Tomorrow Pittards will complete their purchase of Ethiopian Tannery. I attended theEGMthis morning which approved the share issue which had been previously placed at 1.5p per share with the directors and senior management. This raised the just over £2m needed for the down payment and some working capital. The whole deal signals that Pittards are out of “intensive care” and there is no real reason for them to slip back into losses in the foreseeable future. They are located in the best place in the world for their major raw material, which is one of the few not subject to huge swings in price, and able to make most of their production in the currency in which they buy and sell.
It seems curious that I can remember 20 years ago sitting in a lakeside hotel outside ofAddisAbabawith a very great friend when we heard PresidentMengistuannounce on the TV that he was stepping down, and it was actually May 1991 when he left the country to go into exile. That was the moment when we had all felt it was logical to enter Ethiopia and purchase on of the plants which it made no sense for the government to hold on to. Guarantee raw material supplies, make in a dollar environment, avoid the high costs of sterling, do something to help loyal suppliers in Africa and make a point that African countries can add value and not just export commodities. So we are twenty years on and there is no doubt that not making the move was part of the problem that lead to Pittards nearly going under after the best part of 200 years in existence. Yes, there were other issues, but growing smaller in a Sterling dominated manufacturing centre was never a strategy that made sense for any sort of company, least of all the one with the best recognised and respected business to business brand name in the leather industry. One with great and loyal customers hoping they would make the move to support them with better supply security and more stable prices.
But the clock cannot be turned back and here we are just ending 2009 and Pittards have done it at last, are still alive, and have every prospect for growth. Instead ofOut of Africait isInto Africaand with perfect timing as never before has the leather industry in Ethiopia looked more like growing into a viable and sustainable industry with footwear, clothing andleathergoodsproduction. With a growing economy local demand will also grow. Kenya and Tanzania are looking at what Ethiopia are doing and are likely to follow. The Middle East is logistically close to Ethiopia and good new market to consider. No longer does everything made of leather have to go to the USA or the EU. This is a moment of change. Perhaps even the African nations will start to be willing to trade to each other and build new lines of communications. The Europeans built routes to the sea to export first slaves and then raw materials, It is a new infrastructure that is needed. If Ethiopia can use its growing wealth to build that infrastructure and at the same time develop a light industrial base out of leather with the large employment opportunities that come with making things out of leather then they will be building a real foundation for future prosperity.
And do not forget about Nigeria. All we hear about is violence, oil, corruption and Sharia law. But Nigeria has a strong leather raw material base and some good plants; it is perfect for capacity building and getting to leather footwear and clothing. And who is the British Ambassador? Bob Dewar, lately of Ethiopia and fully understanding of the potential good leather can do for a country.
Perhaps one day he can persuade the British DFID to understand and support the concept. It is all about Trade not Aid. A chap called Tony Blair wrote the book, but then did nothing to help implement it. So it is up to Pittards to do their bit, and in doing so it is surely a win:win situation for Pittards employees and shareholders and for Ethiopia.