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Traditional
Leather Sector Inflicting High Opportunity Cost
Wondirad Seifu, October 14, 2007, Addis Fortune
Ethiopia’s traditional leather sector consumes less than
10pc of the available hides and skins (HS). The remaining 90pc is assumed
to be used in the modern leather sector that yields only 97 million dollars
in export earnings. This incident displays a loss resulting from
underdevelopment.
History tells us that many products are invented by
accident or pure chance. Conversely, leather warrants suspicious
observation in its peculiar development. Traditionally, a number of wild
eggs are wrapped in a raw hide and heavily beaten with a stick. Then animal
excrement is added to the content, and left for a period of days. Though,
the smell is unpleasant, the process achieves its objectives of
strengthening the skins. The modern process is applying sodium sulphide – a
chemical famous for its ability to destroy hair and generate gas that
smells like a rotten hen egg.
Though tanners are often labelled as a conservative
bunch, slowly, many have accepted the modern ways and many tannery
operations have popped up. Though not gaining wide usage until 1884, the
discovery of Chromium around 1800 for tanning purpose was a breakthrough
moment. The chemical shrinks the tanning production cycle from more than
three months to just a day and produced a multi-purpose leather.
Despite the industry’s modernisation, Ethiopia’s sector
is characterised by a mix of traditional and modern production. More
efficient use of HS is lost in the traditional sector making bags, straps,
heat blower, baby carrying cloak and sandals. Because of their weak
chemistry, these products depreciate quickly.
A blacksmith who makes knives named Bedlu,
15 , is using innovative means to substitute other
materials to construct the device traditionally made from leather. He
leaves in a makeshift shelter in one of the highly marginalised shanty
districts in Addis Ababa, called ‘Ketechene’ and
is one of many blacksmiths that uses rubber rather than leather heat
blower. This is just one way more of the raw materials can find their way
into the modern sector.
About seven percent of the country’s 30 million-strong
cattle population is slaughtered every year. This is much lower than 35 pc
rate for goats and sheep. This production inputs translates into two
million hide and 18 million skins annually, though over two million skins
go to the traditional sector.
Skins not reaching the value-adding technology process
do not fetch the foreign currency generated from the international prices
reaching 10 times above the local. This opportunity cost is damaging in a
poor country with vast potential. Smuggling and damaging due to lack of
quality control also contribute to lower than the desired revenues.
A visit to the traditional leather goods market of over
20 shops in Mercato shows a thriving trade that
is even aggressively expanding in other towns such as Bahr Dar and Gonder. In some cases NGO’s have lent their hand to
promote the traditional sector.
Notwithstanding the ban of HS from export, the stand-off
between HS traders and tanneries has deflated the local HS price below the
international price, relegating to much quality product to the traditional
sector. This leather fails to fetch the international price and decreases
business development.
The government should create the incentive structure so
that the comparative advantages in terms of leather input may be exploited
and exports are boosted. The foreign currency and business development will
surely aid the country’s growth prospects.
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