Fixing Afghanistan's Leather Trade

Kamaluddin shouts at his team to load up the trucks as quickly as possibly so that they get on the road. By the afternoon, they should have made the run down from the northern city of Mazar-e Sharif to the Afghan capital Kabul. From there, they will head south for Pakistan.

The trucks are carrying lambskins and other animal hides, the product of one of Afghanistan’s most important industries. They have been temporarily cured with salt, but they cannot be tanned and readied for sale because most processing plants collapsed long ago during years of war and disruption. Hence the long trip to Pakistan.

As a merchant himself and head of the hide traders' association in Mazar-e Sharif, Kamaluddin is unhappy that all the extra value added by tanning Afghan hides goes to Pakistan. Traders in the latter country make extra profits by re-exporting the finished product back to Afghanistan.

"It’s better than being unemployed,” he said of his job. “I make a ten per cent profit by transporting the skins to Pakistan, but even that sometimes falls to five or six per cent because of fluctuations in the value of afghanis and [Pakistani] rupees."

He added that much of the profit is made by those traders who import the skins back to Afghanistan after they are processed.

The plains of northern Afghanistan are ideal for raising livestock, and the region continues to lead production of wool for traditional carpets, the tightly-curled lambskins known as karakul, and other animal hides.

With 60 million skins – nearly the whole of the north’s production – exported to Pakistan every year, traders say the country is missing out on tens of millions of US dollars in export revenues and tax receipts, all because the government has failed to revive the tanning industry, which would also create many new jobs.

Before the cycle of conflict began with the Soviet invasion of 1979, there were so many Afghan tanning factories that it was the Pakistanis who exported their raw hides there.

"Now it’s the other way round,” Kamaluddin said. “We send skins to Pakistan where they are processed, and 90 per cent of the profit is earned there,"

In Balkh province, where Mazar-e Sharif is located, there are more than ten commercial firms involved in hide exports, as well as at least 200 traders operating independently. They deal in the skins of lambs, sheep, goats, cows and camels raised in the neighbouring Faryab, Jowzjan, Sar-e Pol and Samangan provinces as well as Balkh.

The head of Balkh province’s economic department, Abdurrahman, says one of the obstacles to leather and tanning factories taking off is the lack of effective barriers to low-quality imports.

Obaidullah Khan’s shop in Mazar-e Sharif is packed with karakul pelts and piles of black and red leather. He agrees that reviving the local tanning industry would increase quality, reduce prices and create much-needed employment.

With cowhide now selling at 20 dollars per kilogram, and processed sheepskin at ten dollars, he says, “The price of leather has increased by 30 per cent from last year."

Engineer Mohammad Hasan Ansari, director of industrial promotion and development at Balkh province’s chamber of commerce, says government has to take a lead on reviving the tanning industry. Private investors are just not prepared to take the risk on their own

"Aside from other problems, the lack of electricity and shortages of the raw materials needed for processing are among several reasons why investors have failed to take an interest in this sector," he said

When Afghanistan’s minister of commerce and industry, Anwarolhaq Ahadi, visited the north over the summer, he promised to kick-start the processing industry and offer support to potential investors.

"We are looking at promoting the domestic leather industry and curbing exports of the raw product in coming years, with some assistance from donor countries. We are aligned with the skin traders on this matter, and we will help them," he said.

For the moment, skins are brought into Mazar-e-Sharif to be sorted, salted and dispatched to Pakistan. The traders share a 500-square-metre area in the city centre for this purpose, and residents complain that it is dirty, messy and smelly, and should be shifted well outside the town.

"We can’t enjoy food and drink because of the stink from the skins,” local shopkeeper Abdul Jabar. “Some people just give up working in this area over the summer."

Abdul Jabar said residents had made several unsuccessful complaints about the hide collection facility to municipality officials and to provincial council chairman Mohammad Afzal Hadid.

"We know there’s money flowing into the pockets of municipal officials on a monthly basis, and that’s why we are not heard," he said.

Council chairman Hadid said he had discussed residents’ concerns with the municipality, but no solution had yet been found.

The skin traders' association has proposed moving out of the city centre to an industrial zone, but its deputy head Fazel Ahmad says the land there is parcelled out to people with good connections in local government but no interest in business.

Abdul Majid, the official in charge of industrial zones in Balkh, acknowledged that this was happening. "Certain powerful individuals are distributing land plots at the Gorimar industrial park to people who are not traders,” he said. “Resolving this problem is going to take some time."

Golab Shah Bawar is a freelance reporter in Balkh province.