Forex shortages choke footwear firm

TOP exotic leather shoe manufacturer, Millennium Footwear, says foreign currency shortages are throttling its operations and is struggling to meet supplier requirements, while at the same time affecting the firm’s competitiveness.

Millennium Footwear’s suppliers such as those that provide leather, require foreign currency for their own raw materials.

The company’s director Stuart Simali told the media in emailed responses that at the moment, capacity utilisation is at 50 percent due to a raft of challenges including foreign currency blues.

However, the capacity utilisation represents a 10 percent jump from about 40 percent in the first quarter.

Said Mr Simali: “We are very much affected by the shortage of foreign currency since most of our suppliers like the leather suppliers import chemicals, of which, most of the times they will be running short of chemicals due to the foreign currency shortages and in turn it affects our productivity and delivery times.

“As we spend most of the time waiting for the leather, this increases our cost of production, which in turn, affects our competitiveness in the export market. We try to substitute to a certain extent by using locally available materials (but they) are of inferior quality.”

Based in Bulawayo, Millennium Footwear is selling 10 percent of its products to a number of neighbouring countries.

Said Mr Simali: “We export to Zambia, Namibia, Botswana and south Africa. Our exports are at 10 percent of our production. We are also trying to penetrate the European market; this we are doing with the help of ZimTrade, who have facilitated the coming in of experts from PUM (Netherlands) to our factory.

“This is to ensure our product quality meets the European standards.”

Last week, Millennium Footwear hosted a production expert and in the first week of October, they will have a marketing expert.

It is expected that in mid-October the company will also have a designing expert from retired experts based in Germany.

Government has challenged ZimTrade to promote local companies mainly horticulturalists so that they export more and generate more foreign currency for the country.

ZimTrade has since engaged retired experts from Netherlands and Germany so that they teach farmers on how best to tailor-make their producers to meet market requirements.

Mr Simali said: “We really appreciate the assistance from ZimTrade to us as Millennium Footwear, and to the whole leather value chain.”

The Reserve Bank of Zimbabwe (RBZ) has encouraged local producers to export their products so as to rake the much-needed foreign currency for the country.   

Millennium Footwear’s product range includes footwear made from elephant, hippo, crocodile, ostrich, buffalo and giraffe leathers.

The footwear will be casual, classic, safari, safety and sandals.

Mr Simali said the company also makes leather belts.

For the local market, Millennium Footwear mainly uses cow leather.

Apart foreign currency shortages, the country’s leather sector is contending with a myriad of challenges including cash shortages, old machinery, ageing skilled labour force, unavailability of a training institute for young personnel, a general difficult operating environment, and red tape in terms of doing export business.

Mr Simali said when one want to export, they are confronted with “just too much paper work”, delays in clearing raw materials and finished goods at border posts.

He implored Government to assist the leather sector by addressing the challenges and offering “better export incentives to exporters”.

“It (Government) should also speed up the implementation of Special Economic Zones but should involve all stakeholders. Currently, it’s done in a not-so-transparent manner like you find out that meetings for the leather sector are held without the involvement of major players in the tanning and footwear sectors.”