Italian firms to invest over $24m in Tanzania’s leather sector
Monday February 25 2019
Two Italian companies have entered Tanzania’s leather sector to take advantage of the large quantities of raw hides and skins produced every year in the country.
Toscana Machine Calzature (TMC) and ItalProgetti have signed an agreement with Prisons Department and the Public Service Social Security Fund to establish two leather factories in Moshi in Kilimanjaro Region.
The companies will invest $24.5 million to construct two leather factories to be managed jointly with Karanga Leather Industries Company Ltd in Karanga Prison.
The two factories, one for shoe-making and another for tanneries, will be constructed on 25 acres of land at the industrial area within Karanga Prison, and are set for completion in 16 months.
TMC sales manager Daniele Ferradini said the Italian companies will provide both finances and technology for production of quality leather products for export to Italy and other European countries. The plant is expected to produce 1.2 million pairs of shoes per year.
The Public Service Social Security Fund and the National Social Security Fund are also reviving leather factories in Morogoro Region with the Prisons Department.
President John Magufuli has also invited Egyptian investors to venture into livestock-based industries, mostly beef and leather products, banking on Egyptian technology in leather and livestock products.
Ministry of Industry and Trade reports show that Tanzania has been importing shoes and leather products while making little use of its livestock products.
In the region, Tanzania has the second-largest herd of livestock, after Ethiopia, and produces 3.9 million bovine hides, 2.5 million goatskins and 2.3 million sheepskins.
Data from the Ministry of Agriculture, Fisheries and Livestock Development shows that Tanzania has 23 million heads of cattle, 16 million goats, 7 million sheep and 2 million pigs.
Low investment in value addition in the leather industry has undermined production, with thousands of tonnes of skins and hides going to waste due to poor handling and low quality, officials say.
Export earnings from the leather sector has in recent years increased slowly at an average of 22 per cent, indicating that the industry is operating below capacity. Raw hides and skins are sold to Kenyan factories.
The leather industry in Tanzania has the total installed capacity of 74.2 million square feet, but most of Tanzania hides and skins are smuggled to Kenya where leather processing factories and tanneries are operating.
Eight small and medium size leather factories are currently operating below capacity with less than 50 per cent capacity in collections and processing of raw skins and hides.
Tanzania imports between 31,000 and 42,000 pairs of leather shoes from China and other South East Asian states, but less than three percent (3 per cent) of shoes are made from pure leather.
Under the Five Year Development Plan spanning from the year 2016 to 2020, the government of Tanzania had set a target for speeding industrial revolution and which will make each of Tanzania’s 26 regions attract manufacturing industries and agro-processing factories.
Minister for Finance and Planning Dr. Philip Mpango said the government’s 2016 to 2020 FYDP) need 107 trillion/- (US$ 53 billion) for its implementation and it aims at boosting industrialization for economic development.