The “Clothing and Footwear Retailing in Middle East and Africa, 2014–2019” report, published by Conlumino, provides an analysis of current and forecast retail sales in clothing and footwear across different channels in Middle East and Africa.
- Middle East and Africa to grow at a CAGR of 3.9% to reach US$55.7 billion in 2019
- South Africa is the largest market in the MEA region it also has highest share of total retail sales with over 29%
- Saudi Arabia is the fastest growing market in the region, while Clothing, footwear, accessories and luxury goods specialists is the largest channel, followed by Department stores
Manufacturing in Nigeria
From the above snapshot, we can see that Textile, Apparel and Footwear manufacturing accounts for 21% of the manufacturing sector which accounts for 22% of our GDP currently. When we break further footwear alone accounts for 40% of the stated sub sector.
Over the years, the Federal Government has implemented a number of macroeconomic policies, plans and strategies to diversify/revive the national economy through the development of key sectors, particularly the agricultural and agro-industrial sector. One of the Key areas identified that could support the attainment of this very laudable objective is the leather and leathers goods industry.
The industry plays a prominent role in the world’s economy, with an estimated global trade value of approximately US$100 billion per year. Developing countries dominate the world leather trade, accounting for more than 74% of export while developed countries dominate the world Finished Leather Goods (FLG) sub sector accounting for more than 80% of exported Finished Leather Goods.
China, Italy, Brazil, India, Pakistan, Hong Kong, France and Germany are among the world leading producers of leather and leather products. Footwear has been the major growth driver for both China and Italy. China being the largest producer of leather footwear producing an estimated 1.9 billion pairs of all types of leather shoes, accounts for about 44% of global production.
Africa produces about 96 million pairs of footwear, representing 2% of global output. Africa also accounts for 1% of heavy leather and 4% of light leather global production. Kenya is the largest producer of light leather, accounting for about 21% of Africa light leather output.
Nigeria, accounts for about 16%, making it the second largest producer after Kenya. According to the International Council of Tanners, about 65% of all finished leather is used in the footwear industry. The furniture, automobile and garment industries utilize 14%, 10.2% and 10% of finished leather respectively. Nigeria produces about 1.6 million pairs of leather footwear annually. This is likely to increase several fold with articulated industry development plan.
The value of leather export from Nigeria, between 2010 to date, ranges from USD600M — USD800M with over 40m goats and sheep skins crossing Nigerian borders annually.
In the last fifteen years, leather had alternated first and second position as non-oil commodity foreign exchange earner. However, Nigeria informally imports about USD 40 million worth of hides and skins from West, North and East Africa. In terms of footwear business, Nigeria owns only an estimated 10% of the domestic market, while its Chinese competitor boasts of a 90% share. Estimated import of Finished Leather Goods to Nigeria is about USD 300 million consisting of over 40 million pairs of shoes and other leather goods imported from Asia, Europe and the Americas. However, considering the volume of import of skins and Finished Leather Goods into the country, the revenue realized from export of leather is almost halved thereby reducing the economic impact of leather to the country.
Nigeria is not a key global player in the production of hide based leather. But, some amount of hide is produced and processed into leather by local tanneries for supply to FLGs producers.
It’s been reported by a number of literatures that Nigeria produce, in excess of 45 million pieces sheep and goats skins annually. These quantities are supplemented by importation of both skins and hide (wet and dried) from all over sub-Saharan Africa. On the other hand, the amount of skins available for tanning is reduced significantly by Nigeria’s feeding culture that encourages singeing of hide (mainly) and skins for food. In all, Nigeria is endowed with high density of livestock, however, the sector is characterized by a high degree of fragmentation, poor branding, packaging and unorganized distribution network of FLGs. In spite of huge amount of resource investments, there is low level of innovation, research and development activities.
The Nigeria leather value chain comprises more of informal skin and Finished Leather Goods businesses (small and medium) and a highly sophisticated and well-organized formal tanning businesses. The informal businesses consist of flayers, village collectors; urban abattoirs skin buyers, suburban skin dealers, major skin dealers, traditional tanners, services providers, input sellers (salt, transporters, local graders, porters etc.) and the Finished Leather Goods sector. The formal businesses consist of tanners and a few major skin dealers.
There are currently around 18 functional tanneries (2017), which is a significant decrease from the approximately 40 tanneries that were operational in 2000. The tanneries that are currently in operation have a total installed capacity which allows for processing of over 250,000 skins per day up to wet blue level. In total, industrial tanneries report that they purchase over 43 million skins per year and generate over 9,300 direct jobs. Traditional tanners typically work with raw skin and wet blue rejects, which are obtained at favourable prices through various channels: (1) directly from the village slaughter place, (2) through the network of skin traders and (3) from tanneries. These tanners have a long history of employing traditional methods to produce reasonably good quality finished leather, primarily for the local market.
