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Economic conditions force leather industry to operate at 50%

Posted in Manufacturing & Value Addition

ZIMBABWE - Players in the leather industry in Zimbabwe are operating at below 50% of capacity owing to the tough economic environment and a government levy introduced in 2014 on exports of raw hides to encourage beneficiation, an association official has said.

The government in 2014 introduced a $0,75 levy tax on exports of raw hides in a move that was expected to boost value addition in the leather industry as well as curtail the exportation of raw hides by local abattoirs.

But, Abattoirs’ Association of Zimbabwe chairman Godfrey Chanetsa told NewsDay that the levy had had a negative impact on the sector with some players ceasing export of raw hides altogether and reducing capacity.

“Right now, there is nothing happening in the leather industry. Local abattoirs have huge stockpiles of raw hides, but with no buyers and it’s a huge loss for them. A number of players in the industry are operating at below 50% of capacity,” Chanetsa said.

Chanetsa said the Zimbabwean market was too small to absorb their products adding their survival lay in the foreign market.

In 2015, the association revealed that the viability of abattoirs had been compromised by the introduction of the levy as it would raise the price of slaughter services because the hide was a part of that.

Chanetsa said in 2015 the industry performed badly due to the liquidity crisis coupled with a number of challenges such as power outages and reduced consumer spending.

Recently, ZimTrade revealed that since 2012, Zimbabwe’s exports of leather products had been declining. It said the country exported $374 000 worth of leather products in 2014 compared to $591 000 and $486 000 in 2012 and 2013, respectively.

January 8, 2016;