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BUSINESS NEWS: Made-in-Nigeria brand waiting for govt’s lifeline

BUSINESS NEWS: Made-in-Nigeria brand waiting for govt’s lifeline

Publish date: 2022-06-20 23:25:15 | Author: Odinaka Anudu | Source: punchng.com

Aba leather industry is thriving in chaos, hampered by government’s inability to provide the right environment, writes Odinaka Anudu

In 2002, five Egyptians visited Aba to understudy the designs of local shoe and trunk makers. After spending three days in the city, one of the visitors said, “If we have this kind of potential in our country, we will conquer the world with leather.”

Twenty years after this statement was reportedly made, the Aba leather industry is still thriving in chaos. Its production is 0.13 per cent of the global output and the industry has not produced sufficient foreign exchange to support the country in a period of dollar crunch.

The Aba leather industry is made up of producers of shoes, bags and trunk boxes, occupying about 14 clusters across the market, which include: Powerline, Imo Avenue, Bakassi, Aba North Shoe Plaza, Omemma Traders and Workers, ATE Bag, Nwogu Avenue, and Ochendo Industrial Market (comprising input suppliers), among others.

 Potential is huge

The most popular of the three areas of leather production is the shoes section. According to studies carried out in Aba, one million pairs of leather shoes are produced each week. Estimates put the size of the Aba shoe industry at N144bn, engaging more than 100,000 people.

However, Secretary of the Association of Leather and Allied Industrialists of Nigeria, Mr Ken Anyanwu, estimates that there are over 200,000 players and the industry is three times what has been estimated.

No matter how it is estimated, the Aba leather industry, whether shoes or bags, provides jobs, creates wealth and produces taxes to the government.

“This is a very big industry. Most times, we have issues with data but there are over 200,000 people who are involved in leather production here. This is not something any government can afford to ignore,” Anyanwu told The Punch.

Quality is improving

One of the biggest challenges facing Aba leather industry is poor quality of output. Many Nigerians often complain about the lack of durability of locally-made shoes or bags –resulting in low patronage of the products.

But major players in the industry said that it was no longer the case as some players with the war chest had imported machines that were able to raise the quality of Aba-made products.

Chief Executive Officer, Mega Colclick Shoe Manufacturing Company, Mr Isaac Collins Ogba, explained that products from Aba were gaining popularity in several African countries owing to improvements in quality and design.

“It is no longer true that our products have low quality. That era is gone and we are in a situation where customers from different parts of Africa buy our products due to their quality and designs,” he said.

 He further said that made-in-Nigerian products were getting better every day, urging the citizens to patronise them to support local manufacturers.

Another leather player in Aba, Charles Ijoma, said the issue of quality had a lot to do with prices that a customer was willing to pay.

“If you pay N10,000 for a pair of shoes, will you compare it to someone who wants a pair for N2,000?” he asked.

“So, what you pay determines the quality we give you,” he noted.

Govt failing shoemakers

The Aba leather industry is waiting for a lifeline, which has failed to come. The most recent funding support provided by the Federal Government to the Aba leather industry came in 2011 through the Bank of Industry.

President, Leather Product Manufacturers Association Mazi Okechukwu Williams, told The Punch that only 21 members of the association benefitted from BOI’s N300,000 money in 2011. He wondered what anybody would be able to achieve with that amount of money while being faced by competitors from China, India and the European Union.

On his part, Anyanwu said the N300,000 provided by the development finance bank was only scratching the surface as setting up a mini shoe factory cost between $25,000 or more. He noted that there was a major challenge with the structure of funds provided by the development finance institution.

“Once they give you the money, they start asking for it one year after. This is not how to fund the manufacturing sector, which requires patient funding mechanisms,” Anyanwu said.

But the BOI, on its part, said despite its intention to increase disbursement to Aba cluster artisans, beneficiary loan repayment challenges resulted in high default rates, It, however, noted that the challenge was being addressed.

It further said that it was working with other financial institutions and development agencies to review its product features and address previous challenges.

Nevertheless, the government’s inability to fund this burgeoning industry has led to several other issues that have held the industry back.

One of the areas where the Aba leather cluster has gone backwards is mechanisation. Up till today, the majority of tools used in shoe, bag or trunk box production in the area are crude and take a lot of human effort to be operated upon.

These tools delay production and reduce productivity of the leather players.

“Well, there is no money to buy the type of tools that can enable us to compete,” Anyanwu said.

