PROJECT DESCRIPTION         

      
Project Ownership
The project is owned by Trogon Trading Limited Company and duly incorporated in Malawi

Business Model
This is an export-oriented business that produces shoes and wetblue leather. The role materials, raw hides and skin are sourced within Malawi and products sold within and outside Malawi. The project already commence production and started exporting.

Objective of the project
The aim of the proposed project is to set up a tannery to add value to the hides and skins, which are being produced in Malawi. This should form a nucleus of developing the leather value chain in Malawi. Textile and the Leather Sectors have been used globally to initiate the industrialization revolution. This will reduce import dependence, generate employment and contribute to the improved significance of the manufacturing sector to the Gross Domestic Product (GDP).

Sector of Operation
Manufacturing
Business Activity
The leather making operation consists of converting the raw hide or skin, a highly putrescible material, into leather, a stable material, which can be used in the manufacture of a wide range of products. The whole process involves a sequence of complex chemical reactions and mechanical processes. Amongst these, tanning is the fundamental stage, which gives leather its stability and essential character. Preserving hides and skins by tanning and performing various steps of preparation and finishing, generates a final product with specific properties: stability, appearance, water resistance, temperature resistance, elasticity and permeability for perspiration and air, etc.
Competitive Advantage/gap analysis
Malawi footwear demand was estimated at 15.5 million pairs per annum in 2017 and is projected to reach 18.1 million pairs per annum in tandem with population growth. An improvement in economic performance may result in even a higher projected growth in footwear demand beyond the current estimate. Currently footwear production in Malawi is estimated at 0.2 million pairs, thus living a demand deficit of 15.3 million pairs per annum. This scenario has pushed up import demand of footwear to grow rapidly from US$ 2.8 million to US$ 12.4 million between 2001 and 2016 respectively.

LOCATION
Actual location of project
Liwonde, Malawi

BENEFITS OF THE PROJECT/ALIGNMENT OF PROJECT TO GOVT GOALS
Contribution to achieving national, regional or global economic, social, environmental and developmental goals
The designing of the project was guided by the overall Malawi policy goal of improving the contribution of the manufacturing sector to its GDP, which is in line with its quest to improve the livelihoods of its citizens. The industry sector contributes 13.9%; this reflects the importance of promoting value addition in the leather value chain, as this could boost the manufacturing sector’s contribution to Malawi’s GDP.
Export orientation/forex generation
Based on the hides and skins production of 2012, the Malawi leather value chain has the potential of reaching a minimum direct value of USD 102 million per annum. A study revealed that Malawi has the capacity to feed into the semi processed leather at global market, in the short to medium term and has the required resources to produce for the export market, hence the project will also target the export market.
Import substitution
All the SMEs that are involved in the production of footwear and other leather goods depend on informal and formal imports of from Kenya, Zambia and Zimbabwe. As such this project’s production will supply to the local market and therefore reduce the import bill on leather products.
Value addition
This project directly answers to the Government’s call for value addition on Malawi’s rich resources. It involves turning raw hide and skin into leather products and shoes.

FINANCIAL REQUIREMENTS
The project needs US$200,000 financing.

PROPOSED INVESTMENT MODEL (ACTIONS REQUIRED/ IMPLEMENTATION ARRANGEMENTS/ CONTRACT TYPE)
Financing
The project promoter is willing for the partner to take up 15 percent of shareholding.

PROJECT FEASIBILITY
A feasibility study on viability of tannery in Malawi was done, a market study was done. The project is already operational.
Financial Feasibility
Internal Rate of Return at 33%, Net Present Value US$10,406,542 and Payback Period of 5 years.
CONTACTS
The Manager, Trogon Trading Private Limited, P.O. Box 1226, Blantyre, Malawi.
Email: This email address is being protected from spambots. You need JavaScript enabled to view it.