Plans underway to revive Tanzania’s ailing leather industry

Efforts to revive Tanzania’s ailing leather industry have started gathering momentum with the Government currently luring potential investors in the country to help revive leather processing factories.

The government through Tanzania Investment Centre (TIC) has welcomed foreign investors including

Chinese firms to help boost the sector whose contribution to the national economy is still minimal as compared to other sectors.

Statistics made available to The Business Wiz by TIC on leather industry shows that, the center has registered only 12 leather industrial projects in the country for the last four years since 2018 up to December 2022.

The current operating industries have a total value of US$ 39.4 million investment capital in the country

Creating 1,038 jobs to Tanzanians.

The Acting Executive Director of TIC John Mathew Mnali told The BusinessWiz in Dar es Salaam that, the investment would involve the construction of a processing industry to manufacture various goods such as belts and shoes among others.

He said there are still many untapped opportunities in the leather industrial sector with huge potential for boosting growth and development through increased output.

He further noted that, Tanzania registered a total of 132 projects in the past five months from July to

November 2022 worth 7trn/- ($ 3.16 billion).

The recorded value is almost four times the value registered during the same period in the previous year, where the value was 2.06trn/- ($881 million).

The value of registered projects increased by 259 per cent in comparison to the value of projects registered in in the country in various sector development between July-November 2021.

“Among the total projects recorded, 50 projects are owned by foreigners while 30 are owned by locals and 52 are under joint ventures between the nationals and foreigners,” he said.

Expounding more on the registered projects based on sectors, he revealed that the industrial sector accounted for the biggest share attracting 67 projects followed by the transportation sector that attracted 25 projects, tourism 12 projects and agriculture 9 projects.

Others are services (8 projects), commercial buildings (7 projects), human resources (3 projects), financial sector (1 project), while leather industry sector did not register any project within the period under review.

According to him, the registered projects are expected to create 21,297 employment opportunities in total if well maintained and managed well.

This achievement was as a result of the government’s efforts in promoting various investments opportunities available in the country to foreign investors especial through various national leaders’ trips outside the country as well as creating an enabling environment for investors.

Low investment in value addition in the leather industry has undermined production, with thousands of

tons of skins and hides going to waste due to poor handling and low quality.

The Ministry of Industry and Trade reports show that Tanzania has been importing shoes and leather products while making little use of its livestock products.

Data from National Bureau of Statistics (NBS) shows that, the contribution of earnings from exports of hides and skins and leather industry to the economy of Tanzania is still minimal accounting for only 0.01 per cent of the Gross Domestic Product (GDP).

Three years ago, the government banned the exportation of raw skins and the situation has caused the bulk of many tons of the products to accumulate at various preservation stores found at the designated slaughter houses in most towns and cities in the country.

Animal skin sellers have raised serious concerns over lack of ready market for their products in the country saying that, “the move comes after the government banned the exportation of this products used as raw materials to manufacture leather products.

In an interview with TBW recently, skin traders urged the government to reduce punitive legislation so as to allow the exportation of such a product at this time around when the government is struggling with all efforts to revive the processing industries which had stopped production.

Three weeks ago the deputy minister for Livestock and Fisheries Abdallah Ulega confirmed in Dar es

Salaam that, “the government is striving to look for the strategic investors to additionally help further the development of leather industry.

According to the deputy minister, the accumulated raw skins have failed to secure markets due to fewer local leather processing industries bearing in mind the fact that two years ago the government had increased export levy by over 100 percent from 400/- ($ 0.13) to 950/- ($ 0.27) per kilogram with a view to discourage those selling raw skins and hides outside.

According to one member of the Board of Tanzania Leather Association (LSA) Elibariki Mmari, Tanzania has only eight available leather industries in the country and these include Moshi leather industries,

Tanzania leather industries, Afro leather Kibaha tannery, Himo tanners and Salex Tanners. , Kiluwa

Group Company, Toscana Machine Calzature (TMC) and ItalProgetti.

Surprisingly almost all these have shelved production or operate at lower level of production capacity required making the industry contribute little to the GDP.

Statistics by the National Bureau of Statistics (NBS) shows that although Tanzania ranks the second with

the highest livestock population in Africa region after Ethiopia, it lags behind among EAC member states in leather industrial development.

Tanzania imports between 31,000 and 42,000 pairs of leather shoes from China and other South East

Asian states, but less than three percent (3 per cent) of shoes are made from pure leather.