The Tanzania Leather Sector Export

Development Strategy

Developed by a Strategy Design Team

Coordinated by the Board of External Trade

(August 2004)

Table of Contents

Page
Table of contents

Preface

ii

I. The Vision: Where do we want to be in five years?

II. The Current Situation: Where are we now?

1. The Sectors business environment

2. The Sectors competitiveness profile

(a) General profile
(b) Raw material profile
(c) Tanning profile
(d) Footwear and leather goods profile

3
3
3
4
4

3. Exporter profile

4. Institutional profile
(a) Private sector
(b) Public sector

5
5
5

5 Profile of the sectors current Competitiveness Development Strategy

6. Resources profile

7. Market profile
(a) General
(b) Hides
(c) Skins

7
7
7
8

8. A SWOT Analysis of the competitiveness of Tanzanias Leather Sector

9. The Sectors developmental profile

10

III. The Strategy: How do we build on the present situation to achieve the Vision?
1. The overall approach
2. Critical assumptions
3. Targets
4. Priorities and resource allocation
5. Key issues
(a) Governance
(b) Value addition and capacity development
(c) Strategy coordination
(d) Strategy management
IV. Action plan

10
10
11
11
13
14
14
14
14
14
16

Annexes:
1. The Strategy design Team
2. The current National value chain for hides
3. The current National value chain for goat skins
4. The current National value chain for sheep skins
5. Export levy on raw hides and skins
6. Laws and regulations governing the sector

28
29
30
31
32
33

Preface
This export strategy for Tanzanias leather sector has been developed under a
partnership between the Tanzanian government and business community. The
design team comprised representatives of relevant public sector departments and
agencies, leather traders and tanners, leather technologists and business
consultants (reference: Annex 1).
This partnership will be maintained and strengthened, during implementation of the
strategy, which is envisaged to begin immediately following its endorsement by all
stakeholders. Such endorsement will be sought during a Leather Sector National
Symposium, which will be held prior to the end of the year.
The International Trade Centre (ITC), under the Joint WTO/UNCTAD/ITC Integrated
Technical Assistance Programme for Africa (JITAP) and the Executive Forum,
supported the design of the strategy, both financially and technically.
The design process, which extended over a three-month period (May-July), followed
the methodology contained in the ITCs National Export Strategy Template. This
methodology highlights the value chain approach to analysis and decision-making.
The Tanzanian Leather Sectors current value chain
The National component of the global chain

Chemicals

Importers

Herdsman/
Farmer

Butcher/
Abbatoir

Collector/
Preserver

Wet Blue
Tanner/
Exporter

Hides/
Skins
Exporter

Border-in and
Development Issues

Importer

Flaying/
Tanning
Equipment

Tanner/
Finisher

Leather
Goods
Producer

Wholesaler/
Retailer

Importer

Scope of Strategic Analysis

Border Issues

Border-out Issues

The export strategy covers a five-year period. As the above graphic implies, it
addresses the cross-section of issues influencing the leather sectors capability to
compete in the international market place (current and future). As such, it is an export
development strategy, as opposed to simply an export promotion strategy.
Issues relating to the sectors border-in strengths and weaknesses (i.e. export
capacity and competence) and border conditions (i.e. trade facilitation and the cost
of doing business) have been assessed, as have border out issues (i.e. those
relating to export opportunities and possible responses).
Most importantly, the strategy identifies priorities among these issues and allocates
resources to priorities.

ii

The strategy also addresses developmental issues, specifically, how to ensure that
future improvement of the leather sectors competitiveness and export performance
will contribute to wider national economic and social development goals, and most
particularly, to employment generation, poverty reduction and environmental
protection.

iii

The Leather Sector Development Strategy

(2005-2009)

I. The Vision: Where do we want to be in five years?

The strategys five-year vision is to move Tanzanias leather sector, in its entirety,
from its current position of producer/exporter of the lowest level of leather
commodity in the global value chain (i.e. raw, air dried and salted hides and skins)
to the next commodity level (i.e. wet blue hides and skins). This extension of the
sectors export value chain will be achieved in a manner that will reinforce the long
term viability and profitability of enterprises willing to invest in value-addition, while
concurrently contributing significantly to the public sectors national objectives of
employment generation, environmental protection and the development of micro and
small scale industry.
The Leather Sectors 2009 Value Chain
The Extended National Component

Importers

Herdsman/
Farmer

Butcher/
Abbatoir

Collector/
Preserver

Chemicals

Wet Blue
Tanner/
Exporter
Crust and
Finished
Leather
Tanner

Importer

Leather
Goods
Producer

Flaying/
Tanning
Equipment

Tanner/
Finisher

Leather
Goods
Producer

Wholesaler/
Retailer

Crust
Importer

In quantitative terms, the vision calls for the value of annual exports to increase to
US$ 70.1 million by 2009 from the current value of US$ 14 million (and for direct
employment within the leather sector to increase employment within the sector by a
minimum of 5000.
The strategy is not resource-intensive (financial and otherwise). Existing financial,
institutional and human resources, if released and allocated to the strategys Action
Plan, should be sufficient to ensure that all competitive and developmental priorities
are adequately addressed. The factors that will likely determine the success of the
strategy are, therefore:

The level to which the public sector is prepared to enforce the laws and
regulations that currently govern the leather sector;

The readiness of the government to release funds earmarked for development of

the small to medium-scale enterprise (SME) sector in general, and the leather
sector in particular; and

The readiness of the private sector to change the line of business they are
currently in (the export of a basic commodity) and invest in value-addition.

Success of the strategy is entirely within Tanzanias own capability. In other words,
implementation of the strategy is not aid-reliant.
Existing technical support Programmes from international technical assistance
organizations (such as the Common Fund for Commodities (CFC), the Food and
Agriculture Organization (FAO), the United National Industrial Development
Organization (UNIDO) and ITC) will, nevertheless, make important contributions and
should facilitate and expedite full realization of the vision.

II. The current situation: An assessment of where are we now?

1. The sectors business environment:
The business environment within the leather sector is not supportive of rapid
development (either in terms of exports or value-addition).
The state of transportation and communication infrastructure represents a significant
problem to raw material collection (hides and skins) and this will not be resolved in
the foreseeable future (or within the five year strategic timeframe). Utility rates
(especially electricity) are high and rising.
Awareness among herdsmen and farmers of the value of the raw material is limited
and flaying practices (and equipment) are inconsistent with high levels of quality and
recovery. Technology at butcher slabs and abattoirs is rudimentary, a consequence
of which most of raw hides / skins collected is of low grade.
Virtually all equipment and chemicals needed for tanning must, moreover, be
imported.
Trade and investment financing is expensive. There are no special incentives
available to enterprises in the sector that are contemplating export development
and/or value-addition investment (though this may change should the sector be
classified as a lead sector). There is no foreign direct investment in the sector.
The availability of skilled technicians (required for progressive value-addition) will
become an increasing problem given that the majority of those who formerly worked
for government tanneries have retired and no new technicians are being trained.
While legislation and regulations governing the sector are consistent with its
expansion and development, there is a serious lack of enforcement.
In summary, the business environment confronting the leather sector (and its future
development) is difficult, but no less difficult that any other sector in Tanzania that
involves rural-based raw materials and urban-based processing.

