Skinning The Cash

Skin Trade : A Quick Guide

Contents
Overview .......................................................................................................................................................3
The Hides and Skins Value Chain ..................................................................................................................3
Notes on The Value Chain.........................................................................................................................4
Skin Quality and Grading...............................................................................................................................6
Why Quality Matters................................................................................................................................. 6
Beginners & Quality .................................................................................................................................. 6
Key things to keep in mind when gauging the quality of skins:................................................................7
Starting: Where To Buy Skins........................................................................................................................9
(Slaughterhouses, Rural &Urban Aggregators).........................................................................................9
The Tanzania Option ...............................................................................................................................12
Revenue and Costs......................................................................................................................................12
Example One ...........................................................................................................................................12
Example Two...........................................................................................................................................14
Revenue : Some Things To Know ............................................................................................................15
Where To Sell..............................................................................................................................................16
Licenses:......................................................................................................................................................17
Single User Business Permit....................................................................................................................17
Buyers License.........................................................................................................................................17
Registration of Premises .........................................................................................................................18
Hides and Skins Movement Permit.........................................................................................................18
Barriers To Entry .........................................................................................................................................18
Critical Success Factors ...............................................................................................................................18
Conclusion...................................................................................................................................................19
Overview
The leather business in Kenya is wide and varied. To help you understand better we have divided the
business into several market segments, which we analyze independently in different guides.

This particular guide which is the first in the series quickly looks at the buying and selling of skins. This is
more like a broker: buying from aggregators, and selling to tanneries. Aggregators here mean traders who
buy skins from individuals who slaughter animals either on a private or commercial level. The aggregator
then collects and put them in a central place say a warehouse or a store of sorts for onward sale to other
traders nay brokers who then sell to the tanneries. This will become clear below.

The Hides and Skins Value Chain

Hides are from cows while skins are from goats and sheep. Though we will mention a little bit about
hides this particular guide is biased towards buying and selling skins.

In a nutshell raw hides and skins are processed by tanneries to make leather, and in turn leather is used
by manufacturers to make such products as shoes, handbags, coats, soles, wallets and such other
products. So in general the key participants in the leather business are:

Animal herders
Individual slaughters, commercial slaughter houses and abattoirs
Aggregators who buy hides and skins from those slaughtering at an individual level or
slaughterhouses
Traders who buy from aggregators and sell to tanneries,
Tanneries who process the hides and skins to leather
Manufacturers who buy the processed skin and use to make items such as shoes and
handbags,
Shops which buy items from the manufactures and sell to consumers.

To insist the above is just a general picture of the leather business, were we to go to specifics and list
the major and minor participants, then you would appreciate how creased it is. There are brokers,
wholesalers and some sort of other gatekeepers at every level of the chain. For instance it’s normal
before the raw hides and skins get to the tannery to have passed through several traders each buying
from another until eventually it gets to the tannery. Same with leather and the finished products.
 Tanneries don’t always sell finished leather some sell semi processed leather to brokers and
agents who sell to manufacturers in Europe and Asia. Other tanneries make finished products,
while others don’t actually buy any skins rather they are just contract tanneries: if you have
hides and skins you want to process to leather you take to them, they process and give you
your leather or semi processed skin as per your agreement. Basically such tanneries are
machines, labour and skills for hire. Just as an aside such tanneries are especially popular with
some Chinese who are involved in the leather business in Kenya; they come buy the skins, take
to the contract tanneries, who semi or full process. The Chinese then export the leather to their
country.

Simplified the leather value chain looks as follows:

Hotels/Bars Urban RHS Urban RHS

Collectors Traders

Animal Animal Animal Slaughterho Rural RHS Rural RHS Tannerie

Owners Traders Markets use Collectors Traders s

Manufacture
rs /Exporters

Backyard
Slaughtering

RHS – Raw Hides and Skins

Notes on The Value Chain

Animal owners sell their herds to animal traders who then take the animals to markets. From the
markets another group of traders will buy and take to slaughterhouses, or bars and hotels. At
times individuals will buy the animals for their own consumption; they slaughter the animals in
their “backyards”, especially in the rural areas.
The hides and skins which are actually by products at slaughterhouses, backyard and hotels are
often sold to collectors either in the rural or urban areas. Think of collectors as aggregators who
buy skins in small quantities from different sources and accumulate for onward sale.

