Tax on used leather products set to rise

Effective January next year, taxes on second-hand shoes will be raised to discourage their importation and promote locally-made leather products, the Minister for Trade and Industry has said. Francois Kanimba, who was yesterday addressing leather products stakeholders on the role of leather cluster operations in reducing the importation of used products such as shoes, bags and belts, said government is also thinking of ways to establish local factories for tannery, shoes factory and other leather products. “We have decided that from January next year, taxes will be raised on used shoes from 35 per cent to 70 per cent and then to 100 per cent in July so as to discourage the importation and encourage locally made leather products,” he said. The minister said besides discouraging used products, the government would also facilitate them by reducing taxes on some imported raw materials so as to make shoes which are affordable. Kanimba added that studies will be completed in two months to establish a big factory in partnership with leather products associations. The study, to be conducted by the ministry, COMESA and National Industrial Research and Development (NIRDA), will go down to the grassroots level to assess the level of skills in leather works to recruit workers for the factory. “We cannot have a shoe factory without a local tannery to process the skins. That is why a Chinese investor started processing skins in Bugesera at first level. He has requested facilitation from the government to start other stages to produce finished skins that can supply the proposed factory as well as other shoe making firms,” Kanimba said. “Another investor from Italy seeks to set up a tannery and you can cooperate or organise to have our own small medium tannery but there is need of tracking the value chain of skins from farmers up to tannery to be able to have quality tanned skins to be used by the factories.” Members of BDF, PSF and RBS participated. Burden of export-import recycling Joseph Twahirwa, a leather products technician, complained that unprocessed skins were exported and tanned in other countries only to be re-imported as expensive finished products. Kanimba concurred that the country was losing out. “Last year, the value of leather exports was $14 million annually, but a recent study indicates that if we process and tan the skins and make leather products like shoes locally, the money can increase to $170 million,” he said. However, leather producers say there is still lack of skills in the sector. On the issue, the minister said they had already signed an agreement with COMESA and the Workforce Development Authority (WDA) to start training for the leather sector before the factory is set up. Augustin Mugemangango, the chairperson of Rwanda Association for the Promotion of Leather and Leather Products, (RAPROLEP), said they intend to double the 200 members of the association, and that once they get more machines, they would be able to satisfy Rwandan market instead of relying on imports. “The factory will give more jobs to TVET graduates as well as the existing leather manufacturers,” Mugemangango said. Joseph Twahirwa, one of the elders also attended. The meeting recommended that those who will conduct the study for the factory to avoid past mistakes, where projects such as the government factory in Gatsibo which collapsed due to lack of sufficient machines and technicians. The minister said the factory would now be handed over to the leather processors’ association to revive it with the support of the ministry and financial institutions.

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Tax on used leather products set to rise