Minister Melaku to Suspend Raw Leather Exports Amid Industry Crisis

Nov 22 , 2025. By BEZAWIT HULUAGER ( FORTUNE STAFF WRITER )

Melaku Alebel, minister of Industry, is drafting regulations to suspend the export of raw leather. He warned federal lawmakers that tanneries are being starved of resources. The sector, once seen as a flagship of value addition, is now beset by shortages and dwindling export earnings. Last fiscal year, leather exports yielded 25 million dollars, a sharp contrast to the 133 million dollars recorded five years earlier.

The federal government is preparing to impose a ban on the export of raw leather, a decisive intervention by Industry Minister Melaku Alebel sought to revive a domestic tanning industry in freefall.

The proposed ban, currently under drafting, marks a dramatic shift from earlier restrictive tax policies and signals the Minister’s frustration with years of policy failure in leveraging the country’s vast livestock endowment for industrial development. Melaku revealed that his Ministry is drafting new regulations to suspend the export of raw leather, blaming its exports for starving tanneries of the resources they need.

“We're drafting a regulation to stop raw leather export,” Melaku told federal legislators, pressing the urgency of his decision.

The authorities are considering suspending the export of raw leather as the federal government seeks to revive a battered industry and curb a mounting shortage of raw materials for domestic tanneries.

Over the past decade, Ethiopia’s vast livestock population has failed to deliver the anticipated economic returns, as quality issues, leakage, and weak policy enforcement have dogged the sector. The country is believed to host tens of millions of cattle, sheep, and goats, making it one of Africa’s leading livestock sources. In 2021, the off-take rate yielded an annual production of about 41 million pieces of hides and skins.

However, the numbers conceal a growing malaise. Despite the theoretical abundance, only 22 million pieces, roughly half of the annual production, reached tanneries. These account for an estimated 138 million square feet of material available for processing. The rest, according to industry experts, was lost to contraband, spoilage, or subpar collection and handling practices. The Leather & Leather Product Industry Research & Development Centre reported in 2023 that the country loses more than 240 million square feet of leather each year, at a cost estimated at one billion Birr.

Export earnings have reflected the downward spiral. In the 2020/21 fiscal year, the leather sector generated 40 million dollars, down sharply from 133 million dollars five years earlier, a 70pc plunge. In the decade beginning in 2012, earnings from tanneries collapsed by 84pc, while export volume shrank by 62pc.

Officials have attempted to prop up foreign currency inflows by imposing minimum export prices and hefty taxes on raw hide exports. Raw leather exporters are compelled to pay a 150pc tax and are required to sell their products at no less than seven dollars a piece. Minister Melaku is determined to go further and prohibit the trade altogether.

The squeeze on supply is felt sharply on the ground. Dagnachew Abebe, secretary general of the Ethiopian Leather Industry Association, represents a sector in distress. He pointed to a shrinking number of manufacturers, a severe shortage of raw materials, and a rapid decline in quality.

“Due to a shortage of raw leather, many tanneries have shut down," he said. “The Association doesn’t support the export of raw skin.”

There were around 35 companies a few years back, but now they have shrunk to seven. According to Dagnachew, the quality of hides and skins from the Addis Abeba Abattoirs Enterprise remains up to standard and is used for safety shoes and military footwear.

“The quality is declining day by day,” he said.

He attributed much of the decline to the shifting of oversight from the Ministry of Agriculture to the Ministry of Trade & Regional Integration, with agricultural extension programs for animal treatment discontinued in the process. Around 80pc of the low-grade leather comes from the way animals were treated before slaughter, and the remaining from the industrial processing.

"The sector’s woes cannot be fixed at the factory gate," Dagnachew told Fortune.

Contraband and the legal export of raw hides continue to siphon off quality materials from the domestic market.

Efforts to train workers through the TVET program have yet to translate into new job opportunities, as the sector languishes without quality input. Ambitious government plans unveiled over the past two years have set targets for the industry to reach 827 million dollars in annual export revenue by 2032. The strategic plan envisions the export of 166.5 million square feet of finished leather worth 208.1 million dollars, along with 45 million pairs of shoes worth 562.5 million dollars, 10.4 million pairs of gloves (20.8 million dollars), and 2.4 million pieces of leather goods and garments (36 million dollars).

