East African countries have embarked on a prescription that could revive the growth of the textile industry by setting the stage for a full-time ban on the exportation of raw hides and skins, writes ALON MWESIGWA.
At the 17th summit this month, the EAC presidents directed that the bloc speeds up a process to ban the exportation of raw hides and skins outside the East African region.
The plan to ban the exportation of raw hides and skins is meant to support the local leather industries in the region, which depend on these raw materials to manufacture finished products.
According to the communiqué from the secretariat, this came up at the same meeting where the heads of state “directed that they ensure that all imported second-hand shoes and clothes comply with sanitary requirements, in the partner states.”
“The summit took note of the progress made in promoting the cotton, textile, apparel and leather industries in the region,” the communiqué noted.
The summit decided that the bloc wanted to promote vertically-integrated industries in the textile and leather sector.
The presidents directed: “The partner states must procure their textile and footwear requirements from within the region where quality and supply capacities are available competitively, with a view to phasing out importation of used textile and footwear within three years.”
The ban on the export of hides and skins is premised on the fact that it would increase supply in the region and boost production of leather materials. In Kenya, there have been press reports that local tanneries have scaled down production due to the lack of raw materials as some traders and government officials collude to export hides illegally to countries in the Far East such as China.
Hides and skins can be used to make footwear, belts, and bags. In Uganda, according to the central bank, the country earned $67.55m from the export of raw hides and skins in the 2014/15 financial year, a slight drop from the $74.82m the country fetched in 2013/14.
The target market was mainly China, which uses them to produce shoes that are again imported into the region. Ugandans buy at least 30 million pairs of shoes, yet only about two million are manufactured locally, according to Daily Monitor, which quoted the Uganda Bureau of Statistics.
Very few firms are engaged in shoemaking in Uganda. Even then, those that are involved in the business are doing it on a small scale. Also, Uganda faces a problem of foot and mouth disease, which ultimately has an impact on the hides and skins. Government plans to provide Shs 4bn towards the vaccination of cattle, according to the National Budget Framework Paper of 2016/2017.
However, the ministry of finance, which drafted the paper, says the amount is not enough. It says the ministry of Agriculture, Animal Industry and Fisheries needs an extra Shs 8bn for vaccination against foot and mouth disease.
If not, the finance ministry warns that “Uganda would suffer an extended ban on export of animals and animal products such as hides, skins, leather, milk and meat to regional and international markets.” The paper noted, that “the country would lose over $50 million annually if such a ban was put on it.”
The export tax on raw hides and skins remain far lower than 20 per cent in Uganda. Kenya has placed an 80 per cent tax on the export of raw hides and skin to discourage the practice.
In Tanzania, the government has put a 90 per cent export tax, but in all the countries, raw hides and skins are still smuggled into foreign markets, leaving local producers yearning for materials to use.
The growth of local firms means the creation of hundreds of jobs for young people. In the textile industry, almost 60 per cent of the cloth used in the region is second-hand and imported from Europe and China, according to Daily Monitor.
At the close of 2015, a Kenyan firm, Fine Spinners, entered the Ugandan market promising to turn around its fortunes. The firm’s managing director, Jas Bedi, said they had made a $40m investment in the country, and acquired two milling factories and signed up 6,000 cotton farmers.
When campaigning for the just-concluded presidential elections, President Museveni boasted of wearing shirts from the local manufacturer. Their products are, however, yet to be felt by most Ugandans.
To boost the industry, which has not been so lively, the presidents said the bloc must consider being strict on what enters the country.
Meanwhile, the presidents endorsed the EAC Vision 2050, which they said was to ensure the bloc be transformed into an upper middle-income region. The block’s Vision 2050 will be supported by plans from the members of the states. Uganda, for instance, has Vision 2040.