CHALLENGES FACING THE PERFORMANCE OF LEATHER INDUSTRY IN TANZANIA:

Abstract

The study on challenges facing leather industries in Tanzania examined technological challenges that constrain the development of leather industries, institutional challenges that hold back performance of leather industries, and market factors that affect production of leather and leather products in Kilimanjaro region. This study was guided by the Evolutionary Theory of Economic Change (Metcalfe, et al., 2016), and the theory of Absolute Advantage by Adam Smith (Bidlingmaier, 2017).The study engaged a descriptive research design with a survey strategy, and adopted the concurrent mixed research approach. A sample of 75 respondents was drawn from Kilimanjaro International Leather Industries, Moshi leather industries Ltd and Himo Tanneries Ltd by using the non-probability purposive sampling. Semi-structured questionnaire and interview guide were employed to collect primary data. Quantitative data was analyzed through descriptive and inferential statistics. Chi square tests were deployed to examine relationships between technological, institutional and market factors, respectively, and the development of leather industries. Content analysis was utilized to analyze qualitative data. The study established that poor quality equipment (M = 4.3462, SD = .6039), outdated technologies (M = 4.2533, SD = .7369), insufficient fund to adopt new technologies (M = 4.0933, SD = .77413), poor effluent management system (M = 4.16, SD = .73795) and company reluctance to invest in research and development (R&D) (M = 4.08, SD = .79431) are technological challenges that restrain development of the leather industries. Also, insufficient skills (M = 4.2, SD = .59275), unfavorable government policy (M = 4.16, SD = .67863), quality control (M = 3.8667, SD = .7413), cost of compliance to various standards (M = 4.24, SD = .6543), and lack of workers skill development program (M = 3.9867, SD = .86201) are institutional challenges that restrain performance of leather industries. In addition, supplies of low-quality raw hides (M = 4.2, SD = .80472), non-tariff barriers (M = 4.1067, SD = .76359) and the presence of low-quality, low-priced substitute products (M = 3.96, SD = .93635) are market factors that affect production of leather and leather products. Also, there are significant relations between technological, institutional and market factors, respectively, and the development of leather industries (p< .05). It is recommended that the government and leather industries and the government should seriously invest in R&D and skill development. The leather industries should monitor the downstream and upstream marketing trends along with taking appropriate measure to make the industry more efficient and sustainable.