The Sunday Mail
Dumisani Nsingo
Senior Business Reporter
TANNERS Footwear Leather Manufacturers of Zimbabwe (TAFLZ) says the viability of the country’s leather sector is under threat from many challenges including shortage of foreign currency to import key raw materials and retooling.
TAFLZ chairperson Mr Arnold Britten said all players in the leather sector were struggling to access working capital to improve their operations, with the industry estimated to be operating at about 25 percent capacity.
TAFLZ is a grouping of players in the leather value chain, which was formed after the demise of the Leather and Allied Industries Federation of Zimbabwe (LAIFEZ) 10 years ago.
“Industry at the moment is going through some very difficult times. The continuous shortage of foreign currency has made things even worse for the industry. Our industry revolves around imports, all the chemicals we use and all the components for manufacturing are all imported. So, at the moment the currency situation has become even worse as the players cannot access foreign currency.
“What they can afford to buy is at a higher premium as they have to source the money from the black market in order to keep the business going, so obviously you are getting a premium from that money, that’s falling into all the products … that’s why you find the shoes are expensive in the shops than the other (imported) shoes although they are made locally that’s because of all those premiums,” said Mr Britten.
He noted that the prevailing liquidity crunch was hindering retailers from making prompt payments for goods delivered by leather products manufacturers, consequently affecting the viability of the sector.
“Retailers don’t pay you cash on delivery. They pay you in 30 to 60 days. So, we all know the economy is not stable, so you have to buffer in as well to say in 60 days roughly what will I get to retain the same value so your price gets ballooned again and that’s really killing the industry. So, the working-class people don’t have extra cash to be spending on a pair of shoes. Someone who used to buy two to three pairs of shoes a year now buys one pair every two years, so that affects your demand as well,” said Mr Britten.
According to the Ministry of Industry and Commerce, the country’s registered footwear manufacturers produced 1 012 million pairs of leather shoes in 2011 and just above 200 000 pairs in 2018, a drastic drop of about 80 percent.
At its peak in the 1990s the sector produced 8 million pairs of leather shoes.
Mr Britten said poor competitiveness of local leather products on the international market was impacting negatively on companies’ efforts to generate foreign currency.
“On the export side it’s more difficult as well because our cost in Zimbabwe are so high when you compare to other players in South Africa.
“They can make a shoe for between US$12 to US$15, which we can’t in Zimbabwe because of all those costs we incur. So, it’s very difficult for us to compete within the region and it’s sad because we now got the African Continental Free Trade Area, which is coming up but we can’t access it because we are not competitive,” he said.
The leather sector, like all the country’s industries, is also suffering from the unrelenting power cuts.
“The rest of the industry spends 90 percent of the time without power so they have to resort to using generators and if they can’t find access to diesel to run the generators, it hits them on their downtime but they still have to pay their employees and all the overheads.
“A lot of us have tried to look at solar but the costs are just beyond us,” said Mr Britten.
He said most of the machinery in the industry was now obsolete and needed to be replaced with new technologies to improve performance and production of quality goods.
The country has nine tanneries, most of them located in the southern region notably Bulawayo with five. However, only four are fully functional, namely Zambezi Tannery, Prestige Leathers, Wet Blue Industries (all in Bulawayo) and Bata Zimbabwe (Gweru).
Mr Britten said the quality of the hide obtained in the country was also of poor quality as most of the cattle population was in communal areas where animal husbandry management is not at its best.
Last year out of 25 000 hides per month, the tanneries were consuming 6 000 hides, meaning the capacity utilisation was going down.