2. The sectors competitive profile:

(a) General Profile:
Prior to privatisation (which began ten years ago), Tanzanias leather sector
comprised tanning, footwear, and leather goods sub-sectors, all geared to the local
market. The sector was, however, highly protected and inefficient by international
standards.
Since privatisation, and the concurrent opening of the local market to international
competition, capacities within the sector have deteriorated appreciably. The leather
footwear and leather goods sub-sectors are now in a collapsed state
There is, nevertheless, scope for the sector to achieve, within a short period of time,
a modest, yet significant, improvement in both value-addition and export
performance. Factors favouring such improvement are: (i) the scale of Tanzanias
annual off-take of hides and skins; (ii) the dynamics of the international market; (iii)
existing government policies and legislation regarding regulation and development of
the sector; (iv) existing tanning capacity; and (v) recent (and planned) entrepreneurial
initiatives.
The fact is, however, that under present circumstances, it is easier and more
profitable to export raw hides and skins, than it is to produce and export higher-value
leather. As a consequence, the sector remains at to the lowest value-added link in
the global value chain. The public and private sector will need to mount a concerted,
and coordinated, effort if this situation is to change.
(b) Raw Material Profile:
Tanzania has the third largest population of cattle in Africa. The size of the hide is
small, like other African producers 1, and therefore of less interest to international
buyers. As a consequence of existing animal husbandry (particularly branding) and
poor flaying practices, the overall quality of hides is low by international standards
and in comparison to some neighbouring competitors.
Indeed, from the perspective of the herdsman/farmer and rural butcher, there is
currently no value chain for leather. Leather remains part of the value chain for meat,
where the value obtained from selling an animal with a good quality hide is exactly
the same as one with a poor hide specifically zero (reference: Annexes 2, 3 and 4).
Estimated annual recoverable off-take of hides and skins (principally goat) stands
respectively at 2.6 million and 2.5 million units. At present, some 900,000 hides (or
35% of total off-take) are exported informally to Kenya and Uganda and are not,
therefore, available for processing into higher value-added forms of leather. These
informal exports also circumvent the 20% levy 2 that has, since 2003, been imposed
on exports of raw hides and skins, thereby reducing the resources available for
upgrading of the sector (reference: Resources section below).
1

Botswana and Zimbabwe are exceptions because they have imported breeds.
An integrated programme for revitalizing Tanzanias leather sector was developed by a local task force in 2002 and
elaborated in the 2003 FAO/UNIDO/CFC/ITC document Blue Print for the African Leather Industry. The integrated
programme identified the full range of systemic constraints impeding the sectors long-term development and
recommended imposition of a 20% levy on the export of raw hides and skins. Subsequent technical assistance to the
sector from FAO, CFC and UNIDO is largely based on this integrated programme.
2

Of official raw hides and skins exports (2003 estimated value: US$ 10.4 million), a
significant proportion is shipped as low priced mixed parcels of frame dried and
banned ground dried hides and skins. Official exports have also been characterized
by under-valuation, with obvious implications for revenue collection via the export
levy (the proceeds of which are intended to be reinvested into the development of the
livestock and leather sectors).
(c) Tanning Profile:
Tanning capacity is limited to the production of wet blue hides and skins (the initial
stage of tanning). Installed capacity is loosely estimated at 1.1 million hides and 1.4
million skins per year. This capacity remains largely under-utilized despite the
theoretical availability of 2.6 million hides and 2.5.million skins. Currently only
170,000 hides and 720,000 skins are being tanned into wet-blue per year, with a
realized export value of US$ 3.5 million.
The majority of existing tanning capacity was not re-activated following privatisation
despite re-commissioning being a condition of sale. While significant investment in
modernization will be required in several cases, some of this dormant capacity could
immediately be activated.
Tanzanias current and projected tanning capacity (Wet Blue Hides)
S/N

Company

1.
2.
3.
4.
5.
6.
7.
8.
9.
10.

Africa Tanneries Ltd. (Mwanza)

Moshi Leather Industries (Tanzania Tanneries)
Tanzania Leather Industries (Morogoro)
Lake Trading Tannery (Kibaha)
Afro Leather Ltd.
Himo Leather Ltd.
Tanzania Institute of Leather Technology (TILT)
Small Citizen Tannery
Others (New investors 2)
Total Tanning Capacity

Current Capacity
(000 hides equiv.)
360 (not operating)

200 (operating)
360 (not operating)

60 (operating)
80 (operating)
30 (operating)
20 (operating)
15 (operating)

Plans

May modernize
Will expand
May modernize
Will expand
Will expand
Will expand
Will maintain
Will maintain
Not available

1,125,000 hides

It is, however, anticipated, that several tannery owners, who are also exporters of
raw hides and skins, will only recommence tanning if existing government regulations
and export levy on raw hides and skins are strictly enforced.
(d) Footwear and Leather Goods Profile:
There is no real prospect of Tanzanias footwear and leather goods sub-sectors ever
becoming internationally competitive. Indeed, the availability of low cost imports,
particularly of shoes, and the absence of fully finished tanning capacity severely
limits prospects for the re-emergence of even a domestically oriented footwear and
leather goods industry. Both sub-sectors will likely remain artisan-based, with the
footwear sub-sector oriented exclusively to the domestic market and the leather
goods sub-sector focusing on the domestic and, to some extent, tourism markets.

3. Exporter Profile:
The sectors exporting companies (exporters of hides and skins and tanners who are
engaged in the export of both raw and wet blue hides and skins) are experienced,
informed, generally well connected (both locally and in principal markets) and have
access to finance.
Given the very limited value-addition within the sector, business operations currently
require only a minimum of technological expertise.
While a number of major players are contemplating investing in tanning in
anticipation of improved governance within the sector and anticipated bans on
imports of raw hide in key markets, others (including those with large, dormant
tanning capacity) remain content to limit operations to the export of raw hides and
skins and indeed may resist any effort to curtail exports of raw hides. How ever with
the 20% imposed on raw hides and skins exports, and the ever increasing pressure by the
Leather Association of Tanzania for the Government to enhance the levy to more than 30%
and a total ban of raw hides export at a later stage, the eminent twist will be to strengthen
tanning industry.

4. Institutional Profile:
Best practice suggests that the private sector should drive sector-level export
strategy, while the public sector should actively promote and support the strategy.
(a) Private Sector:
In a recent effort to invigorate the sector, particularly with respect to export activity,
the private sector took the initiative to resurrect the Leather Association of Tanzania
(LAT).
LAT, which is currently operating at a moderate level of efficiency, but which has the
potential to improve significantly on present performance, has some 50 subscription
paying members and an annual income of Tshs 50 million ($ 50 thousand). LAT also
receives ongoing support from UNIDO and the Common Fund for Commodities.
Notwithstanding its growing pains, LAT has taken centre stage in advocacy and in
driving the value-addition movement. Under the supervision of a full-time Executive
Secretary, it operates leather goods technical training centres in Dar es Salaam and
Morogoro. It is anticipated that the Government will cede the facilities of the Tanzania
Institute of Leather Technology (TILT) to LAT in the near future. LATs Chairman sits
on the Livestock Development Fund Committee 3. (Refer annex 5 Fund Management)
Since May, when LAT began monitoring exports of raw hides and skins through Dar
es Salaam, the revenue from the export levy has increased from the equivalent of
Tshs 50 million to Tshs 96 million per month.
(b) Public Sector:
The key public sector organizations, including the Ministries of Water and Livestock
Development, Industry and Trade, Planning and Privatisation and Local Government,
the Board of External Trade and the Tanzania Investment Centre, operate at

Other members include the Permanents Secretaries of the Ministries of Finance, Local Government, Livestock and
Water Development, Industry and Trade.

moderate to high levels of efficiency. All, however, work under severe financial
constraints and rely on donor support to implement support programmes.
Heavy reliance on new public sector initiatives should not, therefore, be a feature of
the sectors export development strategy.

