‘Export grant killing Nigerian leather sector’
Participants at the just concluded conference on “Understanding the Impact of the Export Expansion Grant (EEG) on Leather Industry” organised by Growth and Employment in States (GEMS1) have stated that big enterprises have captured market share at the expense of midsize and smaller operations in the EEG. The capture, according to the participants, had resulted in the closure of most tanneries in the nation.
This was contained in a communique issued at the end of the conference held in Kano. According to the communiqué, the administration of the EEG has not been transparent and equitable as it is not available on an equal basis to all enterprises in the leather sector (tanning to finished leather goods). This, the communiqué stressed, provides the opportunity to embed corrupt practices in the EEG’s operation and particularly makes grant unavailable to SMEs.
It further revealed that uncertainty of access to the grant, especially the current suspension, has seen raw skin prices fall as much as 50 per cent in recent months. The participants mentioned that finished leather is only an intermediate product in the leather value chain which eventually produces retailready finished leather goods. The quantum of the grant that applies to finished leather, the participants lamented, is too high and limits the availability of finished leather for further value addition in Nigeria.
The communique also revealed that the grant has reduced the number of operational tanneries in Kano state from over 30 to less than 7, a situation the document termed as the catalyst that forced local finished leather goods producers that have the capacity to consume a significant proportion of locally produced leather to buy semi-synthetic leather from Asia, with the resultant exportation of jobs which could have been done in Nigeria.
The communique recommended a continued advocacy by stakeholders within the leather sector to ensure a formal review of the EEG.