Justicia Shipena
Government revenue from the leather industry is expected to decline following a reduction in export levies.
This week, the Ministry of Finance announced revised export levy rates on skins and hides, effective 1 May 2025.
The levy on raw skins and hides was reduced from 60% to 15%, while the levy on pickled skins dropped from 15% to 10%.
“Export levies on raw materials can have a detrimental effect on investment, which will lower the long-term supply of raw resources, by lowering domestic prices in the country while implementing the measures and raising uncertainty,” said economist Josef Sheehama.
The ministry said the change is meant to boost flexibility in the market and improve global competitiveness.
“The ministry aims to improve the competitiveness of Namibian livestock products in regional and international markets, enhance market access, and generate employment opportunities in rural and urban areas,” said ministry spokesperson Wilson Shikoto.
Shikoto added that the reduced levy is a balanced approach to ensure availability for local value addition while also allowing producers to export surplus.
“This revision is intended to improve market flexibility, support revenue generation for producers, and increase the global competitiveness of Namibia’s livestock products,” said Shikoto.
Namibia’s livestock production remains its top agricultural activity.
However, the hides and skins trade lacks a full regulatory framework, apart from veterinary requirements and restrictions on moving raw materials from northern quarantine zones to the south.
Sheehama said the lower levies reflect Namibia’s difficulty in growing its leather exports.
“The decline in export rates from 60% to 15% reflects the country’s difficulty in penetrating international trade in leather and leather products.”
He warned that earnings may drop.
“It is obvious that the company will have to lay off some employees, reduce salaries, or resort to casual employment to avoid paying other fringe benefits.”
He said Namibia’s leather manufacturing sector will not gain from the lower levies.
“Namibia’s tanning and leather manufacturing businesses will not benefit from this decline in levy exports.” However, he added that local tanneries may benefit from more affordable raw materials. This could make processing and manufacturing more viable.
Sheehama cautioned that reducing levies weakens producer motivation.
“It is unfortunate because decreased levies have a detrimental impact on the country by reducing incentives, and the total result may be to reduce the quality and quantity of raw hides and skins reaching the market.”
Namibia exported $8.81 million worth of raw hides and skins, excluding furskins, and leather in 2023.
This was 12.8% lower compared to 2022, when exports totalled $10.1 million.
These exports made up 0.16% of Namibia’s total export value of $5.48 billion in 2023.
The top export destinations for these products in 2023 were South Africa, Italy, and the United Kingdom.
In 2021, Namibia exported $1,110 worth of hides and skins to Hong Kong.
Sheehama said the finance ministry has started looking into Namibia’s position in the global hides and skins trade, but more needs to be done.
“The government depends on the tax system to generate income while promoting growth in the economy and the creation of jobs, and policy goals like combating climate change.”
He urged the government to educate the public on export competitiveness and to support both commercial and communal producers.
“For Namibia to continue to improve and sustain its export competitiveness of hides and skins, a paradigm shift is required, and the ministry of finance’s decision to draw in new nations with competitive prices is wise.”
