ group) was the highest. It declined from 63 to 49 in 1998/99 after which it recorded a modest increase to 54 establishments in 2000/01. Of these, 39 (72%) are located in Addis Ababa, 6 in Amhara and 9 in Oromiya. The employment is just over 7,000 persons in 2000/01, down from about 8,200 in 1996/97 (CSA 2002a). Only 7 out of the 54 establishments (or 13%) are public companies, although they are the larger ones. For example, these 7 public enterprises employ 57.5% of the workers (cf. Annex 4E). Therefore, as was discussed in the above (cf. Section 4.1 and Annex 4), even in this sector there is still an important presence of the public companies.

Leather processing categories and suppliers
Within the leather sector, the CSA distinguishes two broad categories. The first one is the tanning/dressing of leather, manufacture of luggage and handbags, while the second concerns the manufacture of footwear. The footwear enterprises are more numerous, but smaller in terms of employment than the former category. For example, in 1999/2000 out of 53 leather establishments, 38 (72%) were in footwear, employing only 49% of the total persons engaged (CSA 2002). Since the downfall of the Derg, a rapid expansion has been taking place in the tannery sub-sector. In 1990 there were only eight tanners, consisting of six public and two private plants. In November 2002, 19 tanneries were registered with the Ethiopian Tanners Association (ETA): 15 private and 4 public ones; the latter are in the process of privatisation. Furthermore, six private tanneries are in development.

The annual sheep and goatskin production of an estimated 15.6 million skins falls below the capacity of the 19 tanneries (LLPTI). According to the ETA, the current daily capacity of the tanneries of 133,450 skins is being utilized for only 50.1%, while this percentage is higher for hides (65.6%), albeit of a much lower daily capacity of 5,055 hides. All but one tannery can produce skins, while only half of them have the capacity to produce hides.

Regarding small-scale footwear producers in Addis Ababa, some studies have been undertaken (e.g. Tebarek 1997, Tseguereda 2002 and Zewdie et. al. 2003, this volume). There is a clear cluster of such producers in a specific part of Merkato, the largest open-air market in Africa. Within this cluster (i.e. Woreda 5), there is a sub-cluster called Shera Tera, where there are not only many producers, but also the largest concentration of suppliers of almost all raw materials necessary for shoe production. The very existence of a well-developed system of suppliers in the footwear sector represents one of the main assets of small shoe producers. The ability of suppliers to manufacture a wide variety of products with short delivery times allows the shoe producers to postpone to the last moment their purchase of inputs.

Products

“Sheep and goats skins represent the bulk of Ethiopian leather production. Ethiopian highland sheepskins (cabretta), in particular retain a high reputation in international markets for some natural characteristics of clarity, thickness, flexibility, strength and compact texture which make them especially suitable for high quality gloves, sports equipment and garments. Goat skins classified as Bati-genuine and Bati-type are characterised by thick, highly flexible and clean inner surfaces and are in high demand for the production of fashion leathers, especially suede (…). Hides, in stead are not regarded as particularly attractive in international markets due to the poor quality and the small size of the zebu, the most common bovine in Ethiopia.” (Bini 2002: 17).

The Ethiopian leather and leather product sub-sector produces a range of products from semi-processed leather in various forms to processed leathers such as shoe uppers, leather garments, stitched upholstery, school bags, handbags, industrial gloves, and finished leather. Such leather products have been exported to markets in Europe, the USA, Canada, Japan and the Far East. There is also export to countries in Africa, in particular to Nigeria and Uganda, as well as to the near East, i.e. Yemen. The market for leather products is mainly international and not domestic.

Export
During the past two decades leather and semi-processed hides and skins have constituted the second major export product of the country with between 10 and 20 % of total foreign earnings, second only to coffee with between 50 and 60% of earnings (apart from the late 1990’s when it was just under 10%). The percentage has been fluctuating, and the most recent figures indicate a decrease in exports. In 2000/2001, 12,170 tons of skins and hides were exported, generating 618 million Birr (almost US $ 73 million); this accounted for 17.2 % of total foreign earnings. However, in the 2001/2002 fiscal year a smaller volume (10,462 tons) of skins and hides were exported, and, as a result, only 481 million Birr was obtained, accounting for 14.1 % of total foreign earnings (Addis Tribune 2002). It has to be said though that the year 2000/2001 witnessed a peak in the foreign earnings in this sector.

