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In an interview last Thursday, Zimbabwe Leather and Shoe Allied Workers Union organising secretary Mr Matthias Nyanhete said the shoe and leather industry, historically one of the towering sectors and a major employer in Bulawayo, was swimming in a sea of challenges that suffocated its performance.
“Over the past years production in the leather industry has declined. The situation became worse at the introduction of the multiple currency system in 2009,” said Mr Nyanhete.
“Most companies in the sector applied for recapitalisation under the Distressed Industries and Marginalised Areas Fund (Dimaf) but could not meet some of the conditions for the scheme such as the tax records.”
Mr Nyanhete cited factors such as the influx of cheap imported leather products from China, high production costs and obsolete equipment as major challenges blocking the growth of the sector.
The financial director of Salelane Enterprises and Pathfinder, one of the remaining players, Mr Charles Moyo, concurred saying Zimbabwe has become a nation of traders rather than manufacturers as it used to be.
“The leather industry has faced a 91 percent production decline over the last decade, which translates to loss of millions of dollars. The advent of dollarisation three years ago came with a host of negatives such as the erosion of the savings that we had made,” said Mr Moyo.
“We were left with nothing for recapitalisation in the face of high production costs, high wage demands and overall de-industrialisation. As it is, we have no access to long-term finance at competitive rates from local banks. There is no access to offshore finance as our economy is still viewed as high risk by investors.”
Mr Moyo said the sector was pinning its hopes on Dimaf, which has turned out to be a pipe dream.
He said the remaining companies in the sector need urgent finance to clear outstanding debts that include workers’ salaries, meet recurrent expenditures, purchase raw materials and replace aging machinery.
The chairman of the Leather Institute of Zimbabwe, Mr Nicoh Mpofu, is on record as saying the sector requires $50 million working capital.
He underscored the need to replace old machinery to increase the quality of production and ensure that local products remain competitive on the global market.
Online Reporter