ETHIOPIAN LEATHER SECTOR The Future Hub For Africa Major divisions of Leather Sector Support industries of Leather Sector • • • • Chemicals for Tannery Accessory and Components Finished Leather Other synthetic Materials Comparative and competitive advantage of Leather sector • Raw Material Resource • Labor • Land Availability CONTENTS OF THE PRESENTATION Ethiopian Manufacturing Industry Strategy Other factors Logistics Custom Taxation Labor Union and Labor Laws MAJOR DIVISIONS OF LEATHER SECTOR 1. Tannery Total no of tanneries are 32, of which 2 of them are under investment. 23 of them are owned by local investors and 10 of them are FDI. The FDI is from China, UK, Italy, India, Sudan, Turkey. Around 6000 workers are employed. They have a capacity of 50 million pieces of skin and 5 million hides. They are located in Addis Ababa and other four regions. Geographical distribution of tanneries. (Map of Ethiopia) MAJOR DIVISIONS OF LEATHER SECTOR Geographical Distribution of Tanneries in Ethiopia ….DIVISIONS OF LEATHER SECTOR 2. Footwear industries 22 medium and large scale footwear manufacturers which have a capacity of 12 million pairs. More than 1000 micro and small footwear manufacturers which contributes for 90% of local market. It is planned to reach 35 million pairs of production and 21 million pairs of export. More than 12000 workers are employed. Almost 95% are located in the capital. Labour productivity at present is 3 pairs in average. ….DIVISIONS OF LEATHER SECTOR 1. Leather Goods and Garment 5 glove manufacturing factories , 2 of them are under investment 50 micro, small and medium leather goods and garment manufacturers. 2000 workers are employed. The weakest link of the leather sector in Ethiopia. High potential area for both local and Foreign Investors. SUPPORT INDUSTRIES FOR THE LEATHER SECTOR 1. Tannery Chemicals: Few Chemicals are produced in Ethiopia. Such as salt, lime, soaking, liming and bating enzymes, sulphuric acid, and some blending of fatliquors also done. Most of the chemicals are imported. Some chemical suppliers has a bonded warehouse facility like Stahl, BASF, C and E limited, Repico. SUPPORT INDUSTRIES FOR THE LEATHER SECTOR 2. Accessory and Components: Shoe boxes, Lasts, Molds, cutting die, soles(PU, PVC, TPR and TR) are produced. But it is not in enough quantities and it covers only 30% of the need . Adhesives are also produced and it covers 50% of a need. Suppliers are taken bonded ware house permission to supply for the foot wear as well as other leather product industries. But also other accessories can be imported free of tax by the manufacturers. SUPPORT INDUSTRIES FOR THE LEATHER SECTOR 3. Finished Leather : More than 100 million square feet of finished leather produced annually. Of which 72 million is from sheep and goat skin and 34 million is from cow hide. More than 60 million square feet from sheep and goat and 10 million from cow is exported annually . There is a possibility of producing up to 500 million square feet at present capacity of tanneries.. There are no leather product factories which are grown to take all the finished leather. Quality finished leather manufacturers like Farida and United Vasan is entered in the production. C O M PA R A T I V E A N D C O M P E T I T I V E A D VA N T A G E O F E T H I O P I A F O R T H E SECTOR 1. Raw Material Good Raw material base from all African countries. Quality sheep skins for glove, shoe upper, garment and other leather goods. Very good type of goat skins. Hides with high tensile strength. ETHIOPIAN CATTLE There are 53 million heads of cattle. No 1 in Africa and 6 in the world interms of population 5 million hides are produced annually. Fine grain and dense Good for shoe upper both for ladies and gents ETHIOPIAN SHEEP SKINS Fine grain 70% is from red hair group Highly utilized in gulf glove It can be shaved until 0.3 mm thickness with out loosing its strength. Glove manufacturers are coming to Ethiopia to invest for the good character of skins. ETHIOPIAN GOAT SKIN Found in large amount 3rd in Africa next to Nigeria and Sudan 7.5 million skins are collected annually. High tensile strength Very good for any suede product C O M PA R A T I V E A N D C O M P E T I T I V E A D VA N T AG E O F E T H I O P I A F O R T H E SECTOR 2. Labour Force 60% of the population is young force. Easily trainable Minimum wage , unskilled 60-70; Semi-skilled 80-90 ; Skilled 90-110; Professional 120-150 USD per month. This is one of the comparative advantage for Ethiopia. It is highly desiciplined if it is managed properly. They need human treatment only. I Pro development of Labour Unions. Communication in English is not that much difficult. C O M PA R A T I V E A N D C O M P E T I T I V E A D VA N T AG E O F E T H I O P I A F O R T H E SECTOR 3. Land Capital Minimum Lease Easily Available for manufacturing industries Industry zone development is growing by JV which the majority share and mgt is for private, and by government. OTHER FACTORS Other factors Logistics Infrastructure Custom All types of Taxation Training centers (LIDI and other TVET centers) Peace and security of the country. INFRASTRUCTURE 1. Power we reach to have 2200 MW Another 1800 MW will be added after 2-3months time. The new Great renaissance dam is started and to be finished the coming three years. It will generate 6000MW energy. We have a capacity of producing morethan 50,000MW energy. ETHIOPIAN AIR LINES A member of star Allinaces Following is a list of destinations Ethiopian Airlines flies to as part of their scheduled services. As of July 2012, the carrier serves 56 passenger destinations in Africa —17 of them domestic ones—, nine in Europe and the Americas, and 14 in the Middle East and Asia. The airline also operates a cargo network of 22 destinations, 13 of them in Africa, two in Europe, and seven in the Middle East and Asia. ETHIOPIAN SHIPPING Although Ethiopia is land locked country, It operate with own shipping line at the port of Jibouti. The port of Jibouti is 800 KM from Addis. We have 11 vessels and another 8 are ordered. Of which 2 of them are submitted from china. We have 4 dry ports. ETHIOPIAN RAIL WAY CORPORATION Previously T was Established in 1904 It was only from Jibouti to Addis Ababa. Now that is demolished because of its back ward structure. Now it is again reestablished in 2006. The construction is started and ADDIS JIBOUTI will be over in OCT 2015, this year. TYPES OF TAXES Turn over tax Value added tax Income tax With holding tax Excise tax SUPPORT INSTITUTES MOI LIDI TVET CENTERS STANDARD AGENCIES OTHER Development partners, Like UNIDO SUPPORT INSTITUTES Leather Industry Development Institute; 1. Duties and Responsibilities 2. Facility 3. International Relation and Capacity building Project. ETHIOPIA IS A COUNTRY OF PEACE 1. The status of peace and security is high 2. Ethiopia is also one of the country who serves for world peace by assigning peace keepers in different African countries. LET US DEVELOP TOGETHER Ethiopia Italy THANK YOU
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