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Ethiopia: Home Grown Leather Holds Sway at District Level

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By Brook Abdu

Visitors to the regularly held exhibitions in the sub city level everywhere in Addis Abeba would have their attention grabbed by the number of booths occupied by producers of leather products. shoes, belts, wallets, and sandals, all made of leather are the major products that occupy the spaces in the booths. These exhibitions provide market access, for the walk-in customers who buy the products. TY, Fekade, Azenagash & Friends Shoe Work Union is a small enterprise that produces leather goods in one of the rooms in a condominium located in Ginfille Textile Production and Display Centre past Queens College in Arat Killo. Fekade Woldeyes, the chairman of the Union, was sewing the leather pieces for shoes on a sewing machine. Two other members were also putting glue on the edges of the shoes and cutting the measured pieces of hide to suit their shoes.

image052There were 10 members of the Union when they started in 2013 and five of them left not long after it was established, losing hope in the business as it lacked access to the market. Fekade’s Union was established with a start-up capital of 5,000 Br. with each member contributing 500 Br. “One of the major challenges in the business is the shortage of inputs that we use for the production,” Fekade said. The inputs that are used for manufacturing leather products are fully processed hides that the producers cut into measured pieces and make the material that they want. The hides, about 12 sq feet each, are sold in bundles of 10 for 3,000 Br to 4,000 Br at Merkato’s Shera Tera by middlemen who buy from processing factories. One piece of these hides can make up to seven pairs of shoes. The other kind of leather that is used for the internal lining and tongue of the shoes is sold for 40 Br to 50 Br a kilo. It is very smooth, faint in texture and thinner than the leather used for the outer parts of the shoes. One kilo of this hide makes two dozen shoes according to Fekade. A synthetic lining that is used for the insole is sold at 90 Br a meter and this quantity makes one dozen shoes.

“The price in the market fluctuates over time, which limits our production capacity,” laments Fekade. Fekade believes that it would be very nice if he could buy the raw material directly from the producers, which unfortunately does not happen for small-scale buyers like him as the producers prefer those that buy their products in bulk. “I plan to grow big and export our products to the foreign market and we can do that as long as we maintain the quality of our products,” says Fekade. “The only thing that is hindering us is the lack of market linkage and the problem in the input market.” Salegziabher Fanta is a producer of such hides in Kality who operates on a rented plot of 4,500 sqm. He started producing in 2011 by buying semi-processed wet blue skins from bigger factories and upgrading them to a usable level. Before coming into the business, Salegziabher worked for Walia Leather and Leather Products Plc as a production manager. He studied Industrial Chemistry and joined the firm in June 2009 immediately after graduating from university.

He then invested his savings, totalling 5,000 Br, on machinery rental, which marked the beginning of the business, named Salegziabher Leather Production. Now he has bought six machines, five used machines and one new imported machine, each worth 1.5 million Br. Each machine has the capacity of producing 500 ox skins and 3,500 sheep skins a day. Because of the lack of space for the processing, Salegziabher is limiting his capacity of production to 500 oxen skins a day. But he has the capacity of processing 6,000-oxen skin a week, receiving up to 2,000 skins a day from factories. One processed ox skin sells for 250 Br. Established with such a small-scale production, Salegziabher now has capital value of 1.5 million Br and employs 15 permanent as well as seven temporary employees. He is planning to expand the plant to a level that can process skins from the beginning on 1,500 sqm of land with 34 machines. He has applied to the city administration for the plot of land that he requires. “It requires us to spend up to 150,000 Br. for the installation of one machine. Therefore, we need to have one stable place to work,” Salegziabher told Fortune.

Salegziabher’s customers are both wholesalers and producers of leather products. But he prefers to sell to the wholesalers because of their financial capacity. “Although the producers give me better price compared to the wholesalers, I sell mainly to the wholesalers as they take most of my products at a time,” Salegziabher said. “We give priority though to shoe producers as they give us better prices.” According to data from the Federal Small & Micro Enterprises Development Agency, there are 564 small and micro level leather product producers in Ethiopia registered between the years 2010 and 2014 not including the regions Gambella and Afar. Another small scale producer of leather products is Hussein Edris, manager of Hussein Leather Production Enterprise, who started out repairing shoes and now wants to buy machines and enter the export market. He had been in the business of making shoes out of finished skin for 20 years before establishing his enterprise in 2004 with 2,000 Br. He started by producing sandals with one of his brothers and two relatives, then transformed to making covered shoes. “We now make every kind of shoe and our customers are those who know our workshop,” says Hussein. “The only way we contact new customers is through bazaars held at the district.”

Source: Addis Fortune

http://allafrica.com/stories/201503171631.html

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