Industry players, such as Evano Mesfin, manager of New Wing Addis Shoe Factory Plc, see that the reality on the ground is less promising. The factory has expanded from women’s footwear to other lines, but the same challenges persist. His company has managed a test shipment of safety shoes to Italy.

“The main challenge we're facing is the quality of hide and skin, which has recently deteriorated in quality,” he said, voicing hope that procurement directly from the Enterprise could improve matters.

The difficulties extend up the supply chain. According to Mesfin Tekelewold, a marketing processor at Addis Abeba Abattoirs Enterprise, the company auctions hides and skins every 10 days, with purchases typically ranging from 20Kg to 25Kg, and sometimes reaching 40Kg. Although the auctions are open to any licensed buyer, attendance is low, rarely exceeding 10 companies.

“Many companies are discouraged, and some of the companies have even changed their line of business,” he said, citing low prices and weak incentives as culprits.

Collectors often do not bother to transport skins to collection centres, as the price is too low to justify the trouble. The collapse of basic collection infrastructure is another obstacle. The Collectors Association, once operated numerous collection sheds, but new corridor development projects have resulted in their demolition.

“There is no shed that collects skins and hides, which is becoming the major challenge,” said Tarekegn Jida, deputy director general of the Leather Development Centre.

He called for the establishment of small posts to collect and transfer hides seamlessly to factories, and urged the use of dry trash trucks during the holiday season, when slaughtering peaks. According to Tarekegn, at current market rates, a seller makes 17.5 dollars from an oxen hide. A research study commissioned by the Centre revealed that pricing should be based on weight, not pieces, as one piece weighs about 11Km, a measure that deters exporters under the current regime.

However, policy solutions remain elusive. The Ministry of Finance has advised the Ministry of Industry not to intervene directly in the market, a position that limits what industry officials can do.

The sector’s setbacks are not new, but veteran industry observers say the underlying issues are deeper than they appear.

Kebede Amda, a leather technician with four decades of experience, believes that the export of raw skins, particularly if destined for food and of lower quality, is not as damaging as portrayed. He contended that the problem lies in the authorities’ failure to support collectors and enforce quality standards at every level adequately.

“The leather is thrown out before we get a chance to collect it,” he said, lamenting the impact of poor waste management and misplaced environmental activism.

Kebede believes that if the sector had succeeded, it would have created jobs and helped reduce unemployment through a long value chain for value addition. He insisted that incentives be granted to collectors, including duty-free import privileges for refrigerated vehicles, to help preserve raw materials for processing.

Minister Melaku delivered a sobering report to Parliament last week, telling federal lawmakers that the sector is challenged by global competition and chronic shortages of raw materials.

“It isn't as easy as exporting coffee,” he said.

The Industry & Minerals Affairs Standing Committee, chaired by Amarech Bakalo (PhD), pressed the Minister on poor results. The Ministry facilitated 681 million dollars in foreign currency to manufacturers last year, but the return on income was half that amount. The textile sector, given top priority, generated 118 million dollars, deemed “encouraging”, while leather exports yielded only 25 million dollars, all considered "disappointing."

“What we ask is results," Amarech pressed Melaku. "Show us the result. If the sector is not gaining, we should stop the incentive and shift our investment to the other sector.”

Melaku defended his Ministry’s efforts, pointing out that manufacturing returns are never immediate and that the sector needs supportive policies to thrive. He identified the lack of input and raw materials as fundamental challenges, adding that the problems extend beyond exports to import substitution. Other lawmakers cited past cotton gluts in Gondar, where overproduction forced farmers to burn their crops, and bemoaned the persistent lack of value addition in the manufacturing sector.

Melaku recalled that cotton exports were permitted at the time, but cost and international prices made them unviable. Only three percent of the three million hectares suitable for cotton cultivation is currently utilised. Tax issues similarly impact food processing, though the recent lifting of withholding taxes has offered some relief. Yet, many companies remain closed, waiting for a change in market and policy conditions.

PUBLISHED ON Nov 22,2025 [ VOL 26 , NO 1334]