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    African Leather Industry Meets World Markets


    © International Trade Centre, International Trade Forum - Issue 4/2004

    Photo: SIC SA African leather and African design are positioning for the predicted boom in global demand.

    Leather is one of the world's most widely traded commodities. The trade in leather and leather products - worth more than US$ 60 billion per year - is predicted to grow. The African leather sector is bursting with potential, but there is a wide gap between resources and production. ITC's development programme has galvanized the sector.

    Trade in hides and skins, and semi-processed, tanned leather goods is lucrative business. This is particularly the case for some developing countries where the dynamism of the sector has led to a move up the value-added chain and strong market positions. As a result, developing countries hold a 45% share of world trade in leather manufactures. Many have substantially increased their share of world footwear production in relation to developed countries.
     Yet Africa shows only a modest increase. Import penetration of the domestic leather footwear markets by other developing countries is an estimated 73%. Leather and leather products generally account for less than 4% of total exports. The numbers tell the story: African countries have 15% of the world's cattle and 25% of its sheep and goats, but produce only 14.9% of global output of hides and skins - 8% of bovine hides and 14% of sheep and goat skins. Exports of hides and skins have fallen in recent years to below 4%, yet leather is ranked very high as an export commodity in several African countries. The countries' tanning capacity has fallen from 9.2% to 6.8%. At the same time, the livestock population has jumped about 25% over the last decade, faster than the world trend.

    To address the issues behind these statistics, ITC, with financial support from the Netherlands, launched its Integrated Leather Sector Export Development Programme for Africa in 1997. Seizing global market opportunities is a key challenge for the African sector. Important steps have been taken over the past seven years - a foundation has been laid, the cornerstone of which is African partnership.

    Mind the gap!

    Leather is a leading export for many African countries. The gap between resources and production is wide, but exposes the potential of the industry. Reducing the gap is critical in this important sector, which is strategic for economic and industrial development. By boosting exports, the entire continent stands to benefit. Because leather is a by-product of the meat industry, the supply chain begins with animal husbandry, the lifeblood of many rural communities.

    Successful development of the sector could help reduce poverty in rural areas. As a labour-intensive industry, it is an important source of employment across the patchwork of its pan-continental supply chain. Because of the backward and forward linkages in the chain, Africa can be both a source of raw materials and an exporter of finished goods.

    A Blueprint for the African Leather Industry is a report commissioned by the UN Industrial Development Organization and jointly prepared by ITC, the Food and Agriculture Organization and the Common Fund for Commodities. It identifies Africa's potential and makes recommendations to players in the supply chain - governments, the private sector and international organizations. The report is the outcome of the "Meet in Africa 2002" meeting that brought together 25 African experts in Tunis.
    It recognizes several positive indicators that provide a solid base for finding cost-effective solutions:

    • Institutions have been set up to introduce and reinforce standards and quality.
    • Databases have been established to support the industry.
    • Standards have been harmonized at national level in several countries, facilitating transactions and greatly reducing costs.
    • Trade promotion strategies have been designed and support institutions established, although coordination needs to be strengthened.

    Supply chain challenges

    Supply chains, often buyer-driven, can span several countries and regions, as marketing and manufacturing agents set up global production networks. To enter new markets, the sector must integrate itself at national, subregional and regional levels. However, effective integration is difficult. Each stage of the supply chain - from recovering hides and skins, to converting them into leather in tanneries, to manufacturing and marketing leather products - requires specific policies, human skills and support systems.

    The expert group meeting held during Meet in Africa 2002 identified a number of obstacles:

    • The quality of hides and skins.
    • A poor and deteriorating infrastructure of roads, power supply and telecommunications that affects all of the supply chain.
    • A lack of foreign investment.
    • Low labour productivity, poor management and outdated training services.
    • Inadequate levels of technological development, productivity and workmanship.
    • Limited or no access to secure working or low-cost capital.
    • Environment protection measures.
    • A lack of marketing information, expertise and control. The problems, constraints, challenges and solutions are interrelated and as a result, require an integrated approach.

    Partnership galvanizes the industry

    The main challenges to integration include the lack of mechanisms for regional collaboration for the sector, limited contact between firms and support institutions and low international visibility of the industry. To meet these challenges, ITC recognized the need for a combined effort by all stakeholders.

    The 1997 programme brought together stakeholders in a partnership developed over a series of highly successful trade shows, organized by ITC together with African partners. It also gave birth to the only organization representing the sector across the continent - the African Federation of Leather and Allied Industries (AFLAI).

    Meet in Africa, launched in Cape Town in 1998, followed by Casablanca in 2000, Tunis in 2002 and Addis Ababa in 2004, is now an international crossroad, combining a trade fair involving buyers from all over the world with events including seminars, expert group meetings, buyers-sellers meetings and factory visits. In this forum, firms and institutions identify measures to be taken and valuable partnerships are forged. It also brings together professional associations, trade support institutions, customs, transport companies and various ministries of the host country to coordinate each event.

    Meet in Africa is driving intra-African and other South-South trade in leather. (Photo: SIC SA)