A collector in a rural area could move from village to village, town to town looking for skins.
They could find someone with one skin, a hotel with nine, butchery with 16 and so forth. He
buys such small quantities until the skins are a number big enough, say 200, and then he sells
to the Rural Hides Skins Trader. This trader goes around a region buying skins from different
aggregators and then transports to tanneries.

In urban areas most of the slaughtering happens in central places nay slaughterhouses /
abattoirs. Other significant areas are big and medium sized bars and hotels, however most of
these now prefer to purchase from slaughterhouses and meat markets. Urban collectors buy
from individuals slaughtering at the slaughterhouses or bars, accumulate then sell to skin and
hides traders.

As a collector in the rural areas you need to have the networks to know where to get the hides
and skins from. You also need to have resources more so in terms of time and local knowledge
to move around looking for skin.

Often there are different levels of collectors in the rural areas. For instance there could be a
village collector who buys skins from individuals who slaughter in their homes. He then takes
the skins to the nearest bigger town where another level of collector has a store. This collector
buys from several such village collectors until he has big enough quantities, and then sells to
the bigger raw skin trader.

The raw skin trader could be from without, and only comes to collect the skins when he is
alerted that the quantities are big enough to make the trip worthwhile. The trader transports the
hides and skins to tanneries where he sells them.

In urban areas the collector often has a store or warehouse near a slaughterhouse; he buy skins
and hides from the individuals slaughtering animals at the slaughterhouse.

After purchasing he waits for the traders come to buy the skins and take to the tanneries. In
some urban areas despite the collectors being able to access the tanneries relatively easily
rarely do they directly sell those hides and skins. One of the reasons is that they are trying to
avoid the hustle of grading and quality enforcements in the tanneries. Still once in a while they
will directly sell to the tanneries. But the market is such that often there is a trader who is
between the collector and the tannery.

This quick guide focuses on being a trader who buys from collectors / aggregators and
then sells to tanneries. The second part of the Leather Guide will focus on the tannery part of
the leather business.

The main issues to think of if you want to become a skin trader are where to buy the skin and
where to sell the skin. When thinking of where to buy the skins you need to know the process,
what the market demands in terms of quality and at what prices to buy and sell. We look at that
below.

Skin Quality and Grading

Why Quality Matters

As you get into the leather business one of the issues that will keep cropping up is that of quality
of hides and skins. On the face it’s easy to assume skin (or leather for that matter) is the same
and there should not be many conditions tied to it. However a little understanding of leather use
and processing will make you appreciate the obsession with quality.

Ideally any skin or hide should have the qualities to make any item say handbag or shoe.
However market and production demands in terms of aesthetics and costs make characteristics
of skins and hides an important consideration in the business.

The core purpose of tanning is to stop the skin and hides from rotting, what is technically known
as the putrefication process. But skin is also tanned to improve functionality depending on what
it’s intended to do. This could involve making the skin firm, increase the stretch or even
softness. This means that from the onset tanners have to get skin with the characteristics that
make it easy to work with in terms of available technology, costs and time. This knowledge is
based on industry experience of how different qualities of hides and skins behave under various
circumstances.

Tanners will go for skin that will not cost a lot in terms of time and money in processing them to
fit the required need. At the end tanners and craftsmen are in it for profit and they want hides
and skin that will not require much processing to fit the intended purpose, more processing
translates to more costs. Of course no skin or hides is 100% perfect, and tanners have to work
on it to get the desired quality, but they want skin with as few defects as possible.

Though leather has many favourable characteristics, the most important, the one that appeals to
consumers is the aesthetic. It takes a lot of effort to make damaged skin aesthetically appealing.

Skin defects can be classified as pre slaughter and post slaughter. Pre slaughter occurs when
the animal is alive, say through bruising, wounds and disease. Post slaughter defects occur
after the animal is slaughtered for example through cuts, poor preservation and carelessness.
To tanners pre slaughter defects are more acceptable than post slaughter defects.

Beginners & Quality

Thus it follows a crucial success factor in the skin trade business is to know what entails quality
skin. Lack of this knowledge could lead to massive losses. Acquiring the knowledge is not
rocket science but it requires some experience to be able to identify some not so obvious
attributes of skins (and hides) for that matter.

Although as a newcomer you can try grade skin based on quality, if you lack sufficient
information and buying in bulk you could make mistakes that could make you suffer massive
losses. Hence it’s advisable if you have an experienced leather quality controller to assist with
you. This is a person with hands on experience on various ways of grading skin, and with an
understanding of the market and ever changing tricks.

