If there is any sector that truly sets Ethiopia apart in Africa—beyond the global acclaim of Ethiopian Airlines—it is leather. Across the continent, countries grow coffee, raise livestock, and produce agricultural commodities similar to Ethiopia’s. But few can claim the same global recognition for high-quality hides and skins. For decades, Ethiopian leather, particularly highland sheepskin, has commanded a reputation that often preceded the country’s name itself. Yet this advantage has been fragile: inconsistent quality, limited industrial capacity, and structural barriers have prevented the sector from reaching its full potential.
This paradox mirrors Ethiopia’s broader struggle with industrialization. Despite being home to Africa’s largest livestock herd—estimated by government data at nearly 200 million, including 65 million cattle, 50 million goats, and 40 million sheep—Ethiopia continues to export low-value hides and semi-processed leather, while importing finished footwear, bags, and garments. According to the Ministry of Trade and Regional Integration, leather exports brought in just over 120 million USD last year, less than one percent of Ethiopia’s total export earnings, despite the country’s unrivalled raw material base.
Small and medium-sized enterprises (SMEs) have demonstrated dynamism, particularly in footwear production, but they face chronic shortages of accessories such as adhesives and soles, difficulties accessing foreign exchange, and cumbersome trade procedures. Meanwhile, larger investors benefit from easier access to credit and inputs, widening disparities within the industry. Tanneries remain undercapitalized, and poor animal husbandry practices—ranging from branding to inadequate veterinary services—further undermine hide quality.
RELATED POSTS
The state has not been idle. Ethiopia has invested in leather-focused industrial parks, equipped with zero-liquid-discharge treatment facilities, and attracted global firms such as Huajian and George Shoe. The government’s industrial policy envisions creating 300,000 jobs in the leather value chain by 2030, supported by abundant labour at competitive wages and preferential access to major markets through the EU’s Everything But Arms initiative. Ethiopia’s benefits under the US African Growth and Opportunity Act (AGOA), however, were suspended in January 2022 following allegations of human rights violations during the Tigray conflict. While this suspension has sharply reduced leather and textile exports to the US, Ethiopia remains eligible for reinstatement should conditions improve.
Beyond incentives, leather has lagged behind textiles in foreign investment and export performance.
The contrast with Asia is instructive. South Korea, Taiwan, and Singapore began their industrialization with little more than determination and coherent policy. Their governments intervened decisively, targeting industries, subsidizing exports, and imposing strict performance benchmarks. Firms were compelled to meet export targets, bureaucracies were professionalized, and education was aligned with industrial needs. Crucially, these countries refused to remain commodity-dependent. They moved rapidly up the value chain—textiles to electronics, assembly to innovation—anchoring their economies in global competitiveness.
Ethiopia’s path has been far more uneven. Under Haile Selassie, import-substitution industries were protected but lacked export discipline. The Derg’s nationalization sapped efficiency. More recently, the developmental state model pursued export-led industrialization, but implementation was undermined by unreliable infrastructure, political instability, and forex shortages. As a result, Ethiopia’s industrial exports remain dominated by garments, while leather’s share has stagnated.
The African Continental Free Trade Area (AfCFTA) could provide a new opportunity. Demand for affordable, durable footwear and leather goods is growing across Africa, where imports from Asia still dominate. With lower tariffs and harmonized trade rules, Ethiopian producers could expand beyond domestic and Western markets. Leather products, being labor-intensive and easily transportable, are well-suited to regional trade. But unless firms upgrade quality, improve logistics, and gain easier access to credit, AfCFTA risks deepening Ethiopia’s import dependence rather than turning it into an export platform.
The lesson from Asia is clear: market access alone does not drive industrialization. Performance-based support, targeted investment in skills, and consistent policy execution are indispensable. For Ethiopia, this means upgrading veterinary services to improve hide quality, recapitalizing tanneries, expanding vocational training, and reforming financial markets to ease access to foreign exchange. It also means aligning industrial parks with supply chains that integrate SMEs, rather than isolating them.
The stakes could not be higher. Ethiopia’s population—already more than 120 million—is projected to reach 150 million by 2030, with nearly two million young people entering the labor force annually. Agriculture cannot absorb them, and services cannot generate sufficient formal jobs. Industry remains the only sector capable of absorbing labor at scale, earning foreign exchange, and altering the economic structure.
Leather, with its raw material abundance, labor intensity, and established global reputation, is a natural candidate to spearhead this transformation. But its success depends less on what Ethiopia has than on what it does. Industrialization is not about potential but about execution, discipline, and institutional coherence. The Asian Tigers proved that transformation is possible under conditions far less favorable than Ethiopia’s. The question is whether Ethiopia can summon the same resolve before another decade of opportunity slips away.
Samson Berhane is an economics graduate with expertise in business and economic reporting and communications. He can be reached at [email protected]. The views expressed in this article are his own and do not represent the opinions of the institutions he is affiliated with nor that of the magazine.
