THE MASTER PLAN

The 2005 Master Plan entitled ‘A strategic Action Plan for the Development of the Ethiopian Leather and Leather Products Industry was endorsed by the GOE and became an eye opener in terms of putting the leather and leather products industry in the global value chain (State Minister of Industry, personal communication). It

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introduced a top-down pull approach (TDA) with footwear, leather garment and leather goods industries taking the lead to pull the tanning sector to produce good quality leather and improve also the quality and quantity of raw material. The Master Plan identified the bottlenecks and constraints that affect the competitiveness of the sector. These problems were identified under each of the three leather sub-sectors: hides and skins, tannery and leather products. Under hides and skin sub-sector, the problems identified were lack of training and insufficient extension system resulting in poor husbandry, low off-take rate, defective and scarce hides and skins; poor hides and skins physical infrastructure resulting in lack of marketing system based on quality. Under the tannery sub-sector, the identified problems were poor management practices, inadequate pollution management, outdated equipment and technical constraints, lack of product diversification resulting in low production of finished leather and low capacity utilization. Such limitations of tanneries have put less pressure on the up- stream hides and skin sub-sector. Under the leather products sectors, the problems were insufficient availability of finished leather, poor workshop management, difficulty in component procurement, lack of skilled manpower, inadequate costing in footwear and garment, lack of shoe engineering and technology resulting in poor design and low diversification. In addition weak market information system on leather and leather products, weak negotiation skills in international market and poor image of the Ethiopian leather industry were believed to have negative impacts on the competitiveness of the sector (UNIDO, 2005)

The Master Plan also included a benchmarking of Ethiopian leather and leather product industry with against four countries namely Italy, China, Vietnam and India, which show similarities with the Ethiopian leather industry. The Master Plan suggested intervention areas to support the Top-Down Approach. These intervention areas pertain to macro-economic policies and finance, raw material, industrial management and market support, investment promotion and infrastructure (UNIDO, 2005).

Following the master plan study, the Ministry of Trade and Industry prepared an action plan to upgrade the leather sector in 2006. The action plan was referred as ‘Ministry of Trade and Industry (MOTI’s) upgrading program for assisting tanneries and footwear companies”. The action plan has set up some specific targets for finished leather and footwear during the next Ethiopian fiscal years (UNIDO, 2007). Similarly, many donors have involved in the sector in order to improve its competitiveness10.

The Ministry of Industry requested development partners to assist in the implementation of the Master Plan. Since 2005 UNIDO, with financial support of the Italian Cooperation, implemented, among others, projects such as ‘Assistance to the Leather and Leather Products Industry to improve its managerial and operative capacity’, ‘Made in Ethiopia project’, ‘support to the MSME cluster’, ‘the national cleaner production center’ (see table 2 for full list).

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The latest project UNIDO is currently implementing began in June 2009 and aims at upgrading the technical and managerial capacity of different players in the leather industry in order to increase export and attract FDI.

Other than UNIDO, donors such as USAID, GIZ are also involved in the leather sector. USAID focused on improving the quality of raw hides and skins which is undertaken through treatment and construction of warehouse. GIZ is involved in providing technical assistance to LIDI and re-engineering of leather industries through the Engineering Capacity Building Program (ECBP). The main involvement of the ECBP is in building the capacities of private companies in the leather and tanning sub-sectors particularly in making the companies competitive in product quality, process, delivery, leadership etc. This is achieved through the benchmarking exercise implemented by LIDI in cooperation with CLRI and FDDI. The initial benchmarking was implemented in seven tanneries and seven shoe companies selected by the government. ECBP used UNIDO’s initial benchmarking studies for the shoe and tanning sectors to conduct and implement company specific benchmarking studies.

In July 2011 the cooperation between LIDI and CLRI was confirmed by a twinning arrangement based on bilateral agreements of the two governments. The purpose of this twinning exercise is to strengthen LIDI’s technical and managerial capacity in supporting the Ethiopian leather industry. The twinning arrangement foresees a total of 550 man/months for short- and long-term experts from CLRI to perform more than 40 tasks over a period of three years. To date, more than 50 CLRI experts have conducted technology transfer missions at LIDI. The funding for the program comes from ECBP who also follows on the general technical and operational issues of the program. The cooperation between LIDI and CLRI is apparently quite successful. Both organizations seem to have established the basis for long-term cooperation. This apparent success story is also interesting with regard to an earlier attempt to establish a similar twinning arrangement with a German shoe research institute that was facilitated by GIZ. This bilateral cooperation was less successful and discontinued after about one year.

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