Regional trade bloc bets on SMEs to ward off Chinese leather imports

Poorly equipped tanneries in countries like Kenya are among the reasons behind the slow growth of the leather and leather products sector, which has led to an influx of imports from China, a regional trading bloc says.

The Common Market for Eastern and Southern Africa (Comesa) has listed the challenges affecting the leather sector, citing the lack of chemical industries in the region, finances, qualified personnel, and flaying techniques that result in poor quality hides.

Flaying is the stripping of skin off the carcass of an animal. It is in light of this that Comesa has launched a five-year strategy that seeks to reclaim the region’s market from the Chinese imports.

The strategy will rope in the 21 member countries of the trading bloc, including Kenya, as well as the rest of the East African Community (EAC).

Other countries in the bloc are Eritrea, Tunisia, Zambia, Zimbabwe, Madagascar, Ethiopia, Egypt, Djibouti, Comoros, Malawi, Libya, Eswatini, Sudan, Mauritius, and the Seychelles.

The Comesa Regional Value Chain Strategy 2025-2029 seeks access to affordable finance and investment in the leather value chain; enabling policy and legal environment; sustainable and quality production processes; improved formal national, regional, continental, and global trade; and enhanced product design, development, and productivity.

The regional bloc says small and medium enterprises (SMEs) will play a pivotal role in the implementation of the strategy. “There is a big market opportunity for SMEs to penetrate the market, with limited competition from locally established firms and also from imports,” reads part of the strategy.

Comesa sees an opportunity, particularly in the footwear sub-sector, estimated at 450 million pairs annually.

“Assuming all these pairs of shoes are produced in the Comesa region, approximately 450,000 shop-level jobs would be created, which would trigger demand in the finished leather soles, glue, and other accessories, consequently creating more indirect jobs,” the strategy says.

Kenya has a similar goal as contained in the National Treasury and Economic Planning 2025 Budget Policy Statement, which aims to create 100,000 jobs from the current 17,000 and boost the country’s leather and leather products exports to rake in Sh120 billion. This will be done through the construction of manufacturing facilities, completion of the Kenya Leather Industrial Park, and setting up tanneries in the counties of Isiolo, Uasin Gishu, and Mombasa.

The strategy notes that in 2022, footwear worth $1.7 billion (Sh221.0 billion) was imported into the Comesa region from the rest of the world. This translates into 176 million pairs made up of imports and regional production.

The gap in the region is 366 million pairs, creating a huge opportunity for SMEs. “China’s contribution to Comesa’s footwear imports bill rose from $159 million (Sh20.7 billion) in 2005 to $Sh1.2 billion (Sh156.0 billion) in 2022,” the strategy points out.

This is while intra-trade in footwear in the Comesa region retreated from eight per cent to two per cent during the same period. “The impact of China in the Comesa market is visible; however, these shoes are lowly priced,” the strategy argues. “It is, therefore, imperative that the SMEs aim to produce quality, durable, and competitively priced products to ward off competition from China.”

The challenges of the leather sector, according to the strategy, stem right from breeding, with the regional bloc citing inbreeding, which produces weak and smaller animals, as one of the issues in livestock farming in the region.

The other challenges are poor animal husbandry, seasonal pests, recurrent diseases, improper animal handling facilities, and recurrent droughts. The strategy also notes the dire situation in slaughterhouses, citing a lack of supervision and poor slaughtering techniques.

The strategy notes that except for some of the big cities where supervision of abattoirs is exercised, the overall situation of slaughter facilities in the region is inadequate in terms of animal welfare, hygiene, meat production, and flaying techniques.

“About 70 per cent of slaughter operations are taking place in rural areas. Backyard and ceremonial slaughter are very common. The hides and skins produced in rural areas are mostly affected by pre- and post-slaughter defects,” the strategy states, adding that this is the case despite all Comesa countries having appropriate laws that govern slaughterhouse practices.

“Some of the big city abattoirs in most Comesa countries do not fully practice appropriate techniques as they flay animals on the slaughter floor.” According to the strategy, while the vertical slaughter technique delivers cleaner meat and better flaying quality of hides, horizontal slaughter is what is practiced.

The vertical slaughter technique involves slicing the animal from the heart down to the throat, while horizontal slaughter is a cut done on the throat targeting the major blood vessels.

Vertical slaughter is discouraged due to its brutal nature and is not considered “halal.” The strategy adds that flayers are not incentivised to produce good-quality hides and skins.

“The local habit to consume fresh meat urges butchers to get their meat as quickly and early as possible to their outlets; hence, speed in production is the dominating driver. After flaying, hides and skins are not preserved on time, leading to putrefaction,” the strategy says.