5. Profile of the sectors current competitiveness development strategy

A comprehensive export development strategy for the sector does not currently exist.
A number of constructive initiatives to upgrade the sectors supply situation are,
however, underway (several of which have been launched in response to the 2002
recommendations to revitalize the sector summarized in the 2003 CFC/FAO/UNIDO/
ITC report A Blueprint for the African Leather Industry)
These initiatives include the creation of the Meat Board to improve slaughtering and
abattoir facilities; the establishment of common production and training centres for
small scale leather footwear and leather goods producers; and the implementation, in
partnership with the Common Fund for Commodities (CFC), of a programme to
increase the quality of hides and leather through improved extension services,
inspection and grading.
The government is also giving consideration to classifying the leather sector as a
lead sector (such as in the case of the textiles sector) which would qualify tanneries
and producers of footwear and leather goods for financial incentives. Early action in
this regard will represent a key element of any future strategy.
Possibly the single most important strategic initiative taken to date has been the
imposition of the 20% levy on the export of rawhides and skins. The levy represents
a disincentive to raw hides and skin exporters, and a boost to the local tanning subsector.
All receipts from the 20% are deposited in the Livestock Development Fund to be
used exclusively to improve training, extension and inspection services in the leather
sector, and to promote value addition.

6. Resource Profile:
As indicated in 4 above, the budgets of public sector Ministries and institutions
directly concerned with development of the leather sector are inadequate to launch
and sustain any major new activities. There is little scope to increase the number of
extension workers, inspectors or trainers.
The three key resources available to enhance the export performance of the leather
sector are, therefore:

The Livestock Development Fund;

The level of entrepreneurship within the private sector and the private financing
that they can access;
The competencies of the existing cadre of inspectors and extension workers.

The level of entrepreneurship within the sector is comparatively high and the ability of
local tanners to access financing for commercial expansion is proven (despite the
high cost).

While the competence of inspectors and extension workers is adequate, the export
development strategy must address constraints associated with management
(through the Ministry of Local Government), logistics and motivation of this vital
resource 4.
The Livestock Development Fund is, consequently, critical to the success of any
export development strategy for the leather sector.
An initial programme of activities has been drawn up for financing under the Fund,
which currently stands at US$ 800,000. The Ministry of Finance has yet, however, to
release these resources.
Technical and financial support from the bilateral and multilateral donor community
represents a fourth important resource. Currently support, focusing on border-in
issues is being provided by UNIDO (to LAT) and CFC to the Ministry of Water and
Livestock Development for raw material improvement.

7. Market Profile
(a) General:

Trade in hides and skins, raw or wet-blue, is a commodity business. Contracts are
made on the basis of availability, price and quality in that order. Price and quality of
wet blue hides and skins are, therefore, the critical success factors upon which the
strategy must focus. In fact, as Tanzania is able to compete on the basis of lowest
price for both raw and wet-blue leather, given the sectors cost structure, the key to
success lies in ensuring there are greater quantities of higher quality processed hides
and skins available for export.
Tanzanians exports of hides and skins, in all forms, represent only a fraction of one
percent of the international market. In other words, Tanzania is a minor player in the
international market place and any attempt at re-positioning within global value chain
for leather will not cause market disruption. Nor will it require a major promotional
effort (outside the country). 5
Indeed, the market may dictate that Tanzania re-position itself as a prohibition of
imports of raw hides and skins from Africa and South and Central America is
currently under active review by a number of countries, including China, which is
currently Tanzanias largest market by far (re-export from Hong Kong) 6.
(b) Hides:
Italy, India and Turkey would appear to represent legitimate, alternate markets 7 for
wet salted hides. These countries, like Hong Kong, apply a zero tariff rate for hides in
preserved and processed form. The expansion of buyer contacts in these markets
should be considered as an interim step to full wet blue processing.
4

Inspectors and extension workers previously were supported and supervised by the Ministry of Water and Livestock
Development. Recent changes have resulted in this front line in the export development strategy reporting to the
Ministry of Local Government, which is not equipped to provide an equivalent level of support and supervision.
5
A concerted effort to extend the Tanzanian component of the global value chain will, however, need to include a
proactive promotional effort within the country.
6
The review and possible prohibition on raw hides and skins is due to rising concerned over the spreading of disease
such as SARS and BSE through the importation of un-processed animal products and by-products.
7
Tanzanian exporters have recently begun supplying raw hides to India whose market is large (40,000 tons a year)
with a growth rate over the 1998-2002 period of 46% in value and 17% in quantity. Turkey bought 20,000 tonnes in
2002 and grew on average at an annual rate of 18% in value over the 1998-2002 period.

Although the world market for wet blue hides is currently static (the largest markets
Italy, Hong Kong 8 and China - are not growing), their sheer size (US$ 873 million,
US$ 170 and US$ 89 million respectively) offers ample opportunity for market
penetration and expansion for a supplier of Tanzanias size. 9
(c) Skins:
International demand for goatskins, in raw and wet blue form, is increasing. As with
hides, the fact that Tanzania is a low volume producer means that there will always
be room for expansion of exports, particularly in wet-blue form.
Tanzania currently supplies raw goatskins to India and Kenya (officially) and wet blue
goatskins to Italy, Spain and Mexico.
Italys imports of wet blue goatskins stood at $96 million in 2002, having experienced
10% annual growth over the prior five years. Spain imported $21 million in 2002,
having grown at a rate of 28% over the five-year period. Mexico represents an
interesting new market, having grown from zero in 1998 to $88 million in 2002.
Although supply to these markets is concentrated around dominant suppliers (Italy
Nigeria; Mexico Bangladesh and Pakistan), the dynamic nature of these markets
should facilitate gains for Tanzania. Brazil represents another important market ($99
million in 2002, with a five year growth rate of 125%).
There is also ample room for expansion of Tanzanias exports of raw goatskins to
India, a large market that is growing at an average annual rate of 52%. Other
markets for raw goatskin worth exploring include Turkey and Portugal.
Although Tanzania exports only a small amount of sheepskins, the international
market is buoyant. Obvious markets for Tanzanian wet blue exports include India and
Pakistan, while Portugal, Greece and Turkey could provide additional commercial
opportunity. Pakistan and Turkey also offer promising perspectives for Tanzanian
exports of raw sheepskins.
A SWOT Analysis of the Competitiveness of Tanzanias Leather Sector
Strengths

Large and stable

cattle and goat
population (annual
off-take of 2.6
million hides and
3.1 skins)

Comprehensive
legislation and
regulations on
animal husbandry,
slaughtering,
grading and
preserving of hides

Weaknesses

Opportunity

Poor quality
hides/skins due to
generally
inadequate
livestock
husbandry,
branding practices
and disease
control.
No commercial
incentives to
improve quality of
hides/skins

Renewed
government
commitment to
support
development of
leather sector
through
enforcement of
laws and
upgrading of rural
extension services.
Leather sector
under Government

Threats

Absence of
solidarity among
the major private
sector players in
the sector

Lack of financial
reward to
herdsmen/farmers
likely to undermine
move to upgrade
quality of
hides/skins.

It is estimated that half of Hong Kongs imports are destined for China, with the remainder sent to South and South
East Asia.
In the case of Turkey, where Tanzanian exporters have yet to establish business contacts, Sudan has, at present, 6
per cent of the wet blue market (indicating that Tanzania could be a competitive supplier). Other smaller markets
where demand for wet blue is increasing at a significant rate are South Africa (currently also buying from Zambia and
Uganda), Brazil, Malaysia and Syria.
9

Entrepreneurial
business sector
driving the
movement towards
value-addition

Extensive underutilized capacity to

add value (i.e.
tanning capacity)

A sector
association with
the dynamism,
commitment and
level of technical
support (from
UNIDO and CFC)
to lead the valueaddition and export
development effort.
A 20% levy on raw
hides and skins
export (for the
exclusive use of
the Livestock
Development Fund
- LDF) which
provides a direct
incentive to
increase export
value-addition and
finance
development of the
sector

Small size of hides

due to type of
breed.