The Nigerian FLG sub-sector has not been able to develop an industry geared towards export. Past attempts have not been successful. However, the sub-sector has been exporting product to neighbouring West African countries where it has a level of competitiveness. When it comes to leather footwear and accessories, innovation is very limited in Nigeria, and at best, firms will replicate market and fashion trends that are several years behind.
( Credit: Sterling Bank, GEM/BIG Portal an initiative of the Federal Government and FMITI)
A Conglomerate of Choice
The Lee group is a multinational Chinese conglomerate that deals in production of footwear, automobile assembly, steel, plastics.
The Lee-Group has over 40 years experience in steel, footwear and plastic industries and have been one of the earlier foreign manufacturing units to set up shop in Nigeria, they began operations in Nigeria in 1963.
They currently own dozens of brands but the most popular are as follows:
a) Standard Footwear Nigeria : With 1.2 million pairs all day production capacity, Standard-Footwear Nigeria is one of the biggest shoe-manufacture in West-African market.
The product includes more then 1,000 different styles of shoes: from simple slippers to beachcombers, from fashionable flip-flops to trekking-/sports shoes, baby footwear, leather shoes. Standard-Footwear Nigeria has now over 30 years experience in manufacturing of footwear. One of the biggest competence is the production of high quality EVA-slippers. SFN produce also with PVC, leather, fabrics materials, depends on the customers demands.
b) APIN Footwear : The Flip flop Brand ( Slippers) of the Lee group that accounts for 95% marketshare in the industry and is the monopoly in the flip flop industry with a whopping 1.5 million pairs of various shapes, size, color, patterns, configurations and motifs produced daily.
APIN produce EVA-slippers, sandals and flip-flops in Nigeria from its Kano mega factory. The slipper collection present an unlimited variety, a lot of different materials, colorful colors and variants. The design range goes from classic bathing shoes for the beach and leisure time to witty street shoes. All styles are smart, unusual with a lot of details.
c) Decent Bag: is a specialist in manufacturing all kinds of PE and PP polybags-products and shares 40% of the Nigerian polybag market. The product range is separated into two sections: the standard-market program and the special customer-specific program. Given its long year in production and high market share, Decent-Bag can provide more flexibility and possibilities to its customers.
The main advantages of Decent-Bags:
• highest quality standard, achieved by years of research:
• careful choose of material
• perfectly structured quality management system
- guaranteed weight, durability and usability
d)Sino PP Woven Bag (Nig.) Ltd : S.P.P. was founded in 2001, focusing to become a leading producer of PP and PE woven plastic bags in West-Africa.
S.P.P. manufacture all sizes of synthetic (PP) woven bags for packaging goods like cement, chemicals, and free-flowing goods like fertilizers, plastic granules, sugar, grains etc…
S.P.P. also produce block bottom valve sacks, compact brick shape, renowned for it ease of filling, handling, compact storage and efficient transportation.
Ideal for cement, sugar, salt, chemicals and free flowing goods.
Custom made according to customer specifications.
Standard sacks for food
Standard sacks with inner liner for hygroscopic goods
Coated standard sacks for hygroscopic goods
Color printing is also available on all above bags
e) Perfection Motors Company Limited: In Partnership with FAW has a semi knock down assembly plant that produces armored trucks for the security sector and other automobile usage.
Chinese Ambassador to Nigeria, His Excellency, Dr Zhou Pinjiang, during a meeting February 6, at his residence in Abuja bared his mind on the vision and strategy to expand the scope of his country’s relations with Nigeria especially in attracting Chinese companies to the country and securing Chinese funding for Nigeria’s economic development. Below are excerpts of his remarks at the meeting.
“I invited some Chinese businesses here (Nigeria).
Some of them have been here for more than half a century and they have done very well and the message I got from them is very encouraging. …the investment from China is increasing very fast.
I met some businesses, they are doing very well. I’m not sure whether you know WIMCO. According to the ranking, WIMCO, though it’s a Nigerian registered company, the Head comes from China. His company has been here for decades.
You see, when I was in the industrial zones in other states, I saw what was happening in China, nowadays and going back to ten years, twenty years. All the machines are busy operating and the workers were very busy. In that factory alone, that industrial park alone, every month, they manufacture 6000 tons of nails. Actually WIMCO employs more than 20,000 Nigerians here. That is why according to the Nigerian business ranking they rank 39th here.
“The Lee Group, they told me that even the slippers, out of ten Nigerians, eight are wearing their slippers. And they employed 26,000 Nigerians here. So why are these companies getting stronger and stronger, because I think they know Nigeria very well. Because they have been here for some time and have the Chinese background. They still have their connections and support network in China. So they mix their advantages in Nigeria and China.
