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Scarcity of hides hurts $680m leather industry  

metro by metro
October 31, 2016
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Scarcity of hides hurts $680m leather industry  
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Nigeria’s $680 million leather industry is dire need of help as shoe, bag, belt and trunk manufacturers in the country face acute scarcity of hides and skins, which are their major inputs.
More than 50,000 Aba shoe and bag makers cannot currently get hides and skins from leather producers in Nigeria as tanneries in Kano and Kaduna, which are in the business of processing animal skins into leather, prefer to sell to buyers from Italy, Spain, the Netherlands, China and India, who pay them in dollars and euros, BusinessDay found.
This makes business sense as profit maximisation remains the objective of every business. The current acute shortage of FX in Africa’s most populous nation also justifies the preference of leather firms to explore the global market, say analysts.
But Aba shoe makers see this as a threat to their business, saying that it is mandatory in many countries to first satisfy the local market before exporting, especially when it comes to industries the country has a comparative advantage.
“Once the tanneries are through with production, they export the entire finished leather to the detriment of local leather works manufacturers. This is affecting the finished leather sector in Lagos, Onitsha and especially the Aba cluster,” Ken Anyanwu, national secretary, Association of Leather and Allied Industrialists of Nigeria (ALAIN) told BusinessDay.
To worsen the situation, shoe and bag makers in Aba and other parts of the country such as Lagos and Onitsha cannot get foreign exchange to import leather from West and Central Africa, a situation that hurts production while threatening to shut down firms.
Many of them are not benefitting from the CBN’s directive, which allocates 60 percent of all the dollars to manufacturers because they do not belong to recognised associations like the Manufacturers Association of Nigeria and are either unregistered or operate at a small-scale, analysts told BusinessDay.
The majority of them have since resorted to the use of a substitute known as synthetic leather, which is cheaper but not durable, according to Christian Nnajiaku, managing director, ChrisKenzy Shoe Industries.
However, synthetic leather, though cheap, is still being imported by the majority of manufacturers in the sector.
Findings show the current local price of soft leather (animal skin), which is now scarce  is N250 a square foot, while the price of hide, which is imported, goes between N350 to N400 per square foot.
Okezie Ikpaezu, Abia State governor, said weekend there are 100,000 young men producing shoes and clothes in the state, disclosing that Aba produced 50,000 pairs of shoes for the Nigerian military.
The news is exciting to key players in the industry, but stakeholders say the state government must quickly set up a cluster in Umukalika, located at Obingwa Local Government, as promised.
Ariaria market, which is currently hosting the Aba finished leather industry, lacks essential infrastructure of constant power, water, good road network, among other amenities, findings show.
According to Ken Anyanwu, the federal government needs to establish marketing board to assist shoe makers in selling their products, saying that the responsibility of the board would be to buy up products from the manufacturers and export or sell within the country so, that their members can concentrate and produce more for the local and international markets.
Nnabugwu Osondu, secretary, Abia State Shoe, Bag, Belt and Trunk Box Association, told BusinessDay the majority of them cannot get high quality adhesives (glue), owing to lack of funds and foreign exchange crisis.
Adhesive (glue) is being imported despite the availability of companies Purechem Manufacturing Limited, Melvyn Nickson Nigeria Limited, Comart Nigeria, among others.
A recent research shows high quality cassava can be used to produce adhesives. This means manufacturers who invest in this area can make good margins, as Nigeria is world’s largest cassava producer.
Aba is the biggest leather industry in the country, but many of its activities are still informal. The biggest market for Aba shoes are Cameroun and Central Africa, whose citizens come directly to Aba to request the design and colour they need.
Mazi Sam Ohuabunwa, president of Abia Think Tank Association, said in 2014  that one million pairs of shoes were being exported to other African countries each week.
Ohuabunwa said that the shoemakers produce quality that compares with the Italian brands, adding that despite leading the Africa market, they are yet to have a presence outside the continent.
According to Nnajiaku, Aba shoe makers are skilled and can compete favorably at the international arena if provided with funds and good environment to operate.
“Most traders that import shoes from China and Dubai do so because we currently do not have the capacity to meet their demands. Aba-made shoes are superior to the imported ones from Asia and I am happy that local consumers have realized that”.

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