Poor flaying
practices.

Improper handling
of skins and hides
prior to processing

Prevalent practice
of ground drying of
skins in rural areas

Grossly inadequate
enforcement of
legislation and
regulations.

Remoteness and
poor transportation
infrastructure.

No effluent
discharge
standards
specifically for
sector
(environmental) .
Urgent need to rehabilitate/moderniz
e tanneries.
Inadequate,
cumbersome and
expensive credit
facilities (limited
long term facilities).

Extensive
smuggling into
Kenya and
Uganda.

Inadequate
monitoring of
exports (with
consequent undervaluation and
implications for the
LDF).

Over dependence
on a single market
i.e. Hong Kong.

Poor market
information

Lack of clarity
regarding
leadership and
coordination within
the sector

consideration to
become lead
industry, thereby
qualifying for
special enterprisespecific incentives.

Poor policing of
existing laws and
regulations
undermines drive
towards valueaddition.

Government
priority to ban
export of live
animals.

Major tanneries
going slow to
revive their
facilities.

Production of
exotic leather (fish,
reptiles, pigs and
wild animals)
provides new value
addition
possibilities.

Environmental
concerns
stimulating
tannery-related
FDI.

Threat of livestock
associated
diseases
prompting
countries to be
wary of importing
unprocessed
animal products
(e.g. raw hides).

Major market
(China) may ban
imports of dry
hides and skins

Availability of
international
cooperation to
assist development
of raw material (i.e.
CFC)

Joint public-private
sector initiative to
establish a hides
and skins
exchange in urban
centres

Open access to
foreign markets,
reinforced by
initiatives such as
AGOA and
Everything but
Arms

8. The sectors developmental profile

In addition to the sector currently making a minimal contribution to value addition and
under-performing in terms of its export earning capability, it has little impact in terms
of employment generation and rural development two high priority national
objectives.
The sector employs only about 300 people full time (principally in the tanneries).
Despite its rural base, its contribution to rural development and to the welfare and
livelihood of those who raise the source of its raw material (herdsmen and farmers) is
essentially nil. Its forward linkages to the leather goods artisanal sub-sector, and
other industry sectors, are weak to non-existent.
Environment protection standards within the tanning sub-sector are also lower than
international standards.

III. The Strategy: How do we build on the present situation to achieve

the Vision?
1. The overall approach
Four distinct, but not mutually exclusive, options have been considered. Specifically:

To increase efficiencies (productivity and output) within the national component of

the sectors value chain, thereby generating more value (i.e. foreign exchange).

To extend the national component of the value chain to include new value-added
links and thereby capture greater value and generate employment
opportunities.

To create a new value chain as an offshoot of the existing leather value chain,
thereby creating additional value, employment opportunities and possibly export
receipts.

To adjust the distribution of value within the national component of the value
chain in order to increase the sectors contribution to national development
objectives, such as employment generation, poverty reduction and rural
development.

Based on this review, an approach that encompasses all four options has been
determined to be the most relevant from the standpoint of the sectors capabilities
and commercial opportunities and realistic from the perspective of resources
available to implement an export development strategy for the sector.
Specifically, the strategy will seek to:

Increase production (quantities and qualities) and domestic distribution

efficiencies within the raw material links of the national component of the value
chain (herdsmen/farmers, butchers/abattoirs and collection).

Extend the national component of the value chain fully into the higher-value wetblue link of the global value chain (extending the national component into
export-oriented footwear and leather goods does not represent a viable option).
This will be done with the necessary measure for environmental protection.

10

Create a new domestically oriented, small-scale value chain for fully finished
leather, footwear and leather goods 10.

Raise the sectors contribution to national development goals through the above
action (employment generation and entrepreneurship development) and through
direct remuneration of herdsmen/farmers for sourcing higher quality hides
(poverty-reduction and rural development).

2. Critical assumptions
The strategy is based on the following fundamental assumptions:

The public sector will fully enforce the laws and procedures regulating the leather
sector (which it is currently not doing).

Financial resources within the Livestock Development Fund will be released in

the immediate future and devoted to priorities specified in the strategy.

The existing momentum within the private sector to invest in the expansion of
tanning capacity will accelerate over, at least, the first three years of the strategy
and that unused capacity will be commissioned.

The effective working partnership between the public and private sectors that
characterized the strategy design phase will be continued throughout the
implementation of the strategy.

3. Targets
In quantitative terms and as summarized in the matrices below, if successfully
implemented, the strategy will result by 2009 in leather sector export value retention
more than doubling to a minimum sustainable level US$ 70.1 million per year and
providing new, sustainable employment (full or part-time) for 5,000 persons.
Within first 12 months.

Exports will have risen to US$ 19 million (an increase of over 30%)

Production and illegal export of ground dried hides will have ended (from the
current estimated level of 300,000 units);

Production/export of frame dried hides will have been reduced to 550,000 units
(from the current level of 1,000,000 units);

Export of higher value wet salted hides will have increased to 500,000 units (from
the current value of 230,000 units) and the average value of hides will have risen
as a result of improved flaying;

Production and export of wet blue hides will have increased to 350,000 units
(from the current level of 170,000 units)

10

This eventual footwear/leather goods sub-sector will for a variety of reasons remain primarily, if not entirely,
focused on the domestic market and will not, in the foreseeable future, contribute to the countrys export development
ambitions. The sub-sector will, nevertheless, provide the principal developmental contribution through significant
employment generation. Essentially, it will be the movement towards export-oriented tanning that will provide the
impetus to growth in employment in these domestically oriented leather products sub-sectors.

11

Exports of dried and wet salted sheep and goatskins will have increased to 1.1.
million units (i.e. by almost 100%); and

Exports of wet blue skins will have reached 1.4 million (again an increase of
nearly 100%, thereby exploiting 80% of the national off take of skins).

In the subsequent four years, the sector will increasingly move to the production of
wet blue hides and skins. The export of raw hides will cease. Tanning operations will
be equipped to meet current environmental standards. By the end of the third year,
the full annual off-take of 2.6 million hides will be available for formal export.
Twenty percent of wet blue, representing the lowest 20% of the quality grades, will be
fully tanned to supply the new leather footwear and leather goods value chain for
local production and consumption. A small quantity of better crust leather (the next
step after wet-blue) will be available for export.
Leather Sector Strategy (2005-2009) 11
Best case scenario
Product /
Commodity
Hides (i)
Frame dried
Wet salted
Wet Blue
Total Export (i)
Skins (ii)
Dried & w/s
Wet blue
Total Exports (ii)
Exports (i) + (ii)
New Employment

$Value
(Piece)

Current

Year 1

Quantity
(000)

Export
($m)

Quantity
(000)

Value
($m).

Extra
Value

Export Total
($m)

7.5
11
12.2

1,000
230
170
1,400

7.5
2.5
2.1
12.1

550
500
350
1,400

4.1
5.5
4.3
13.9

0.7
0.7
1.4

4.1
6.2
5.0
15.3

1.15
1.60

580
720
1,300

0.7
1.1
1.8
13.9

1,100
1,400
2,500

1.1
2.3
3.4

0.2
0.4
0.6

1.3
2.7
4.0
19.3

100

11

Notes
A. The value per piece has been kept constant over the five-year period.
B. Current illegal exports of 300,000 ground-dried hides are not included in current year calculation.
C. Wet blue (w/b) is all from wet salted (w/s), except for the 950,000 frame dried rural hides (figure to be less if
expansion of wet salting is practicable). Value of the w/b hide from frame dried is $11.50.
D. Extra value of 15% on both wet salted and wet blue resulting from better flay and grading.
F. Finished hide, lower 20% selection, taken as 25 square foot each (sq. ft.) @ $0.86 per sq. ft.
G. Finished goat, lower 20% selection, taken as 5 sq. ft. each @ $0.60 per sq .ft.
H. Leather products are shown as footwear and leather goods, with 3.5 sq. ft. leather in each product. This is
equivalent to $3.0 for hides and $2.1 for skins. The average added value is estimated at 250% i.e. 1 pair of shoes at
$7.5 and one average piece of leather goods at $ 5.25 each. These are for the local market (within the 2005-2009
timeframe, and are considered as artisan and not from mechanised production).
I. Total sector value in year 5, represents the sum of the value of exported production, including extra value achieved
through product upgrading (reference: Note 3) and new production of leather products for domestic consumption.
The value of finished leather is included in the value of footwear (hides) or leather goods (skins).

