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With an eye to curbing the major setbacks the
leather industry is facing, Tadesse Haile, state
minister of Trade and Industry, held talks with
investors engaged in tannery and leather and leather
products processing.
Though Ethiopia has been earning foreign currency
from the export of hides and skins for over half a
century, the government believes that the growth in
the export of industrially processed leather and
leather-made garment has remained stagnant.
A senior official at the Ministry of Trade and
Industry (MoTI) told Fortune that the export
revenue from the sector is unsatisfactory despite
the fact that the leather industry has been one of
the priority areas backed by the government.
Ethiopia's share of the world leather trade is less
than 0.5pc, which accounts for about 40 billion
dollars a year. The leather sector registered
revenue amounting to 650 million Br in 2006 while
the unit price of the sector's exports soared from
10 Br per kilogramme in 1988 to 43 Br per kilogramme
in 2006 alongside Birr devaluation from two to nine
against the dollar. Still, the volume of exports was
nearly constant and the overall growth of the sector
averaged four per cent over the past 20 years.
"Tadesse discussed with the sector's investors and
governmental agencies working with them on the
implementation problems of the sector and the
possible remedies," an expert at the Ministry told
Fortune.
Over 100 investors engaged in the tannery and
leather industry were found in the consultative
meeting. Representatives of the three state-owned
banks including the National Bank of Ethiopia (NBE),
the Ethiopian Customs Authority (ECA) and the
Ministry of Agriculture and Rural Development (MoARD)
were also participants of the meeting.
Those producing tanned goods complained that their
major set-back is banks' reluctance to grant them
credit for the hides and skins they would purchase
from the local market. They also said the credit
from the banks is not adequate to meet their
expectations.
Leather product producers on the other hand, pointed
their fingers to the tanneries claiming that they do
not supply them a quality product with a reasonably
fair price. The tariff imposed by ECA on various
goods like sewing machines has also lowered the
international competitiveness of leather exporters,
they claimed.
"A significant amount of the meeting time was spent
on blaming each other," one of the participants
disclosed to Fortune.
Representatives of MoARD also pointed out that the
inefficiency in tanneries and traders who supply the
hides and skins to the tanneries is the major
constraint hampering the growth of the overall
leather sector.
The traders hoard huge numbers of animal skins,
especially those slaughtered during holidays, in
warehouses hoping that prices would increase in the
future, an agricultural expert told Fortune.
"This basic raw material that should have been
delivered to the tanneries as early as possible
would get rotten which is detrimental to the
sector."
Moreover, some tanneries that mix and export this
low quality hide with that of the better quality are
putting the country's image at stake, he added.
Though banks did not resist the complains of the
exporters and tanneries, they argued that most of
the leather exporters and tanneries are defaulters
forcing them to reconsider their decision to advance
loans over and over again which of course elongates
the time.
On the consultative meeting, Tadesse told the
representatives of banks to detach themselves from
their conservative actions and actively work on
reviving the sector.
Requesting the whereabouts of the perpetrators that
hoard the hides, the Minister vowed that an instant
measure would be taken against those who do that if
a tip-off is obtained.
"I was personally satisfied with the consultative
meeting which gave me a hope," a tannery owner who
participated in the meeting told Fortune.
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