Entrepreneurship Zone: 17 July 2021: Ethiopia: International market for locally-made leather products

Sat Jul 17 08:57:31 CAT 2021

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Entrepreneurship Zone:  17 July 2021: Ethiopia: International market for locally-made leather products

Ethiopia has the largest livestock population in Africa, measured at around 53 million cattle by the Ethiopian Investment Commission. However, only 50% of the hide and skin potential is currently being utilised. It used to be even lower, which in 2012 prompted the government to start a programme discouraging the export of raw hides in an effort to boost value addition.

Ethiopian-born entrepreneur Abai Schulze saw this gap in the market on a trip home from the US, where she grew up after being adopted at the age of 11. Following the conclusion of her studies in economics at George Washington University, Schulze realised her birth country was getting the short end of the stick. Ethiopia was exporting raw leather, only for it to be made into luxury leather items with an enormous mark-up in European countries.

Schulze crafted a plan to produce high-end leather goods – such as handbags, backpacks and clutch bags – under the brand name ZAAF Collection using local talent and resources in Ethiopia and to export it to the rest of the world.

Starting out

In 2014, Schulze went back to Ethiopia to conduct market research for her business idea. She also completed an internship during the summer to learn how to operate a business in the country. “I couldn’t just assume what I know to work in the US would hold true for Ethiopia,” she acknowledges.

Using a loan from her family and grants received from startup competitions, she registered the company and the brand and partnered with a local artisan for the first year of ZAAF’s existence to learn the process of procuring leather, designing and producing. In this first year, she had the opportunity to showcase the leather bags alongside the collection of Liberian-born fashion designer Korto Momolu. The exposure benefited the company and sales ticked up.

A year later, Schulze set up her own workshop in Addis Ababa and advertised through the Leather Industry Development Institute (LIDI) for artisans to join the team. “Some would not have the perfect skill set but if they had an eagerness to learn, it was something I could work with. If I see someone is motivated and teachable, that works a lot better in building a culture of high standards.”

Initially, with no online or brick-and-mortar store, Schulze focused on pop-up shops to figure out the market demand and preference for the different samples the workshop was producing.

ZAAF opened its first retail outlet, later in 2015, in Addis Ababa. Its clientele is mostly international tourists or business visitors, as well as Ethiopian diaspora on their trips home.

ZAAF produces a variety of leather products. Photo by Joey L

“It has been slow, organic growth over time,” Schulze says. “Then we opened the first store in Washington DC (since relocated to National Harbor, Maryland) in 2018 and by the following year, sales from the US made up about 70% of total revenue.”

Today, ZAAF still runs these two stores and its e-commerce platform ships globally. It has added jewellery, shoes, garments and other accessories to its line that are produced in Ethiopia, Senegal, Niger, Kenya and Rwanda.

The story of the products’ origin is an important differentiator. One that Schulze believes customers connects with in a competitive fashion market.

ZAAF currently has 17 full-time employees in the US and Ethiopia and various partners in the other African countries from where it sources products.

The ZAAF retail store at National Harbor, Maryland, US.

Expanding the reach

Before Schulze decided on leather goods as a starting point, her interest veered towards textiles. It was the topic of her economics thesis but did not translate into a viable business idea at the time; the working capital required to start would have been prohibitive.

“Now that we are partnering with other producers in Africa, I am starting to dabble in textiles. We’ve just done a sportswear range from Rwanda. People loved it and we sold out quickly. We are bringing a full collection soon.” An assortment of linen dresses, men’s pants and tops and indigo dye products from Senegal is also available in the US store.

For the online shop, ZAAF focuses on one-size-fits-all products to reduce the complexity of returns if garments don’t fit. Leather sandals from Kenya and jewellery from Niger are proving popular.

“I always wanted to grow into ‘made in Africa’ versus just ‘made in Ethiopia’ but I had to start with something I know and test it first. I believe every country has something unique and I want to leverage on that,” adds Schulze.

When looking at sourcing from a new country, Schulze focuses on finding an established company or person of contact to liaise with artisans in that country instead of employing them directly, learning from the challenge she encountered in the early years. She believes this partnership approach will allow the company to scale more quickly.

“For now, I am happy to gear expansion towards products from other African countries. At some point, my goal is to have at least a couple of shops in major African cities but not yet.”-Howwemadeitinafrica

Abai Schulze, founder of ZAAF Collection. Photo by Michael Fung

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