Leather industry players have appealed for access to finance to increase production capacity required to meet the growing demand following the ban on importation of security boots.
This follows the Ministry of Trade and Industry’s ban on selected imports, including leather products like security boots to empower local leather industry small and medium enterprises (SMEs) who demonstrated strong capabilities.
When justifying the ban, Minister of Trade and Industry Vitumbiko Mumba said leather SMEs have demonstrated high potential to the extent that the Malawi Defence Force has started giving them business, as such, other departments should follow suit.
However, in an interview on Wednesday Kabula Leather Cluster chairperson Daniel Mkama said sector players need capital to meet the demand although they have the leather design studio at their disposal.
He said: “We have the state-of-the-art design studio in Chileka, which guarantees production capacity but for us to access enough raw materials we need more capital.
“This is because the cost of producing one boot is K35 000 and some departments would order between 200 and 500 boots, which means we need enough capital to produce and meet the needed volume within the specified time.
Mkama said their capital constraints emanate from the fact that they have been producing at low capacity because most government ministries, departments and agencies (MDAs) have been importing security boots.
In a separate interview, Leather Industry Association of Malawi chairperson Edward Malunga described financing needs in the leather industry as critical and suggested that if the MDAs make part payment in advance or ensure payments of contracts don’t take long, the SMEs can meet the market demand.
“It could be easy for SMEs if the MDAs pay as early as possible because when they are importing, they make payment before supply is made,” he said.
Malunga said inquires for supply from the local leather SMEs have increased significantly since the minister announced the ban, a situation he said is promising but requires instant intervention in terms of financing.
In a separate interview, Chamber for Small and Medium Businesses Association executive secretary James Chiutsi said the SMEs sector need social financing models to capacitate them to upgrade their businesses while describing the ban on imports of security boots as the starting point.
Mumba said last week during the Buy Malawi Day commemorations that to ensure consistency in production, the ministry is doing some interventions, including discussing with financial institutions on the possibility of special financing to promising enterprises.
He said: “It is basically an issue of resources because many people have ideas and others have graduated from ideas to products, but the issue is resources to maintain consistency.
“As a ministry, we looked at it and there are interventions that have been undertaken. We are helping some small and medium enterprises with finance.”
Mumba said they are planning to meet various financial institutions to discuss what they can do to help small businesses at a meeting where the reserve Bank of Malawi governor will attend.
