How a Tk150cr shoe industry blossomed in a Rajshahi village

TBS Infograph

When Manjur Rahman's father died in 1987, the responsibility to look after his mother and six siblings fell to him. A tenth grader back then, he quit school and began taking on a variety of jobs— from working as a day labourer to selling vegetables. Poverty was common company throughout his life until 2014 when he used all his savings to set up a small shoe factory with only three people. Manjur, now 45, has close to Tk1.5 crore in assets.

Manjur invested Tk70,000, which included a Tk50,000 loan, to set up a small factory in his house. He now has over 70 people working in his factory, earning him over Tk70-80 lakh a year.

Manjur's rise from poverty-stricken labourer to the owner of 'Manjil Shoe' is one of  many examples of successful entrepreneurship in the small village of Kaluhati in Rajshahi's Nimpara union. The village houses over 60 shoe factories founded by low-wage earners with an average annual turnover of Tk150 crores, with little or no help from the government.

Kaluhati's transformation from an unknown village to a hub of handmade shoes began with two workers— Amirul Islam and Barik. The youths left their village for Dhaka in the early '70s in search of better wages and ended up working in a shoe factory in Dhaka's Siddikbazar for nine years.

Returning to Kaluhati they shared their experience with Subedar Amzad Hossain, a retired military man. Together they hatched the idea of setting up their 'Paduka Palli' (Shoe Village) in Kaluhati. The three, with two other—Kashem and Delshad— received further training in Bhairab, one of the major shoemaking hubs in the country. Later, in the early '80s, Amzad and Delshad set up the first shoe factory in Kaluhati — Mukta Shoe.

Now the village has over 68 factories, down from 75, after seven of them went out of operation last year.

The shoe industry in Kaluhati has grown at an incredible speed in the last four decades, despite receiving little assistance from the government. The village has gained a new name as the 'Shoe Village' of Rajshahi.

Most of the shoes coming out of Kaluhati are made of leather. Kaluhati Shoe Association, comprised of 117 members, puts out 90% of its total production in leather, with 10% shoes made of jute and rexine. Most of the raw materials are bought from Dhaka and Chattogram.

According to the association, the village produces over 22 lakh shoes every year and the annual turnover amounts to Tk150 crore on average.

The handmade shoe factories have provided financial security to thousands. In all, over 15,000 people— 30% of whom are women— are engaged in the industry, directly and indirectly.

Many of the new owners were workers at one time, who later opened up their own factory with years of experience in the industry.

Md Rana Ahmed, owner of 'Bijoy Shoes' is one such entrepreneur. After losing his father at the age of six years, he entered into shoemaking at the age of seven in 1995. After learning the craft for 12 years, he opened up his own factory with a working capital of Tk45,000 and four workers.

"Now my factory employs 75 workers and we produce nearly 1.50 lakh shoes every year, with  annual sales of Tk40 lakh. I bought lands worth Tk17 lakh a few days ago and am also planning to expand the factory. I will soon begin work on a five-story building."

A blow from the pandemic

The remarkable growth of the Kaluhati shoe industry suffered a huge blow in the last two years, with at least seven factories going out of operation, production falling, and owners counting huge losses.

The industry suffered a loss of about Tk80 crore in the last one and a half years with annual production falling to from 22 lakh shoes to 14 lakhs with 25% of goods still unsold, according to the Kaluhati Shoe Association.

Also, 25% of workers have moved on to other jobs in the meantime. Demand has fallen 30% relative to pre-pandemic levels, said members of the association, without giving any detailed data.

They also said none of them received any aid from the government during the pandemic.

Rabiul Islam, owner of New Sarkar Shoes, said "In a regular year, I would earn Tk25 lakh. But amid the lockdowns I failed to make any sales at all. With declining demand and sales, I couldn't pay my workers and had to shut down the factory last year."

"I did not receive any aid from the government nor did local banks lend me any money. I want to get back to shoemaking, but so far, I have not been able to manage any money for that."

Bringing technology on board

Following in the footsteps of major shoemaking hubs in the country, the Kaluhati shoe industry also wants to move towards automation from handmade shoes.

But the entrepreneurs say that lack of financing is proving to be a major obstacle.

"The industry in Kaluhati has high potential but it lacks investment. We have not received any support from the government and the banks do not give us any loans. We are often forced to take very high interest loans," said Sohel Rana, general secretary of Kaluhati Shoe Association.

However, the industry has garnered attention in recent years. Currently, shoes from the village are exported to several districts of the country, including Dhaka, Khulna and other neighbouring districts.

"If the government provides us low interest loans and machines for automation, our annual turnover could increase to Tk500 crore. Employment will also increase threefold alongside production and the industry has potential to expand into other villages of the district as well," said Manjur, president of the association.

The SME Foundation has promised to provide Tk2.5 crore worth of modern machines to the shoemakers, which is expected to greatly increase production.

Dr. Md Mafizur Rahman, managing director of SME Foundation told TBS that the foundation has decided to provide Kaluhati shoemakers with machines worth Tk35 lakh right away, with more help on the way.

The foundation is also training workers in the industry and they have asked banks to provide the shoemakers with loans at low interest.