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Market Assessment on the Market System for Leather Products (Draft Report)

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Market Assessment on the Market System for Leather Products (Draft Report) PROJECT Increasing Employment of Young Women and Men in Leather Sector through Market Assessment on the market Improved Quality of Vocational Education system for leather products (Draft and Support for Business in SNNPR, Ethiopia. Report) People in Need, 2018 TARGET AREAS Soddo town in Wolayta and Dilla town in Gedeo Zone, SNNPR, Ethiopia Market Assessment on Leather Goods Soddo in Wolayta, Dilla town in Gedeo Zone, SNNPR, Ethiopia April/May 2018, conducted by People in Need Acronyms and Abbreviations Dabu Capital Debub Capital Goods Finance Business S.C. GOs Governmental Organizations HPC Hawassa Polytechnic College Kebele The lowest level administration unit with elected government LIDI Leather Industry Development Institute MFI (OMO) Micro Finance Institution MSE Micro and small enterprise NGO Non-Governmental Organization PIN People in Need PWD Person with Disabilities T&I Office Trade & Industry Office TVET Technical and Vocational Education and Training W&Ch Office Women & Children Office Woreda The third level administration unit, consists of kebeles WS Workshop 1 | P a g e Market Assessment on Leather Goods Soddo in Wolayta, Dilla town in Gedeo Zone, SNNPR, Ethiopia April/May 2018, conducted by People in Need BACKGROUND In April 2018, People in Need (PIN) conducted market survey for the project: “Support Leather Sector Micro and Small Enterprises in Wolaytta Soddo and Dilla Towns of SNNPR, Ethiopia, 2018– 2019”. The project funded by Czech Republic Development Cooperation is implemented by PIN in Soddo town in Wolayta and Dilla town in Gedeo Zone, SNNPR, Ethiopia. PIN has been operating in leather sector in Ethiopia since 2011 when the first project supported by the Czech Republic Development Cooperation started. The proposed project therefore builds on previous interventions, experience gained and contacts with relevant stakeholders. PROJECT SUMMARY The project aims to increase employability and entrepreneurial opportunities for unemployed young women and men through vocational training and business support in the leather sector in Ethiopia. Its specific objective is to put in place effective market system to attract customers and create value chain for leather MSEs through support of TVET actors in Wolayta and Gedeo Zones, SNNPR Ethiopia.Geographically the project covers Dilla and Wolayita Soddo Towns, in Gedeo Zone and Wolayita zone respectively. The project works in partnership with GOs and other organizations, which work towards increasing employment of youth women and men. The project is thus focusing on the following. Enhancing accessibility to vocational training in the field of leather production and a consequent increase in the number of skilled workers. Within this component, required facilities will be fulfilled and capacities of instructors will be updated in the field. Strengthening of vocational and entrepreneurial skills and capacities of small businesses through specially adapted trainings in cooperation with local institutional partners. In addition, relevant partners from the large leather enterprises will be included in the project; they can become employers of trained young people who could not find employment in their own business. Help in promoting the services provided by small or newly established MSEs, designing the marketing strategies and working towards improvement of incomes generated through sales of leather products, increasing the awareness of people about availability of leather products Raising awareness of small entrepreneurs about government support programs in intensive cooperation with the relevant local institutions and facilitation of contacts between entrepreneurs with microfinance institutions, as a practical component of the planned training. 2 | P a g e Market Assessment on Leather Goods Soddo in Wolayta, Dilla town in Gedeo Zone, SNNPR, Ethiopia April/May 2018, conducted by People in Need Strengthening the institutional capacity of local partners in the areas of training, equipment and supply of adapted training materials. Promoting of cooperation and networking of relevant local institutions, especially in the creation of a program to increase capacities. The project is fully in line with government development strategies for the sector, it was extensively consulted with all the aforementioned key stakeholders (authorities) who had repeatedly expressed their support. As a result, families of small entrepreneurs, unemployed and disabled people, who will get new or higher incomes due to the project, in average 5 per household. 