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RESTRICTED ISED/R.19 22 April 1994 UHITED RATIONS ORIGINAL: ENGLISH IBDUSTRIAL DEVELOPMENT ORGANIZATION -r..r -:• .-. .. • ·-·· REGIONAL AFRICA HIDES ABD SKINS, LEATHER ABD LEATHER PRODUCTS IMPROVEMENT SCHEME US/RAF/88/100 Terminal Report Backstopping Officers: Juhani Berg, Aurelia Calabro Agro-based Industries Branch * This report has not been edited • • v. 94 22876 2 TABLE OF CONTENTS ................................................. 4 INTRODUCTION SUMMARY OF ActIIEVEMENTS .................................... . 5 6 EI1Il0PIA ................... · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · 1. Hides and skins improvement ....................... . 6 2. Rehabilitation of factories . . . . . . . . . . . . . . . . . . . . . . . . . . .. 7 KENYA ................................................... . 8 • 1. Hides and skins improvement ....................... . 8 2. Rehabilitation of factories and upgrading of effluent treabJ\ent plants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..... . 8 9 MALAW I ................................................. . 1. Hides and skins improvement ....................... . 9 9 2. Liwonde Tannery . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 3. Leather goods production and training unit ............ . 10 SUDAN ................................................. . 10 1. Hides and skins improvement ...................... . 11 2. Rehabilitation of factories . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 TANZANIA .............................................. . 11 1. Hides and skins improvement ...................... . 12 2. Rehabilitation of factories . . . . . . . . . . . . . . . . . . . . . ..... . 12 ZAMBIA ................................................. . 12 1. Hides and skins improvement ...................... . 13 2. Rehabilitation of factories . . . . . . . . . . . . . . . . . . . . . . . . . .. 13 ZIMBABWE .............................................. . 13 1. Hides and skins improvement ...................... . 13 2. Rehabilitation of factories . . . . . . . . . . . . . . . . . . . . . . . . . .. 14 General .................................................. . 15 Problems encountered ....................................... . SUBSTANTIVE OVERVIEW OF US/RAF/88/100 PROJECT AC T1VTI1ES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 1. HIDFS AND SKINS IMPROVEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 Output 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Outpu~ 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Output 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 Output 4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 Output 5............................................. 21 2 TANNING SUBSECTOR REHABILITATION/IMPROVEMENr . . . . . . . . 22 Output 6............................................. 22 3. FOOTWEAR SUBSECTOR REHABILITATION . . . . . . . . . . . . . . . . . . . . . 2.l • 4. EFFLUENT TREA TMEN'f . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 Output 7 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 . ....... . TRAINING SEMINARS, WORKSHOPS AND STUDY TOURS 5. ' ' I I I I I I I I I 1111 3 . ............................................ . ']!J 6. MARKl::.IING 7. JOINr VEN11.JRES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . '1!J 8. WOMEN PARTICJP AT ION IN THE LEATHER SECTOR . . . . . . . . . . . . . '1!J • ANNEXES .. Annex 1 Revolving Fund Operations 31 Annex T Ust of Documentary Output 32 44 Annex 3 International Experts Annex 4 Newspaper Oippings 45 Annex 5. . Output 1: Improved Policy Guidelines and Industrial fr7 Strategy for the Development of the Leather Industry ·Summary FAO Statistical compendium for raw bides and skins, 121 leather and leather footwear in Africa Annex r Output 4: Guidelines for Grading of Hides and Skins 126 by Quality 138 Rehabilitation: Expert and Company Reports Annex~ Annex tr Anbessa Shoe Factory: Expert and Company Reports 158 Annex 10 Sagana Tanneries Ltd. 165 Annex 11• Seminar Report Title Pages 172 Annex 12• Pirmasens and DUsseldorf Fairs • Report Excerpts 176 Annex 13• Integration of women in the leather, footwear and 181 leather products industries in the African region 185 Annex 14 PAD 188 Annex 15 Delivery Report •Full documents available in ISED/ Agr~based Industries Branch, Leather Unit ' I 1111 I 4 INTRODUCTION The Regional Hides and Skins, Leather and Leather Prod•Jcts Scheme (US/RAF/88/100) was conceived on the basis of the recommendation of the UNIDO Third Consultation on Leather and Leather Products Industry, held in Innsbru~ Ausbia in 1984. Subsequently UNIDO convened a Regional Meeting on the Leather and Leather • Products Industry in Africa in Alexandria, Egypt in January 1987 which focussed on the constraints and shortcomings experienced in the African leather industry as a whole. The meeti11g identified several major constraints affecting the leather industrial sector development in Africa and, therefore, proposed as a follow up a regional scheme which would reduce the enormous wastC!ge of raw hides and skins, increase capacity utilt:ation of industries within the sector, improve productivity and train t-tanpower at all levels of the various subsectors of the African Leather Industry. In order to assess the prevailing situation of the leather sector in the African countries at that time and also to collect the pertinent data for the whole programme, a preparatory phase entitled " Preparatory Assistance for a Regional Hides and Skins, Leather and Leather Products Improvement Scheme" (UC/RAF/87 /069) was launched. The studies were carried out by two senior experts whose findings and recommendations formed the basis of the" programme approach" adopted during the implementation of US/RAF/88/100. This scheme was funded generously through the special purpose ::ontnbutions by the Governments of Austria, France, Finland, Germany, Italy and Switzerland. The regional programme and country project activities of the eight countries