Ways higher tax charged on leather processing machines thwart sector’s

13Dec 2019
James Kandoya
The Guardian
Ways higher tax charged on leather processing machines thwart sector’s

ANNA Malongo (25) is one of shoemakers living in Nkunhungu suburb, few kilometres from the country’s capital – Dodoma, benefitting from the leather sector.

Her story dates back in 2013, after she attended a shoes designing and manufacturing training from Small Industries Development Organisation (SIDO).

She further attended another training organised by the Agricultural Non Actor Stakeholders Forum (ANSAF) in 2014 to further her capacity in the similar field.

Malongo now owns her small shoes making factory near Nanenane grounds, enabling her to earn a living for her family and the nation using hand machine at her workshop.

She says that her idea resonates with the fifth-phase government target of becoming an industrial economy and middle income country by the year 2025.

 “I’m currently owning a small shoe designing and making workshop. Together with me, i have employed more three workers. I sell my products to customers in Singida and some in Dar es Salaam region,” she said.

She has a special message, “I call upon the government to waive or lower tax charged to imported tanning and leather processing machine to enable us to buy raw materials at low cost.”

Malongo is not alone, she represents majority of small entrepreneurs who face similar challenges in different parts of the country and would one day want their dreams be achieved.

In her views, she describes lack of modern machines as one of big the challenges she encounters hence drawbacks efforts to realise her dream.

As a result, she uses hand machines that sometimes take longer time to finish one pair of product compared to if she had used machines.

 “If there are many skin processing plants, I could easily manufacture many shoes and at cheaper prices contrary to how it is now,” she noted.

Besides that, low investment in value addition denies individuals and nation earnings, as nearly 90 percent of exports are raw hides and skins.

Explaining her future plan, Malongo said “I want to be a larger scale entrepreneur owning a modern shoe factory that can employ many people as well as producing related products.”

What worries her, is the exorbitant prices charged to the imported tanning and leather processing machine amounting to 80 m/-, calling upon the government and the private sector to volunteer supporting her.

According to her, improvements in hides and skins handling can enhance the role of leather industry in creation of employment and poverty reduction.

Country situation

Despite the fact that Tanzania is second country to have large livestock population in Africa (accounts 11 per cent of African cattle population), the contribution of leather sector to GDP is remarkably minimal.

This is attributed by a number of factors including low public financing set through the budget allocated in the sector.

In view of the fact, there is a direct relationship between the level of investment in the livestock projects, (like any other economic sector) and its GDP contribution.

The experience has also shown that when a serious public financing to the livestock sector especially on development budget is made, there is a great potential for the livestock sector to contribute to the national economy.

At present, the livestock sector is predominantly done by smallholder’s keepers and pastoralists, many of whom are women constrained by a lack of access to inputs, services, information and markets.

Providing incomes for smallholders, the livestock sector has the potential to create thousands of jobs through increased production and commercialization of processed products both for domestic and regional demand.

On the other hand, more efforts in improving leather value chain is very important to make the sector vibrant, currently, it is performing at a very low level.

Traditional based animal husbandry practices, poor slaughtering facilities, old technologies in both tanning and leather manufacturing industries are some of constrains along value chain that limits the development of the leather sector in the country.

The government recently launched the Tanzania Livestock Master Plan (TLMP) to address all challenges facing the sector to achieve the Tanzania Development Vision (TDV) by 2025.

One of the TDV goals is that by year 2025 there should be a livestock sector, which, to a large extent shall be commercially run, modern and sustainable using improved and highly productive livestock to ensure food security, improved income for households and the nation while conserving the environment.

The Minister of Livestock and Fisheries, Luhaga Mpina said that at the launching of the plan held in Dar es Salaam that 64 percent of the fund set 1.4trl/- will come from the private sector while government contribution is about 36 percent.

The plan is an integral part of Agriculture Sector Development Programme (ASDP II).

He said the TLMP sets out livestock sector investment interventions on improved genetics feed and water resources, health services, huge investment on industry and factory.

Other interventions are on promoting private sector investments and business environment and hence complementary policy support which will help to meet the sector wide approach programme.

Furthermore, the plan sets also to develop and improve red and white meat production, milk and other priority livestock products.

“I call on the development partners and private sector to join hands with the Ministry of Livestock and Fisheries to ensure that the plan is effectively and efficiently implemented for the betterment of the livestock sector, the nation and the world as a whole,” he said.

In a similar sentiment, the (ANSAF) Executive Director Audax Lukonge said it was an important opportunity for the government to continue creating conducive environment for important stakeholders and the private sector as well.

He advised the government to review the livestock policy saying the current policy is outdated and need to be reviewed.

“The policy should be reviewed. It should focus on livestock, their owners and the value chain, increase efficiency, link production and the industries, link the private sector and industries and open employment opportunities.

According to the minister, Tanzania accounts for about 1.4 per cent of the global cattle population and 11 per cent of African cattle population.

It has about 30.5 million cattle, 18.8 million goats, and 5.3 million sheep. Others include 1.9 million pigs, 38.2 million local chickens, and 36.6 million improved chickens.

The sector employs about 50 percent of the population which is equivalent to 4.6 million households who their incomes depend on livestock.

However, the Trend Analysis of Public Financing to the Livestock Sector in the country shows that for the last six fiscal years, Tanzanian national budget has been increasing at different rates, from over 15bn/- in the fiscal year 2012/13 to over 31bn/- in the fiscal year 2017/18.

While the national total budget doubled between the fiscal year 2012/13 and 2017a/18, the public agricultural sector basket has not exceeded 7 percent.

Maputo commitment and Malabo declaration demand 10 percent national budget allocation to agriculture sector so as to attain annual 6 percent sector net growth.

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