Why EAC leather industry has lost Sh347b
Regional players in the leather industry have lost close to $3.2 billion (Sh347 billion) because of inadequate investment in value addition, a new report by the East African Business Council (EABC) has revealed.
Peter Mathuki, EABC chief executive said the leather industry has contracted due to the high presence of imported used footwear as well as synthetic shoes.
“These imports are priced way below the production costs of local producers, thus reducing the market for a sector that is still not getting adequate financing,” he said during the launch of the report.
The report finds that the region provides a good resource base for the production of hides and skins, having over 188.1 million livestock - cattle, sheep and goats.
Despite the region currently having a monthly demand of about 600,000 pairs of industrial shoes - security, safety, industry - production is only about 60,000 shoes per month.
It indicates that the East Africa Community (EAC) region processes leather up to wet blue stage with a minimal transformation to finished leather.
On the international market, the price of finished leather costs about $5 per (Sh542) square feet, while the wet blue is sold at $1.5 (Sh162) per square foot.
“This suggests that the EAC, which exports mainly wet blue, loses as much as $3.5 per ft².
This implies that the EAC in effect lost close to $3.2 billion in the last 4 years, (from 2014-2018),” the report notes.