Leather is not just any commodity; it ranks among the 25 most traded in the world, boasting of an international trade value of $129.3 billion, surpassing the combined worth of coffee, meat, sugar, rice, and other commodities, according to the Kenya Leather Development Council, 2020.
Kenya has over 11.8 million goats, sheep and cattle slaughtered annually, according to the Economic Survey 2024. The potential to transform these raw resources into luxurious leather products that rival Italy's finest is immense.
Kenya's leather industry is one of the oldest and most resilient sectors in its economy. During the 1970s and early 1980s, it was among the top five foreign exchange earners, with footwear production meeting over 80 percent of the national demand.
Recognising this potential, the Bottom-up Economic Transformation Agenda aims to create 100,000 jobs and increase wealth in the sector from Sh15 billion to Sh120 billion.
However, achieving these ambitious goals necessitates addressing significant challenges that currently hinder the sector's growth.
The 2024 Economic Survey reports that jobs in the leather value chain contracted by 19 percent to 1,303 persons in 2023, highlighting the need for increased efforts to realise the goal of creating 100,000 jobs.
The government's commitment to the leather industry is evident in various initiatives. The Local Content Policy, Buy Kenya Build Kenya Strategy and the Public Procurement and Disposal Act, for instance, have provided opportunities for the procurement of boots for the disciplined forces from local manufacturers.
Kenya Association of Manufacturers through its Leather and Footwear sector, advocates for better policies that will promote value addition.
However, the sector faces critical challenges that need urgent government intervention.
Over the past few years, eight tanneries have closed down due to issues such as a shortage of raw hides, smuggling, poor quality of hides and inappropriate policies. Despite the country slaughtering 3.35 million animals annually, most hides are smuggled out of the country, with over 90 percent exported to West Africa as food.
The smuggling of raw hides out of Kenya deprives local tanneries of essential raw materials. This shortage was increased when the government reduced the export levy on raw hides and skins from 80 percent to 50 percent in 2023.
This reduction made it more profitable to export these materials, resulting in a 470 percent increase in dry hide exports (Directorate for Veterinary Services, 2024).
Reverting the export levy to 80 percent or $0.52 per kg would ensure more raw materials remain in the country for local use.
Additionally, the government should enforce strict bans on the export of ground dried hides. Allowing the duty-free import of chemicals not locally manufactured for tannery use would also bolster production capabilities.
Italy’s leather industry thrives on a robust value chain, meticulous craftsmanship, and innovative techniques. Famous designer brands like Gucci, Prada, and Louis Vuitton source their leather from Italian tanneries.
Kenya, with its rich livestock resources, has the potential to emulate and even surpass such success, transforming into a leather fashion house that can compete on the global stage.
The East Africa Community (EAC) 30th June 2024 Gazette Notice, which approved a one-year 'Stay of Application of the EAC Common External Tariff (CET) rate of 25 percent' by increasing it to 35 percent on leather bags under Chapter 4202, is a positive step toward enhancing the competitiveness of locally made bags.
This change could significantly benefit the Kenyan leather industry by offering local manufacturers a better chance to compete against imported products. The notice also granted duty remission on certain chemicals used in tanneries, which is a welcome move as it may reduce production costs and encourage more local processing.
However, while these measures are commendable, more needs to be done to fully support the growth and sustainability of Kenya's leather sector. Many essential chemicals used in tanneries have not been included under the duty remission, which continues to increase the cost of production for local leather producers.
The rising demand for leather products in Kenya highlights this opportunity. For instance, imports of finished leather products account for approximately $25.4 million with mitumba leather shoes accounting for $7 million (Mckinsey & Company, 2024). This shows a growing market that local producers can tap into, further boosting the sector’s prospects.
Kenya's leather industry possesses immense potential to drive economic growth and position the country as a global leader in leather production and fashion. With the right policies and sufficient support, Kenya can unlock this potential, creating jobs, increasing wealth, and making a significant impact on the international stage. Through dedicated efforts, the narrative for the leather sector can shift from livestock to luxury, heralding a new era where Kenyan leather products are synonymous with global quality and style.
The writer is the chairperson of the Leather and Footwear Sector at Kenya Association of Manufacturers