covered by the scheme, that is Ethiopia, Kenya, Malawi, Somalia, Sudan, Tanzania, Zambia and Zimbabwe, operated under the overall administration of the Leather Unit at UNIDC' Vienna and were coordinated by the Chief Technical Ad.riser, who was based at the 1 regional headquarters in Nairobi and was assisted by a regional coordinator and national experts operating from their respective countries. From the regional headquarters the CT A supervised the activities of the international experts and the subcontractor's team fielded in the various countries. • The implementation of this umbrella project was based on the integrated programme approach concept and comprised several programme components according to the various subsectors of the industry such as hides and skins improvement, tanning, ' I I II I I foo!wear and leather goods. Project activities were carried out at both regional and national levels taking into account the broad regional needs as well as the more specific national requirements for the individual Lountries. UNIOO acted as the executing agency and sulx--ontracted to the sister agencies, FAO and ITC, the implementation of programme components which fall under their specific areas of competence. • SUMMARY OF ACHIEVEMENTS The project US/RAF/88/100 had eight outputs, all of which can be considered as su<.:cessfully implemented. Particular achievements were made in hides and skins improvement with a recorded increased recovery of raw hides and skins as well as improved quality. Inputs from the project included training programmes on correct flaying and curing methods, supply of appropriate slaughter tools and transportation facilities and supply of publicitv materials in local languages. However, the quality and recovery of raw hides and skins remain pivoted to the development of the region and improvement in this area should be viewed as a long-term, ongoir:g activity, preferably promoted by the principal beneficiaries, the tanners and leather goods manufacturers, through their respective trade associations. In this respect a revolving fund for hides and skins improvement was set up in most of the countries where trade associations were either founded or strengthened with the project's assistance. The revolving fund is financed by the companies which received technical assistance from their national project or the regional project for rehabilitation in fom1 of machinery and equipment. The companies pay into the fund for the assistance received in local currency and under concessionary terms. (See Annex 1.) All companies assisted in the participating countries are up-to-date with their pay-back schedule. A good example of the motivation created by the revolving fund is in Kenya. Within a few months of conceiving the establishment of a "Training and Production Centre for the Shoe Industry" (TPCSI), the building construction of the new training centre started, financed to a large extent through the revolving fund. Training activities are expected to start mid-1994 . • Technical assistance in the areas of tanning and finishing revolved around the tannery rehabilitation project US/RAF/88/102 at the regional and country levels. Implementation C'f the technical assistance included organizing five seminars at the I I I II 11 111 11, 6 regional level. Industry rehabilitation in this secLor could probably be considered as the most successful part of the whole programme. An extensive volume of reports and working documents were produced during the programm'!'s duration and are listed in Annex 2 The experts and consultants assigned to the programme are shown in Annex 3. The attention the scheme received in the public media is illustr.:tted by a selection • of newspaper excerpts presented in Annex 4. The impact of the programme is summarized below for each of the countries where technical assistance was provided, either in expertise or capital assistance in the form of machinery and equipment. Mon: details are contained in the terminal report of the respective associated country project. EfHIOPIA 1. Hides and skins improvement The main project activities consisted of introducing a grading system for raw hides and skins in the target area, conducting training through workshops for field ex1ension officers, and the construction of model curing and demonstration shed~. Although during this period it was difficult in Ethiopia to obtain definite tr~nds in collection and quality of hides and skins due to the then prevailing war situation, the project was able to note an improvement in the target area. In the target area the producers obtained additional earnings of Birr. 600,000 per annum from hides and skins as a result of improved average quality grades. The collection of hides in Ethiopia at the beginning of the project averaged about 37 per cent of the expected hides production of 1.1 million hides. H there is improved collection, as demonstrated in the target area, by at least 20 per cent, this would be equivalent to 220,000 additional pieces of hides per annum. If exported as wet-blue leather, these hides would earn Ethiopia an additional sum of US$3.3 million per annum, assuming a modest selling price of US $ 0.60/ sq.ft. for wet-blue leather. It is estimated that in the target area it was possible to collect sheep and goatskins at a rate of about 95 per cent of the expected production. Although collP.ction of skins was generally quite reasonable there is still room for improvement and additional skins collected, as demonstrated in the target area, will generate more foreign exchange earnings. 7 The benefits arising from improved quality thro•1gh the introduction of better flaying techniques, preservation methods and provision of incentives for better grades will result in higher prices for raw hides and skins, which. in tum, will benefit the producers. 