“This is the biggest challenge facing us in the cluster and I wish the government would understand this fact,” he noted.

In Aba, producing a pair of shoes takes between one and two weeks, but doing the same in China takes two to three days for obvious reasons.  A sophisticated shoe soles machine seen on Alibaba.com costs $2,999. This can perform the shoe-gumming function within minutes, but Aba shoemakers manage to perform this with bare hands or by the use of gum and hammer.

“Such takes a lot of time and reduces the output that we produce,” said a bag maker at Bakassi cluster, Adaku Veronica.

“If you have this number of people in the leather cluster in India, I am sure they will be able to produce at least 20 million pairs of shoes each week. But that shows you that the government is failing in its responsibility,” she further said.

Apart from the Federal Government, the general feeling in Aba is that the state government is not doing enough in terms of road network.

Vice President of the Nigerian Bar Association, Aba Branch, Mr Victor Onweremmadu said in 2021, “Nobody can visit Ariaria like a normal person anymore. You cannot visit Alaoji Spare Parts Market to buy parts anymore if you have a problem. You can’t visit the Building Materials Market at Uratta anymore. If you’re driving on Faulks Road that they told us that took billions of naira to repair, you will think you’re having a nightmare. Port Harcourt Road, those who are living there aren’t living like human beings anymore.”

Similarly, players in the Aba leather industry told The Punch that the state of the markets in the cluster was something to be worried about.

Several lines in Aba are disorganised and the buildings do not have an international outlook.

Okechukwu of LEPMAS stressed the need to redevelop the markets in line with global standards. He appealed to the Abia State government to relocate and renovate the markets in Aba in order to have a convenient atmosphere for leather production.

A shoemaker, Daniel Uka, compared Aba to what he saw in Ethiopia, saying that the local industry in the city was nothing to write him about.

Scarcity of leather

One of the challenges facing the Aba leather industry is scarcity of hides and skin. Nigeria exports hides, goats and cow skins to Europe but Aba leather makers import them from China and various parts of Africa. Between January and March 2022, Nigeria tanneries exported raw hides, skins and furskins valued at N4.838 billion. In the corresponding periods of 2020 and 2021, they exported those products worth N5.534 billion and N14.295 billion respectively.

As much as the export produces revenues to tanneries, it robs Aba shoemakers of quality raw materials needed to produce finished shoes, bags and trunk boxes, players said.

In a recent interview with one of our correspondents, the Coordinator of Made-in-Aba Project, Mr Chinatu Nwagbara, said that the tanneries in Kano and Kaduna would sell animal skins at prices that would be very high for shoemakers.

“They sell in the international market to make profit, but we, shoemakers, move to China, Cameroon and other parts of the world in search of raw materials. Most times we get raw materials that are substandard,” he noted.

But a tannery worker in Kano, Idris Kuta, said the decision of the players was typically based on economic realities.

“People go to where they will make money, especially with the current foreign exchange scarcity now.”

 Global map

The largest leather producers in 2020 were China (6.170bn), Brazil (2.360bn) and Russia (1.652bn), according to the UN Comtrade – a repository of official international trade statistics. Others were India (1.560bn) and Italy (1.521bn).

Globally, major shoe exporters as of 2020 were China ($8.35bn), Italy ($5.84bn), Vietnam ($5.67bn), Germany ($3.22bn), and Indonesia ($1.81bn), according to the Observatory Economic Complexity, which compiles trade data.

Aba shoe industry’s share in the global industry of $271.82bn is 0.128 per cent, which is considered infinitesimal.

Way forward

To change the situation, Ike Ibeabuchi, a market analyst, urged the players to be more open-minded and change their business models.

“How many of them are in the formal sector? You will be surprised that many of them are not registered with the Corporate Affairs Commission. Some have no book-keeping and business plans. These things must begin to change,” he advised.

But major players have blamed governments at various levels, urging them to wake up to support the Aba leather industry to boost foreign exchange earnings and employment.

According to Okechukwu of LEPMAS, the BOI should return to Aba and provide substantial funds to the leather industry to achieve positive outcomes.

He also urged Nigerians to consume less or none of ‘ponmo’, which was a vital raw material, stressing that it was wrong for citizens to consume their own shoes.

On his part, Anyanwu noted that it was high time Nigerian banks got involved in funding the Aba leather industry.

He urged the Central Bank of Nigeria to lead the pack as it did in the Anchor Borrowers Programme.

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