An Investigation of the Ethiopian Tanning Industry’s Competitiveness

Abstract

Ethiopia’s leather development plan has prioritized the tanning industry in order to accelerate the sector’s growth. The aim of this study is to identify the factors that allow and prohibit Ethiopian tanning industries from coping with competitive challenges, as well as the competitive advantages and drawbacks that the tanning industry faces. The study followed a primary and secondary data collection methods, which included both qualitative and quantitative approaches. In the study, 13 functioning tanneries in the country involved in leather production from 2020 to 2021 were investigated. The study data were collected through distributing structured questionnaire and having interviews with tanning industry top management body (i.e. managers, directors, and heads). The study results are presented in forms of the mean and standard deviation. The study findings revealed that the tanning industry competitiveness is low due to different determinates factors. With the exception of the country’s natural resource endowment in hides and skins and low labor cost availability, all determinants of competitiveness (raw material, infrastructure, skilled labor, industry and institution linkage, capital and managerial capability, and government policy) are found to be insignificant. Similarly, the tanning industry’s ability to use its cost advantage in raw hides and skins and maintain its market share on the domestic and international market is limited by poor quality of locally supplied raw material, lack of strong supporting institutions and association’s, lack of infrastructure, capital and managerial capability, poor industry and institution linkage as well as factors such as scarcity of skilled labor and raw materials (chemicals and spare parts). In order to enhance the competitiveness of the tanning industry in the country, the industry, government and stakeholders need to work in collaboration in creating strong supporting industries, fulfilling infrastructure, providing investment capital, and supplying experienced managers and skilled workers.