Where is the money going?

While the aid agencies are well intentioned, sadly, a large amount of money is being spent on projects that simply are not worth the investment. Trawling through Sam’s postbag to see whether he was gaining support or criticism, I thought it would be interesting to put forward some of the views expressed by those in the industry.

I am also publishing a letter of criticism from a source, unknown to me, who dares me to publish it. The writer is obviously not a regular reader. I always give the right to reply and have published many letters which have been highly critical of either myself or the magazine.

To: Sam Setter

From a consultant

‘The channels through the EU confuse the issue because they are often duplicating and competing in projects. They are career people, of course. There seem to be so many office folk in these organisations, just as politics is full of lawyers or party people who have never had ‘ordinary’ jobs. I am afraid that I’m not supportive if you direct your anger towards the UN in NY. It is so easy to be angry at all this waste and so difficult to be positive.’

Response from Sam

‘I am not hitting out at the UN in New York. On the contrary, I am seeking the help of the UN secretariat in order to eradicate the system of project development, which is in the hands of the few and the project executing which is in the hands of the same few. I am seeking the help of the UN in order to call CFC to its duties and change the money flow which is distributed through a few established channels. I am seeking the help of the UN to give projects which are developed outside the system, a fair and even chance. It is not easy to approach governments as they are part of the system and feeding the system.

‘You have correctly underlined the fact that ‘they are career people’. I once wrote a Limeblast in which was written that Africa must be kept poor and fighting bloody wars, because without that hundreds of thousands of luxury jobs would become obsolete… Shelagh preferred to edit that phrase out. However, you and I know that it is cynical but also that I am right. If the salaries for those luxury jobs would be spent on actual aid for the Africans, Africa would be rich.

‘Your comments are of great value to me. I am writing from my own experience. Finding confirmation from third parties that what I write is common practice is, on one side, comforting in terms that my experience is not the only negative one and, on the other, extremely sad in terms of the money not being spent properly.’

To: Sam Setter

From the consultant

‘Having seen a disastrous abattoir in X last year, which had received some earlier CFC ‘assistance’, I felt very critical as nothing had changed, with all slaughter and skinning being done on the ground by casual workers. I agree that there seems to be a vested interest in most agencies to secure their own future (natural self-preservation?) when they should be working to eliminate themselves.

‘I certainly had a shock when I left the real, commercial world to work in the development field. Initially, I expected that the projects would all run smoothly with a success rate of 80-90%. Reality reduced this expectation to 50% success. Sometimes it is better than that! It does depend on local culture and the people involved as well as the agencies.

‘Personally, there seem to be too many folk involved with little real experience of the actual industry, let alone the specific area. That may be inevitable, as we are all a dying (as well as dyeing!) breed. Of course, as I worked in a factory I saw leather everyday, but I never worked in an abattoir!

‘I would like to know if any of the CFC personnel have any type of industrial background; which could be true of so many agencies, and even advisers. The lack of ‘follow-up’ on projects seems a major weakness. The comment that ‘all stopped when the foreigner left’ is too common. I am not sure what evaluation does in this respect.

‘You are so right to concentrate on the state of the raw material in these developing countries. There is often legislation to support better slaughter, preservation, grading etc, but it is disregarded. The dealers have an easy sale without the need to grade properly (as your July Limeblast) and there is no realisation of the true value of the final leather to the national interest.

‘The real rural farmer is far away from the market, and collects cattle for his personal power, not for slaughter. The problem will not be solved until local people realise the facts and energise the officials in to doing something. There are exceptions; Ethiopia made a favourable impression on me.’

From: Ron Sauer

‘Go ahead and I don’t think it has to be anonymous as long as you don’t write that I am against international organisations or leather industry associations. However, you may write I am against every organisation which does not do its job right, has no touch with the international leather trade or industry and is just wasting money for nothing. Unfortunately that does cover quite some projects, associations and organisations.

‘The people involved live in their own cocoon, their own little world far from the real leather trade. They cover each other and guarantee each other’s lives, they make sure the final reports fit the objectives and conclude the project’s success.

‘And as long as both parties sign, nobody outside will ever find out what really happened or if something improved in the leather world. After so many programmes and projects in Africa, who in the trade has ever said: ‘Those hides and skins from country Y are a lot better than they were before?’

‘It is, of course, a sound objective to improve quality and employment but with millions spent, results were too often next to nothing. I know stories of projects designed to make sure the money spent would flow back to the donor country through the sale of equipment, managers, etc. Basically such projects were in reality export development programmes for the donor country, not for the developing country! There are rumours of commissions and bribes taken, etc.

