Probe starts into illegal export of raw hides, skins

Some hides and skins impounded at the Mombasa Port in the past. The government is investigating illegal export of raw hides and skins following complaints by tanneries that the vice could roll back gains made in value addition. PHOTO | GEORGE KIKAMI |

What you need to know:

  • Most of the exports end up in China, which has a burgeoning industrial sector in need of raw materials.
  • Sources added that the government stands to lose about Sh4 billion revenue through falsified weight entries in documents meant for export of skins and hides.

The government is investigating illegal export of raw hides and skins following complaints by tanneries that the vice could roll back gains made in value addition.

Many tanneries have had to scale down production due to inadequate raw materials as unscrupulous traders and government officials collude to export them to Far-East countries where demand is high.

Most of the exports end up in China, which has a burgeoning industrial sector in need of raw materials.

“The investigation is intended to fix the problem by sealing loopholes in the export conveyor belt, mostly at Customs department,” said a source.

Local tanneries experienced a down-turn in the 1990s following liberalisation that brought the nascent industry in direct competition with more developed low-cost production tanneries in the Far-East.

The sector has, however, posted growth since 2004 when the government initiated reforms and introduced tax incentives.

Players have had to grapple with several challenges, particularly in enforcement of controls meant to encourage value-addition.

“There is under-declaration in weight and value of wet salted hides, which is denying the tanneries raw materials. Many tanneries are operating at between 30 and 40 per cent capacity, which might lead to loss of jobs,” Tanners Association of Kenya chairman Robert Njoka said.

Sources added that the government stands to lose about Sh4 billion revenue through falsified weight entries in documents meant for export of skins and hides.

“Traders are declaring 13,000kg per container instead of the required 25,000kg per container. They are declaring Sh500,000 instead of Sh2.7 million per container, causing a loss of Sh2.2 million per container (in taxes). They are declaring Sh50 per kilo — Free on Bond — instead of Sh140, while the local price per kilo is Sh110,”Mr Njoka said last month.

This financial year, leather and textile sectors were identified as potential drivers of industrialisation to achieve Vision 2030 objectives.