12

Product/ /
Commodity
Hides (i)
Frame dried
Wet salted
Wet Blue
w/b ex framed
Total exports (i)
Finished leather
Footwear
Total sector (i)
Skins (ii)
Wet blue/crust
Total export (ii)
Finished leather
Leather goods
Total sector (ii)
Export (i) + (ii)
Sector (i) + (ii)
Employment

Value $
(piece)
7.5
11
12.2
11.5

Quantity
(000)

Year 3
Value Extra
($m)
Value

Export
Total

Quantity
(000)
nil
nil
1,150
950
2,100
500
3,600

950
350
1,300

7.1
3.9
15.9

0.5
2.6

7.1
4.4
18.5

2,600

26.9

3.1

30

2,500
2,500

4.1

0.6

4.7
4.7

21.5
7.5

1.65
3.0
5.25

2000
2,000
500
700

Year 5
Value
Extra
($m)
Value

14.0
10.9
24.9
10.7
27.0
62.6

2.3

3.3
3.3
1.5
3.7
7.5

0.5
0.5

34.7

2.3

Export
Total

16.3
10.9
27.2
-

3.8
3.8
-

31
70.1

1,200

5,000

4. Priorities and resource allocations

The strategy assigns highest priority to:

Sector governance (border-in and border issues)

Value-addition and capacity development within the sector as a whole (a borderin issue);

Coordination between linkages in the national component of the global value

chain for leather and the new national value chain for footwear and leather goods
(a border-in issue); and

The strategy allocates locally available resources financial (i.e. the Livestock
Development Fund), institutional, programme-specific and personnel (and donor
support) to these issues.
It is noted in this regard that the revenue coming into the Livestock Development
Fund will progressively diminish as less raw hides and skins are exported (and the
20% levy is imposed on fewer shipments) and that no new revenue will be generated
during the strategys fourth and fifth years. New sources of funding will, therefore,
need to be identified to achieve strategic objectives and to sustain the momentum
towards value-addition in the post 2008 period.
Market development and promotion (border-out issues) are not seen as
representing a major constraint to the export development within the sector in the
immediate and medium term. A lower priority is therefore assigned to the border-out
gear of export strategy.
Developmental issues will be addressed in conjunction with the implementation of
border-in initiatives to improve raw materials supply and to create a new value
chain for the labour intensive footwear and leather goods sub-sectors.

13

5. Key Issues:
Key issues to be addressed directly by the export development strategy under each
of these priorities are:
(a) Governance:

Enforcement of existing legislation and regulations regarding inspection and

grading of raw material; unofficial exports of raw hides and skins; production of
air dried hides; levy imposition; and the commissioning of privatised tanneries.

(b) Value addition and capacity development:

Increase of quantity of raw hides and skins available for wet-blue and further
value addition tanning

Increase quality of raw hides and skins available for wet blue and further value
added tanning (with particular emphasis on the introduction of new pulling
technology and a system to reimburse herdsmen and farmers for improving
hide/skin quality).

Full utilization of existing, and progressive increase in, wet-blue tanning capacity

(c) Sector coordination

Organizing greater cohesion between the public and private sectors, and among
tanners and raw hide/skin exporters, with the ultimate objective of ensuring all
hides/skins are processed at least to the wet-blue stage prior to export.

6. Strategy Management
As the strategys Action Plan, summarized in the following pages, calls for a variety
of initiatives by the public and private sectors, with comparatively short timelines, ongoing and conscientious monitoring will be a key feature of the strategys success.
A joint public-private Management Group should be established to monitor and
manage implementation of the strategy.
Joint public-private sector chairmanship of the Management Group is envisaged
(Ministry of Industry and Trade and the Leather Association of Tanzania), with
membership in the Management Group as presented below:

14

Management Group - Leather Sector Export Development Strategy

Private Sector
Public Sector
Co-Chair:
Co-Chair:
Chairman, Leather Association of Director (Industry) Ministry
Tanzania
Industry and Trade
Members: Representative of
Members: Representative of:

Confederation of Tanzania Industries

Chamber of Butchers
Eastern and Southern Africa Leather
Industries Association (ESALIA)

of

Ministry of Water and Livestock

Development
Ministry of Local Government
Ministry of Agriculture and Natural
Resources (Zanzibar)
Board of External Trade (BET)
Small
Industries
Development
Organization
Vocational Education and Training
Authority.

The strategy is seen as a rolling strategy, with appropriate refinements and

adjustments added on an on-going basis through a process of regular consultation by
the Management Group.
The Action Plan provides a series of milestones that the Management Group should
monitor implementation of the strategy. Additional milestones should be incorporated
into the strategy during the course of implementation.

15

IV. Action Plan

Tasks, Timeline and Milestones
Border Issue: Governance within Sector Transaction-Related
Task

Interventions

1. End
unofficial
exports of raw
hides and
skins

Improve crossborder
supervision and
control

2. Enforce ban
on ground
dried hides
and skins
(production
and export)

Improve crossborder
inspection and
supervision and
strengthen
monitoring of
trade licenses

Improve selfgovernance
within the
private sector

Institution(s)
Responsible
Customs
Department

Expected
Output
Increased
availability of
raw hides and
skins either
for official
export (upon
which the levy
is applied) or
for local
tanning

Customs
Department

Ministry of
Water and
Livestock
Developmen
t (MWLD)

Increase in
value addition
through frame
drying

Ministry of
Local
Government
(MLG)

Leather
Association
of Tanzania
(LAT)

Resources
Existing staff
and budget

Existing staff
and budget

Greater
motivation to
base export
activity on
wet-blue
tanning

Existing staff

16

Year 1
X X X X

Year 2
X X X X

Timeline
Year 3
X X X X

Year 4
X X X

Year 5
X X X

IV. Action Plan (continued)

Tasks, Timeline and Milestones
Border Issue: Governance within Sector Transaction Related (continued)
Task
3. Enforce
imposition of
existing export
levy (20%) on
exports of raw
hides and
skins

Interventions
Improve export
supervision and
control
procedures and
practices

Improve
monitoring of
trade licenses

Institution(s)
Responsible
Customs
Department

Revenue
Authority

LAT
Monitoring
Group

MWLD

Expected
Output
Greater
motivation to
base export
activity on wet
blue tanning

Resources
Existing staff
and budgets

Year 1
X X X X

Greater
revenue to
Livestock
Development
Fund (first 3-4
years)

Milestone 1

End of export of mixed parcels of ground and frame dried hides/skins

Milestone 2

Officially exported hides and skins reaching 80% of annual off-take-

Milestone 3

Revenue of Livestock Development Fund consistent with monitored

value of raw hides and skins exports (through Dar es Salaam and other
exit points)

17

X
X
X

Year 2
X X X X

Timeline
Year 3
X X X X

Year 4
X X X

Year 5
X X

IV: Action Plan (continued)

Tasks, Timeline and Milestones
Border-In Issue: Governance within Sector Capacity Related
Task
1. Enforce
laws and
procedures
governing
animal
husbandry and
trade in hides
and skins

