Product Description: Leather goods are goods made from finished leather. The goods include suitcases brief cases, ladies’ bags, wallets, gloves, belts, footballs, etc.
Market Potential: With the largest livestock population in Africa, one could have expected Ethiopia to have thriving leather goods industries which supply domestic and foreign markets. But there is only one leather goods making factory in the country; and this was built to supply to foreign markets through an arrangement with a European marketing firm. Some of the products of the factory are sold in Addis Ababa in one or two shops. Apart from this, there are no supplies of leather goods in the country. the demand for leather goods is limited due to high prices of the products and the low purchasing power of the majority of the population. However, there is a section of the population which has the financial ability to buy leather goods like ladies’ bags, wallets, belts small briefcases. Of the 20 million people in the urban areas of the Amhara Region, at least 0.05 percent can afford to buy some type of leather goods. This will translate in to 100,000 potential customers. if we assume that one potential customer will buy one piece of leather goods per year, 100,000 units of leather (the majority of which will be ladies bags) goods will be sold every years. Even if half of this becomes actual demand, it will make a leather goods making factory financially viable.
In order to project the future demand, it is conservatively assumed that demand for ladies bag, wallet and belt increases by 1% while 0.25% increase is considered for the brief case. Accordingly, the following demand projection is obtained.
Projected Demand for Leather Goods
Sources of raw Material: The main inputs will be printed or plain chrome leather, cloth lining, stud, thread, rivets, buckles, pins, nails, flour, dyes, etc. The main inputs will be secured from domestic sources; others will be imported.
process and Technology: The main processes include lay out and cutting of components as per designs, sorting of components, assembling components, stitching or cementing with card board/plywood, fitting of stud or buckles, reverting, lining and fixing, finishing, brand staming and packing. Machines needed are flat bed industrial sewing machine, stitching machine, upper skiving machine, sole splitting machine, ball press, strap cutting machine, trade mark embossing machine and other accessories.
Estimated Investment: For a plant that will produce about 25,000 units of different types of leather goods, the estimated investment will be:
Buildings 350m2 at Br. 2000/m2 …………………….. =Birr 700,000
Plant and Machinery ……………………………….…= Birr 300,000
Working capital ………………………………….= Birr 200,000
= Birr 1,200,000
Benefits: Saves foreign exchange, will generate income to the Region, stimulates the development of the livestock and leather industry,
Location: Bahir Dar