Difficult times in Africa

16 June 2003

At the annual conference of the Leather and Allied Industries Federation of Zimbabwe (LAIFEZ) in April, members were largely concerned with survival. Power cuts, foreign exchange shortages, soaring inflation, labour unrest and stalled negotiations, price controls, are every day events that take precedence over more normal business concerns. Commodity prices, even for locally produced goods, are increasingly pegged to US dollar black market rates. These bear little resemblance to the rates set by government, but more accurately reflect market forces. In an effort to control the situation the government has introduced price controls. Controlled prices for school shoes are one example. The interpretation of what is and what is not a school shoe rests with inspectors appointed by officialdom and this lack of definition has particularly affected plimsoll output. Reduced bovine slaughter is on the cards, a reduction likely to move basic raw material from the short supply bracket to the scarce. Such conditions result in acrimonious competition for raw material and rising prices. It also leads to illegal hide exports, smuggling, and overall worsening of the economy. Ample supply of raw material was for long a 'taken for granted asset' by the Zimbabwe leather sector. But this is now in jeopardy. The national herd has been decimated, the commercial herd on political grounds and the subsistence farming sector by the ravages of drought and the incompetence of governmental departments in providing aid. Apart from scarcity of hides, drought compounds the problem of sourcing good quality hides for export quality leather production. The meeting agreed to ask government to restrict hide export permits to recognised industry players. But, in conditions of extreme scarcity, there are always businesses prepared to ignore the common good, people prepared to circumvent regulations and use - or cultivate - political acquaintances in political circles. At present, by agreement, hide merchants cannot export in the raw officially and have to offer a nominal 50% of hide production to local tanneries before exporting either as raw or as third party processed wet-blue. But this is open to abuse. A few merchants ask impossibly high prices for raw stock, which have to be refused, and then arrange wet-blue processing by third party tanneries on a commission basis. Tanners have been asked not to third party tan without authorisation from LAIFEZ. But will all comply? First and second grade hides, vital to quality production, are in especially short supply. Tannery managements suspect the bulk of better grade hides are exported by merchants, either raw or as wet-blue, to the detriment of local industry. It was suggested that hide suppliers should be 'persuaded, cajoled or threatened' into supplying locally. This approach reflects near desperation and is not a practical proposition. Common Fund for Commodities (CFC) The CFC has agreed to sponsor two projects in Zimbabwe: Firstly, commercialisation of hides and skins by improving collection and quantity in small-holder farming systems. Secondly, adding value to African leather through improvement of quality of leather and leather products by improvement in design and quality of finish for export regionally and to Europe. During the mid 1980s Unido embarked on similar projects and these continued until the mid 1990s, when direct Unido participation in the projects ceased and Zimbabwe based authorities accepted responsibility for their continuation. Over the years since much that had been achieved in the area of hides and skins improvement has been lost. The project became moribund from lack of interest. This was a direct result of 'on the ground' Unido participation being withdrawn. Despite much investment in the training of veterinary staff in hides improvement, rehabilitation and improvement of facilities at animal health centres, provision of transport to enable servicing of the project, field operations gradually degenerated, finally ceased. If the new CFC project is, in the hides improvement sector, to yield any permanent dividend, it is essential the CFC retain a fixed presence. There is a need not only for the provision of finance and expertise, but also an arrangement for continued CFC long-term participation: the local presence of experienced staff and the existence of a stable administrative structure. The efforts of Juhani Berg, Jacov Buljan, Ms Aurelia Calabro and many other Unido employees, yielded much of permanent value. The skill levels of technicians in tanneries, footwear plants, finished article factories were raised, as were those of managements at both floor and senior level. Obsolete equipment was replaced at attractive repayment rates, as part of a revolving fund; exposure to European conditions were provided for senior and junior staff managerial staff by sponsorship of attendance at international seminars and fairs. The permanent nature of the improvements resulted directly from the fact that the concerns assisted, big or small, were under private ownership. Editor's note: On May 18 it was announced that 40 people had starved to death in Bulawayo in the first two months of this year due to the failure to plant crops compounded by drought

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