2. Enforce
contractual
agreement that
privatised
tanneries
become
operative

Interventions

Institution(s)
Responsible

Stricter
supervision of,
and improved
awareness
building/training/
extension
services in:
Branding

Animal
transport
Butcher slabs
and
abattoirs
Inspection
and grading
Ground
drying ban
Licensing of
traders and
exporters
Consultation
with tannery
owners

Local
Governme
nt (LG)
MWLD

Expected
Output
Increased
availability of
raw hides and
skins for either
official export
(upon which the
levy is applied)
or local tanning

Resources
Existing staff
and budgets

Year 1
X X X X

Year 2
X X X X

Timeline
Year 3
X X X X

Year 4
X X X

Year 5
X X X

LG and
MWLD
LG and
MWLD
LG and
MWLD
LG and
MWLD

Ministry of
State
(President
s Office)
Privatisatio
n
Leather
Association
of
Tanzania
(LAT)

Recommissioning
and
modernization
of nonoperating
tanneries

Existing staff
and budgets

18

IV: Action Plan (continued)

Tasks, Timeline and Milestones
Border-In Issues: Governance within Sector Capacity Related
Task
Increase
cohesion and
raise business
advocacy
within the
sector

Milestone 1

Intervention

Responsible
Institution(s)
LAT, MTI
and
Manageme
nt Group

Expected
Resources
Output
Ongoing
Greater selfExisting staff
outreach with
regulation
and budgets
potential and
within the
aspiring
sector and
exporters of
more
tanned hides
investment in
and skins
tanning
capacity
Release of financing from Livestock Development Fund

Milestone 2

Launching of coordinated programme to create awareness of existing

laws and regulations and to provide associated training and extension
services (under Livestock Development Fund financing)

Milestone 3

Commissioning of currently dormant tanneries (3)

Year 1
X X X X

X
X

19

Year 2
X X X X

Timeline
Year 3
X X X X

Year 4
X X X

Year 5
X X X

IV. Action Plan (continued)

Tasks, Timeline and Milestones
Border In Issue: Capacity Development Raw Materials
Task
1. Improve
quantity of
hides and
skins
available for
processing
and export

Interventions
Enforcement of
laws and
regulations as
specified in
Border Issues
above (with
particular
emphasis on,
enforcing ban on
ground drying,
ending unofficial
exports of raw
hides and skins
and full
imposition of levy
on raw material
exports)
Establishment
and operation of
raw material
exchanges in
Dar es Salaam
and three zonal
centres

Institution(s)
Responsible
Customs
Department

LAT

Ministry of
Water and
Livestock
Developme
nt (MWLD)
Ministry of
Local
Governme
nt (MLG)

Expected
Output
100% off-take
of hides and
80% off-take
of skins
available for
official export
and eventually
for tanning
(80% for export
and 20% for
further
processing for
domestic
footwear/leather
goods subsectors

Centralized
auctions for raw
hides and skins

Resources
Existing staff
and budgets

Year 1
X X X X

Year 2
X X X X

Timeline
Year 3
X X X X

Year 4
X X X

Year 5
X X X

Livestock
Development
Fund

FAO/Common
Fund for
Commodities
(CFC) Project
(approved),
with support
from Eastern
and Southern
African Leather
Industries
Association
(ESALIA)

20

IV. Action Plan (continued)

Tasks, Timeline and Milestones
Border In Issue: Capacity Development Raw Materials (continued)
Task
2. Improve
quality of raw
hides and
skins

Interventions
Improved and
extended
outreach of
extension
services

Upgrade
abattoirs and
introduce
pulling
techniques to
replace current
flaying practices
Extension of
frame drying in
rural areas

Broader
application of
wet salting in
urban areas

Institution(s)
Responsible
MWLD and
MLG

MWLD,
MLG and
LAT

MWLD,
MLG and
LAT

MWLD,
MLG and
LAT

Expected
Output
Improved
condition of
livestock and
green and
preserved hides
and skins

Resources
Existing staff
and budgets
and Livestock
Development
Fund

FAO/CFC
Project,
Livestock
Development
Fund and
private sector
(LAT)

Year 2
X X X X

Timeline
Year 3
X X X X

Year 4
X X X

Year 5
X X X

Livestock
Development
Fund and
private sector
(LAT)

Livestock
Development
Fund and
private sector
(LAT)

LAT resources
and FAO/CFC
Projects

ESALIA grading
standards
introduced

Year 1
X X X X

LAT (with
ESALIA)

21

IV. Action Plan (continued)

Tasks, Timeline and Milestones
Border In Issue: Capacity Development Raw Materials (continued)
Task
2. Improve
quality of raw
hides and
skins
(continued)

Interventions
Introduce new
breeds that offer
bigger hides
and skins

Develop,
establish and
promote grading
and pricing
scheme through
which herdsmen
and farmers
receive
remuneration for
quality of hide
and skin at the
time of
slaughtering
Milestone 1
Milestone 2
Milestone 3

Institution(s)
Responsible
MWLD

Expected
Output
Gradually larger
hides available
to local
tanneries

Better quality
hides

MWLD,
MTI,
Chamber
of Butchers
and LAT

Resources
Livestock
breeding
programmes
(Mainland and
Zanzibar)

Year 1
X X X X

Livestock
Development
Fund and
LAT/tanners

Livestock Development Fund released

CFC Project to establish zonal exchanges operational
Initial purchase of hide pulling technology and system installed

X
X

22

Year 2
X X X X

Timeline
Year 3
X X X X

Year 4
X X X

Year 5
X X X

IV. Action Plan (continued)

Tasks, Timeline and Milestones
Border In Issue: Capacity Development Tanning
Task

Interventions

1. Increase
coordination
and promote
commissioning
and
modernization
of existing, idle
tanneries
2. Promote
expansion and
modernization
of tanning
facilities at
existing
tanneries

Consultation
with tannery
owners (and
enforcement of
conditions of
privatisation)

3. Promote
foreign direct
investment in
tanning subsector

Targeted
investment
promotion
programme

Consultation
with, and
incentivise
existing
tanneries

Institution(s)
Responsible
Ministry of
Trade and
Industry,
Ministry of
Privatisatio
n, MWLD
and LAT

Expected
Output
Idle wet-blue
tanning
capacity
commissioned

Expanded wetblue tanning

capacity and
eventually
capacity to
produce further
value added
leather

Private sector
investment

New capital
investment in
tanning subsector and
increased
export capacity

Existing staff
and resources

Expedite
confirmation of
the leather
sector as a
lead industry
thereby
qualifying
enterprises for
incentives.

Ministry of
Trade and
Industry,
Ministry of
Privatisatio
n, MWLD,
Tanzanian
Investment
Centre,
Committee
responsible
for
incentives
to lead
industries,
Tanzanian
Investment
Centre and
LAT
Tanzanian
Investment
Centre and
LAT

Resources
Private sector
investment

23

Year 1
X X X X

Timeline
Year 3

Year 2

Year 4

Year 5

IV. Action Plan (continued)

Tasks, Timeline and Milestones
Border-in Issues Footwear and Leather Goods
Task
1. Develop
capacity to
produce fully
finished
leather to
supply
domesticallyoriented
artisanal
production of
leather
footwear and
leather goods
2. Develop
entrepreneurial
and technical
skills in
footwear and
leather goods
production

3. Increase
access to
finance, at
reasonable
rates, to SME
sector

Interventions
Consultation
with tanners

Expanded
vocational
training
programmes
targeting smallscale
entrepreneurs
and technical
staff
Finalize
modalities for
use of 2003/04
and 2004/05
special funds
set aside for
SMEs (US$ 1
and US$ 1.5
respectively

Institution(s)
Responsible
Ministry of
Industry
and Trade,
Small
Scale
Industries
Organizatio
n and LAT

Expected
Output
20% of wet-blue
output (lower
quality hides
and skins)
processed into
finished leather
for sale to local
footwear and
leather goods
sub-sectors

Vocational
Education
Training
Authority
(VETA),
TILT and
LAT

Skills
developed
consistent with
employment in
leather sector

Existing staff
and budgets

Ministry of
Finance,
Ministry of
Industry
and Trade
and
commercial
banks.

