The leather and footwear industry in South Africa has a history stretching back to the Cape Dutch settlers, yet the sector today is fighting for its place in a market flooded with cheap imports. Productivity SA’s latest research report, An Overview of the South African Leather and Footwear Industry, examines how the sector performs in terms of employment, exports and GDP, and what stands in the way of a stronger, more competitive leather and footwear value chain.
Why the Leather and Footwear Industry Matters for South Africa
The leather and footwear industry sits inside the country’s broader Clothing, Textiles, Leather and Footwear (CTLF) sector, which government has repeatedly identified as a priority for economic development and decent, sustainable job creation. The industry has strong backward linkages to primary agriculture through hides and skins, and it plays a connecting role between upstream farming and downstream manufacturing, including automotive leather, footwear, furniture upholstery and general leather goods.
South Africa is one of the few countries with a leather value chain covering the full journey from hides and skins offtake, through wet blue processing, to finished leather and manufactured products for the automotive, footwear and general goods markets. Ostrich leather, produced mainly in the Western Cape’s Klein Karroo, adds a uniquely South African dimension to this value chain, with skins and leather the single highest value earner in that industry.
Key Findings on the South African Leather Industry
The report’s desktop research, drawing on data from the dtic, Stats SA, TIPS and the World Footwear Yearbook, points to a sector under sustained pressure since South Africa’s accession to the World Trade Organisation in 1994.
Trade effects. South Africa applies far lower import duties on leather and footwear than many trading partners, which leaves local tanners and manufacturers exposed to cheap and, in some cases, illegal imports from the East. China alone accounts for the majority of South Africa’s footwear imports, even as its share has gradually declined in favour of suppliers like Vietnam and Indonesia.
Employment effects. Employment in the clothing, textiles, leather and footwear industry has been in long term decline, dropping by around two percent a year between 2008 and 2017, even in years when production grew. Footwear alone accounts for roughly one in fifteen jobs in the sector, while the leather industry contributes about one in twenty.
Output and GDP effects. Leather and leather products, along with footwear, make a modest but meaningful contribution to manufacturing GDP. Growth in the leather and footwear industry tracked the rest of manufacturing fairly closely from 2001 to 2010, before both experienced renewed decline from 2014 onward.
What This Means for the Footwear Industry and Leather Value Chain
The report’s implications for productivity in the South African leather and footwear industry are clear. Raw hides and skins are frequently exported rather than processed locally, meaning the country earns far less from its own leather value chain than it could. Based on the evidence gathered, the report recommends that South Africa’s leather and footwear strategy should:
Encourage local processing over raw hide exports, including consideration of export duties on raw hides and semi processed leather to keep more value adding activity onshore
Build leather tanning expertise and close the skills gap through mentoring, skills audits and targeted training, particularly for the footwear industry’s youth workforce
Support small, medium and micro enterprises to form cooperatives that can pool resources for capital, investment and participation in regional value chains
Raise awareness among local retailers of the hidden costs of importing leather products compared with sourcing them locally
Continue channelling government support, such as the Clothing, Textiles, Footwear and Leather Growth Programme and the Clothing and Textiles Competitiveness Programme, toward productivity and competitiveness gains across the value chain
Read the Full Report
This research forms part of Productivity SA’s ongoing work to support evidence based productivity and competitiveness policy across South Africa’s manufacturing sectors. The full report includes a detailed look at the hides and leather value chain, the ostrich leather industry, industry role players, and a complete set of findings and recommendations for strengthening the South African leather and footwear industry.