‘Dangerous stuff! But if kept quiet, only the papers will talk and reach the outside world and those concerned know that all decisions are taken on the basis of that – the papers! It would be great if the donors would be much more critical of how their money is being spent. But that cannot be done by a bureaucrat behind a desk far from the place where the action is and without knowing what exactly the action is or should be.’

In another letter, Ron Sauer wrote: ‘I admit the idea of giving African hides a quality stamp to differentiate the good from the bad is a good idea. But it counts for all parts of the world not just Africa. A condition would be that it would work and be worth the money spent to develop it. But it doesn’t and would not work.

‘I speak to the biggest traders in East African hides and their buyers virtually on a daily basis but nobody has ever heard of a ‘quality guaranteed stamped or certified African hide’. Nobody has ever seen offers of parcels with or without these quality stamps which should have a different price.

‘Nobody is interested either since all know how easy it is to fiddle around with any stamp or certificate. Nobody would pay a penny more for hides with such a stamp.

‘There are two worlds in leather Africa. The one of the ‘organisations and associations and the privileged few who know how to play the game and benefit from it’ and ‘the African leather trade and industry which has to gain its place on the world’s tough, no pity and I will get you if I can markets of today’. These two worlds hardly ever meet. It is not because of a lack of goodwill from the organisations. But they are so stuck in the limitations and political consequences of whatever they do that hardly ever does something with real value comes out of the many well meant efforts. Put a man who knows the trade on the job, give him the liberty to operate as he thinks fit and you will see how well tax payers’ money can be spent.’

Flaying

Although the static flaying frame has had some detractors, many are convinced that it is a good, simple, cheap solution. Sam’s main concern has always been that industries, consultants and others should not be able to make a profit from it. It was his gift to the developing world. His only condition is that if non-resident consultants are used, these consultants are approved by him. This is probably the real stumble block. If CFC could use their favourite consultants, most probably projects would come forward.

The biggest obstacle at the stage of implementation has come from the workers’ insecurity. On occasions they literally have even had their knives out for Sam.

From Sam Setter

‘The problems connected with the introduction of hide pulling like the SFF are multiple. After several tries and pilot projects, I have come to the conclusion that the main obstacle is social. Flayers, who 90 out of a 100 work on a carcase basis, are afraid to lose their job. This is closely connected with the animal not belonging to the abattoir as flayers work in teams which are not paid by the abattoir. Flayers don’t realise that the SFF makes their job easier, less heavy, and raises their expertise by creating a real job.’

From a consultant

‘I agree that those flayers are one of the significant factors. They seem to be often casual workers, paid per piece to produce the meat, regardless of the damage to the skin. (That is why they leave it lying flat on the ground.) If the animal owner realises that an undamaged hide will bring him an extra return, then it is one step towards redirecting the work of the flayers.’

From a hide trader

One of the biggest operators in the African raw materials field, says: ‘In case of interest, our company has had a regular dialogue with the Ministry of Livestock in Tanzania and Uganda explaining that in both countries, the value of raw hides and skins could be increased by up to 30% just by improvements in flay. In Tanzania’s case, some measures would have to be taken regarding brands, in particular multiple brands, whereas branding is not a problem in Uganda. These measures would have a greater and more immediate effect than trying to establish grading or pricing structures, or even the Holy Grail of making expensive wet-blue.

‘It is also important to note that cuts and holes are not only made by the person flaying the hide but in many cases worse damage is made by small boys being allowed in the slaughterhouse who take off small pieces of meat left on the hide with no regard to what further damage they may cause. I also feel strongly that CFC/Esalia have nothing to show for money invested, whereas measurable results should be possible, admittedly with some government commitment.

‘When travelling in Africa, as already stated, I see little evidence of progress due to any input from Esalia. Some progress is being made in some countries, however, this is purely driven by local companies. For instance, there has been a recent local initiative in Ethiopia by the tanners to deliver salt to outlying areas in order to encourage the preservation of wet-salted hides instead of air dried. This was prompted by better selection and yields being noticed on wet-salted hides from the Addis Ababa area.

‘Also when travelling in Africa I am unaware of any co-ordination of passing on the above results from Ethiopia to other countries (although as it is quite recent there could be a time lag in disseminating such information, but I doubt it is even known by Esalia).