They act as a good mix. In Lagos we discussed and actually everybody think it’s a good idea to promote made in Nigeria with China. It would not be a bad idea. As we think of China and Nigeria cooperation, we are working basically on two fronts. One is the major infrastructure development projects, like the railways, highways. So you see last week, the Minister of Transportation announced that the China Exim Bank has cleared 1.275 billion USD concessionary loan to support the Lagos — Ibadan road. And with this clearance of the concessionary loans for Nigeria from China Exim bank, well over 5 billion USD.
This concessionary loans, we are working mostly on infrastructural development, Zungeru hydro power and railway Terminus in Lagos, Abuja, Kano, Port Harcourt and the light rail in Abuja. And last year we completed the Abuja-Kaduna railway. And I know after the visit of my Minister, the Nigerian Minister of Finance kept sending more requests and we send it to Exim bank for consideration. We are all for them and we encourage China — Exim bank to do the assessment of whether we can do it or not for the concessionary loans.
The category two, is for the US 60 billion dollars. For 2016 to 2018, a three year timeframe, we have allocated 35 billion USD for all of Africa as concessionary loans. And as Ambassador to Nigeria, I encourage them to do more business with Nigeria. So, we are open on that. I have confidence we can do even more, because both countries have a lot of potential.
It will be mutually beneficial for the role of Chinese government. For the concessionary loans we have to provide the subsidy of interest to the Exim bank, because the Exim bank they charge at a lower rate but is good business. So the government has to subsidize the interest to them. So in this part we work very closely with the government. Some say, why do we borrow a lot from them, we say, we are open, because as we see the 35 billion USD will be used during the 3 -year time frame, but it’s not necessarily for Nigeria, maybe Liberia, Ethiopia, Kenya, but for us its open.
And another thing, I’m taking more interest in investment, because you don’t have to borrow. And in this area I shall say that the sky is the limit. (There are) huge potentials. You see, it’s possible, I think it might be right. Last year, more than 1/3 of the foreign direct investment to Nigeria came from The Chinese business, and we got the data from the Chinese side.
And the Chinese businesses show strong interest in doing business here. Why? They are not here to help you or anyone. They are here to help themselves. They are for business and Nigeria is attractive for them to do business. And it’s why they are also keen on the made in Nigeria project with China project. Last year the trade volume between Nigeria and China declined very quickly. Last year, I think its 10.6 Billion USD, 2016, and the year before was 15 billion USD. And in the other year in 2014 it was 18 billion USD. You see it declined very fast.
So what is the way forward for the business to work out? They floated this idea to me, that it’s better for them to turn trade into investment. If we can do investment here, that is a better way to solve the problem of foreign exchange or even the naira issue. The seed of the economic development of China town now as we call it ‘the supply side structural reform’. Why do we put so much emphasis on the supply side of the economy? Simple, over capacity of everything. Over capacity on anything, that is China’s problem.
But here we met another supply problem. We can buy everything here, but you wish more products could be made in Nigeria. So even in the economic sense, we think we can work together on this project. And in the political perspective, made in Nigeria is the thing. How soon can this be achieved and it will benefit Africa as a whole. If one day, and I believe that day will come, Nigeria becomes the manufacture centre for Africa and the world, I think it is most credible.
You have the population and the location, and the resources. You have all the things. So as we see it, if we could encourage more cooperation in the manufacturing sector in the investment area, then the practical cooperation between China and Nigeria, could be adequate. But if we have to do this, a lot of work has to be done. And I believe the media plays a very important role. So sometimes, according to our experience, the concept, the thinking, the philosophy is very important. In the early stages of the Chinese opening up to the world, not everybody saw it, (FDI), but it was a good thing. We tried very hard to tell our people if the foreign investment, the foreign businessman can make money here, then we can achieve our goals. In the same report we say, you make money, we achieve development. Because they are for business, everybody cherishes friendship but they are for business.
“At the end of 1978, China opened its doors to the outside world. Before then the FDI of China was zero, nothing. We had the Cultural Revolution. For 38 years, since 1978, until last year. We have attracted 1.7 trillion USD as FDI. And then even last year, it was 139 billion USD in China. And that means for 38 years we have used 1.7 trillion USD FDI.
But now the tide is turning. Why? 2015 was the first time the outbound direct investment surpassed inbound direct investment. So, last year the FDI to China was 139 billion USD and the outbound, 170 billion USD. Back in the 1980s to 1990s, few Chinese businesses had the money to invest in their growth. But now these things are different. The relocation of the labour intensive industry has been happening, because the labour cost is rising very fast in China. They have to relocate to the neighbouring countries in Asia. And as we see, why not Nigeria, why not Africa? It makes sense.
