One million pairs of quality shoes are produced every week in Ariara Market, Aba, capital of Abia State, in Nigeria’s south east, but the artisans/entrepreneurs, numbering at least 70,000, are missing out of huge opportunities because they still operate in an informal market.
With a market size estimated at N96 billion, the shoe makers operate in small disjointed pockets, in a disorderly environment lacking in basic infrastructure such as good roads, clean water and state-of-the-art machinery.
“The market is still largely unorganised. Some of us do not have business names, which is why it is always difficult to get loans from financial institutions because banks are cautious,” Mike Okwuonu, managing director of Judone Shoes, which operates in the hub, told BusinessDay.
The Nigerian military recently awarded a contract for the production of 50,000 boots, but the contract went to an Abia-State born shoe maker, based in the federal capital, who had state-of-the-art machines and adhesives, for the finish. Shoe makers at Ariara Market, who also applied for this contract, lost out, mainly for lack of the machines and the finishing materials.
According to Nnabugwu Osondu, secretary, Abia State Shoe, Bag, Belt and Trunk Box Association, many shoe makers do not have good machines and adhesives (glue) as it is difficult to get funds from local and international sources or get global partnerships necessary for local and international competition. Osondu said competing with China, which has cheaper products in the Nigerian market, is still a challenge.
Many of the shoe makers do not belong to the Footwear Group of the Manufacturers Association of Nigeria; thus, they are unable to access funding such as the 60 per cent allocation of forex from the Central Bank of Nigeria to manufacturers, or any other support enjoyed by members.
Before the suspension, in August 2013, of the Export Expansion Grant (EEG), an incentive given to exporters to make them competitive in the international market, the Federal Government often channelled grants to tanneries in Kano which are better organised and structured.
West African Tannery Company Limited and Fata Tanning, both located in Challawa, Kano, were beneficiaries of the EEG because their exports were captured.
“EEG has encouraged so many investors in finished leather. Once they finish production, the entire finished leather is exported to the detriment of local leather works manufacturers and this is affecting the finished leather sector, in Lagos, Onitsha and especially the Aba cluster,” complained Ken Anyanwu, national secretary, Association of Leather and Allied Industrialists of Nigeria (ALAIN).
Meanwhile, Nigeria’s economic downturn and foreign exchange scarcity present a big opportunity for local manufacture and export of shoes, experts say.
Traders in footwear from Cameroun, Togo, Ghana, Cote d’Ivoire and other East and Central Africa are directly buying leather shoes and slippers from Ariaria shoe makers, paying them in naira.
This is robbing Aba shoe makers of earning foreign exchange (dollar), a natural benefit of external trade. One key reason for this is the informal nature of the industry which makes it difficult to share market information and get capital to compete.
“All they need to do is to move their products to those countries. I understand they bear no cost waiting for the buyers, but as long as they already know where buyers are coming from, all they need to do is to deliberately move their products there and earn FX. Whatever they lose in logistics cost will be gained from foreign exchange differential,” said Ike Ibeabuchi, CEO, MD Services Limited, a services and manufacturing firm.
At the 2016 Tony Elumelu Entrepreneurship Forum, held in Lagos, late October, Abia State Governor Okezie Ikpeazu, proudly declared his state the SME Capital of Nigeria, where young people are in the business of making shoes, bags and clothes,” but business watchers say that the state government is not offering sufficient support such as infrastructure upgrade and capacity development to the artisans/entrepreneurs.
Their major raw materials which is leather, is in short supply, with many unable to obtain same from local tanneries processing animal skins into leather, which prefer to sell to buyers from Italy, Spain, the Netherlands, China and India, who pay them in dollars and euros, BusinessDay found.
They therefore struggle to get synthetic leather and adhesives, as they lack access to foreign exchange needed to import them from China and some African countries.
“Once the tanneries are through with production, they export the entire finished leather to the detriment of local leather works manufacturers. This is affecting the finished leather sector in Lagos, Onitsha and especially the Aba cluster,” Ken Anyanwu, national secretary, Association of Leather and Allied Industrialists of Nigeria (ALAIN) told BusinessDay.
A majority of shoe makers in Aba, however, have resorted to the use of a substitute known as synthetic leather, which is cheaper but not durable, according to Christian Nnajiaku, managing director, ChrisKenzy Shoe Industries.
BusinessDay market survey shows that the average price of a pair of made-in- Aba shoes is N2, 000.
Ariaria Market in Aba is the shoe hub in West Africa, with nine clusters, including Imo Avenue, Shoe Plaza, Bakassi (Umueghilegbu) Industrial Market, Old Site, Bag, Belt, Trunk Box and Powerline Clusters.