‘Another co-ordination benefit could be the encouragement of processing hides and skins from one country in Africa without tanning facilities by another African country with excess capacity. Uganda has very little tanning capacity whereas Kenya has overcapacity with most tanneries idle.

‘I understand there are many obstacles to this, export tax and a burdensome cross-border bureaucracy, etc. However, I am again unaware of any input or effort by Esalia, the FAO among others, to follow this point. I should point out that there is already a customs union between Uganda, Kenya and Tanzania but, according to my information, hides and skins still cannot cross from one country to another within this customs union.’

So there you have some of the views from some of the people who are actually engaged in the leather industry in Africa but from an international perspective. How about the Africans themselves.

On June 28, 2005, Kiganda Ssonko, Kampala, wrote that East Africa loses $770 million annually by exporting raw hides and skins instead of processed leathergoods. The general manager of Leather Industries of Uganda, Niazali Hirani, said Uganda loses $191 million, while Kenya and Tanzania lose $290 million.

According to Hirani: ‘East Africa’s hide and skin exports generate $30 million. There is potential to increase the earnings from the tanning and leather industries to $800 million after processing. There are 14 tanneries in Kenya but the majority are no longer operational. Tanzania has six and Uganda has two, all of which are working below capacity’, he said.

On the same day, Kaburu Mugambi, Nairobi, said: ‘Tanners are mounting pressure on the government to raise export duty on raw hides and skins. The tanners say low tariffs are encouraging export of the raw materials, impeding growth of the local sector.

However, Livestock and Fisheries Permanent Secretary, David Stower, said although the government wants to discourage hide and skin exports, it does not want to stop them completely. ‘This has to be gradual. We want to open more tanneries to absorb more local hides and skins’, he said.

However, Niaz Hirani, head of leather industries sector for the Industrial Promotion Services told BusinessWeek that to save Kenyan tanneries from imminent closure, export levies on raw hides should be increased to 60%. Stower disagrees, saying charging high export duty on raw hides and skins will make them expensive for exporters.

The ministry had asked the finance minister, David Mwiraria, to increase export duty to between 30-40%. But this proposal was not granted in this year’s budget. At present, there is a 20% export levy on raw hides in Kenya. ‘This levy is insufficient and the enforcement is not effective’, Hirani said.

The ministry is now collaborating with the Kenya Revenue Authority to check undervaluation of raw skins and hides by exporters. In the past, exporters have been undervaluing their materials so that they can declare less revenue and pay less duty. Now the ministry has stationed its officers at the ports to work with KRA officers to eliminate cheating by exporters.

There is obviously a huge potential gain to be had from a practical response to the needs of the African industry. The aid agencies should stop producing expensive reports telling us what we already know: that the greatest financial reward would be reaped if slaughter, flay, collection and primary preservation was carried out in an hygienic and efficient manner. Tanners in Ethiopia should be applauded for their efforts in this respect. And CFC should get a rap over the knuckles for declaring that none of their aid money will go on constructing the SFF in rural areas.

A footnote from Sam

Comments from my readers indicate that I am not writing off the track. It is only that too few people wish to be bothered to right the wrong. They know things are wrong but think that the money wasted is not theirs. I was recently told that my approach is too aggressive and that I lack credibility. That may be true. I am certainly not perfect, but how much credibility do the help agencies have when they produce projects without results? How much credibility have officials that look only at their monthly pay cheque without producing anything worthwhile? How much credibility have officials that are led by their personal feelings rather than by the objective of their job? I am not asking for the moon.

I am not criticising without reason and I believe I am more constructive than my opponents try to make themselves believe.

From: Zewdu Nebiyou at dazax2000@yahoo.com

‘Someone offered me to read an article by Sam Setter in the August/September 2005 issue of Leather International while attending a training course. The article attacks CFC, FAO, ESALIA, and UNIDO who are really helping in the development of the leather industry in Africa by financing all those projects he mentioned, and others as well. The writer’s problem seems to arise from CFC rejecting his SFF project proposal and he is jealous of the travelling of project executives in project areas, holding offices with air conditioners, making fortunes (I don’t know how?) etc.

‘And his explanation of tackling the flay damage and thus solving all hides and skins quality problems is too simplistic!

‘I just wanted to express my feelings and point out that he has a negative attitude. He is actually discouraging funding agencies from providing much-needed financial assistance for the development of the African hides, skins, leather and leather industry, and you are helping him along by publishing his negative ideas. I dare you to publish this!‘