The quality controller is not necessarily as person as fancy as the title suggests but one with
practical experience of the business and who understands. Usually the terms with such quality
controllers are not permanent; you pay them per assignment. You agree on terms based on the
quantities you are buying, where you are buying and the number of days you will be engaging
them. If you want to join the business and have difficulties getting a quality controller let us know
and we will help you find one.

That said it’s important to have the basics of what makes good or bad skin. Some of the
attributes as you will see are pretty obvious, and even those that are not if you are keen and
with interest you can learn within a few weeks in the business.

The quality of the skins depends on what happens before when the animal is alive, during the
slaughtering process and after. As a buyer you have no control over these stages, you will not
be there to tell people how to rear their animals, how to slaughter or preserve. Often you will
seek to buy skin not knowing where the animal was from, how it was slaughtered or preserved.
Your work will be to determine the quality based on what you see. Although there are many
similarities in terms of quality considerations for hides and skins, for this guide we focus on
skins. We will exhaustively cover hides in a different guide.

Another key point to note is that whereas hides are traded in terms of kilograms, skins are
traded piece by piece. That is if you have 9 skins each will be sold and bought at an agreed
price for each, while if you have 9 hides, they will be weighed sold and bought at a price per
kilogram.

Key things to keep in mind when gauging the quality of skins:

No holes – The skin should not have holes. Holes in skins are often the result of
careless slaughtering and flaying.

No knife cuts – The skin should not have knife cuts. Knife cuts, same as holes are
result of lack of keenness during slaughtering.

Size of the skin – The best skin size is 3.5 square feet and above. Anything below is
considered small and of lesser value. The market demands skin of bigger square due to
their many possible uses.
 No infection – when animals are infected by such diseases as small pox it leaves some
pimples and marks on the skin. When such skin is tanned it will have pin holes reducing
its functionality and value. To identify infections hold the skin against the light and you
will see black spots. Other common diseases that affect the quality of the skin especially
in animals from the arid and semi arid areas are lumpy skin diseases, cysts and other
forms of poxes.

No Permanent Branding and Marks– Sometimes animals from the pastoral sometimes
tend to have branding which is used to identify them. The branding is sometimes done
using a red hot metal stamp which leaves a permanent mark .This affect the aesthetics
of the skin and the resulting leather. So is anything else that leaves permanent unnatural
marks on the skin. These include whip lashes, thorns, wounds and bruises during
transportation and excessive tick bites which leave holes on the skin.

Putrefaction process should not have started – This simply means that the skin
should not have started going bad. Normally to avoid this coarse industrial salt should be
poured on the skin immediately after slaughter. Normal salt dissolves quickly. Other than
smell other observable signs of rotting are the skin turning to a greenish colour. When
transporting skin you stack one on top of the other, this generates heat, and so if the
putrefaction process has started it means by the time the skin gets to the tannery it will
be worse, and the likely to be rejected or bought at ridiculously low prices.

No hair slip at the time of purchase – Hair slip means that the hair on the skin is falling
“slipping”. Slipping hair is a sign of poor preservation, and a sign the skin has already
started going bad.

Skins from the highlands areas are preferred as opposed to skin from the arid areas, for
instance north eastern Kenya. The former are more ‘healthy ‘and less prone to infections.
Skins of animals which have had a poor diet tend to tear off under little pressure. However
the fact that 70% of animals are reared in the arid areas means most of the skins come from
such areas, you just have to be extra keen when selecting and buying.

In reality you can never be 100% sure about the quality of all the skin you purchase. Small
defects could escape your eye only for the tanner to pinpoint it to you. However you should
always aim to purchase skin with as few defects as possible.

Another truth is that when purchasing all the skins at your disposal cannot be of the best
quality, some will definitely be of lower quality, but still sellable. That’s where grading comes in.
As you purchase you grade the skins based on quality.
There are no rules cast in stone as to how to do the grading s you could have grade 1 -4, then
rejects. Use your judgment and sense of profit to grade, with Grade 1 being the best quality.
Classify skins with many or significant defects as rejects and buy them at the lowest cost
possible. Some tanneries will not take the rejects at all; others will offer very low prices thus by
buying at the minimum price possible you are insulating yourself against such uncertainties.