The largest share of the foreign earnings comes from sheepskins; in 1995 sheepskins, mainly in pickles, accounted for 66% of the total of US $ 61.3 million in foreign earnings by the leather sector, while this percentage was 18% for (wet-blue) goatskins and 16% for hides and other skins (Muchie 2000: 549). It is also sometimes claimed that the large majority (i.e. 90%) of all the sheepskins that are produced in Ethiopia are exported. The importance of Ethiopian exports relative to other African countries, can be indicated by the share Ethiopia contributes to total African skin exports: 51% in the case of sheep and 30% in the case of goats. Exported products go in particular to the UK and Italy; in 1996 these countries took up 27% and 26% respectively (Kodama 2001 and Muchie 2000).

Constraints for development

Supply
A major problem with the leather sector is the by-product status of hides and skins: Cattle, goats and sheep are mainly used for meat (cf. Kodama 2001 and Worku 2002). Thus, the product, i.e. hides and skins, arrives when meat is needed,not when it is appropriate for leather processing. In Ethiopia meat is needed in three waves because of religiously induced fasting seasons and festivals; for example, in Amhara, which provides the largest volume of sheepskins, these festivals are Easter (April), Ethiopian New Year and Mesqal (September), and Christmas and Timqat (January).

Quality
As a result of this by-product status, not enough attention is paid to maintaining the quality of the hides and skins. Different serious problems at the source impacting on the leather quality are: flay cuts, putrefaction, animal diseases (ekek), branding, poor pattern, dirt and dung, hides/skins are not sold when prices are considered to be too low (deteriorating quality), etc. Estimates of the loss to the Ethiopian economy due to such problems reach US $ 14 million per year. In order to address these problems, (pilot) projects are underway with the participation of ESALIA, CFC, UNIDO, FAO, UNIC and others.

At the same time, meat consumption, especially in the rural areas, is intertwined with the system of food security. Unless the food security of peasants is ensured, the meat consumption will not increase.

Berhanu and Kibre (2002) have made an interesting study of competitiveness in the Ethiopian leather sector. For the tanning sector, they have concluded that the main factors affecting competitiveness are:

1. low capacity utilization;

2. the poor economic infrastructure: inefficient infrastructure and inefficient bureaucratic structures combined significantly raises the transaction costs of firms, making it difficult to compete nationally or internationally;

3. the technology employed is not updated (regularly), in particular the lack of learning in production management;

4. the lack of hard currency to purchase spare parts and inputs;

5. the relative lack of export support and/or promotion services

For the leather footwear firms, the main factors affecting competitiveness are the poor quality of domestic leather, and the high cost of (imported) inputs.

They conclude that resource endowment is not enough for competitiveness, and that, similarly, the availability of cheap and abundant labour by itself does not seem to be sufficient to compete internationally. Labour costs in Ethiopia, for example, are estimated to be lower than those in China: the basic wage in Ethiopia is around US $ 0,7 per day, or almost 6 Birr, while it is around US $ 1 in China. Most relevant with respect to technology is the lack of timely and efficient maintenance, modification, and innovation. This has in particular to do with the lack of spare parts (foreign currency shortage), and unsatisfactory learning effort exhibited by labour and management.

 Companies and Products [top]                                                                                   

 Leather Training Centers  [top]                                                                                  

Leather and Leather Products Training Institute (LLPTI)

Productivity Improvement Center (PIC)

 Supply Markets  [top]                                                                                                     

Made in China. Machinery of 16 different sector. Leather and Textile and others.
www.made-in-china.com

The German Export Directory. Germany supplies. Sources of supply and company profiles of the German export industry. Textile and leather under others
www.sachon-exportadressbuch.de

 Exhibitions and Trade Fairs for Leather  [top]                                                         

Indian Leather Portal

• International Leather Good Fairs, India International Leather Fair

• Products Directory (bags, wallets, purses, cases, boxes, portfolios)

• Manufacturer list

http://www.indianleatherportal.com/leather-events/

Consumer Goods: Footwear and Leather
Trade Shows, Exhibitions, Fairs and Festivals, Conventions, Conferences and Seminars
Web Directory of Events, Products and Services

http://www.expocentral.com/consumer_goods/
industry_consumer_goods_apparel_footwear_and_leather.html

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