PREMIUM prices offered in the neighbouring countries are said to have fuelled smuggling of raw hides and skins, creating acute shortage of raw materials for the local factories.
This was expressed in Dar es Salaam by Mr Emmanuel Muyinga from the Ministry of Livestock Development and Fisheries while presenting findings of a survey conducted after the government had hiked export levies on hides and skins in July this year.
"Small Scale Entrepreneurs (SMEs) who were vending raw hides and skins to the domestic processors have stopped particularly after the government had increased export levies on the products," he said, adding that, "it is currently unknown to whom they trade with."
Some reports indicate that all high quality leather products are being smuggled to neighbouring countries, leaving inferior products for the domestic factories. Consequently, the quality of raw leather products and revenues are declining.
For example, the findings have revealed that most local factories received raw hides and skins of grade five and six instead of the highest grade of Tannery Run (TR) supplied before July this year when the government introduced the new fees.
The committee formed to conduct the survey discovered that after export levies were hiked from 40 per cent to 90 per cent, no firms traded on raw hides and skins, cutting down the amount of levies collected before.
Statistics show that smuggling of raw hides and skins to neighbouring countries, cost the government approximately 1bn/- annually. It was estimated that at least 50,000 hides cross the border to neighbouring countries, monthly, denying the government about 427m/- in export levy.
Mr Muyinga challenged traders in raw leather commodities to diversify from dealing with wet blues only and instead develop other products to ensure that the market becomes sustainable. Permanent Secretary in the Ministry of Industry and Trade Joyce Mapunjo urged stakeholders in hides and skins sub-sector to invest more to increase local production and generate more income.
She said the government introduced the new levies on leather products to discourage exportation of raw hides and skins to foster domestic leather industries. Director for Industry Development in the Ministry Eline Sikazwe said by increasing value addition into the raw leather products, incomes generated and contribution to economic growth will also increase.
"The government has been wasting massive revenues from exporting raw hides and skins, but it is now time to transform the subsector to explore its profitability," she said.