That is one thing. You are the expert to tell your people why made in Nigeria is important. Actually everybody knows, the problem is how can you achieve it?”
( Excerpts from the Chinese Ambassador interview with Nigerian Journalists in 2017)
There is resistance to a proposed multi-billion project in Jigawa State by the Lee Group as farmers in the affected communities treat those who collected compensation for their farmlands as betrayers to the extent of banishing some of them from their communities.
It is apparent that the issue of handing over 12,000 hectares of land spread across four local government areas to the Chinese investor, has indeed sparked a lot of misgivings in Jigawa State. It would be recalled that the Jigawa State government had in 2014 signed a Memorandum of Understanding (MoU) with the Lee Group to allocate land to the company to set up a sugarcane plantation with a view to setting up a multi-billion naira sugar factory in the state.
The Badaru-led government, which came into power in 2015, decided to continue with the sugarcane factory as agreed in the MoU. The company when completed is said to have a projection of an annual turnover of over N60bn with a proposal almost twice the existing local sugar production in the country, which is presently put at 75,000 metric tonnes per annum.
Recent investigations have revealed that the Lee Group which is into steel, footwear and plastics industries is one of the oldest foreign investments in Nigeria. The Chinese company has been in existence in Nigeria since 1963 and has continued to expand.
According to one of the company’s directors, Alhaji Ahmadu Haruna Zago, the company has over 40 outlets across the country with factories in Lagos, Rivers, Ogun, Jigawa and Kano, with a work force of over 29, 000. He added that Lee Group steel, footwear and plastics industry in Kano own companies like Valley, Standard Plastics, Asia plastics, Nigerian Spanish and many others.
Commenting on the crisis, the director stated that Lee Group of Companies is a law abiding company that won’t do anything against the laws of Nigeria. According to him, the company is in Jigawa based on the invitation of the State government.
“The issue of compensation has never been Lee Group’s part of the bargain; we have tested our sugarcane samples, collated our results which I am happy to announce to you that it has been very encouraging. The company isn’t in Nigeria to create confusion but to create wealth to all,” said Zago.
The director further revealed that based on the mutual understanding and the existing strong understanding between the company and its host communities, especially in Kano, the company has a policy that 85 per cent of its workforce should come from the host communities. “The company has built for the host community a big Friday mosque which is adjacent to the factory in Gezawa Local Government Area of the state and is presently building a modern hospital for the same community.
However, we have maintained our policy of employing 85% of the workforce from the host communities and I am sure one can tell what that means to the communities’ per capital income,” said Dan Zago.
It was gathered that the company has developed a policy of donating to its host communities every month as attested to by the village head of Dausayi in Gezawa Local Government Area of Kano State Alhaji Sulaiman Yahaya. He reaffirmed the community’s untiring assistance to the community members, adding that the monthly donation is timely taking into consideration the present economic hardship in the country.
“The company donates its products to host communities based on a time table drawn every month. My community Dausayi is one of the beneficiaries of such donations. Apart from giving employment to hundreds of our youth, the company has also assisted us in other ways,” said the village head of Dausayi.
However, United Labour Congress of Nigeria (ULC) Kano Chapter said the problem with the Lee Group, especially in Kano State, is that of not allowing workers to form unions.
Attempts to get officials of the Kano Chamber of Commerce, Industry, Mines and Agriculture (KACCIMA) to react to Lee Group’s business activities in the state proved abortive.
(Culled from Daily Trust Newspaper article on the Lee Group vs Local Farmers)
Diversify or Die
Chairman of Lee Group, Mr. Sheau Fung Lee, stated that the company’s investment in Nigeria in the last five years has hit N200 million.
Fung Lee, who commended the federal government for its support for the Lee Group since its arrival in Nigeria 54 years ago, said of the expansion plans for the shoe production factory: “Plans for setting up the remaining shoe production lines have been formulated and this will increase our production capacity to 120,000 pairs of footwear in the near future.”
Lee Group established its first company in Nigeria in 1962 and, today, provides employment to more than 25,000 local workers in the country in over 50 factory locations.
“In line with our group’s diversification strategy, we are venturing into agricultural development and our first point of call in Nigeria is Jigawa State. We are establishing a sugarcane plantation covering an area of over 12,000 hectares. We are also establishing a 10,000 metric tonnes per annum sugar refinery cottage company in Gagarawa, as well as starting commercial production of tomatoes, sweet corn and rice,” Lee said.
We recognise the impact the Lee Group has done in our Manufacturing unit and celebrate them as a Shadow Titan on Manufacturing.
(PS. Most information are gotten from news reports online, this information may not or may be accurate representations of the company, it also has some information on its website, the fact is the company is very silent on matters such as most chinese companies are, if there are information you do not agree with please feel free to correct or instruct )