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Sundan: Development of Meat and Leather Products Exports

Wednesday, September 02, 2015 > 10:32:26

(Sudan Vision Daily)

The Mamoun Beheiry Centre for Economic and Social Studies Research in Africa organized a very important workshop on "Development of Meat and Leather Products Exports". The informative paper was presented by Mr. Mohamed Suliman from the Leather Chamber in the Sudanese Business Federation, which followed by very fruitful discussions on the prospects for  future of these industries in Sudan.

In 2010, Sudan was considered the 17th fastest growing economy in the world and this was attributed to oil profits, the secession of South Sudan which contained over 80 percent of Sudan's oilfields, brought uncertainty to the economy.

Although agricultural remains the main source of income and employment hiring over 80 percent of Sudanese , and making up a third of the economic sector, oil production drove most of Sudan's post 2000 growth.

Given this scenario it is imperative that Sudan should focus on value addition activities especially in agriculture, where there is already has a critical mass. One-sub sector upon which Sudan has a great potential is the development of the leather value chain given its huge animal resource potential.

Through a participatory stakeholder's consultation, it was agreed that the following issues were undermining the performance of the Leather Value Chain in Sudan.

They included; limited or no collaboration among stakeholders, absence of viable long term and short term finance, production of poor quality hides and the Fashoda Factor, lack of human capacity, limited enforcement of policies/regulations and bureaucracy in export documentation, international sanctions, export of raw hides and wet blue and production of poor quality finished leather and absence of parks.

To address these issues, a strategy was proposed which contained strategic objectives to address the root causes of the identified challenges.

The strategic objectives were identified as strengthening horizontal and vertical collaboration among value chain players and stakeholders; improve accessibility of short-term and long-term finance to enterprises and the production of quality hides and skins.

Also, capacitate SMEs/ cottage industries for higher and value addition and competiveness in domestic, regional and international markets. This must be accompanied by the promotion of quality and cleaner and environmentally sustainable production techniques and systems. And the production of value added products.

This should be done within the framework of improved policies and enhancing efficiency and effectiveness in their implementation.

It is important in this context to facilitate the establishment of Leather Industrial Parks with common effluent treatment plants.

The implementation of these objectives would lead to the attainment of the following vision.

" To be among the top five economies in Sudan with regard to competitiveness by 2024".

The attainment of this grand Vision would be anchored on the implementation of detailed activities, which are logically related with the above objectives.

The future of the Sudan Leather Value is bright, however this brightness can only be realized though collaboration among the government, private sector and academia/ specialized institutions.

The paper dome started the importance of these industries by pointing to that the COMESA region's market of footwear is estimated at 365 million pairs of shoes with a per capita of 0.85 per annum. In 2012, US$ 640 million worth of shoes were imported into the COMESA region from the rest of the world and this translate to approximately 64 million pairs of shoes.

Value Chain

The writer defined the Value Chain as a concept which can be simply described as the entire range of activities required to bring a product from the initial input-supply stage, through various phases of production, to its final market destination.

The procurement stages entail a combination of physical transformation and the participation of various products and services, and the chain includes the product's disposal after use.

As opposed to the traditional exclusive focus on production, the concept stresses the importance of value addition at each stage, thereby treating production as just one of several value-adding components of the chain.

This inclusive approach is critical in building an understanding of the challenges which are currently impacting on the performance of Sudanese leather value chain, despite the immense potential it holds.

Leather value chain displays social and economic relationships, thus their sustainability is hinged on ensuring that the economic benefits are shared commensurate to the level of contribution each economic agent invests in.

It is, therefore, imperative that a deep appreciation of how the income generated in the value chain is shared and developed.

Leather market

The potential of the level of demand of finished leather was estimated on the basis of the Libya Market which is located in Omdurman. Among other SMEs operating in Libya Market there are approximately 250 SMEs involved in the production of footwear, especially the traditional Sudanese Markoob.  One average each SME has 5 artisans, producing an average of 5 pair per person.

This translate to 25 pairs per SME per day , and 1,250,000 pairs per annum for 250 SME , with a leather consumption estimated at 3,125,00 square feet.

Currently the SMEs depend on imported leather from Egypt and badly vegetable tanned leather from local artisan tanners.

Thus, local tanners have an opportunity to increase their production of finished leather if strategic linkages can be made with Libya market with the support of line ministries.

This would lead to reduction in import demand which is estimated ay SDG 43 million, based on landing cost of SDG 13.5 per square feet from Egypt.

It is important to note that beyond the Libya market there are several SMEs operating across Khartoum state, which are currently importing leather from Egypt, at the expense of the local material.

Leather Value Chain

In developing countries, a significant proportion of national funds are used to support agricultural production inputs, primarily seeds, fertilizers and irrigation systems.

Traditionally, little attention has been paid to the value chains by which agricultural products reach final consumers and the intrinsic potential of such chains to generate value added and employment opportunities.

While high income countries add nearly US $ 185 of value by processing one tone of agricultural products, developing countries add only approximately US $ 40. Furthermore, while 96 percent of agricultural production in high income countries undergoes industrial processing, barely 38 percent is processed in developing countries.

It is imperative to note that the export of raw hides/skins, wet blue and crust entails forgone opportunities with regard to value addition, which could have been attained in Sudan.

Put simply , the export of wet bile means the exportation of jobs , foreign currency earning, opportunities and other indirect benefits, which  could have been generated In Sudan, had the large proportion of  hides and skins been transformed into finished leather goods.

In addition, more losses are incurred due to the resultant production of low quality hides and skins, which fetches lower prices in the international markets. As it was reported, the prevalence of pre, and post slaughter defects was very high in Sudan; this renders more than 65-70  percent of hides and skins produced to categorized grade three or worse.

A partial equilibrium model was employed to compute the potential losses that Sudan was incurring per annum due to pre, peri and post slaughter defects and the export of wet blue and raw hides and skins. Based on the hides and skins production of 2013, the Sudan leather value chain has the potential of reaching a minimum direct value of US$ 1.5 billion per annum. While gross losses due to post slaughter defects were estimated at $ 42.5 million.

Trade Policies

The export restrictions policies based on export taxes has generally contributed to the growth of the tanning sector in Ethiopia , Kenya and Uganda , as reflected by the number of new tanneries which were established and also the export values.

Sudan currently operates with a 15 percent export tax, however, stakeholders raised the concern that the implementation was not effective and smuggling of hides and skins is rampant.

Draft Strategy

The Sudan Leather Value Chain strategy was designed through a participatory process. Stakeholders agreed that strategic interventions should be crafted to address the above issues in a systematic way, which would stimulate the growth of the industry.

The broad strategic interventions should contribute to the achievement of the following; increase value addition, employment creation, export and fiscal revenue. In addition to increased production of quality leather, footwear and leather goods.

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