New small
businesses
created in
domestically
oriented
footwear and
leather goods
sectors.

Funding
earmarked by
Ministry of
Finance for
development
of SME sector

Resources
Existing staff
and budgets

Year 1
X X X X

Year 2
X X X X

Timeline
Year 3
X X X X

Year 4
X X X

Year 5

UNIDO project
(support to
LAT)

24

IV. Action Plan (continued)

Tasks, Timeline and Milestones
Border-in Issues Footwear and Leather Goods (continued)
Task
Milestone 1
Milestone 2
Milestone 3

Interventions

Institution(s)
Expected
Resources
Responsible
Output
TILT facilities transferred from Government to LAT
Release by Ministry of 2003/04 and 2004/05 funds earmarked for SME
development
VETA agreement to participate in leather strategy Management Group

25

Year 1
X
X
X

Year 2

Timeline
Year 3

Year 4

Year 5

IV. Action Plan (continued)

Tasks, Timeline and Milestones
Border Out Issues: Market Development and Promotion
Task

Interventions

Institution(s)
Responsible
Central
Bank and
Board of
External
Trade
(BET)
LAT and
BET

Expected
Output
Wider and less
expensive
access to
finance by
export-oriented
tanners
Greater export
orientation and
better informed
commercial
decisions

Resources

1. Expand
operations of
the Export
Credit
Guarantee
Scheme
2. Expansion
of technical
and market
information
services
available to
exporters of
wet blue and
further
processed
leather
3.
Implementation
of relevant
market contact
and promotion
programme for
tanners.

Review and
revise current
Scheme

Milestone 1

Export Credit Guarantee Scheme adjusted to facilitate access to finance

by tanners
Membership focused information system established in LAT

Milestone 2

Develop
commercial
information and
outreach
programme
targeting exportoriented tanners
and LAT
members

Review of
existing
promotional
plans

BET (in
consultatio
n with LAT)

Identification of
new export
opportunities
(for processed
leather) and
expansion of
commercial
contacts

Existing staff
and resources
of commercial
banking
system
Existing staff
and budgets

Year 1
X X X X

Timeline
Year 3

Year 2

Year 4

Year 5

UNIDO Project
(supporting
LAT)

Existing staff
and resources
(BET and LAT)
ITC technical
support
(including
Product Maps)

26

X
X

IV. Action Plan (continued)

Tasks, Timeline and Milestones
Development Issues
Task

Interventions

1. Raise
environmental
protection
standards
within the
sector

Introduction and
enforcement of
effluent
discharge
treatment
standards

2. Contribute
to poverty
reduction in
rural areas

Introduction of
grading/pricing
scheme for
cattle and
goats/sheep
All interventions
summarized
above,

3. Generate
entrepreneurial
and
employment
opportunities
within the
leather sector

Milestone 1
Milestone 2
Milestone 3
Milestone 4

Institution(s)
Responsible
National
Environment
Management
Commission
- NEMC (in
conjunction
with
ESALIA) and
LAT
MWLD, MTI,
Chamber of
Butchers
and LAT

Expected
Output
Internationally
recognized
environmental
standards
regulating
tanning subsector

Small
supplement to
income of
herdsmen

Resources
Existing staff
and budgets

Year 1
X X X X

Livestock
Development
Fund and
LAT/tanners

Particular
Employment
Existing staff
emphasis on within sector
and budgets
Ministry of
reaching 5000
Finance
by 2009
UNIDO project
(SME funds),
MTI, SIDO,
VETA and
LAT
interventions
Introduction of grading and price scheme targeting farmers and
herdsmen
Release of Livestock Development Fund
Release of 2003/04 and 2004/05 SME development funds
Creation of leather sector Management Group, with membership from all
concerned parties

27

Timeline
Year 3
X X X X

Year 4
X X X

Year 5

X
X
X
X

Year 2
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Annex 1
The Tanzanian Strategy Design Team

Team Navigator
S/N Name

Position

Institution / Company

1.

Principal Export Finance Officer

Board of External Trade

Samuel Billy Mvingira

Team Members (Private Sector)

1.
2.
3.
4.
5.
6.

Mr A. Albait
Azim S. Mawji
Mr. E. N. Mmari Masia
Mr. Adam Ngamilo
Mr. Kalua Simba
Mr. Joram Wakari

Director
Director
Managing Director, ( LAT Chair)
Leather Business Consultant
Customer Development Officer
Executive Secretary

7.

Mr. Gerald Kimweri

Leather Technologist

Lake Trading Company Ltd.

Afro Leather Industries Ltd.
J.A.E. (T) Limited
Dar es Salaam
TCCIA
Leather Association of
Tanzania
Dar es Salaam

Team Members (Public Sector Policy Making Bodies)

1.
2.

Mrs Eline Sikazwe

Mr. E. Muyinga

Principal Industrial Economist

Principal Leather Technologist

3.

Mrs Taifa Masheko Ali

Senior Trade Officer

Ministry of Industry and Trade

Ministry of Water and

Livestock Development
Ministry of Agriculture and
Natural Resources

Team Members (Public Sector Trade Support Network)

1.
2.
3.
4.

Mr. Titus G. Kyaruzi,

Mr. Fidelis Mugenyi
Mr. Ahmadi Muya
Mr. Remmy N. Temba

Research and Planning Manager

Principal Market Research Officer

Senior Trainer/Consultant
Director

SIDO
Board of External Trade
CIBDS
CIBDS

Leather Specialist,
Leather Specialist,
Trade Analyst
Senior Trade Promotion Officer
Coordinator, Executive Forum,

Liphook, Hampshire, U.K.

International Trade Centre,
International Trade Centre,
International Trade Centre
International Trade Centre,

ITC Technical Support

1.
2.
3.
4
5.

Mr. Michael Woodley

Mr. Giovanni Dadaglio,
Mr. Bastiaan Bijl,
Mr. Ashish Shah,
Mr. Brian Barclay,

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Annex 2: The Hides National Value Chain

Rural
Herdsman
(cattle)

Revenue***
Costs

0
0

Butcher/Slab
(green hide)
1.70
0.05
Operations

Collector/ Preserver
(ground dried hide)

Exporter

2.90
1.70 plus
from/to transport (.60)

Senior Collector
(Parcel ground 30%
And air dried 70%)

Urban
Farmer

Revenue
Costs:

0
0

Butche r/
Abattoir

4.00
0.05
operations

7.50
4.15 average
plus transaction
costs and 20% levy

5.40
4.70 plus transport and
financing (0.60)

Collector/ Preserver
(frame dried hide)

4.70
4.00 plus
transport (.60)

Collector/Preserver
(wet salted)

Senior Collector
(green or wet
salted)

6.30
8.00
4.00 plus
6.30 plus transport (.60)
salt (.40) and transport (.80)
and financing (.80)

*** Kindly note that the herdsman sells the animal to a trader or butcher as an animal
and not as hide and skin per se. The butcher appears to be getting more benefit that any
other trader in the chain, this is so because he knows the market and so dictates terms.
1. Average size of wet blue is 23 sqft at $ 0.53 per sq ft
2. National average wts are 11.5 kg for wet salted which sells at$ 0.95 per kg,
15kg for green hide which sells at $ 0.53 per kg and 5kg for dried hides.

