Experts seek improved competiveness for Nigeria in $242bn global leather market
By Onome Amuge
The global leather market size,valued at $242.85 billion in 2022, is expected to expand at a compound annual growth rate (CAGR) of 6.6 per cent from 2023 to 2030,according to a report by Grand View Research, a U.S based market research and consulting company.
The market, primarily driven by a rising consumer demand for leather apparel, footwear, and accessories, along with growing brand awareness, is highly popular among consumers for its unique qualities,durability and is reputed as one of the most widely traded commodities in the world with an extensive value chain that encompasses animal husbandry, tanneries, manufacture of finished leather products and leather products marketing.
Industry players consider Nigeria’s leather to possess one of the finest qualities globally, making it a consistent supplier to European and Asian markets.
In a 2021 report, the Nigeria Summit Group (NESG) estimated that Nigeria’s leather industry could generate over N1 billion in export earnings by 2025, if considered a resource base for the country.
Yemi Osinbajo, in his remarks during the launch and sensitisation workshop on the National Leather and Leather Products Policy Implementation Plan in Abuja, confirmed that Nigeria is one of the highest producers of leather and finished leather products in Africa with an enormous potential for greater job opportunities and much higher export proceeds.
Osinbajo further noted that the leather and leather products industry employs over 750,000 workers with about 500,000 workers in the finished leather goods sector, while about 11 leather exporting companies have been active at the upstream end of the leather value chain.
The vice president also said that the export of leather has grown steadily, reaching a peak of $117 million in 2018 and currently in the order of $272 million notwithstanding a decline in 2020 largely due to the Covid-19 pandemic.
Despite the numerous potentials attributed to the Nigerian leather industry, industry players have pointed out that the country’s growth in terms of revenue generated from the industry is crawling below average. They observed that local production and market growth have been hindered by bottlenecks that have continually undermined required levels of productivity, restricting the country’s competitiveness and revenue in the world market. Analysts have also noted that the launch of the implementation plan of the leather and leather products policy by the vice president in 2021 and the Inauguration of the inter-ministerial steering committee on the national leather and leather products policy implementation plan is yet to achieve significant progress.
In his assessment of the Nigerian leather industry, Muhammad Yakubu, the director- general, Nigerian Institute of Leather and Science Technology (NILEST) Zaria, disclosed that every week, more than 20,000 pairs of shoes and different high quality leather materials are exported to African, Asian and European countries from South-East, South-West and Northern parts of Nigeria.
Yakubu attributed the the high cost of imported processing materials for the spike in the prices of most Nigerian leather products compared to the foreign ones
“For instance, now you can get a leather of one square meter costing about $5. But, by the time you add up production costs, the cost of processing may rise to about $30.
“So, you may end up buying imported leather rather than buying leather processing materials,” he said.
The NILEST DG expressed confidence that Nigeria could attain high level production of leather in the world if science and technology were accorded special attention, especially in the area of manufacturing.
For Nigeria to attain significant recognition and revenue in the global market, Yakubu said local industries must be revived and SMEs must be assisted with capital and training just like what obtains in Asian countries.
Abbas Zein, managing director, Z Tannery, a Kano based leather processing and production company noted that one of the major factors affecting Nigerian leather manufacturing are the stereotype of local customers believing it to be inferior and of less quality whereas the same leather is also used to make shoes all over the world. He attributed this factor to the industry lacking a strong and positive brand image among consumers/investors.
Zein added that Nigeria’s tough investment climate, high cost of credit, and low finished goods standards for export has made it difficult for producers in the local industry to compete with foreign brands.
Femi Olayebi, CEO/creative director,FemiHandbags, a luxury line of leather handbags and accessories,said Nigeria has not fully tapped into the potential that the leather industry can bring into the economy and so much still needs to be done in terms of value addition to bring the leather industry into the top foreign exchange earner to the country.
Olayebi, who is also the convener of the annual Lagos Leather Fair, asserted that the industry has been affected by weak tanning and leather preparation standards, giving rise to poor quality raw material which hinders tanneries’ performance to fully utilize manufacturing capacity for leather products.
According to her, the government needs to focus on formulating a leather-industry strategy to be driven by stakeholders, improving the regulatory framework to reduce raw materials production costs and initiating the necessary value addition processes. This, she pointed, will enable leather designers to have access to processed leathers. She also suggested the need for Public-Private partnerships to support the creation of skills acquisition centres and establishment of more manufacturing hubs to boost leather production.
She also advised the federal government to intensify its backward integration efforts to ensure that all raw materials needed for the growth of the industry are 100 per cent sourced locally.
Lawan Sule-Garo, chairman, Nigerian Tanners Council (NTC), indicated transportation of finished products as one of the challenges affecting the industry. According to him, transportation of leather products from the northern hinterlands to the South, particularly Lagos ports,poses a big challenge owing to bad roads and poor transport system. He noted that in most cases,leather products are transported by road on trucks and the poor roads make the movement slow and cumbersome.
The NTC chairman further averred that Nigeria has one of the best quality leathers in the world and can compete with developed countries in the production of bags, belts, shoes and other products manufactured using leather as raw material.
“We need people to come in and invest and we need improved power supply and infrastructural facilities which are indispensable variables that can aid, not only the leather but also the entire manufacturing sector in the country,” he stated.
Given Nigeria’s endowment in the production of livestock, hides and skins in Africa, the Nigerian Economic Summit Group (NESG) emphasizes the need for the government to promote sustainable diversification of the economy through public-private coordination in the leather industry in order to boost competitiveness in terms of prices, quality and entry into domestic, regional and international markets.
To actualise this, NESG called for an urgent need to promote a holistic coordination between the government and the private sector in order to reduce cumbersome and bureaucratic procedures that constrain private investment and growth in the leather industry. This, it explained, will relieve the government of any major cost associated with financing infrastructural development in the leather industry and provide incentives to willing investors in operationalizing and deepening the leather value chain.
The group also advised the federal government to promote the development of Nigerian brand of leather, support local establishment of shoe manufacturing clusters in Aba, Kano, Kaduna, Abuja, Lagos and Nasarawa states, and help rehabilitate moribund hides and skin plants and tanneries.
NESG also pointed out the need to establish a credit guarantee scheme to address working capital requirements and inadequate financing in the industry as well as utilisation of domestic technology as well as application of innovative/modern technology transfer to improve on the leather processing techniques across the value chain.