A general rule of the thumb is that if the putrefaction process has started, the skin is small or
has holes classify the skin as reject. This does not necessarily mean you won’t buy them, but
you have to buy them at the lowest price possible; you have to be thorough and strict. The
tanneries where you go to sell won’t compromise much on quality, and neither should you so as
to minimize possible losses and actually make profit. And use all your senses to determine their
quality. For instance just by the smell you can tell whether the skin is fresh and well preserved.

To emphasis quality and grading of the skin you buy contributes a lot to profit or losses in the
business.

Starting: Where To Buy Skins

(Slaughterhouses, Rural &Urban Aggregators)
The obvious, and which supposedly should the easiest, place to buy skins are abattoirs
commonly slaughterhouses and vichijio. After all these are the places with the volumes and thus
easy to aggregate and have a variety to choose from.

But this is not as easy as it sounds. Walk into any slaughterhouse say in Nairobi such as
Kiamaiko ,Dagoretti , Njiru or Kiserian, and the process is not as straightforward and smooth
as you would hope for. It’s nothing like walking to the market and buying a bunch of bananas.

The leather business, just like any which is lucrative and operating in a similar relatively small
setting, has gatekeepers, quasi thugs and loosely formed cartels controlling it especially at
lower levels of the chain. Tough luck if you want to set up shop and start buying directly from
those who are slaughtering goats and sheep in the slaughterhouses more so in urban areas.
You will need more than money. You will need people skills, ability to negotiate and form
alliances and in a way muscle your way to the market.

Mark you we are not saying that it can’t be done. It can, but it’s not a walk in the park. And you
have to ask yourself if it’s something you would want to get in to as a beginner in the leather
business.

Still this is the place with skins, so what do you do? You buy from local aggregators rather than
trying to buy directly from those slaughtering. Aggregators are the few traders with stores and
warehouses around the slaughterhouses and who buy skins directly from those slaughtering.
Essentially they are brokers (just like you) coming between you and those slaughtering.
Buying from such aggregators has its own challenges too. One of the first things that will likely
happen when you go to such an aggregator’s warehouse is that he will indirectly try to gauge
whether you are new in the business, your understanding of the market, whether you look like a
person in it for the long run or you are just testing the waters, and how well capitalized you are.

They do this by a series of indirect innocent looking questions, like by asking you which tannery
you will sell to, a random comment about some tannery or market trend and so forth. Your
responses help them decide whether to actually sell to you or not (for they prefer to sell to
customers who will be regular buyers), at what price to sell to you at, how much to bully you and
so forth. This is another reason why when starting you should have an experienced hand by
your side.

Some aggregators will often set some arbitrarily conditions which for a newbie could feel
arrogant. For instance an aggregator could say we are going to sell to you only if you will
purchase 5000 pieces. And there you are with only enough cash to buy 2000 pieces. You try
negotiating so as to buy the 2000 pieces and they tell you to stop wasting their time get out of
the warehouse. Be prepared to buy more than you had planned for.

Sometimes such aggregators will agree to sell to you but on condition that you don’t grade the
skins, and if you have to grade then not to be strict and say have only two broad grades. This
puts you in a fix. On one hand you don’t want to damage the business relationship you have
with this person while on the other you are thinking of your profits and the survival of your own
business. You need a skill to negotiate through such situations because you are also in stiff
competition with others who want to buy the same skins (no wonder the traders can afford to be
arrogant.)

Aggregators in big towns like Nairobi, Mombasa, Thika, Eldoret or others with a tannery or near
tanneries tend to know the price at which tanneries are buying the skins. So at times they will
insist you buy skins from them at prices Kshs.10 or believe it or not Kshs.5 below the price at
the tannery. Buying at such prices means that you can’t covet your costs and thus will definitely
suffer losses. You need a margin big enough not only to cover direct costs but protect you from
variations in grades and thus prices. If you buy skin from collectors at prices so close to those at
the tannery then you will be taking such a big risk. You need to know how to stand firm while
being friendly as you negotiate on quality and prices.

The bigger the aggregator, his grip on the, market and the number of skins he has at any one
time the more of a nuisance he is. Again to insist this doesn’t mean that it’s impossible to
purchase from such aggregators, you can actually buy from them, and people usually do, but be
alive and prepared for the challenges. Of course after the usual up and down you get a footing.
At the end of the day even the aggregators will want to sell at a profit, and they will sell. The
initial handles are at the start, understanding how they work and them taking you seriously. The
above scenario applies more in urban areas.

