INDUSTRIALIZATION

State woos investors from India to leather industry

A 14-member business delegation from India is in the country seeking partnerships and investment opportunities

In Summary

• Industrialization Principal Secretary Betty Maina says incentives and regulations to protect local investors are being put into place.

• The government is constructing a common effluent treatment plant at the park which will be ready by September 2020.

A trader works on leather belts at old Kariokor leather market on April 15
HIGH PRODUCTION: A trader works on leather belts at old Kariokor leather market on April 15
Image: COURTESY

Kenya is courting investors from India for its leather sector with a  target for a major plant in the country next year, according to Industrialisation PS Betty Maina.

She said the ministry is leading investors towards the Machakos Leather Park, whose development is underway, and should be open by September next year.

A 14-member business delegation from India is in the country on a three-day visit to meet government and private sector players for possible partnerships and investment opportunities.

 

Maina said incentives and regulations are being put in place to protect local investors even as the government revitalises the sector.

“We have put taxes on imported leather and finished products, so there is an opportunity for investors to invest in the country,” she said, noting the government is keen to lock out second hand shoes, commonly known as mitumba, from the market.

Traders spent about Sh5.4 billion on importation of footwear and second-hand clothes in the first quarter of this year, according to Kenya Investment Authority. In the third quarter of 2018, the country imported six million pairs of shoes.

The government is keen to revolutionise the leather sector and raise local production to meet the 40 million pairs annual demand.

Among tax measures to protect the local market include a 35 per cent duty on leather imports.

The duty came into place under the 2018/19 budget(financial year), and forms part of the East African Community Common External Tariff.

“East Africa Community has worked and adopeted a programme for restriction of inputs used in leather products especially foot wear so this is an opportunity to replace that market,” PS Maina said during a Kenya-India forum in Nairobi.

 
 

In Kenya, import duty on footwear went up from 25 per cent or US$10(about Sh1,000) per unit, but local players have continued to face stiff competition from cheap imports.

PS Maina yesterday said the Machakos park, and other planned investments in the sector, will be a game changer as leather remains a key instrument in the Big Four's manufacturing arm.

“We are currently in the process of constructing a common effluent treatment plant at the park which will be ready by September 2020,” Maina said, adding that an administration block and other utilities such as power, access roads and water are being implemented.

She has assured manufacturers of military boots and disciplined forces' footwear a ready market, as sourcing of these products is strictly from the local market.

The Council of Leather Exports (India) chairman Aqeel Ahmed said Indian investors continue to see Kenya as a regional hub, assuring of mega investments in the near future.

“Investment opportunities that we have in this country are amazing.We believe we could do huge investments in the coming year, that is why we are here,” Ahmed told Journalists at the event.

Sitting on a 500-acre plot, the Machakos park is designed to be a one-stop shop for leather, footwear, leather goods and related industries, including tanneries, aimed at promoting growth of the leather sector.

Earlier this month,the Tanners Association of Kenya called for remove the 10 per cent export levy imposed on tanned and crust hides and skins.

Association's chairman Robert Njoka said the leather industry "is facing many challenges" of which if the export levy is reduced, "it will help get good market for local traders."