Smuggling of raw hides, skins impede sector growth

Smuggling of raw hides and skins hold back development of the leather sector and making it contribute little to growth, job creation and alleviation of poverty despite its enormous potential.

Creating jobs and alleviating poverty remain at the top of the government priorities, by creating enabling environment as well as increasing investment for infrastructure improvements in view of achieving big results, particularly in the improved living standards of its citizens.

Smuggling of raw hides and skins would mean taking jobs from Tanzanians, denying the badly needed government revenues and premium returns to livestock keepers.

Available statistics put Tanzania in the second place in Africa with the largest population of livestock having potential of producing 3.6 million hides and around 6.1 million skins but surprisingly, almost all tanneries in the country have shelved production due to insufficient raw materials.

The increasing population growth in Gross Domestic Product (GDP) per capita and urbanisation are boosting the demand for food of animal origin in Tanzania, consequently, increased volume of raw hides and skins for the domestic tanneries.

“Apart from swindling the much needed government revenues; the malpractice has been denying tanneries necessary raw materials, thus cutting down production capacity.

This has also resulted into the factories cutting down number of employments for operating under capacity,” said Mr Onorato Garavaglia, the Tanzania Tanners Association Chairperson.

He said the government was losing revenues worth 1bn/- per month, due to smuggled raw hides and skins from about seven to 10 containers which are illegally passing through the Dar es Salaam port.

According to the study commissioned by Tanners Association, more than 10,000 people could have been employed in the sector and about 15.67bn/- paid to the government annually in terms of pay as you earn (PAYE), skills and development levy as well as workers pension contributions if appropriate measures are taken to address incidences of smuggling.

The study revealed further that tanneries could pay more than 6.48 million US dollars as import duty annually for the importation of chemicals. Mr Garavaglia said this while commenting on the failure by the Tanzania Revenue Authority (TRA) to take appropriate measures against culprits nabbed at the port with three containers of smuggled raw hides and skins.

Recently, three containers each weighing 80 tonnes of what is claimed to be wet salted skins and hides were impounded at the Dar es Salaam port being under declared. The value of the consignment is estimated to be over 240m/-although the owners under declared its value at only 140m/-.

“The three containers seized last week at the port is just a small portion of the consignments of raw hides and skins smuggled every day, thus stunting the growth of the leather sector as well as denying the government massive revenues,” he said.

Mr Garavaglia said each container passing through the port is taxed between 30m/- and 40m/- depending on whether is raw hides and skins respectively.

“It is not enough to impose penalties on the culprits linked with the smuggled raw hides and skins, but it is high time that the government take stern measures against them including confiscation of the consignments,” he added.

He added, “As Tanners association, we would like to know the owner of the containers, where were the consignment heading to and where the raw hides and skins originated.”

He said while the government was struggling to put favourable environment for investors, there are few government officials putting stumbling block to the efforts by collaborating with some owners of the warehouses to ensure the illegal business is successful.

Speaking at the event, the Leather Association of Tanzania (LAT) Executive Secretary, Mr Joram Wakari, said it was high time that the government acted strongly on the illegal business on raw hides and skins for the sector to contribute accordingly to economic growth.

Tanzania with a comparative advantage in livestock production has failed to tap fully opportunities from the sector, due to lack of information and missing markets that lock the poor into portfolios of activities of low returns.

As the market imperfections loom large in rural areas, however, decision makers should design and implement the appropriate policies to make the poor fully exploit gains from livestock demand, he added.
Source: Daily News, reported from Dar es Salaam, Tanzania
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