Another important thing to note as you look for skins the bias of the slaughterhouse. For
instance Dagoretti in Nairobi is biased towards beef and thus hides. In Kiamaiko you will get
skins but it has a high percentage of poor quality flaying methods. The slaughterers are not
keen resulting in many poor quality skins relative to the volumes.

Meat consumption is highest in Nairobi, thus the number of animals slaughtered and thus skins
available is highest in the city. It’s also higher in bigger towns. But there are slaughterhouses
and skin aggregators outside Nairobi and major towns.

There is no blanket rule to judge aggregators based outside the major towns, but generally they
tend to be more flexible compared to the traders in Nairobi. In some locations there will be a
major trader who purchases from the slaughterhouses and small aggregators then takes them
to the tanneries. Others will aggregate and wait for traders (like you) to come purchase the
skins. To get a good understanding of what the market is at particular locations start by visiting
the local slaughterhouse.

The biggest challenge is the amount of work largely in time and moving around needed to get
quantities big enough to cover costs and make a profit. Say for instance you travel to Meru to
buy skins you want to come back say with at least 2000 quality skin pieces for the effort to be
worthwhile. In some towns getting such quantities, considering you are not the only one looking
for skins, is a big challenge.

Other rural aggregators will insist you pay them in advance. Say you pay them Kshs.200, 000
and they get you skins worth the same amount. This is tricky because there are no proper
agreements on what quality to expect and the time duration. It will often be a cause of pull and
push.

The best way to work with rural aggregators is to pay in cash as per the quality. You also should
develop contacts, so that the aggregators inform you when they have a sizeable number of
skins. There is no formula of getting these contacts. Like we said above if you are new in a town
and not sure where to get aggregators start by visiting the local slaughterhouses. And if you
have no clue where to get the slaughterhouse ask local taxi drivers or better still butchers. You
will need to have a means of transport say a pick up or canter. You collect small quantities say
100, 200, 400 until you have an economically feasible number to take to the tannery.

To save time and money you also need to establish a route. Say if you are going to Meru, you
pass through Kirinyaga and Embu looking for skins there. For instance if you are in Nairobi an
aggregator could call you and say “ I have 100 skins” Of course 100 skins might not leave with
you much or any margin after considering transport and possibly accommodation costs. And
although the aggregator could say all of them are skins of grade 1 quality, you know that some
could be grade 3 and others total rejects. On the other hand you know that if you don’t go
purchase the skins as soon as possible the aggregator will sell to another trader. (The reason
you will sometimes prepay aggregators).

So to make the trip profitable you aim to get as many skins from the region as possible. This
could involve blindly chasing other aggregators other than your major contacts. With time you
get contacts of as many skins aggregators within a region. But despite their perceived sweet
talk don’t believe that they will sell to you only. Some will have cash flow problems and as soon
as they get a buyer offering a good price they will sell. Some despite you prepaying them will
have no commitment and will sell to anyone. These are challenges you will experience at the
start but with time experience and definitely some losses will harden and make you smart to
navigate the business.

The Tanzania Option

Because of the challenges depicted above when purchasing skins locally some traders have
opted to go buy skins in Tanzania and bring to Kenya where they sell to local tanneries. Such
traders talk of more skins being available in Tanzania and also very important the
businesspeople in the skins in Tanzania are relatively easy to deal with when compared to their
Kenyan counterparts. They are more flexible and more open to sorting and grading. Though
debatable some traders claim chances of getting better quality skin is higher in Tanzania than in
Kenya. The process though not 100% straightforward is much easier.

But where do you buy in Tanzania? More or less the process will be the same as in Kenya; you
start by looking for skin aggregators with warehouses around major slaughterhouses in urban
areas. For instance in Arusha one of the well known skin traders is Salim Ali, Kwa Edwardi,
Igunga and others . If you ask a taxi to take you to Salim Ali hapo Kichinjio then they will. There
are other traders too.

Other areas that you can buy skins in large quantities from are Mbea, Mwanza, Geita
Daresalaam, Singinda, Iringa, Dodoma, Babati, Morogoro, Tunduma the transport Moshi then to
Taita Taveta border. Before starting it would be wise to make a point of visiting the locations to
make contact and to see the volumes, quality, availability and present prices.