2. Rehabilitation of factories The rehabilitation programmes carried out in Ethiopia were implemented satisfactorily and resulted in quandiable benefits in most of the cases. Awash Tannery was the main object of rehabilitation and the benefits accruing from its rehabilitation are as follows: Installation of full hide fleshing and splitting machines increased the yield of wet blue leather and splits, resulting in an additional income of Birr 70,588 per year. Installation of four skin staking machines achieved an increase of about 6 per cent, bringing and additional income of Birr 184,642/ - per annum. Installation of overhead driers for crust skins resulted in increased productivity and efficiency. The tannery is, therefore, able to save Birr 161,000 per annum. The installation of retanning drums, soaking drums and a dry shaving machine brought about further savings and additional revenue. The accrued benefits are estimated to be Birr 562,205 per annum, equivalent to about US$112,440. Dire and Modjo Tanneries also benefited from the rehabilitation to a lesser extent but the investments resulted in increa~d productivity and better quality leather. Anbessa Shoe Factory was a major rehabilitation object and was provided with two automatic conveyors and shoe malcing machines. Prior to the rehabilitation this factory used to produce 1,600 pairs of shoes per day in two shifts, but after rehabilitation the production capacity increased to the extent that the factory produces 2,500 pairs of shoes in a single shift of eight hours. The rehabilitation also resulted in quality improvement, better production flow as well as reduced direct labour costs. Production increased from a total of 254,366 pairs per annum in 1989 to 431,418 pairs per annum in 1991, representing an increa~e of more than 70 per cent, while the sales turnover during the same period increased from Birr 6.822 million to Birr 12636 million. II II I I I I I I I I I I I I I I I 11 11 I I I 8 KENYA 1. Hides and skins improvement In Kenya the project concentratet1 hides and skins improvement activities in the target areas of Nakuru and I<iambu/Nairobi. Implementation of the project activities in Nakuru faced operational constraints as a national expert was not recruited for Kenya. However, improvement in quality of raw hides and skins in the Kiambu/Nairobi • target area was recorded as follows: Year 1989 Grade I Grade II Grade ill Grade IV Cattle hides 45.6% 2.8.2% 18.5% 7.7'1o Goatskins 47.6% 28.0'fo 19.6% 4.8'1o Sheepskins 44.3% 38.5% 123% 4.9'1o Yeai· 1992 Grade I Grade II Grade ill Grade IV Cattle hides 46% 30% 22'1o 2% Goatskins 48% 29% 20% 3% Sheepskins 45% 40% 14% 1% From the above data it is possible to assess the likely impact if activities of the project in hides and skins improvement are carried out throughout the country. Improvement of the hides quality alone by 5 per cent in the target area wouid,if applied nationally, reflect a significant increase of revenue. The current price range based on quality of wet-blue hides is from USS 0.59 to USS 0.72 per sq.ft. and, therefore, in a situation where the 1 million hides exported in wet blue are upgraded in quality through improved extension seivices, it would result in about US $ 1.75 million per annum additional foreign exchange earnings for the country. 2 Rehabilitation of factories and upgrading of effluent treatment plants Sagana Tannery was selected by the project as the most suitable for the construction of a model effluent treatment plant which was commissioned and used for demonstration during the regional pollution control seminar in June 1992 The design and technology used are being transferred to the other countries in the region. The tannery was also a rehabilitation object and received three liming drums, three tanning drums, a fleshing machine, a sammying machine and spare parts. As a result of this I I I I II I 11 111 I I II I I I I I I II 111 I 111 I 9 invesbnent the tannery increased its production three-fold from 200 hides per day to 600 hides per day. This has improved the cash flow of the factory and changed its position from a 100 per cent contract-tanning operation to an exporter of wet-blue hides. The tannery is able to obtain premium prices of up to 20 per cent of the prices fetched by equivalent wet-blue hides processed elsewhere because of the improved quality due to the utilization of appropriate machinery for fleshing and sammying. Alpharama and Kitale tanneries were assisted to upgrade their effluent treatment plants by providing them with some equipment as well as expertise. MALAWI 1. Hides and skins improvement At the start of project activities there was no organized hides and skins improvement extension service in Malawi and the whole sector was monopolized by the Cold Storage Company Ltd. Ta1e producer prices were low and purchases were not made on the basis of quality according to grades. Hides and skins project activities were concentrated in the target area of Central Region where grading was introduced in 1991. In 1992, after the introduction of grading in the target area, data collected show a general improvement in the quality of hides collected of up to about 5 per cent, while showing at the same time improvement of about 3 per cent for skins. The producer prices in Malawi are still low, mainly due to the high cost of transportation, but there is an upwards trend in the prices being paid to them. The liberalization of the hides and skins trade during this period enabled more people to join this trade, thereby creating new employment opportunities for Malawians. About 75 per cent of the raw hides and skins from Malawi are still exported in raw form while only 25 per cent are processed by Liwonde Tannery. 2 Liwonde Tannery This tannery is the only tannery in Malawi and was established in 1989 in order to produce finished leather for the local footwear and leather good!t manufacturers who • relied on imported finished leather from neighbouring countries. Although Liwonde Tannery experienced liquidity and management problems intermittently, its production steadily increased and the turnover rose from Malawi Kwacha 46,467 in the first six II I Ill I II 111 I I I I II II 11 I 111 II 11 I I I I