The Ethiopian Leather Industry Development Institute (LIDI) last week announced that the nation had earned 123.4 million dollars in leather exports. This was 64.3pc lower than its projected target of 192 million dollars, for the 2012/13 fiscal year.

The export of processed leather brought in revenues amounting to 101 million dollars during the fiscal year, which showed a 98pc increment when compared with the previous fiscal year. Additionally, 19.2 million dollars and 3.2 million dollars were earned from exporting footwear and gloves, respectively.

Although the overall export performance showed an 11.4pc increment when compared with the previous year, the country once again failed to realise the target outlined by the government in its Growth & Transformation Plan (GTP).

The leather sector is one of the eight priority sectors highlighted by the Ethiopian government in its five year plan, from which the government aims to collect half a billion dollars in export revenue, by the end of the 2014/15 fiscal year.

However, the sector's performance is much lower than what was initially envisioned. Only 220 million dollars were collected within the first three years of the GTP period, starting from 2010/11, according to the annual report released by the LIDI.

The country has secured 19.2 million dollars in this fiscal year from shoes. The report stated that a lot remains to be done in terms of using the untapped leather potential the country has.

The Ethiopian leather industry lost an estimated 20 million dollars, as the result of illegal trading going on in the border towns.

"The issue of contraband is becoming very serious and is creating a bottleneck to the emerging sector," Wondu Deresse, director general of the Institute, told Fortune.

A team of delegates from the Institute discovered that samples of shoes made in Ethiopia were floating in the markets of neighboring countries, such as Sudan and Kenya, according to Wondu.

"The shoes, which are smuggled out of Ethiopia through contraband, are then imported back at a higher cost," claims the director, who attributes the limited success of the sector mainly to contraband issues.

"We cannot stop the act alone," he claimed, adding that his Institution's responsibility is to provide technical assistance to companies engaged in the sector.

The LIDI, in partnership with Addis Abeba University (AAU), is training students at the undergraduate level. The first batch of students graduated last fiscal year, according to the performance report. The training will commence at the post graduate level, beginning in the current academic year, Deresse told Fortune.

Among the measures taken by the government to boost the export performance of the sector, is a restriction on the export of low value added hides. The 150pc export tax levied on the hides had a notable impact on the composition of the leather industry's exports, the report stated.