Logically for the trip to be worthwhile you have to purchase a number of skins big enough to
cover the costs of manpower, transport, time and still turn a profit. The bigger the number you
are able to bring at a go the better it is for your business. For instance at an average weight of
1.5 Kilograms per skin a 17 tonnes lorry will carry 10,000 to 15,000 pieces of skin. You could
also start with lower quantities as long as they make your profit.

Whether purchasing from Kenya or Tanzania always be strict about quality and grading as need
be.

Revenue and Costs

To understand how much you are likely to make in revenue let us consider costs, buying and
selling prices.

To illustrate let us assume you If you are importing skins from Tanzania.

Example One
Item Details Cost (Kshs)
4000
Road Transport Nairobi to Arusha, Tanzania for
you and the QC (Amount will be
higher for other towns).

Accommodation 8 days @ Kshs.1500 per 24,000

person per night

Meals, Transport and @ Kshs. 1000 per day for 8 8,000

Miscellaneous days

Skins 10,000 pieces of skin @ at 700, 000

Kshs.70 per piece

Loading All 6500

Quality Controller Fees For the trip 30, 000
Transport (17 tonnes Lorry) Arusha to Namanga 120,000 + 40,000 =160,000
Namanga to Nairobi

Cess / Duty / Bribes etc at For all 250,000

the -

Miscellaneous All 20,000

Total 1,202, 500
Selling Price Kshs.150 per skin for 10000 1,500,000
skins

Net Profit Total Revenue – Total Costs 297,500

The cost of transport varies, for instance Mbea to Taita Taveta will cost an average of Kshs.180,
000.

The selling price of Kshs.150 per piece is an average for Grade 1 (February 2016) Prices
change as per demand and supply. If say the tannery is buying Grade 1 skins at Kshs.150, then
the cost of Grade 2 will be between Kshs. 60 and Kshs.80, grade three Kshs.40. There are
times tanneries buy grade 2 and 3 are bought at one price if the percentage of Grade 1 is high,
say 70 %. Prices fall within a certain range but are not fixed and there is a lot of haggling.

Still this is a nearly ideal situation and it may not always work like this. For instance not always
will you be able to amass 10000 pieces of skin at a go in five days. In Arusha it could take
slightly more than a week to raise 10,000 pieces. (In Daresalam it’s estimated they do 5000 to
8000 killings in a day but remember you are not the one interested in buying the skins).
Sometimes you just get 4000 pieces or take even up to ten days to get the 10,000 pieces.
 Even in Tanzania the demand for skins has increased not only from Kenyans but also the
Chinese and Rwandese. Some of the Chinese buy skins from Tanzania and bring to Kenya for
tanning before exporting to China or Europe.

Secondly rarely will your whole consignment be Grade 1 skins which you sell at Kshs.150 per
piece to the tannery. Some skins will be of lower quality and the tannery will buy them at lower
prices.

You should have purchased the lower quality skin at lower prices. However if you are not strict
and compromised on quality then you could find that some of the skins you classified as Grade
1 or 2 when in Tanzania, are classified as Grade 3 or 4 by the tanneries in Kenya, meaning you
will get low margins or losses in the worst case scenario.

Now let’s explore the situation if you are buying the skins in Nairobi, say from trader in
Kiamaiko.

Example Two
Item Details Cost (Kshs.)
Skins 3000 Grade 1 Skins @ Kshs. 270,000
90 per skin
Transport From buying point to tannery 20,000

Quality Controller For the assignment 20,000

Skin Transport License For two days 3,000
Cess @ Kshs.10 per skin 30,000
Miscellaneous For all 10,000
Total 353,000
450,000
Selling Price Kshs.150 per skin for 3000
pieces

Profit Total Revenue – Total Cost 97,000

Kshs.450,000 – Kshs.
353,000

Again this is an ideal situation since to get 3000 pieces of grade you will have to buy some
Grade 2 and 3 which will fetch lower margins. And realistically you can’t get 3000 pieces every
day. A more realistic picture is twice, thrice or even once per month depending on how
aggressive you are and your relationships with aggregators. When purchasing skins outside
Nairobi and major urban areas you should pay lower prices. Learn to negotiate hard without
losing the goodwill of the aggregators.

