Delayed leather industry park could see investors flee from Kenya

Tuesday February 11 2020

Kenya is seeking to develop its leather industry which is facing various setbacks.

Kenya is seeking to develop its leather industry which is facing various setbacks. PHOTO | FILE | NATION MEDIA GROUP 

NJIRAINI MUCHIRA
By NJIRAINI MUCHIRA
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Kenya is yet to begin the construction of a $164 million leather industry park, as it seeks to develop a sector riddled with exports of semi-processed leather commonly known as wet-blue and smuggling of raw hides and skins. This, despite the government doubling export tax to 80 per cent in a bid to encourage value addition.

The industry is on a downturn after China drastically cut imports of semi-processed leather products from Kenya due to quality concerns. Potential investors are turning to Ethiopia and Tanzania for opportunities.

The EastAfrican has established that the Kenya Leather Development Authority is yet to complete the construction of a $9.6 million common effluent treatment plant three years after embarking on the project. The affluent plant, which is the major component of the park, is a key incentive for investors to open shop in the facility being constructed on a 500-acre piece of land, and aimed at providing a one stop shop for leather, footwear, leather goods and allied industries.

KLDA chief executive Dr Issack Noor attributed the delays to the prolonged rains experienced in the country since 2018.

“We have encountered delays in building the plant because of rains but we are on course to complete it by September this year,” he said.

KLDA has so far received 30 applications from investors from across the globe, seeking to set up shop here, with the majority being from Asia.

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“The park promises to be a plug-and-play facility but investors are wondering how committed Kenya is to develop the leather industry if the affluent plant alone takes more than four years to complete,” said secretary general of Leather Apex Society of Kenya Beatrice Mwasi.

Tanzania and Ethiopia on the other hand, are offering incentives to investors. Last year two Italian companies, Toscana Machine Calzature and ItalProgetti, ventured into Tanzania to invest $24.5 million in leather factories, one for shoes and the other for tanneries.

Ethiopia, which already has a thriving leather sector is also keen on spurring the leather industry with investments in industrial parks.

China, which Kenyan exporters relied on, is increasingly turning to South American countries for semi-processed leather where the quality is of high standards.

The decline in demand from China is threatening the survival of the 14 tanneries in Kenya, majority of which are operating at below 40 per cent of their capacity.

Data in the Economic Survey 2019 shows Kenya’s leather exports declined to 23,141 in 2018 from 26,212 tonnes in 2014, while exports of footwear plunged to 34.4 million from 40 million pairs in the same period. Globally, the leather industry is estimated to be worth $100 billion and despite Africa owning a fifth of the global livestock population, the continent accounts for a paltry four per cent of world leather production and 3.3 per cent of value addition in leather.

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