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The possibilities of Nigeria generating $1 billion from leather industry

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24 Sep 2021 9:03 AM GMT
The possibilities of Nigeria generating $1 billion from leather industry
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With a workforce of about 750,000, Nigeria’s leather industry is expected to be a major contributor to the nation’s economy. It is projected to generate an export revenue of one billion dollars annually by 2025. According to Vice-President Yemi Osinbajo, the sector holds much potential for employment opportunities in its value chain. Osinbajo spoke recently […]

With a workforce of about 750,000, Nigeria’s leather industry is expected to be a major contributor to the nation’s economy.

It is projected to generate an export revenue of one billion dollars annually by 2025.

According to Vice-President Yemi Osinbajo, the sector holds much potential for employment opportunities in its value chain.

Osinbajo spoke recently at a sensitisation workshop on National Leather and Leather Products Policy Implementation Plan in Abuja.

Industry stakeholders, especially the National Union of Chemical, Footwear, Rubber, Leather and Non-Metallic Products Employees (NUCFRLNMPE), have, however, expressed doubts about the possibility of achieving the projected revenue target.

The fear is hinged on slow pace of growth in the industry, which tends to stifle local value chain.

Stakeholders are of the view that tangible measures must be urgently put in place to improve the sector if it must meet the target.

They are convinced that challenges hindering realisation of the desired quantity of finished leather produce – that will spur the sector into sustainability and huge revenue generation – must be tackled strongly.

The President of NUCFRLNMPE, Mr Babatunde Olatunji, is of the opinion that the Federal Government should create an enabling environment and provide funds to encourage leather producing companies to restart operations, generate revenue and pay taxes.

According to Olatunji, socio-economic problems and the COVID-19 pandemic have had harsh effects on leather producing companies, regretting that the pandemic caused job losses and factory closures.

He lists insecurity, bad road network and poor power supply as some of the hinderances to optimal leather production.

“The Coronavirus pandemic negatively affected efforts being made to keep the few leather companies afloat, as prices of cows rose and quantity of leather sources dropped,’’ Olatunji regrets.

Power supply is at its lowest ebb, with total supply in Nigeria standing at 4,000 megawatts for about 200 million people.

'Industrialisation cannot take place in the absence of power,’’ he remarks.

The unionist is worried that some roads that link sources of raw materials to markets are no longer motorable.

The NUCFRLNMPE president regrets that insecurity is becoming a huge impediment to the growth of leather companies.

“Non-indigenous workers in some states that still have functioning leather factories are forced to leave to save their lives as they no longer feel secure to work.

“No employer can establish and grow in a state that is not secure. This has also reduced the number of members of the union. We need the government to tackle these challenges.’’

NUCFRLNMPE’s General Secretary, Mr Dada Ahmed, suggests that Tarry Company in Sokoto State, Intertarn leather company in Kano State, Ajayi Shoe Industry and Bata (both in Lagos) should be urgently revived.

Ahmed advises that they should be adequately equipped to be able to generate the expected one billion dollars.

He also advises the government to reconsider some of its policies.

“There was a shoe factory in Lagos called PASSAT Industry and owned by a German but has been shut because of unfavourable policies.

“There are also companies that deal with leather shoe components. Let the government bring them together and find ways to resuscitate them,’’ he urges.

The scribe calls on the Federal Government to tackle smuggling of fairly used shoes and other leather wears that poses a threat to the growth of local companies.

He notes that some shoe factories in Nigeria have closed while some in operation only get leather materials to work during Muslim festivals.

“If the country must tackle limitations in the leather value chain which has contributed to underproduction and disintegration, the government must also look at its economic policies.”

Mr Segun David, President, Chemical and Non Metallic Products Senior Staff Association of Nigeria (CANMPSSAN) claims that the Central Bank of Nigeria (CBN) is not consistent in some of its financial policies.

According to David, this is impacting negatively on the growth of leather industry.

David appeals to the CBN to ensure to steady access to foreign exchange and regulate taxes and levies.

He also urges a more effective fight against insecurity to encourage foreign investment in the industry as well as strengthen war against smuggling to encourage local production of leather products.

For the President, National Union of Textile and Garment Workers of Nigeria, the country does not lack the desired policies but requires effective implementation of the policies.

““What is the hope that the target of 2025 will be achieved amidst the challenges of insecurity, inadequate power supply, foreign exchange issues and poor infrastructure?’’ he asks.

Mrs Adaeze Nkoma, the Manager of AOAN Group, a non-metallic company, urges the Federal Government to encourage investment in the industry by providing soft loans for interested people to start shoe and bag making.

Nkoma is convinced that a conducive atmosphere will boost production and secure investments.

“Government should create entrepreneurship programmes for start-ups, provide soft loans that will boost businesses,’’ she urges.

She suggests that, if realised, the one billion dollars should be channelled into building houses for communities and providing needed infrastructure to reduce restiveness and enable companies to operate optimally.

She also urges effective regulation of the industry to ensure standards.

Analysts are optimistic that tackling challenges to leather production will generate more income and spur Nigeria, one of Africa’s highest producers of leather and finished leather products, into global relevance in terms of leather production.

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