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Exporter
(wet salted)
11.00
8.0 plus
transaction costs
and 20% levy

Tanner/Exporter
(wet blue)
Revenue: 12.2
Costs: 8.0 plus financing /
production (3.00) and transaction
costs

Annex 3: The Goat Skins National Value Chain

Rural
Herdsman
(goat)
Revenue***
Costs

0
0

Butcher/Slab
(green skin)
0.25
0.05
operations

Collector/ Preserver
(dried skin)

0.50
0.25 plus
finance, transport
rejects and bad debts (.20)

Exporter
(dried skins)

1.00
0.55 average
plus
finance/transaction costs
(0.05)

Urban
Farmer

Revenue
Costs:

0
0

Butcher/
Abattoir
0.50
0.05
operations

Collector/ Preserver
(dried skin)
0.80
0.25 plus
finance, transport
rejects and bad debts (.25)

Exporter
(wet salted skin)
1.15
1.0 plus
transaction and financial costs
(0.05)

Collector/Preserver
(wet salted)

Revenue
Costs:

***

1.0
0.25
finance, transport, salt, rejects (.30)

Kindly note that the herdsman sells the animal to the trader as an animal and not as a hide or
skin per se. The Butcher appears to be getting more money than any other in the value chain, but
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he has other hidden costs he has to defray.

Tanner
(wet blue)
1.60
1.0 plus processing,
operations, reject and
transaction costs (0.50)

Annex 4: The Sheep Skins National Value Chain

Rural
Herdsman
(sheep)

Revenue*** 0
Costs
0

Butcher/Slab
(green skin)

0.25
0.05
operations

Collector/ Preserver
(dried skin)

Exporter
(dried skins)

0.50
0.25 plus
finance, transport
rejects and bad debts (.20)

1.00
0.50 average plus
finance/transaction costs
(.05)

Urban
Farmer

Revenue
Costs:

0
0

Butcher/
Abattoir

0.70
0.05
operations

Collector/ Preserver
(dried skin)

Exporter
(wet salted skin)

0.90
0.25 plus
finance and transport
rejects and bad debts (0.25)

1.40
0.90 plus
financial/transaction costs,
rejects and bad debts (0.05)

Collector/Preserver
(wet salted)
Revenue
Costs:

1.35
0.25 plus
finance, transport, salt, rejects (.30)
Tanner
(wet blue)

***

Kindly note that the herdsman sells the animal to the trader as an animal and not as a
hide or skin per se. The Butcher appears to be getting more money than any other in
the value chain, but he has other hidden costs he has to defray.

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2.00
1.35 plus processing,
operations, reject and
transaction costs (0.50)

Annex 5
Export Levy on raw hides and skins
1.

Introduction

A levy of 20% on the f.o.b. value of exported raw hides and skins was introduced by Act
of Parliament on 11 June 2003. The collected proceeds are deposited in a special
account, named the Livestock Development Fund
2.

Purpose

There are two objectives for the introduction of this levy, namely:
Discourage export of raw hides and skins and thereby encouraging local processing.

Using the proceeds of the collected fund for the development of the livestock and
leather sector.

3.

Issues Addressed

The Fund is intended to cover a wide variety of issues in the livestock sub sector, the
tanning industry, vocational training etc.
4. Collection Status

a) July December 2003

b) January April 2004
c) May 2004 (Dar port only)
d) June 2004 (Dar port only)

Tshs. 300 million

337 million
94 million
96 million

Note:
The figures for May and June 2004 were obtained with the efforts of LAT, under which,
with cooperation of exporters based in Dar es Salaam, an export monitory team was
formed during April 2004, which monitors all containers passing through the Dar es
Salaam port. The exporters provide loans to LAT to cater for payment of monitory staff,
with the understanding that, once the Livestock Development Fund is operational, they
will be refunded.
5. Management of the Fund
The management of the fund will be under the National Steering Committee, comprising:

Permanent Secretary Ministry of Finance

Permanent Secretary - Ministry of Industries and Trade
Permanent Secretary Ministry of Water and Livestock Development
Permanent Secretary Ministry of Local Government
Chairman Leather Association of Tanzania

6. Fund Utilization
The Fund is expected to start being utilized in late 2004 after Parliamentary approval.

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Annex 6
Laws and Regulations governing hides and skins trade
(The Hides & Skins Act No. 68 of 1964 Chapter 544)
1. Animal Husbandry:
Animal Disease Act No 17 of 2003 Section 15 and 49 outlines ways for proper animal
husbandry, for example

Frequent dipping of animals to free animals from ticks and other pests that are
healthy risk to animals and that distort the quality of animal hide / skin
Prohibits branding, except in permitted areas like head, leg or ear parts.
Prohibits use of sharp objects e.g. barbered wire to fence kraals upon which animals
may scratch and in the process impose indelible marks on animal skins / hides.
Encourages herdsmen to dehorn their animal to reduce chances of scratching each
other
Prohibits whipping or beating animals to minimise inflicting indelible marks on the
skins

In this respect the Hides and Skins Law No 68 of 1964 Cap 544 supplement 1966 is
directed to

Extension Officers
Ministry Water and Livestock Development Officers
Livestock Keepers

2. Slaughter of animals and abattoir operations

Hides and Skins Act No. 68 of 1964 Cap 544 Supp of 1964, Section 7, 107, 110, 208
and Animal Disease Act No 17 of 2003. Law guides butchers to

Butchers to ensure skin / hide is not littered by blood

Butchers to wash the animal before slaughter
Use special flaying knives
Use special tables or special slabs for skinning
Ensue all blood drips from the slaughtered animal
Use sufficient water to reduce the skin / hide temperature to reduce petrifaction.

Also: Hides and Skins Act No 68 of 1964 Cap 544 Supp to 1964 No 26, Rule No 16,
Sections (2) and (3). The Act empowers

Meat Inspectors
Hides and Skins Inspectors
Hides and Skins Flayers/Dressers
Butchers

To take offenders to court of law.

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3. Preservation of Hides and Skins

Frame drying and Salting - Hides and Skins Act No 68 of 1964 Cap 544 Supp of 1964,
Rule No 18, Sections (2) and (3)
Ground drying is prohibited under Hides and Skins Law No 68 of 1964 Cap 544 Supp of
1964, Rule 15. It instructs butchers to

Remove all flesh and fats on the skins / hides.

Dry skins / hides on a drying shed to avoid excessive sunshine and rain.
For wet salted hides / skins ensure there is enough and clean salt to ensure smooth
drying

4. Hides / Skins Grading

Hides and skins grading is covered under the hides and skins Act no. 38 of 1964 (Cap 544 Supp
1964) Rule number 10 and section 1. The Act is directed to

Hides and skins inspectors

Hides and skins graders
Hides and skins traders

To ensure that only high quality hides and skins is traded.

5. Hides and Skins Storage

Hides and Skins Law Number 68 of 1964 Cap 544 Supp of 1964, Rules 15 and 18,
Section (2). Also covers:

Hides and skins inspectors

Hides and skins graders
Hides and skins traders

That hides and skins are stored in a properly ventilated store which does not expose
products to sunshine or moisture.

6. Buying of Hides and Skins by Grades

Hides and Skins Law Number 68 of 1964, Cap 544 Supp of 1964, Rule No 10, Section 1
Also covers:

Hides and skins inspectors

Hides and skins graders
Hides and skins traders

7. Transportation of Hides and Skins

Hides and Skins Law No 68 of 1964 Cap 544 Supp of 1964, Rules No. 18, Section 1 and
Rule No. 22, Section (1) (e) prohibits walking live animals over long distances, instead
they should use special trucks.

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