Low investments in value addition have denied the nation earnings as nearly 90 per cent of exports are raw hides and skin. Official records show that skin and hides exports earnings last year increased by 23.5 per cent to 8.4bn/-, a figure indicating that the industry is operating below capacity.
The Ministry of Industry, Trade and Marketing officials say the government's target is to enhance the capacity of local industries to process all the skin locally instead of exporting raw.
Tanzania's present capacity is to produce 2.8 million cattle hides, 3.8 million goat skin and one million sheep skin a year, which is nearly 94 million square feet but it is capable of collecting only 62 million square feet.
The tanneries capacity is to process 74m square feet raw hides and skin. There are eight leather processing plants with a total capacity of 73.9 million square feet, but it produces only 34.3 million square feet which is equal to 46.4 per cent of the installed capacity.
The plants include Moshi Leather Industries, Tanzania Leather Industries, Afro Leather, Kibaha Tannery, Himo Tanners and Salex Tanners - which can process 40 square feet of leather. Most of these factories operate at below 50 per cent.
Stakeholders say improvement in hides and skins handling can enhance the role of the leather industry in creation of employment and poverty reduction. In 2009, the industry generated 6.8bn/- in exports of leather related products.
The Permanent Secretary in the Ministry of Industry, Trade and Marketing, Ms Joyce Mapunjo, recently challenged key players in the leather industry to enhance the quality of their products to penetrate into many markets in the east African region and beyond.
"Despite various efforts at both national and local government levels, leather products sold in foreign markets have remained of low quality thus becoming not only uncompetitive but tarnish the country's name abroad," she said adding leather industry could have been the giant contributor of foreign earnings to the economy if stakeholders were making real investments to promote the quality of the products for local and international markets.
The industry's contribution to the economy has remained low due to many reasons. Ms Mapunjo said the factors included poor animal husbandry due to inadequate and poor quality feeds, diseases and the practice of branding with hot iron for identification purposes.
She said that the government is losing a lot of revenues through tax evasion as some greedy business persons provide wrong export figures.
"Such businesses quote low export prices and volume of the cargo to evade paying the right tax to the government," she stressed. She said the government has intervened by forming a special team to probe the continued incidences of tax evasion and culprits would be penalised.
Ms Mapunjo warned greedy businesses involved in smuggling of leather products, saying they would face music. There are reports of massive smuggling of raw hides and skins to neighbouring countries and the government loses about 1bn/- annually.
It was estimated that at least 50,000 hides per month are being smuggled out of the country, denying the government about 427m/- in export levy.
The Director of P.M.TITO'S (TWINS), a specialist in leather goods and garments, Mr Paul Michael, expressed concern over continued inflow of fake and cheap foot wear, referring them as factors that contribute to the killing of local industries.
"We are facing very stiff competitions from fake and sub-standard leather products sold at a very low price," he said. He said the Tanzania Bureau of Standards (TBS) should be more vigilant in checking fake foot wear imports to protect small scale local factories.