Local footwear struggling to compete with imports

Samuel Achara is a small-scale footwear maker in Aba, the economic capital of Abia State in South Eastern Nigeria.

His make-shift shop at York Street mini market in Abia South Local Government Area costs him less than N3,000 ($15) every month. But he still coughs out more than N8,000 ($40) within the month to pay a myriad of levies and taxes that come with different nomenclatures.

As in the usual Nigerian manner, the revenue collecting agents are fierce-looking young men aged between 22 and 40, claiming to represent the state or the local government area. Refusal to ‘cooperate’ with them is as dangerous as rejecting the modern-day armed robber’s demand to relinquish your property or money.

By a dint of hard work, Achara’s Vision Shoes Production, a firm with three staff members who are mainly apprentices, can ‘finish’ at least four pairs of shoes each day. The firm opens at exactly 7:00am each day and closes at 6:30pm.

But the shoemaker struggles to get its raw materials from the Northern part of Nigeria, where traders of animal skins prefer to sell to representatives of Italian, Dutch and Chinese firms that pay twice or three times higher.

Achara’s firm now resorts to sourcing its animal skins from Cameroon, Chad and China. Achara’s adhesives, which serve as glue for leather, are often imported from China as no known manufacturer produces it locally.

But he is still cautious of Chinese adhesives, which, though are cheaper, cannot compare with those of Italians and the Dutch that are superior, not easy to come by and are often inaccessible to foreign firms.

Achara is also attracted to an offer from one of the new generation banks with several branches in Aba. The bank wants to offer him a loan of N1 million ($5,000) to expand, but is demanding an interest rate of 18 percent payable in 12 months.

However, he decides to settle for a relative who lends him a loan of N500,000 ($2,500) at an interest rate of 13 percent, which is equivalent to Central Bank of Nigeria’s Monetary Policy Rate, the benchmark interest rate for financial institutions in Nigeria.

The deplorable state of Aba roads makes access to the market difficult. To Achara, Aba roads are the most deplorable in the South East, making accessibility to customers difficult, but armed robbers’ onslaught easy.

Due to inconsistent and intermittent electricity supply in Aba, Achara’s firm has to acquire three generators, all of which run for more than seven hours each day.

“In fact, my ‘landing’ cost of production for a pair of shoes is about N2,200 ($11), but an imported pair of shoes is sold for N2,000 ($10),” said Achara, in a chat.

“We are in business to make profit. I will have to pay for my shop as well as taxes and levies. I will pay my apprentices some stipends and take care of my family, because this is my source of livelihood,” he said.

“But tell me, how will I set my market price?” he asked rhetorically, almost mechanically.

This paints the gory picture of the state of local footwear makers in the country, who play in an industry worth $680 million, creating 700,000 direct and indirect jobs, according to Olusegun Aganga, minister of industry, trade and investment.

In Abia State alone, there are more than 30,000 footwear makers, mainly small-scale. Added with other leather wear players such as bag, belt and trunk box manufacturers, the number increases to 80,000, according to Nnabugwu Osondu, secretary, Abia State Shoe, Bag, Belt and Trunk Box Association, who spoke with BusinessDay in a telephone chat.

In Aba, Lagos, Kaduna, Kano, Onitsha, and other parts of the country where footwear is made, the complaints have been similar: poor access to finance, raw material challenge, poor infrastructure and lack of adequate/sophisticated machinery.

According to Osondu, “we sincerely need finance to drive this industry.

“We often approach banks for finance, but they give us difficult conditions that we cannot meet. It is difficult because many of us are in the small- and medium-scale category.”

Aba shoemakers have now resorted to the use of the synthetic leather, often called the plastic leather, imported from China, because they find the price of animal skins from Northern Nigeria prohibitive, he said.

Hamman Haruna, managing director of Hamman Shoes, Kaduna, lamented that the constant use of diesel had kept on increasing his cost of production and continued to make his products unable to compete with imported ones.

Coupled with high cost of production is poor perception of made-in-Nigeria footwear by local consumers. Currently, local footwear makers put foreign labels on their products because they must sell their products, which if seen as locally-made, may not be taken too seriously by consumers.

“If we cannot be proud of our own products, then we are encouraging our artisans and local manufacturers to use foreign labels on their products,” said Thank-God Injima, managing director, Nwadiche Shoes, Aba.

“I was surprised to hear a senator in Nigeria confess in Abuja, in one of the trade exhibitions I attended recently, that he booked for some products to be imported from China. But a friend of his informed him that he could source those items in Aba, which he succeeded in getting. However, instead of being proud to say that the items were produced in Aba, he claimed that he sourced them from China, thereby depriving Aba and the country of the credit,” Injima narrated.

Rasheed Olaoluwa, CEO, Bank of Industry, Nigeria’s frontline development bank, in a chat during a factory inspection in Ogun State, said: “We need to get over this inferiority complex among our citizens. We should be proud and see a product made in the country as our own.”

Olaoluwa further berated Nigerian businessmen who advise local manufacturers to put foreign labels on their products, saying the practice was inimical to the country’s economic progress.

Even though Frank S.U Jacobs, president, Manufacturers Association of Nigeria, sees this type of branding as a sharp practice and misinformation, the practice seems to have persisted.

But one thing that stands out among shoemakers, especially those in Aba, is that their products are not as inferior as it is painted by some local consumers. This is evidenced in the fact that locally made shoes from the area are already being shipped to West and East African markets.

But one fact that should not be hidden is that locally-made products are not as competitive in the international market as they should be owing to comparatively lower quality.

Ayotola Oluwaseun, CEO, Olariwaju Lagos-leather Products Designers and Crafters, said more emphasis should be placed on improving the quality and consistency of locally-made footwear.

“I’m impressed with their products, because it shows some level of craftsmanship, but emphasis should be placed on improving the quality and consistency of their products, which is a key part,” Oluwaseun said, at a two-day market meeting, organised by the Leather Product Manufacturers Association of Abia State (LEPMAAS) and facilitated by Growth and Employment in States GEMS 1, held recently.

According to him, a couple of the artisans he spoke with produce very limited quantities of shoes, because they run their production manually. He advocated for procurement of better machines/equipment to make them consistent at every point.

“Let us make products that scream Nigeria, so that when we take it to the outside world, they would see that the product is different,” he said.

But the governments at federal, state and local levels have failed to create the right environment for this sector to thrive.

Taxes are still multiple. The outgoing government, which promised to initiate plans to increase revenue accruable from the industry to N20 billion annually and double its $680 million worth, did not live to its words. Power supply situation has worsened with the new electricity managers who keep complaining of gas shortages and lack of funds. Experts say Nigeria’s economic diversification mantra can never be realised as long as a sector like leather/footwear is still under-exploited.

 

ODINAKA ANUDU

 

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