Malawi Leather Industry Association says it is struggling to meet the annual demand for shoes, producing only 200 000 pairs against demand of 15.5 million, largely due to competition from imports and forex shortages hindering raw material imports.
Data from Small and Medium Enterprises Development Institute (Smedi), which is championing the revamping of the industry, said while there is ready markets for footwear in Malawi extending to regional neighbours, consumers mostly prioritise affordability of imports.
In an interview on Tuesday, Malawi Leather Industry Association president Edward Malunga observed that because of the challenges local companies are not growing.
“Whatever we produce does not receive much attention as the market mostly decides to buy what is lowly-priced though made from cheap materials,” he said.
Malunga, who is Bantu Arts and Craft director, said the situation leaves local firms with available stocks piling, thereby encouraging imports and increasing the foreign exchange import bill.
Speaking separately, Joan Leather Footwear director Annie Chifulemba said limited access to affordable funding has restricted their ability to invest in new technologies, expand operations and develop new products.
She said while foreign exchange scarcity has limited their ability to import raw materials and machinery for boosting production, currency devaluation has increased the cost of imported materials, making it challenging to maintain competitive pricing.
Said Chifulemba: “High inflation, interest rates and other macroeconomic pressures have affected consumer spending power and demand for our products.
“Disruptions to our supply chain have affected our ability to maintain consistent production and meet customer demand.”
She said through the Joan Leather Footwear and Accessories Expansion Project, which has been fronted in the Reserve Bank of Malawi Investor Compendium, the firm is looking for K110 million financing to increase production capacity and expand market reach.
The project could help generate over $150 000 (about K263 million) in export revenue annually and reduce imports of footwear and accessories by 20 percent through local production with 50 percent of raw materials locally.
The Malawi Leather Value Chain Strategy shows that the leather value chain has the potential to contribute to the country’s economic growth.
The strategy indicates that based on its animal resource of goats, bovine and sheep, the leather sector has the potential of earning $102 million (about K179 billion) that is if all hides and skins produced in Malawi are processed into finished goods.
It is, thus, estimated that at full potential optimisation, the value chain could contribute 3.9 percent to the gross domestic product.
As at 2024, the industry was estimated to be earning K1 billion against the potential at K45 billion.
In addition, the industry could potentially generate 3 500 jobs in the manufacturing of footwear and thousands others in accessories and footwear distribution and marketing.
In the Common Market for Eastern and Southern Africa (Comesa) region, footwear was estimated at 365 million pairs of shoes with a per capita of 0.85 pairs per annum.
Assuming all these pairs of shoes are produced in the region, approximately 365 000 direct factory level jobs would be created, which would stimulate increased demand in the use of finished leather, soles, glue and other accessories consequently creating more indirect jobs, according to Comesa.
Meanwhile, Smedi, through its K1.3 billion Enhancing the Competitiveness of the Leather Footwear in Malawi Project, has stepped up to address capacity gaps to supply security footwear and reduce imports by industrialising production.