Almost 90% of tanneries will pay you on the spot either in cash or an open cheque. So you are
unlikely to have cash flow problems resulting from long credit periods.
Revenue : Some Things To Know
When transporting skins from Tanzania mainland to the border (Kenyan) you need the attached
documents which are permit to transport skins and business permit of sorts. You cannot
transport skins without such documents, they are a must and we have included them in the
Kshs.250, 000 cess, duty, licenses cost.

Another thing that you need to know is that when transporting the skins never declare the actual
quantity- you will pay hefty levies on your way. For instance if you have 7500 pieces you can
declare 2500 pieces

In the above case if you declare that you have 7000 pieces instead of 10,000 the Kshs. 250,000
could go down. No one has time to count.

For a beginner all this may look complex, but it’s not. Once you get into it everything becomes
clear and simpler.

Also note that the price at which you buy the skins varies with volumes. A rule of the thumb is
that someone, an aggregator, with high volumes will ask for high prices, while the aggregator
with fewer volumes will ask for lower prices. Thus prices are not fixed and will vary from person
to person. Because of this your average price could drop to Kshs.60 or even Kshs. 50.

On the Kenyan side also make sure you do not declare the actual quantity. The reason being
the county officials charge cess on the number of pieces you have at an average of Kshs.10 per
skin. Traders sometimes declare 500 pieces even when they are ferrying thousands. County
officials don’t have the capacity to count each of the skins. Of course you could be required to
give a small monetary consideration to the county officials so that they turn a blind eye.

The Kshs.250, 000 that we have noted above caters for everything; Tanzanian cess, Kenyan
cess, border fees, offloading charges, bribes here and there and all that.

When importing from Tanzania the Taita Taveta route tends to be much cheaper than the
Namanga route but it also depends on the area you in Tanzania you are sourcing the skin
Where To Sell
Now that you have bought the skins in Kenya or Tanzania where do you sell? Like we have
stated above you sell to tanneries. Tanneries process the leather for export or onward sale to
manufactures.

Selling to a tannery is a walk in walk out affair if you have significant numbers say 1000 pieces.
They will check the quality, do their own grading then purchase and pay on the spot.

Among the major tanneries are:

Tannery Contact
Alfarama Limited Athi River - 0723 595 400

Email: [email protected]

MAS Trading Nanyuki Road, Industrial Area, Nairobi -

0720703769, 0700400700

Nairobi Tanners 0722 440 999

Email: [email protected]
Leather Industries of Kenya 0722 51970 / 0733 519709

Athi River Tannery Athi River - 0722 881 024/0737 881 024
Email: [email protected]
Nakuru Tanners Nakuru - 254 722 787733
[email protected]
Aziz Tanneries – Njiru, Nairobi – This is known 0722 511 348
for buying low quality skins and rejects,
processing then selling to the leather works at [email protected]
Kariokor Market in Nairobi

Sagana Tanneries Sagana 0722 710 162

Email: [email protected]

Zingo Investments +254 700 873558

Email: [email protected]

Munasa Tannery Industrial Area

This is not an exhaustive list of all tanneries. But it should be a good start. Once in the business
you will hear of many other small , ‘unknown’ and new tanneries.
The selection and grading process at the tannery is done piece by piece by a number of
graders. For 10000 skins the process could take 4 – 6 hours. If you have to stay at the tannery
overnight, like happens when there is a queue of other traders waiting to sell their skins then the
owner of the lorry could charge you an extra fee. There is no fixed rate for this, and it will
depend on the agreement you have. But it could fall between Kshs.2000 and Kshs.10, 000.

It also happens that you could go sell the skins but the tannery declines to purchase some
because of quality issues. In that case you can opt to load the skins back to the lorry and try sell
to another tannery or the tannery owner could give you a standard price. “Okay we are going to
take all the skins but we are going to purchase at Kshs. 110 irrespective of the grade”. At other
times you could also offer to sell the skins at a lower price or just the buying price and save
yourself the hustle of going around selling. Always try not to sell at a loss.

When the percentage of quality skins is high the tanneries will offer better prices or even
standard prices even for the rejects. On average out of a batch of 5000 skins from Tanzania,
3500 to 4000 could be Grade 1-4, reject and double reject could be 1000. A tannery could buy
the whole lot say at Kshs. 125 or even if the percentage of Grade 1 is above 80% some
tanneries will buy the whole lot, even the rejects, at the price of Grade 1.

Also note that sometimes due to increased competition there are price differences between the
tanneries. Find out what tanneries are buying at what price before you decide to deliver.

