The government-driven tannery project in Ondangwa which cost N$ 42 million to set up, is running way below its capacity targets and dies not generate enough income due to a shortage of hides. High fuel and transport costs and expensive chemicals to process the hides add to the woes, according to government media reports. The Namibian government once again guaranteed a loan, this time from the Chinese government to have the Northern Tannery constructed, which opened in 2002. According to reliable sources, there was allegedly no proper market research done and the feasibility study was allegedly "far too rosy". According to the "business plan", Northern Tannery was supposed to earn N$5 million each month in the initial phase and after six months it was supposed to have a fantastic turnover of N$ 11 million each month. This was allegedly based on the assumption that there were "2 million cattle" north of the red line and that the subsistence farmers would sell their cattle to abattoirs in the north, from where the tannery would get its hides. However the Meatco abattoir in Oshakati has its own tannery (Okapuka) near Windhoek, where the hides from the slaughtered animals is processed.

According to Alfred Andreas, general manager of Northern Tannery, instead of the envisaged 120 000 hides per annum, the plant only handles 8,000, sometimes 15,000 hides per year.