From livestock to luxury: Kenya’s Path to becoming a global leather powerhouse

Leather is not just any commodity; it ranks among the 25 most traded in the world, boasting of an international trade value of USD 129.3 billion, surpassing the combined worth of coffee, meat, sugar, rice, and other commodities (Kenya Leather Development Council, 2020).

Imagine Kenya, a nation abundant in livestock, with over 11.8 million goats, sheep, and cattle slaughtered annually, according to the Economic Survey 2024. The potential to transform these raw resources into luxurious leather products that rival Italy’s finest is immense. From the rugged landscapes where livestock graze to the bustling tanneries and artisan workshops, Kenya stands on the brink of a leather renaissance. With strategic interventions and supportive policies, Kenya can not only revive its leather sector but also establish itself as a fashion powerhouse on the global stage.

Kenya’s leather industry is one of the oldest and most resilient sectors in its economy. During the 1970s and early 1980s, it was among the top five foreign exchange earners, with footwear production meeting over 80% of the national demand. Recognizing this potential, the Bottom-up Economic Transformation Agenda (BETA) aims to create 100,000 jobs and increase wealth in the sector from Ksh 15 billion to Ksh 110 billion.

However, achieving these ambitious goals necessitates addressing significant challenges that currently hinder the sector’s growth. The 2024 Economic Survey reports that jobs in the leather value chain contracted by 19.0% to 1,303 persons in 2023, highlighting the need for increased efforts to realize the goal of creating 100,000 jobs.

The government’s commitment to the leather industry is evident in various initiatives. The Local Content Policy, Buy Kenya Build Kenya (BKBK) Strategy and the Public Procurement and Disposal Act, for instance, have provided opportunities for the procurement of locally manufactured boots for the disciplined forces from local manufacturers. This policy has created a steady demand for locally made leather products, benefiting the sector immensely. Kenya Association of Manufacturers (KAM), through its Leather and Footwear Sector, continues to lead in advocating for better policies that will promote the addition of value to raw hides and skins. KAM’s initiatives involve improving flaying procedures and using modern technologies in collaboration with slaughterhouses, abattoirs, and other actors nationwide. These efforts are crucial to ensure the production of high-quality hides, which are critical for a robust leather industry.

However, the sector faces critical challenges that need urgent government intervention. Over the past few years, eight tanneries have closed down due to issues such as a shortage of raw hides, smuggling, poor quality of hides, environmental compliance issues, and inappropriate policies. Despite the country slaughtering 3.35 million cattle annually, most hides are illegally exported with undervaluation out of the country, with over 90% exported to West Africa as food.

The illegal export of raw hides out of Kenya deprives local tanneries of essential raw materials. This shortage was increased when the government reduced the export levy on raw hides and skins from 80% to 50% in 2023. This reduction made it more profitable to export these materials, resulting in a 470% increase in dry hide exports (Directorate for Veterinary Services, 2024). Consequently, local tanneries faced even greater difficulties in obtaining the raw materials needed for their operations.

To address these issues and unlock the sector’s potential, several solutions are necessary. Reverting the export levy to 80% or USD 0.52 per kg would ensure more raw materials remain in the country for local use. Additionally, the government should enforce strict bans on the export of ground dried hides, which is illegal under The Hides, Skins & Leather Trade Act (Cap 359). Allowing the duty-free import of chemicals not locally manufactured for tannery use would also bolster production capabilities.

The East Africa Community (EAC) 30th June 2024 Gazette Notice, which approved a one-year ‘Stay of Application of the EAC Common External Tariff (CET) rate of 25%’ by increasing it to 35% on leather bags under Chapter 4202, is a positive step toward enhancing the competitiveness of locally made bags. This change could significantly benefit the Kenyan leather industry by offering local manufacturers a better chance to compete against imported products. The notice also granted duty remission on certain chemicals used in tanneries, which is a welcome move as it may reduce production costs and encourage more local processing.

However, while these measures are commendable, more needs to be done to fully support the growth and sustainability of Kenya’s leather sector. Many essential chemicals used in tanneries have not been included under the duty remission, which continues to increase the cost of production for local leather producers.

Kenya can draw inspiration from Italy, home to some of the world’s best-performing tanneries and renowned for its high-quality leather goods. Italy’s leather industry thrives on a robust value chain, meticulous craftsmanship, and innovative techniques. Famous designer brands like Gucci, Prada, and Louis Vuitton source their leather from Italian tanneries, a testament to their superior quality. Kenya, with its rich livestock resources, has the potential to emulate and even surpass such success, transforming into a leather fashion house that can compete on the global stage. The rising demand for leather products in Kenya highlights this opportunity. For instance, imports of finished leather products account for approximately USD 25.4 million with mitumba leather shoes accounting for USD 7 million (Mckinsey & Company, 2024). This shows a growing market that local producers can tap into, further boosting the sector’s prospects.

Kenya’s leather industry possesses immense potential to drive economic growth and position the country as a global leader in leather production and fashion. With the right policies and sufficient support, Kenya can unlock this potential, creating jobs, increasing wealth, and making a significant impact on the international stage.  Through dedicated efforts, the narrative for the leather sector can shift from livestock to luxury, heralding a new era where Kenyan leather products are synonymous with global quality and style.