Ethiopia: Technology Transfer Uplifting Leather Industry
Experts in the leather sector contend that the effects of technology transfer on the leather industry have been positive, in terms of improving productivity, and in elevating the sector into manufacturing high value products.
Despite Ethiopia's abundant resources in cattle population, whose skins and hides are the basis for some of the world's best leather, the country has utilized so little of it so far. And various studies and experts have argued that the success of the leather sector of Ethiopia hinges, among others, on its ability to boost technology adoption/transfer.
According to Abdissa Adugna, General Secretary of Ethiopia Leather Industries Association (ELIA), technology transfer has played a role in the country's move from exporting semi-processed items towards exporting finished leather products.
He states that technology transfer has helped elevate the sector from producing semi-processed leather products to manufacturing high value products. This comes as a result of the technological improvement that took place within the sector.
The low level technology involved/utilized in the sector has been elevated, resulting in increase in productivity. "The leather products we now export are finished products, unlike ten or some odd years ago, where we used to export semi-processed leather goods. We have now reached a level where we export leather wardrobes/garments, gloves and other leather products."
Although that much needs to be done in terms of improving productivity and taking the technology level to higher level, says Abdissa, the sector is now at a satisfactory level compared to past times.
He notes that pertinent stakeholders shouldn't sit on their laurels considering the ever-growing sector, and demand in the global market. It is hard to say that it will be enough for the times ahead, there are works that need to be done to further improve in terms of using modern technology and bypass the challenges, he concludes.
The government of course has been committed to combine modern technology to bypass the bottlenecks facing the sector, which culminated in the setting up of Leather Institute Development Institute (LIDI).
Established to trigger rapid development within the domestic industries by facilitating technology transfer, the Institute believes there has been headway made in terms of augmenting the sector's productivity and competitiveness.
Institute General Manager, Wondu Legesse, says that the Institute is carrying out development and transfer of leather products' technology through four packages with various positive outcomes.
He says one way the Institute transfers technology is by developing and transferring new design and products as a package to leather industries that are already in the export business or have a potential to do engage in.
In addition, the Institute also develops and transfers machinery to Small and Medium Enterprises (SMEs) through reverse engineering technique.
The Institute identifies the machinery requirement of SMEs, especially those which are expensive and can be manufactured locally, and then transfer them so that the enterprises produce better quality and improve their productivity with this technology backup, explains the General Manager.
"And in this regard, on top of the successful development of some critical machines, seven machines needed for footwear production have been developed.
Wondu also mentions the linkage between FDI and local industries as one platform used by the Institute to facilitate technology transfer within the sector. "Though the numbers of investments that have joined the sector are limited, the ones who have already joined are big in size."
The companies have an integrated facility to produce footwear, which includes the outsole, mold and last production and these are the gaps that the local industry faces, he adds.
Furthermore, he notes that given that linkages are made not only by supply of products, but also through provision of technical know-how, some local industries have started producing some of these items, having used the technical and technology transfer facilitated by the Institution.
On top of helping local industries produce higher quality with improved productivity, whilst becoming competitive in the global market, he opines that technology transfer tangibly foster the economy in general, serving as a catalyst for cross-sectoral linkage among metal engineering, plastic engineering, and petrochemical industries.
Addis Ketema, Director of Leather and Footwear Research and Monitoring at Ministry of Industry, for his part zooms on disentangling the positive effect of technology transfer on the productivity of domestic leather firms from FDI.
When attracting FDI, one of the objectives is to transfer technology, as professionals that work under them are provided with training, he explains.
Further hammering the role of foreign investment in generating technology spillovers to domestic firms, Addis highlights the positive role industrial parks that are being built in the country can play in developing and transferring leather product technologies, and thereby boost skills formation.
As foreign investors get involved in industrial parks, they will have the opportunity to create job opportunities for the youth, where the chance for our unemployed youth to increase their skills and knowledge will be high, he says adding the fact that technology is transferred when they are able to work practice and master what they have learned or acquired.
Next, the move will be to open up their own footwear and leather goods businesses and industry as their capacity and capital blossoms.
To this end, the Director cites Huajian - one of the largest shoe exporters in China - as an example. The company sets up its factory in Ethiopia in 2011 with a plan to invest 2 billion USD in developing manufacturing clusters focused on shoemaking for export.
But for Addis, in addition to the heavy investment and job creation, what caught his eyes is its effect in generating technological spillover to indigenous leather industries. "It is with seeing the country's leather industry potential attract such kind of heavy investment that I say the sector has a bright future ahead of it."