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{
    "id": 599271,
    "url": "https://info.mzalendo.com/api/v0.1/hansard/entries/599271/?format=api",
    "text_counter": 58,
    "type": "other",
    "speaker_name": "",
    "speaker_title": "",
    "speaker": null,
    "content": "The recently launched Leather Industry by Organising Strategies and Action Plan Report developed with the support of the World Bank indicates that 63 per cent of the footwear is imported as used shoes, followed by imported non-leather shoes at 26 per cent, with a balance of 11 per cent being locally made shoes. Export of wet-blue, despite being classified as value addition, is a big disadvantage to the country in that it produces over 70 per cent of the environmental pollution load for only 30 per cent of the total value of the full processing. The cost of managing the waste load negates the gains from the exports. Also, exports of wet-blue strangles the forward movement to full value addition as it denies local manufactures finished leather, which is their basic raw material for either footwear or leather goods’ production. This also limits the sector’s capacity to generate employment. Due to the concentration of export of semi-processed material that has killed production of local leather products, the sector has moved from a major foreign currency earner to a prime consumer of the same. Leather production that includes footwear and leather goods is currently done by Bata Shoes Company, a few other firms and small and medium firms in different parts of the country. Kariokor, the main production centre for Small and Medium Enterprises (SMEs) distributes its products throughout the county and the region. This production is away below the national demand, allowing room for massive importation. Currently, the per capita shoe consumption in Kenya is 0.85, translating to 34 million pairs annually. This demand compared to our production estimates of 5.2 million, then shows that the country has a deficit of 28.8 million pairs. Kenya’s lack of cost competitiveness results from three major constraints disadvantaging Kenyan producers. These are high cost of leather inputs, high cost of labour and high cost of electricity. In addition, on the demand side, the inflow of cheap new footwear and the growth of second-hand mitumba market represent two of the major challenges to greater value addition in footwear. Mr. Speaker, Sir, the second question was about whether the policy in place to control dumping of footwear in the country kills local production. The response to this is that this has been brought about by policy changes in the past that led to collapse of the manufacturing arm of the value chain. Some of these policies include, but not limited to:- (1) Market liberalisation that opened the sector to competition with foreign and sometimes, subsidized leather products; that is, used footwear mitumba and synthetic leather. (2) Commercialisation of the support services namely; Kenya Industrial Estates (KIE) and Kenya Commercial Development Corporation (KCDC), which used to be a source of affordable capital and incubation for entrepreneurs. (3) De-regularization of bank interest rates leading to high cost of money that is more suitable for trading but not manufacturing SMEs. For the sector to regain its feet and attain faster growth, the principle of private and public partnership has to apply with the Government developing facilitative policies while the private sector generates investment. In view of the above, there are various policy interventions that the sector requires to be implemented at short, medium and long-term to ensure that not only is the sector growing, but it is also globally competitive. The electronic version of the Senate Hansard Report is for information purposes only. A certified version of this Report can be obtained from the Hansard Editor, Senate."
}