The Middle East and North Africa (Mena) region offers robust growth opportunities for the footwear and leather goods trade on the back of a booming retail spending power estimated to hit $150 billion by 2026, leading leather producers said on Monday.
While population growth, demographic dividend and ease of access attract leather industry majors to the region in the backdrop of increasing non-tariff barriers in western export destinations, leading global exporters seek to ride the retail boom sparked by an annual six to eight per cent spending surge, led mostly by the UAE and Saudi Arabia.
According to a retail industry estimate by Statista, non-food retail sales in the GCC alone are on track to exceed $150 billion by 2026.
Speaking at a press conference on the opening day of Diflex 2023, the region’s largest footwear and leather goods show, senior officials representing some of the global leather hubs including Egypt, India and Turkey, said the growth potential of the leather market in the region is remarkable in the backdrop of the ongoing retail boom.
“Mena markets offer sunrise opportunities to leather producers and manufacturers with a rising population — 55 per cent under the age of 30 — offering a significant demographic dividend to both domestic and export businesses. Coupled with this is the increasing e-commerce spending and new fintech solutions like Buy Now Pay Later (BNPL) reshaping the consumer behaviour and making consumption and access to goods easier than before” said Sanjay Leekha, chairman of the Council for Leather Exports, a Government of India trade body under the Ministry of Commerce and Trade.
India, which is the second-largest exporter of leather garments and fourth largest in leather goods globally, clocked $5.2 billion in leather exports value in the 2022-23 fiscal. Over 60 top Indian footwear and leather goods manufacturers are taking part in the three-day show at the Festival Arena in Dubai Festival City.
The UAE has become a major driving force in the leather market growth after the signing of Comprehensive Economic Partnership Agreements (Cepas) that enabled tariff-free access of goods from various countries.
“Being a major trading and re-export hub in the region, Cepas catalyse trade in general and with concomitant value chain impact across Mena. For leather producers, this translates to ease of entry, particularly in the wake of the rising trend of non-tariff trade barriers in western export destinations,” said Leekha.
India is also in negotiations with the US, the largest importer of Indian footwear and leather goods, to reinstate the US GSP (Generalised System of Preferences) programme which expired in December 2020. The expiry of the trade preference programme has affected Indian exports to the tune of $450 million per annum.
India was the first country to enter into Cepa with the UAE, followed by Israel, Indonesia and Turkey, with more countries in the pipeline. Bilateral non-oil trade between the UAE and India post-Cepa has already touched $50.5 billion as of April 2023, with the target being $100 billion by 2030. Under the Cepa regime, bilateral non-oil trade with Israel is expected to touch $ 10 billion in five years while with Indonesia and Turkey $10 billion and $40 billion respectively.
Jeen Joshua, managing director of Verifair, organisers of Diflex 2023, said the show is an opportunity to foster partnerships and forge new market entry strategies into Mena on the back of booming e-commerce and consumer spending.
Over 250 top-notch footwear, leather and leather accessories producers from across the world are participating in the event, showcasing over 10,000 product lines