750 family members of the people who will obtain livelihood in the leather sector until the end of the project. We expect that at the end of the project this number will increase by 150 each year. MARKET SURVEY’S OBJECTIVE The market assessment aimed on the following specific objectives: a) To reconfirm /update our knowledge of the market on leather products b) To identify key challenges, market opportunities, marketing strategies of MSEs c) Analyze the market for short and long term TVET graduates of TVET the leather sector in order to provide recommendations on how the project and other key actors can enhance employability MARKET SURVEY’S METHODOLOGY The market survey’s methodology was informed by a range of different guidance, including Practical Action’s Participatory Market System Development (PMSD)1, approach to inclusive markets, and the Operational Guide for the Making Markets Work for the Poor approach2 The assessment was conducted by PINs project team, with advisory support from PINs Technical Advisors. The following sources of information and approaches were used in the market assessment: Review of secondary data: Government studies and evaluations, previous PIN assessments, assessments by other actors of the leather sector Field observations of the SMEs (e.g. reviewing their shops, promotional materials, bookkeeping) 1 http://policy.practicalaction.org/policy-themes/markets/participatory-market-systems-development 2 https://beamexchange.org/resources/167/ 3 | P a g e Market Assessment on Leather Goods Soddo in Wolayta, Dilla town in Gedeo Zone, SNNPR, Ethiopia April/May 2018, conducted by People in Need Interviews with PINs project team, who have good existing knowledge of the leather sector 13 Key informant interviews with a range of different government and market actors3 Focus Group Discussions with the supported SMEs (this involved conducting a Strengths, Weaknesses, Opportunities, and Threats SWOT analysis with the SMEs, a customer segmentation, and a competitors’ analysis). A participatory reflection was then facilitated by PINs project team to share the initial findings of the market assessment with key stakeholders (19 participants joined, from DTI, Tvet colleges, MSES, DOT) and discuss and agree on next steps to strengthen the leather market system. The market assessment covered the following sections: 1. Market Mapping 2. Description of key actors 3. Key constraints and opportunities in the market system, and recommendations for implementation Market mapping The following ‘market actors map’ shows the key actors in the leather market system and the relationship between them. Market actors in the core value chain are in the center, actors providing supporting functions are across the bottom, and actors involved in the rules/environment functions are across the top. The project team reviewed / updated the market map based on the new market information (since the last market assessment was conducted), and there were no significant changes. 3 Actors interviewed: PIN project/program managers, officers, MSEs (including previously supported MSEs in Awassa), Soddo T&I Office, , Soddo Polytechnic College, Dilla TVET College, Customers, Dilla T&I Office, MSE Bakur, LIDI, local sellers, local wholesalers 4 | P a g e Market Assessment on Leather Goods Soddo in Wolayta, Dilla town in Gedeo Zone, SNNPR, Ethiopia April/May 2018, conducted by People in Need Soddo town Market Map Dilla Market Map Description of key actors Primary producers (SMEs) 5 | P a g e Market Assessment on Leather Goods Soddo in Wolayta, Dilla town in Gedeo Zone, SNNPR, Ethiopia April/May 2018, conducted by People in Need In total, there are 12 functional MSEs focused on leather products production that have been established by PIN, 6 in Soddo, and 6 in Dilla. DTI: Department of Trade and Industry Office, which is responsible for majority of tasks related to MSEs – from establishment, providing working and selling premises, market-linkage support, and follow up on the MSEs work. OMO MFI: is responsible for coordination and provision of credit services. Soddo Polytechnic College and Dilla TVET College: are involved in providing technical training to youth. The trainers provide long and short term trainings for selected people interested in the leather business. Raw material and tools & machineries suppliers All main material and machineries suppliers are based in or around Addis Ababa. Leather Industry Development Institute (LIDI) LIDI’s main objective is to facilitate the development and transfer of leather and leather product industries’ technologies. It is the key provider of supporting inputs and services for MSEs and leather industry itself. LIDI has direct connection to the machineries importers or tanneries. MSEs have access to LIDI through Trade & Industry Offices (where MSEs can ask for arranging purchase of processed leather), leather sectoral associations or NGOs. Tanneries There are 294 tanneries in Ethiopia, none in SNNPR. Tanneries5 focus
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