Licenses:
To engage in the skin trade business you need a couple of licenses. There are the usual
business licenses then specialty licenses applicable to those buying and selling skins. There are
several traders operating without the licenses , but for the peace of mind and to better seize
opportunities its preferable to be fully licensed.

Single User Business Permit

This is issued by the county governemt to all businesses operating within the county. The cost
depends on the business and size of premises. Budget at least Kshs.15,000 .

This other group of licenses are issued by the department of veterinary services.

Buyers License
This is issued to anyone engaged in the business of buying and selling hides. As with
any license there are conditions attached to it but which are rarely enforced. For the
buyers license the conditions as stipulated by the hides and skins act include:
 keep the hides, skins or leather purchased by him free from damage
- buy and sell each hide by grade as well as by weight;
- buy and sell each skin by grade as well as by piece;
- buy and sell leather by grade as well as by weight or area depending on the
tannage and type of leather;
- carry out the grading of the hides, skins and leather at the time of purchase to the
satisfaction of an inspector; and
- keep proper books in English or Kiswahili in the manner prescribed.

Registration of Premises
As you grow in the business you will definitely require a premises to store the hides before
taking them to the tanneries This is more so if you are purchasing skins ins small quantities and
far from the tanneries you sell to. . But even without the need to store the assumption is that you
should have a premises of sorts registered and veterinary officers will occasionally harasser you
if you engage in the trade without a premises registered.

Before you are issued with the license an inspector shall come and inspect them. There are no
exact guidelines of how the premises should look like but the key thing is that the skins and
hides should be stored in such a way they don’t cause damage.

Hides and Skins Movement Permit

Both in Kenya and Tanzania you need a permit to transport hides and skins. The permit is
issued by the department of veterinary services, and is only applicable for a number of days.
There is no much bureaucracy is the issuance of the permit , and you will always find officers
near slaughterhouses or administrative headquarters. Among the few requirements are that you
should have an appropriate means of transport and well cured hides and skins.

Barriers To Entry
The barriers to entry are medium mostly because of lack of enough market knowledge and a
good understanding of the business. Gradually though information about the business is starting
to become much more available. The number of people in the business is higher than say five
years ago; this means that the chances of meeting someone talking about the leather business
are higher. Again there is now more talk of how lucrative the business is. Though much of the
talk is theoretical and ignores a lot of other facts its motivating enough to make entrepreneurs
seek to join the business. Despite attracting more players in the business the demand for good
quality skins is still high and thus opportunities exist in the business. We don’t foresee any major
changes in the midterm.

Critical Success Factors

Quality
Price
Market Understanding
Conclusion
There is opportunity in the skin trade business. And for a beginner in the leather business skin
trade is a much easier than trade in hides. (Which we cover in another guide). It’s also a good
starting pointing if you plan to eventually get into the tannery business or other aspects of the
business. But despite the opportunities and relatively good margins they are people who get in
the skin trade but fail; they suffer losses or quit the business. This is because of lack of market
knowledge, skill about quality, not being able to consistently source quality skins, increasing
competition at times. For others its lack of enough working capital, such that if they suffer losses
or lower margins then they are not able to bounce back. You can avoid these setbacks or
manage them better.

The truth is that though with good returns the business is not a walk in the park, you will have
some challenges. But then again these can be overcome if you are willing to learn, and form
necessary networks. Don’t expect immediate profits, but once you get into the system, once you
have done a number of buying and selling then everything becomes clear, and you are able to
explore the opportunity better.

Again we insist if you are totally new in the business, and you have no experience in grading
skins, get someone with the required skill to help you. And whenever possible don’t just get
someone who can grade skins but also who understands the market. The amount you pay them
will save you a lot of trouble; that is if the person is not only skilled but honest.

Some Statistics

Annually Kenya produces:

2.6 million cattle hides

2.4 million pieces of sheepskins
3.5 million goatskins
60,000 pieces camel hides

There are 2760 registered hides and skins traders, 19 operating tanneries, 1500 registered
slaughter houses and 16 registered exporters.

Due to trade legislation its not possible to export raw skins, it has to be semi processed or fully
processed. 80 % of exports are in the semi processed level known as wetblue, which is more or
less the first stage of the tanning process.

70% of the total livestock population in Kenya is reared in the arid and semi arid areas.
Source: Ministry of Agriculture