It was Hailemariam Desalegn, Prime Minister of the Federal Democratic Republic of Ethiopia (FDRE), who opened the sixth All African Leather Fair; a trade exhibition for the sector that was first envisioned and implemented by the late Prime Minister Meles Zenawi, six years ago.
Though the fair, which opened on Wednesday, February 20, 2013, brought 202 exhibitors, 48 of which were from foreign countries, its largest number so far, it did not manage to avoid questions or remarks about the leather sector.
"We must get our act together," warned Hailemariam during his speech, addressing the less than stellar performance of the leather sector in the export market, despite the elevated expectations set by the government.
Leather is one of the eight priority sectors outlined by the government in its Growth & Transformation Plan (GTP), from which the government aims to collect half a billion dollars in export revenue by 2014/15.
Its current performance, however, is much lower than what was initially envisioned - "a far cry" in the Prime Minister's words. Only 112 million dollars were collected in the first two years of the GTP period, starting from 2010/11. Its current performance is no less disappointing.
Leather and leather products totaling 2,172 tonnes brought in 57.4 million dollars in export revenue during the first six months of the 2012/13 fiscal year, according to data from the Ministry of Trade (MoT). This is only 16.27pc of the 352.71 million Br the government hoped to gain for the year, down by 12.8pc from the revenue recorded during the same time last year.
Still, the Prime Minister has chosen to call the plan achievable, even if ambitious, hence the urge for all involved to get their act together.
The answer is "trained manpower and technology", in addition to "taking the notch higher in the value chain". For this, the government is placing policies and strategies, aimed at not over-protecting, but empowering the private sector, the Prime Minister stated.
However, some of the policies have come too early and may take time to produce results, according to some involved in the leather sector.
The major policy turn witnessed over the past year was the 150pc tax levied on the export of crusted leather in April 2012, with the aim of encouraging the export of value added and finished products. At the time, only six of the 26 tanneries had the technology for such a production, leading many to complain that it was too early to implement such a policy.
"The policy direction in and of itself is very commendable," John Moriarty, managing director of Pittards Ethiopia Tannery, told Fortune at the fair. "However, most of the companies were not ready and did not have the machinery to produce finished products."
Pittards processes 12,000 sheep skin and 1,200 oxen hides at its Modjo Tannery, which is the largest producer and exporter of raw hide in the country.
Biruk Debebe, manager of the Ethiopian Leather Industry PLC (ELICo) agrees that companies were not ready.
"Those that do not have the machine to process leather goods yet are having a hard time with quality," he told Fortune. "Since achieving international quality takes time, tanneries, which have just started production, are forced to sell at low prices in order to stay in business."
In the past six months, Ethiopia had exported 1,553 tonnes of finished leather, from 33 tanneries, according to data from the MoT. This has garnered 45.1 million dollars, which is only 36pc of the 122.19 million dollars the government had targeted to earn this year.
Out of this, crusted leather, which brought in 70.5 million Br last year, accounting for 67.3pc of the total income from exported leather, only had a small part to play, bringing in just one million dollars.
The availability of chemicals to be used for finished leather, which are different from those of crusted, were also hard to come by, according to two tanneries that Fortune talked to.
"The slow process of goods that has occurred in the past year at shipping lines, contributed to the problem," the manager of a tannery who wanted to remain anonymous told Fortune at the fair.
Accessing foreign exchange from local banks to import chemicals has also become difficult, and caused cut backs on production, the manager added.
Importing chemicals from abroad for finished leather, since their availability is limited here, is challenging, according to Sime Bekele, from Bahir Dar Tannery. The tannery, which can process up to 4,000 sheepskins a day, to be used for shoes and jackets, also exports finished goods.
The past year proved to be so tough that Debre Brihan Tannery, in Amhara Region, which had the capacity to process 6,000 sheepskins a day, has been put on auction for 23.5 million Br, after being foreclosed.
As for finished leather products, skilled manpower that can produce quality finished goods has been the culprit, agreed production factory managers that Fortune talked to.
"We train our employees in order to improve quality," said a representative from Huajin Shoes.
The export of leather products, like; shoes, gloves and bags, has also generated low amounts of foreign revenue, at 12.2 million dollars. This is far below the 230 million dollars targeted by the government in its GTP for the 2012/13 fiscal year.
All these problems are ones that could improve over time, with the appropriate government support, the foreign companies investing in Ethiopia agree.
For the Ethiopian government and officials from the Leather Industry Development Institute (LIDI) - an institute established to give technological and capacity building support to the sector - the improvements must happen now, within the GTP period.
Prime Minister Hailemariam reiterated that the government still expects to meet the GTP target by 2015, when he later answered questions by reporters that had surrounded him at the fair.
For this, attracting new investors into the sector is imperative, Hailemariam told Fortune.
"We are creating cluster zones for the leather industry, including the 300ha industry zone that Huajin is operating," Hailemariam explained at the fair to reporters gathered outside. "We need to create more industry clusters like this to be able to meet the target," he told Fortune.
United Kigdom based Pittards and Huajin from China are also among the hopeful. Huajin is in the process of getting a licence to produce shoe moulds for the local market.
Pittards, on the other hand, is planning to increase its production of gloves from 500,000 pieces to 1.5 million pieces in the coming year, according to Tsedenya Mekbib, general manager & commercial director at Pittards. The firm is also trying to set up a sheep farm in Northern Ethiopia, to improve the birth rate of livestock and thereby produce quality leather.