Over the past 11 months, Ethiopia has earned 110 million USD from the export of leather and leather products. On the other hand, this is just a small portion of the overall potential in a country ranked first in the African continent in terms of its livestock resources.
Low quality and quantity of livestock resources and lack of technology and skilled workforce are some of the hindrances to compete in the international market. Domestic leather producers advise that the Ethiopian Leather Industry Development Institute (ELIDI) is expected to exert more effort in overcoming these hurdles.
Dire Industries Private Limited Company has been producing various leather products such as glove, shoe, etc for the past 50 years. However, despite its capacity, the company has not been able to export its products. Company Trade Section Manager, Fiseha Aserat said that though there are some improvements in recent years, it has not been able to generate the desired amount of foreign currency due to several factors.
In one hand, while it is a good thing that foreign companies are engaged in adding value to the country’s leather products, the proclamation has also allowed getting involved in activities that can be performed by domestic investors. This has its own impact on domestic investors because; even if they can borrow money from banks, it would still not make them competitive with foreign companies.
On the other hand, it is important that ELIDI set up an effective sewerage system to prevent environmental impacts. Domestic investors complain that this is one of the reasons that force them to shut down their industries.
Yet, Fiseha said the institute has been providing the necessary advice and technical support when it is needed and recognized the complexity of the job. It has also been striving to discharge its mandate by providing proposals for concerned government bodies to resolve the issue.
Institute Communication Director Berhanu Sergibo indicated that the presence of foreign investors has a lot
of advantages for domestic investors. Besides creating opportunities to engage in the production of semi-finished leather products, it also enables domestic companies to access advanced technologies, capital, and skilled man-power.
“Indeed, foreign investors have a lot of influence on domestic investors as they have a better capacity. The domestic investors have also a limited capacity to supply the required inputs for the industry. In order to fill the gap, the government then allows foreign investors to produce inputs until the domestic investors build their capacity to do so. Once they build their capacity, this rule will be altered.”
Until this year, it was the government alone that has the permit to export finished leather products, but the government has started to give license for domestic investors to start the export of processed leather products.
Two factories in Bahir Dar and Debre Berhane were shut down due to the poor sewerage system. Others have also temporarily stopped production due to the same reason. It takes up to 30 million birr to install a modern sewerage system. But domestic investors have to capacity to spend this amount of money. That is why the government has been constructing state-of-the-art industrial parks for the industry.
Presently, factory owners in Addis Ababa have agreed to construct second level refinery and the industry has shown its willingness to provide support. In this regard, as to the institute, environmental pollution will not be tolerated.
In order to join the international market, the sector needs unreserved support and strong follow up of the institute by said Yigzaw Assefa, Owner and General Manager of the Bahir Dar Leather Factory.
As to Yigzaw, there is no domestic chemical industry here in Ethiopia. The country has been importing most of the ingredients for the industry from Europe and Asia. On the other hand, the price of chemicals is rising in the past two to three years. Presently, there are efforts to organize the industries in group so that they have better capacity to import inputs. The institute together with Investment Commission has been working to organize local and domestic investors for this purpose.
In order to meet the demand, the institute has been collaborating with local and international technical and vocational education institutes to build its staff’s capacity in leather technologies. The institute has agreed with an Indian company to adopt leather production techniques for the use of domestic producers. It has also published six researches on international journals.
Regarding chemical supply shortage, ELIDI has also has been working jointly with Chemical Institute, Industry Input Supply Enterprise, and Trade Ministry to establish a committee that strives to supply chemicals on time. In the long run, it is also planning to produce the chemicals locally.
The Ethiopian Herald July 18/2019
BY GIRMACHEW GASHAW
