As part of efforts to cut the country’s footwear import bill, a modern factory able to produce 900,000 footwear such as shoes, boots, and sandals is being constructed in Kigali’s Special Economic Zone, Doing Business has learnt. Imports of new footwear increased from $15 million in 2016 to $23 million in 2019, according to the Ministry of Trade and Industry. Rwanda exported $585,936 worth of footwear in 2019, showing a very big trade deficit. In an exclusive interview, Evalde Mulindankaka, the Acting Director General of Industry Promotion and Entrepreneurship Development at the Ministry, said that the government has facilitated an investor who owns “Rwantan Ltd” to construct a factory that is expected to start while producing 300,000 pairs of shoes per month. At full capacity, he said, the factory will produce 900,000 pairs of shoes per month. “We signed an agreement with the investor and the factory could start production in the beginning of next year  as construction works are at over 70 per cent. It should have been completed already but the Covid-19 pandemic affected its progress. We expect that the production will cover 57 per cent of total footwear demand on the local market and thus reduce import bills drastically,” he said. The demand According to the 2017 Leather Value Chain Technology Audit Report, to cover national demand, it would take seven shoe factories, each producing around 2.5 million pairs per year, to satisfy local demand for footwear. As footwear in Rwanda is largely based on imported shoes, a significant proportion of which are second-hand, repaired and refurbished pairs, it gives a great opportunity for Rwanda to industrialise to cover the forecast demand of 1.5 pairs per person per year (17 million pairs in total), the audit shows. Statistics shows that Kenya provides the largest value of new footwear imports to Rwanda, with a value of $8.2 million during 2015. This is followed by China, with $5 million worth of imports and Uganda with a value of $2 million. This represents lost income to Rwanda compared to the situation when footwear production is done within the country. There are around 100 SMEs involved in the production of leather goods such as shoes, belts, bags and others and the Ministry of Trade and Industry is enhancing their capacity to boost quality and quantity of footwear. “The Rwanda Development Board also shows that investors from Italy are interested in the leather industry and the private sector federation recently travelled to Egypt and found investors who are also interested in investing in Rwanda’s leather sector,” Mulindankaka said. So far, 30 SMEs are trained in the design of leather products for export, he said. According to SMEs, tanned hides and skins from a local leather factory are more expensive than those imported. “We hope that with the tannery park in the offing, the prices and quality must be assured to help us. We rely on imports because that is the only way to get diversified tanned hides and skins. Most of the tanned hides come from Kenya,” said Junis Mukanyandwi, an entrepreneur who makes women’s shoes. Yves Sibomana, another leather products producer, said that there is a need for setting hides and skins collection centres across the country to be able to seek investors for treatment. “There is a need for a modern tannery so that we can get raw materials locally at a low-cost price. It can also help create many jobs in the leather value chain,” he noted. “For instance, for a good tanned skin, one meter goes for Rwf2,500 on the local market. Yet we import the same size at Rwf1,300 from Nairobi in Kenya,” said Jean d’Amour Uwimana, another entrepreneur who makes shoes in Kigali and retails them in 12 shops across the country . Rwf12 billion tannery park for Bugesera According to Mulindankaka, the investor also seeks to venture into tannery to be able to easily get raw materials for local footwear production. “We have secured an investor to develop the Bugesera Special Economic Zone in which they must also develop a tannery park on 15 hectares. It could cost more than Rwf12 billion to set up the park and then seek an investor to tan hides and skins,” he said. The government of Rwanda and ARISE Integrated Industrial Platforms (ARISE IIP), a Pan-African company that designs, develops, finances, conceives and operates industrial ecosystems across Africa, are jointly working to develop the Bugesera Special Economic Zone. More than Rwf12 billion is needed to develop basic infrastructure for the tannery park. Among others, a sewage treatment plant is needed in the park, noted Angelique Umwali, the Vice Mayor in charge of economic development in Bugesera District. “We decided to set up a tannery park in Bugesera where all tanneries have to relocate so as to improve treatment of waste water from tanneries which need appropriate technologies,” Mulindankaka noted, making a case for a centralized effluent treatment system. According to Mulindankaka noted, the country has two tanneries (Kigali Leather Ltd and New RUCEP Rwanda Ltd) in a dormant state. Kigali leather which is located near River Akagera has to relocate to the proposed tannery park. The factory tans hides and skins and produces shoes but has been struggling with waste water treatment. “We hired consultants and they told us that there are technologies that can use less water in the tannery while others can use waterless technology to tan the skins. Within two or three years Bugesera Special Economic Zone will have been completed and the tannery might be available by the end of 2023,” Mulindankaka said. Reducing tanned hides and skins import bill The tannery is expected to reduce the import bill of tanned hides and skins. In the leather industry, hides are defined as skins of larger animals such as cows and camels while skins refer to those of smaller animals such as goats and sheep which are used to make leather products such as shoes. Rwanda imported tanned hides and skins worth $15.6 million in 2019, an increase from $13 million in 2018, mainly from Kenya, China, Ethiopia, the UAE and Tanzania. Rwanda is also losing a lot from exporting hides and skins that are not tanned. Raw hides and skins worth $14 million were exported in 2014. If transformed into finished leather products, they could have generated approximately $170 million, according to studies. The losses on hides and skins are also being incurred from exporting live animals. According to the Ministry of Trade and Industry, there is a need for sufficient capacity to locally process meat at required standards to meet safety standards so as to be able to get enough hides and skins for tannery. Hides and skins volumes to rise The need is based on the fact that livestock population and demand for meat keep increasing, triggering the rise in volumes of hides and skins. “The hides and skins must be locally tanned to supply raw materials to local shoe factories and export markets,” Mulindankaka said. Statistics show that the cow population increased from 1.13 million, in 2012, to 1.54 million in 2021. The goats and sheep population increased from 3.48 million to 3.61 million. In 2019 and 2020, Rwanda exported 4,397,095 kilos and 6,079,903 kilos of live animals, respectively, while 8,694,447 kilos were exported in 2021. The country seeks to reach safe and quality meat production levels of 215,000 tonnes per year in 2024, according to the Rwanda Agriculture and Animal Resources Development Board (RAB). In 2021, the country produced 185,989 tonnes of meat, up from the 76,830 tonnes in 2012.