Leather company closed amidst competition

Stiff competition from the region led to the closure of Rwanda Leather Industry, casting doubt on the future of the entire sector, which is now left with only two players. “The situation needs immediate action,” John Nkubana, a Team Leader of Industry and Small and Medium Enterprises (SMEs) in the Ministry of Trade and Industry said in an interview with Business Times. He said the situation was occasioned by government’s decision to institute a ban on the exportation of unprocessed hides and skins in 2005, which Rwanda Leather Industry could not absorb. The company requested government to lift the ban, which it did, a move that attracted other regional players. “When government lifted the ban, competition from Uganda and Kenya was high, and it was too late for our local company to stay in business,” Nkubana said, adding that “To save the entire leather industry, we need to formulate an immediate turn around plan and give focused attention on the whole value chain right from slaughter houses.” Aloyse Habimana, a supplier of hides and skins, said they were stopped on a short notice, yet Rwanda Leather Industry owed them money, which was later paid in installments. The industry collapsed a month to the launch of the customs union and government had already signed the protocol, a move that opened a floodgate to competitors, mostly from other East African Community partner states. However, government is proposing to introduce excise duty on export of raw skins and hides, which is expected to be a first step in the long journey towards recovery. In a similar move to turnaround the industry, government through the Ministry of Trade and Industry intends to introduce hides and skin collection centres across the country. Industry analysts say that Rwanda’s hides and skins industry remains largely unexploited and has not kept pace with the substantial growth of the industry in the region. Studies suggest that world trade in leather - which is one of the most widely traded commodities - stands at over US$60 billion a year, and continues to grow steadily. Trade experts say a significant portion of this increasing trade can be captured by Rwanda’s hides and skins industry. Last year, the country fetched Rw3.74 million from the sector and experts say that if well harnessed, it holds the potential to pull the population out of poverty. Rwanda Leather Industry had invested in value addition with the whole upgrading programme costing more than US$1.2 million. An overseer at the firm Elias Simpali, said with a previous workforce of more than 100 employees, the company today has less than five employees, with the option of employing others on a casual basis whenever there is a tender. “We now sell finished products on the local market, as we await a decision by both government and shareholders,” he said. Efforts by Business Times to talk to shareholders were fruitless. Ends

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Leather company closed amidst competition