Abebe Hode, 64, joined the leather industry in the late 1970s, right after graduating from high school.

He first worked for two years in raw leather processing, starting with the removal of hair from the hide or skin. The leather industry at that time was thriving with huge untapped potentials.

Abebe, who now works as quality control supervisor at Colba Tannery, is worried about the industry these days owing to the various challenges he sees. One problem that jumps out at him is the low quality of the raw material that comes in.

“When I started working four decades ago, 80pc of the hide and skin was within grade one to three, and the rejects not meeting export quality were very few,” he said. “Nowadays, the reverse is true as a result of natural or human-caused problems.”

Even though the number of tanneries in the country has grown to 24, the industry’s insiders stress that product quality, lack of access to capital and lack of market integration have created significant roadblocks.

At Colba, where Abebe works, the company has been impacted by these problems leading to production decline. Established in 2009, the tannery produces leather products for shoes, garments, gloves and belts for export to European and Asian countries, and processes up to 6,000 goat and sheep skins and large animal hides daily.

“For the first eight years, we exported up to four containers a month, which is not the case anymore,” said Kebede Amede, a leather technologist at the tannery that employs 300 people.

The company exported products valued at 16 million dollars in 2015. Last year, it saw a dramatic decline that registerd only a third of that figure.

The main cause of the decline in export performance was the directive that made it mandatory to export value-added products.

“The measure is not bad but requires market integration and great financial capacity on the part of the factories to develop the necessary technological capacity to produce competitive finished products and to meet the quality requirements of the importing countries,” argues Kebede.

To succeed in the export of finished leather products, the factory has to be well-equipped with suitable machinery and have a better financial profile, according to professionals working in the industry. They add that this will enable the companies to procure the necessary raw material and cope with the constantly varying needs of clients that follow a frequently changing fashion industry.

Low-quality raw hides and skins collected from local markets are considered one of the major obstacles in the production of quality finished products.

Hides and skins are easily damaged by external parasites that live on the skins of small animals and hides of cattle. Damage also occurs during slaughtering and handling of the raw material prior to its arrival at the tanneries.

“We have stopped engaging in the first stages of raw skin processing because of low-quality raw hides and skins,” said Demberu Yohannes, production head at Friendship Tannery Plc, a Chinese company established almost a decade ago that produces suede, a type of finished leather commonly used for jackets, shoes, shirts, purses and furniture.

“We couldn’t be competitive in the world market with the low-grade hides and skins, so we import wet blue and raw products from Sudan and Saudi Arabia for further processing and manufacturing of our products,” he adds.

The raw materials pass through multiples stages before they come out as finished products. Raw hides and skins are preserved with salt in the first stages and pass through machines and chemicals to be pickled. Then they are processed further and treated with chromium to end up as wet blue hides and skins.

The value of the highest grade of semi-processed hides is three dollars for every square foot and 1.30 dollars for those with lower grades.

Andrea Squillace, 61, an Italian who runs a family-owned leather business from Milan that specialises in gloves and a client of Colba suggests local manufacturers can only gradually become engaged in the production of finished products.