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The government has stepped up measures to curtail the exportation of raw hides by introducing a US$0.75 export tax on every kilogram of raw hide in a move that is expected to boost value addition in the leather industry.
During the past 10 years, the leather sector has been failing to absorb all raw hides and skins that are produced leading to more hides being exported from Zimbabwe in their raw form.
In 2011 alone, a total of 5,440 tonnes of raw hide including crocodile skins worth US$28 million were exported.
During the same year, a total of 2.2 million pairs of foot wear were produced while four million pairs of mainly cheap synthetic shoes were imported, essentially making Zimbabwe net importer of footwear.
Minister of Finance and Economic Development Patrick Chinamasa during the presentation of the 2014 National Budget last week said the introduction of export tax would help revive the sector, which was operating at less than 50% capacity.
"The leather industry currently operates at capacity levels of between 25-40% due to inadequate raw material supply, since leather merchants prefer to export the hides in raw form. I propose to levy an export tax of US$0.75 per kg on raw hides, in order to encourage value addition," he said.
This move by Government is expected to support the Zimbabwe Leather Sector Development Strategy, which was launched in June and expected to make the country's leather sector a vibrant and internationally competitive industry.
The strategy seeks to improve the leather sector in Zimbabwe and generate US$116 million in revenue by 2017 compared to US$82 million in 2011 at current sales and margins by 2017.
The main objective of the strategy is to transform the Zimbabwe leather value chain from the production and export of raw materials and semi processed products to the production and export of value added products such as finished leather footwear and other garments.
In October, Industry and Commerce Minister Mike Bimha said Government would adopt a cluster approach to value addition in the manufacturing industry in an effort to revive the areas that have been most affected by the demise of the sector.
"The sectors that have been prioritised include Leather and Allied products, Clothing and Textiles and Pharmaceuticals manufacturing," he said.
The manufacturing industry under which the leather industry falls, reached its peak in 2011 with average capacity utilisation of 57.2% but this fell to 44.9% in 2012 and continued to drop to 39.6% this year.
Source: The Herald