Na Aba Made: A Case Study on Aba Shoe Industry

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By Tunji Adegbite

Initially a derogatory phrase implying that the product is of low quality, “Na Aba Made,” and “Made in Aba” are fast becoming positive phrases. And this change in perception plus international recognition has grown the Shoe Manufacturing industry in Aba to an estimated worth of N120 billion.

Aba, the commercial hub of Abia State is a busy and energetic town. It is known for its growing population of business-minded individuals, most of whom are drawn to the opportunity of learning and establishing a trade. With a population of over 600,000, more than 15per cent of whom are artisans producing clothes, leather shoes, and designing and building a variety of machines, it has been said that one in six people in Aba is a manufacturer and an employer of labour. Aba prides itself on being Nigeria’s manufacturing capital, built on the backbone of the famed Igbo apprenticeship system. A common saying in Aba is, “When I finish, I will get money to start my own” and it is not unusual to see people with more than two decade’s experience doing the same thing. Once established as business owners, they continue to mentor others.

Over 100,000 shoemakers in Aba produce shoes, slippers, and sandals from locally sourced or imported leather. According to Ken Anyanwu, National Secretary of the Association of Leather and Allied Industrialists of Nigeria, “more than 60per cent of new shoes worn in Nigeria come from Aba but most Nigerians don’t know that they are wearing Aba shoes”. Most of these shoemakers have workspaces in their homes or in market stalls and streets clustered around Ariaria Market where the shoe manufacturing industry is structured around three major hubs – Bakassi, Shoe Plaza, and Power Line. The Bakassi and Shoe Plaza hubs have shops grouped according to their cooperative societies or unions. Bakassi has about 1,400 shops producing women’s shoes, slippers, and sandals, with an average of 5 workers per shop. Shoe Plaza has about 1,290 shops making men’s shoes, slippers, and sandals with an average of 4 workers per shop. However, in Power Line, the shops are individually owned, with about 4 workers per shop producing and selling women’s shoes, slippers, and sandals.

Each year, about 48 million pairs of shoes are produced at an average price of N2,500. Approximately 25per cent of these are exported to neighbouring African countries (Cameroun, Ghana, Togo, Liberia, etc), European countries (UK, Italy, Greece, Ireland), North America, and China. With an export value of $17 million, the Aba shoe industry is making a lot of strides; however, there is room for significant growth. Compared to China, Vietnam, and Indonesia, the top 3 global shoe exporters, Aba’s export value is about 0.1per cent of their combined annual export values and produces only about 0.3per cent of their total yearly production.

Although the Aba Shoe Industry is growing, this is being challenged by transportation issues. Some of the roads are paved but damaged by potholes, others are too narrow for vehicle transportation.

Another critical challenge is access to raw materials such as leather and glue. Though produced locally, leather is difficult to source in Nigeria because local tanneries prefer to export and earn foreign exchange rather than sell to the domestic market.

Thus, manufacturers usually import expensive leather of sometimes questionable quality from China, Italy, and other countries. The fluctuating price of glue also affects operational costs thus increasing the price of the final product. To remain competitive, some manufacturers choose to trim operations or reduce profit margins. Other challenges are the perception of inferior quality, limited equipment, and access to finance, local and international markets. Production is mostly done manually, impacting quality, turnaround times, and ability to scale. For example, finishing machines are not readily available and so, most of the shoes are exported to Dubai and Italy for final work and then re-imported for distribution.

Also, with only 6per cent of businesses located in Ariaria Market registered with Corporate Affairs Commission (CAC), Aba’s manufacturing industry’s informal nature also limits access to financing from banks and other lenders.

To resolve these challenges, an Ecosystem approach is required. On infrastructure, the Federal and State government need to provide enablers like roads, electricity, and access to finance, amongst other growth enablers. To change the perception of inferiority, the shoemakers need to start designing shoes rather than copying the designs of foreign brands. Credit to the Abia State Government that made efforts to ensure Aba industries are positioned appropriately in the global manufacturing market. The Governor launched a ‘Made in Aba’ campaign to correct Aba’s image, invite investors, and encourage the purchase of Aba made products. On the informal business nature of the shoemakers, reasons why the shoemakers do not register their businesses include not knowing that they need to register, not aware of the benefits, not interested in registering, and the time and cost associated with it. Consultancy business opportunities exists here; businesses can create awareness including benefits of registering with CAC, help them register and facilitate access to cheap financing.

In terms of opportunities, online marketplaces focused solely on Aba made products such as abanaijamade.com.ng, have been created to increase distribution and access to Aba’s products locally and internationally. Other online marketplaces stocking Aba made products include Gada Africa and Jiji.ng.

The Aba Manufacturing Industry is said to be a gold mine waiting to be exploited. Although challenges exist, opportunities also abound. The Naira’s devaluation against the Dollar renders imported goods more expensive, making locally produced alternatives more attractive though this may be negated by the high cost of imported raw materials. Opportunities also exist for investors to create solutions that improve production efficiency and distribution networks. According to Ken Anyanwu, a shoe factory setup cost is estimated at $250,000-$750,000.

It seems like the gold mine may never be exploited because the level of investment required may never be received. Rather the opportunity lies in small and medium sized investors, who will provide conservative investment to aid machinery sourcing, distribution, and access to market opportunities.

• Tunji Adegbite (MBA, FCCA, MCIPS) is a thought leader in Strategy and Supply Chain and has worked with leading organisations like PwC and an IOC. He is also the founder of Naspire, a research and business strategy platform using contextual knowledge to help entrepreneurs and professionals in Africa succeed. He can be reached via tunji@naspire.com.