Leather industries want better policies....

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Original Author: JOSEPH MAZIGE.

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Leather industries want better policies....
JOSEPH MAZIGE
THE Leather sector has been lobbying the Ugandan

government for the last ten years for policies that enable competitiveness in the market in vain. "Leather industry has the largest potential in Uganda and East Africa as a whole", the Leather Sector head Industrial Promotion Services (IPS) Mr. Niazali Hirani said in an interview. IPS owns Leather Industries of Uganda located in Jinja with a processing capacity of 300tons of hides per month. The hides and skins are locally bought by the tanneries through direct dealers and 1kg of the hide goes for shs1200 and the skin is bought at shs2000. He said because of the poor leather policy, the government and the industries has not fully benefited from this potential. Hirani said exporting raw hides for US$1 per kg is throwing away money. "If the hide is processes, its multiplier effect is 3 to 4 times and in finished products it is 10-12 times profitable". The tanneries export semi processed hides because there is no market for the finished product. The exported leather is called the wet blue. He said that the government has not bothered to develop the industry like the other East African countries where the export duty is at 40 percent. "In Uganda the export duty is just at 20 percent and this opens the door for business person at the international market hurry for them". He said that if the government emulated Kenya and Tanzania, then factories that deal in leather products will be forced to invest here (Uganda). "We need to harmonise with the rest of countries in the region. We need policies to restrict our material with right policies. "This will enable the industries down stream to develop", he argued. He said that will such a policy, the Chinese shoes which look like leather flood the Ugandan market. "They last for 3 months and make the feet stink", he added. He said the government should now wake up and address the competitive issues in the leather industry and educate the people. Hirani said on top of the good policies, the government should also look at giving incentives to the leather sector. Environmental issues There are now four leather industries in Uganda that include; Uganda Leather and Tannery Industries, Sky Fat both located in Jinja and Balawi Hides and Skin in Busia and Novelty Tannery in Masaka. The installed capacity of the tanneries is 1.1million hides and 2.1million skins. Tanneries are a problem to the communities because of the by-products released into the environment. Like of recent, the people of Jinja accused the tanneries here of contaminating the air. Particular times of the day a strong stench engulfs Jinja town including the outskirts. But Mr. Hirani says the cost of managing the effluent is high and requires incentives from the government. He said the location of the industries also matters in terms of the effluent management. "If these tanneries are in one place, the government to give incentives to have a common point for discharging the effluent so that the water can be re-used". The market According to Food and Agriculture report 2002, the leather field accounts for 55 percent followed by coffee at 25 percent. Rice is 14 percent and meat 6 percent. Hides and skins are a product of livestock. The East and Southern Africa sub-region has the highest concentration of livestock in Africa and estimated population of 89.6 million cattle, 57.3 million sheep and 57.7 million goats. The total hides and skins production in the region 41.2 million of which Uganda produces 1.2million hides and 2million skins annually. In Uganda over 90 percent of the hides and skins are exported in raw form yet this has the potential to generate employment through value addition and earn foreign exchange. Unlike in South East Asia, India and Pakistan where supporting of leather industries by offering incentives, Uganda leather industries have not benefited. In Feb 2006, the European Union imposed a dumping duty on shoes from China and Vietnam, further evidence of distortion but not on the African continent. An incentive of 10 percent on the final product is equivalent to 60 percent on the raw hides. Out of the total US imports of leather articles in 2005 of US$7 Billion, no African country benefited despite the AGOA programme. In the financial year 2000/01 Uganda lost revenue of US$249.7Million through the exportation of raw hides. The raw hides and skins export was valued at US$22.7million yet if it had been finished leather it would have been US$68.1Million and the final product should have yielded US$272.4million. There is virtually no organized shoe factory in Uganda and a huge opportunity lies in the development of these value added products. Ends item=. Write your abstract here.

Published: August 31, 2007

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