Challenges

The South African leather industry has encountered numerous challenges in recent years. One such challenge is the competition from cheaper imports, primarily from Asian countries, which has put pressure on local manufacturers. In the early 1990s, South Africa had a booming clothing and textile industry which accounted for a quarter of a million jobs. Two-thirds of jobs were lost in the two decades after the end of Apartheid due to restrictions around international trade being lifted. [1] Fluctuating exchange rates have also made it difficult for local manufacturers to remain competitive, as the cost of raw materials and other inputs can become more expensive.

High input costs, such as hides, chemicals, and electricity, have made it difficult for local manufacturers to maintain profitability. The industry has also faced increasing pressure to comply with environmental regulations, particularly surrounding the use and disposal of chemicals in the tanning process. The International Union of Leather Technologists and Chemists Societies (IULTCS) has developed best practices in tanning technology and provided recommendations to several countries, including South Africa, for adopting cleaner leather production technologies. South Africa faces environmental pressure due to continuous amendments to the NEMA Act, and the tanning industries must comply with these regulations, which are strictly enforced (Leather Value Chain Inception Report, 2022). Animal welfare considerations also need to be addressed [2]

Synthetic leather is another challenge facing the leather industry with the synthetic leather market estimated to reach US$ 78.5 billion by 2025 globally, at a CAGR of 4.4%.

Furthermore, limited access to finance has hindered small and medium-sized enterprises’ ability to invest in new technologies or expand their operations. A skills shortage in many industry sectors including in design and production has made it difficult for local manufacturers to compete with foreign companies. Since the COVID-19 pandemic, the whole CTLF industry has experienced significant disruptions in supply chains, reduced demand, and forced many manufacturers to shut down or reduce operations [3]. Recent challenges, such as the unrest in KZN and Gauteng, the war in Ukraine, and floods on the eastern seaboard, have also impacted the industry, causing damage to factories, retail stores, and affecting global supply lines [4].

Opportunities

The leather industry in South Africa has several opportunities for growth and expansion. These include:

1. Expanding the export market: South African leather products have the potential to meet global demand, especially from Europe and the United States, due to their high-quality reputation. By enhancing exports, the country could bolster its leather industry.
2. Capitalizing on the automotive industry’s growth: The automotive sector, a significant consumer of leather products, has experienced growth in South Africa. This presents opportunities for leather suppliers and manufacturers to provide high-quality leather for car interiors, such as seats, steering wheels, and gear knobs. The automotive industry’s growth also fosters innovation and new technologies in the leather sector [5].
3. Embracing sustainable production: With rising concerns about the leather industry’s environmental impact, there is growing demand for sustainably produced leather. South Africa’s leather industry can seize this opportunity by adopting environmentally friendly practices with the support of organisartions such as the National Cleaner Production Centre (NCPC) [6].
4. Attracting increased investment: More investment in the leather industry could modernize and expand South African leather production, leading to increased competitiveness and the development of innovative products [7].
5. Catering to the growing local market: South Africa’s local market for leather products, particularly high-end luxury items, is expanding. The industry can capitalize on this growth by creating products that cater to the needs of local consumers [8]. Additionally, the supply-chain disruptions caused by Covid-19 and the concommitant spiralling shipping costs are encouraging SA retailers to source products locally [9]
6. Government incentives such as the Clothing, textiles, Footwear and Leathwr Growth Programmee aim to grow employment, improve overall competitiveness and to grow the industry [10] http://www.thedtic.gov.za/financial-and-non-financial-support/incentives/clothing-textiles-footwear-and-leather-growth-programme-ctflgp/?hilite=leather