• Friday, June 21, 2024
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Foreign brands dominate local $200m leather goods market

Nigeria saves N4.2tn on manufactured goods imports

As the taste of the Nigerian middle class for quality leather goods steps up, foreign brands are moving into the market to meet the demand, Business Day investigations  show.

Meanwhile, industry analysts say Nigeria is not taking advantage of its leather market which is valued at over $200 million, blaming  the situation  on shortage of skilled manpower  to produce quality leather goods.

Nigerian leather exports rose considerably in 2010 to over $3billion, from $680 billion in 2008. Analysts attributed the increase  to investment by the major tanneries in higher value products.

They further estimate that Nigeria imports around $300-N500million  worth of leather products informally, annually, as the import of leather is officially banned. The estimated value of for domestic and regional markets is $200 million.

However, Olusegun Aganga, minister of Trade and Investment, said plans are being put in place for the country to double its revenue in the leather industry to $680m, adding that nothing stops Nigeria from increasing its annual revenue to N20 billion  if the right policies are put in place.

Recently however, Italian luxury brand, Ermenegildo Zegna, opened its first Lagos flagship store on Victoria Island, Lagos.

It is the first luxury monobrand boutique in the country. With over 100 years producing luxury leather goods, Ermenegildo has 557 Zegna stores in over 100 countries around the world, with total revenue of € 1.127 billion in 2011.

Consequently, the analysts say the only way of reversing the trend is by upgrading  knowledge in  modern leather works and sourcing for funds to attract highly skilled manpower.

According Funmi Onajide, founder, Regal, a local luxury brand, foreign brands like Ermenegildo Zegna have continued to dominate and have strong presence in Nigeria because local artisans have not been properly empowered to produce quality products that will rival those produced in Italy.

Onajide further said other foreign brands like Gucci, Chanel, Calvin Klein, Dunhill, are some of the brands largely imported into the country for Nigerian consumers who usually have preferences for European and American luxury items. “Local consumers rarely give a thought to locally manufactured leather goods,” she said.

Read also: Nigeria’s over N25bn leather value-chain to receive new lease of life

“Nigerian leather works are not being manufactured to international standard. We have a man’s bag in Buffalo. They come with lifetime guarantee. We have women bags in Nile croc. They are one-offs unlike Louis Vuitton pieces. You won’t see another person using it. Our bags come in different skins.

“For example, Buffalo is an exotic skin. Everything I import is certified. It means they are made of skin that has been authorised. This is also part of the Aviva range, the mirror. This is the Buyu range from Kenya, this part here is the Baobab tree, a combination of the tree of life and leather.”

She said that the high level of artistry in Africa’s rare pieces is reasons for Africans to consume locally manufactured leather products, although Nigeria has not gotten to that level yet.

“We often equate things sold in Africa to things we buy in the normal tourist setting, which is fine. But in my travel across Africa for luxury goods, in the high end malls, particularly in Southern Africa, North Africa, I saw that there is a very high level of artistry going on that is virtually unknown to us in West Africa.

“We are accustomed to buying designer products. But there is the same quality available in a very small market in Africa, where more than 90 percent of what they produce is being exported. For a lot of the pieces we stock, they are not known in West Africa,” she said.

ComTrade, the United Nation’s  International Trade Statistics Database, approximates the global market for finished leather goods at $ 1 trillion, while demand for leather around the world increase 3 to 4 percent yearly, from 2005 to 2008.

However, it fell in 2009 due to the global economic and financial crisis. Also, TradeMap data showed that China dominates the export market, with one-third share of the world market for leather. It is ahead of other leading manufacturers like Italy, Brazil, India, Pakistan, France and Hong Kong.

Footwear has been a major driver of growth for both China and Italy. Analysts estimate the global market for skins at around $29 billion. Nigeria has one of Africa’s largest livestock sectors and leather is the second major earner of foreign exchange after Oil.

The major drivers of recent change and growth in the Nigerian leather sector have been government interventions: the most recent being the banning of wet blue exports and a minimum requirement of crust exports in 1999. In both cases, many tanneries closed and only the foreign-owned tanneries had the financial resources and technological know-how to invest in new equipment, machinery, and technology.