The Global South, especially Africa has workers without jobs.
Conversely, the global north has jobs without workers. Kenya is a microcosm in this dichotomy, which underscores the policy failure to harness the youth dividend to spark an upward trajectory of economic growth.
A case in point is the leather and leather products subsector in Kenya, of which the micro and small enterprises (MSEs) account for over 90 percent of the ventures mostly offering informal jobs.
Taking cognisance of this subsector as a major source of employment, the government has prioritised it. Specifically, the government intends to grow employment from 17,000 to 100,000 jobs and incomes from Sh15 billion to Sh120 billion.
The export share of finished leather and leather products in Kenya at 10 percent unfavourably compares with export share of Ethiopia, India and Italy at 80 percent, 99 percent and 97 percent respectively. This means Kenya exports 90 percent of its leather related products either in raw hides and skins or semi-processed leather – “wet blue”.
The leather value chain, first, starts with production phase at the farm level. It comprises animal husbandry, branding and health, which affect the quality of hides and skins with extension and veterinary services.
The second level of the value chain is harvesting of hides and skins from the carcass upon slaughtering, which must be conducted with due care to guarantee quality and reduce wastage. Skilling of flayers and access to necessary flaying tools is vital.
Third, once the hides and skins are harvested, preliminary preservation takes place before delivery to the tanneries by the aggregators, who serve as link between the tanneries and individual traders.
The value chain is highly informal at this level, and it is characterised by information asymmetry, underdeveloped markets, and dominance by some players.
Policy support to strengthen hides and skins aggregation centres is essential. This will strengthen the value chain by enhancing competition and price discovery. The roll-out of the County Aggregation Industrial Parks is an opportunity.
Fast-tracking establishment of hides and skins aggregation centres in Marsabit, Narok and Garissa counties as outlined in the government medium term priority, MTP IV, is also crucial.
The tanning phase is capital intensive, which restricts capacity expansion especially for MSEs. Other key constraints are low quality hides and skins, owing to poor handling during livestock husbandry, flaying, and preservations before delivery to tanneries. Moreover, the inaccessibility to finance, costly imported tanning ingredients and cost of waste management constrain tanning capacity.
The government is fast-tracking the completion of the Leather Industrial Park at Kenanie, which will be a game-changer for MSE tanneries.
Access to Common Effluent Treatment plant and opportunities for private sector players to set up tanneries, leather and leather goods manufacturing plants, will provide avenue for an integrated approach to strengthening the leather value chain.
Additionally, the ongoing revamping of the Ewaso Ng’iro Tannery and Leather Industry in Narok County, is a key stride for this level of the value chain.
Beyond the tanning level, is the manufacture of diverse leather goods such as footwear, garments, wallet and purses, belts, handbags, travel bags, leather folders, pen holders, household and furniture accessories. Upgrading product quality is key at this level.
This can be done by improving tanning and manufacturing technology, expanding scope for vegetable tanning and strengthening linkages of MSEs with medium and large enterprises and global brands through sub-contracting arrangements.
The linkages will facilitate learning and technology transfer. It is imperative to fast-track priority programmes of equipping Constituency Industrial Development Centres, with common user facilities and establishment of leather clusters in Isiolo, Uasin Gishu, Narok, Kisumu, and Mombasa counties.
Creating market opportunities locally, regionally and internationally is imperative. Market access integration of leather and leather products MSEs is hampered by inadequate information on available market opportunities, logistics costs, competition from synthetic products and requirements on product and environmental standards.
Low awareness and compliance with standards, green production and traceability standards as well as low product certification hinder access to export markets. Product marketing for MSEs is heavily dependent on word of mouth and customer referrals, with the emergence of social media providing opportunities to connect with customers.
In conclusion, the integration of MSEs along the leather value chain is key towards upgrading the leather and leather products industry.
The measures should include interventions at the farm, flaying and trading in hides and skins, tanning, manufacture of leather and leather products, and market.
Technology upgrading and linkages of MSEs with medium and large enterprises, as well as international brands will be key to product diversification and sophistication.
