Poor policy implementation, lack of export incentives threaten Nigeria’s leather industry

Nigeria’s leather industry, once regarded as one of the country’s most promising non-oil export sectors, is facing an uncertain future as operators blame years of policy neglect, inconsistent export incentives and weak government commitment for the steady decline of the industry.

An investigation by BusinessDay over the weekend, reveals that the poor implementation of the national leather development framework, coupled with challenges surrounding the Export Expansion Grant (EEG) scheme, has left many leather processing companies struggling to survive, forcing several tanneries to shut down operations and discouraging fresh investment in the sector.

Industry stakeholders say the situation has eroded Nigeria’s competitiveness in the global leather market despite the country’s vast livestock resources and long-standing reputation for producing high-quality hides and skins.

At the centre of the crisis is the EEG scheme, a Federal Government incentive designed to encourage non-oil exports and help local manufacturers compete internationally.

The scheme, administered by the Nigerian Export Promotion Council (NEPC), provides post-shipment incentives to exporters through Export Credit Certificates that can be used to offset tax obligations and access government-backed credit facilities.

However, exporters allege that the scheme has been plagued by delays, uncertainty and policy inconsistencies that have undermined its intended purpose.

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Speaking with BusinessDay in Kano, Abbas Hassan Zein, Managing Director of Z-Tannery Limited, said many leather exporters suffered significant financial setbacks as a result of prolonged delays in the payment of EEG claims.

According to him, arrears accumulated during the administration of former President Muhammadu Buhari remain unpaid for years, depriving exporters of critical funds needed to expand production, maintain operations and explore new markets.

Industry sources disclosed that when the payments were eventually approved after years of waiting, beneficiaries reportedly received only 50% of their approved claims.

They further alleged that an additional 30% deduction was applied during the payment process, leaving exporters with a fraction of what they were originally entitled to receive.

Stakeholders argue that the development weakened investor confidence and frustrated businesses that had relied on the incentives when making investment and export decisions.

“The EEG was introduced to promote exports and improve competitiveness, but the uncertainty surrounding the scheme has had the opposite effect,” one industry operator told BusinessDay.

“Many companies borrowed funds and expanded operations based on expected incentives, only to discover years later that they would receive much less than anticipated.”

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Beyond the EEG controversy, operators say the absence of a comprehensive and effectively implemented national leather policy remains one of the biggest obstacles confronting the industry.

A senior official at Fata Tannery in Kano, who requested anonymity because he was not authorised to speak publicly, described the lack of a coordinated policy framework as a major impediment to growth.

According to the source, successive administrations have announced initiatives aimed at revitalising the leather sector, but implementation has remained weak, inconsistent and largely ineffective.

“The industry lacks clear direction. Policies are announced but rarely followed through. There is little coordination among agencies responsible for livestock development, industrialisation, exports and standards enforcement,” the source said.

Findings indicate that despite repeated recommendations by industry experts and research institutions, little progress has been made in addressing long-standing structural challenges facing the sector.

Ibrahim Igomu, an industry expert based in Abuja, said recommendations made over the years by researchers and management of the Nigerian Institute of Leather and Science Technology (NILEST), Zaria, had largely been ignored by policymakers.

According to him, countries across Africa, Asia and Europe continue to invest heavily in leather production because of its ability to generate employment, stimulate manufacturing and earn foreign exchange. Nigeria, however, has failed to maximise the enormous opportunities available within its hides and skins value chain.

Experts argue that the country’s leather industry possesses strong fundamentals, including abundant livestock resources, skilled manpower and established export markets. Yet these advantages have not translated into sustainable growth due to policy failures and inadequate government support.

Industry data reviewed by BusinessDay reveal another major challenge confronting the sector: the diversion of hides and skins to local consumption.

More than 60% of Nigeria’s hides and skins are reportedly consumed locally as food, particularly in the form of processed animal skin commonly known as “ponmo.”

Stakeholders say this significantly reduces the volume of raw materials available to tanneries and leather manufacturers.

The shortage of quality raw materials has contributed to the closure of many processing facilities over the years. Industry estimates suggest that only seven of Nigeria’s 41 registered tanneries remain operational today, a sharp decline that reflects the worsening state of the sector.

The collapse of numerous tanneries has also had broader economic consequences, including job losses and reduced export earnings.

Analysts believe that reviving the leather industry could provide significant benefits for Nigeria’s economy at a time when the government is seeking to diversify away from dependence on crude oil revenues.

They argue that effective implementation of a national leather policy, timely payment of export incentives, improved livestock management practices and stronger regulatory oversight could help reposition the industry as a major source of non-oil export earnings.

Such reforms, stakeholders say, would attract investment into leather processing, footwear manufacturing and related industries while creating thousands of jobs for young Nigerians.

Industry operators further contend that economic opportunities generated by a revitalised leather value chain could contribute to social stability and improved security, particularly in northern Nigeria where livestock production is concentrated.

For many stakeholders, the message is clear: Nigeria already possesses the raw materials, technical expertise and market opportunities required to build a globally competitive leather industry. What remains missing is consistent government commitment, effective policy implementation and the political will to transform the sector from a neglected industry into a strategic driver of economic growth.

Until those issues are addressed, industry players warn, Nigeria risks losing even more ground in a global leather market that continues to expand while local producers struggle to survive.