THE Common Market for Eastern and Southern Africa (Comesa) region has been challenged to transform raw hides into finished goods and boost the leather industry whose potential value is worth over US$800 million annually.
BY OUR CORRESPONDENT
Comesa secretary-general, Sindiso Ngwenya told delegates at the launch of the Zimbabwe Leather Value Chain Strategy in Bulawayo last week that countries in the Comesa region were losing millions of dollars in potential revenue by exporting raw leather materials.
“The overall market potential of Comesa leather can grow from an estimated value of raw material of US$378 million to an estimated value of US$875 million for fully finished leathers, which represents a value addition of roughly US$500 million or about 150% of the value of raw materials,” Ngwenya said.
“If all the raw hides and skins are transformed into finished goods like footwear, garments and other leather goods, the industry would balloon to US$2,5 billion from the present value of US$450 million,” Ngwenya said.
He said the Comesa region was important to Africa and the world in terms of the size of livestock herds and production of hides and skins.
“However, Comesa’s contribution to global trade in these products is very weak and was estimated at 0,3% in 2012. This is mainly attributed to the concentration in production and trade of non-value-added commodities, such as hides and skins,” Ngwenya said.
He said the global value chain stands at approximately US$80 billion, which was approximately three-fold the value of the meat and meat products value chain.
He said the Comesa region’s market size of footwear was estimated at 365 million pairs of shoes per annum, based on the estimated footwear per capita of 0,85.
“Assuming all these pairs of shoes are produced in the Comesa region, approximately 365 000 shop level jobs would be created, which would trigger demand in the finished leather, soles, glues and other accessories, consequently creating more indirect jobs,” said Ngwenya.
Ngwenya said the region had a footwear demand gap of approximately 280 million, which had however been taken by imports.
“This could explain why imports have grown astronomically from US$108,2 million to US$568,1 million in the period 2000 to 2010,” he said.
“In 2010, US$568 million worth of shoes were imported into the Comesa region from the rest of the world and this translates to approximately 28,4 million to 113,6 million pairs of shoes. With an estimated shortfall of 280 million pairs, it means that the unsatisfied market gap in the region is 180 million pairs per annum,” he said.
“This is a clear indicator that SMEs have a big room to enter the market, with minimal competition from locally established firms and also from imports.”