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Kenya: Leather Industy in Need of Incentives
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The Nation (Nairobi)
4 July 2008
Posted to the web 4 July 2008
Mwaniki Wahome
Nairobi
The leather industry in Kenya holds much potential in terms of job creation and foreign exchange earnings, a value chain analyst has said.
Dr Alfred Muthee said that for this to be realised, the industry will need more incentives to catch up with its competitors in the international market.
Speaking during a stakeholders workshop in Nairobi on Thursday, Dr Muthee said; "if Kenya is to penetrate the market in the European Union, it has to compete with China and Vietnam that are currently the leading exporters to that market" he said.
He said although the increase in export duties on raw skins and hides in 2006 to 40 per cent had helped raise value addition and aided in revival of tanneries, more incentives are needed.
Last year, the country exported Sh3 billion worth of leather translating into a 54 per cent increase compared to 2006 before the increase in export duties on raw skins and hides.
Since 2003, six more tanneries have been revived bringing the total number to 12. They collapsed in the mid-1990s following liberalisation which increased competition in the international market.
Dr Muthee, however, said the recent increase in electricity costs and tax on resins could impact negatively on the industry that was beginning to pick up.
"The increase of export taxes on raw skins and hides was to be graduated but the government has to do so in a manner that does not disrupt trade," Assistant minister for Trade, Mr Ndiritu Murithi said.
He said the government was working with United Nations Industrial Development Organisation on the Kenya Integrated Project phase two that would further spur the leather industry.
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"We will provide grant funding to assist you in certification, improve management and other services," Mr Murithi said.
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