Investment policies
18. There are substantial differences in the attitude taken by the various countries of the CECAF region toward foreign investment and joint ventures in the fisheries sector. Some countries adopt a policy of requiring any foreign investment in fisheries or, in particular, in fishing operations to be associated with local capital through joint venture arrangements. Thus in Morocco, for example, the policy is to prohibit foreign fishing within the Moroccan fishing limits, now extended to 70 miles, while encouraging joint ventures with Moroccan interests. The foreign investment law itself contains separate provisions in fisheries. Tax reliefs, import duty exemptions, etc. are provided for joint venture. At the same time, the law aims to ensure that joint ventures do not infringe on the operations of small-scale fishing enterprises. The Government itself is prepared to take an active part in joint ventures and has taken up equity positions in several operations.
19. Both Senegal and Nigeria also have policies designed to ensure that foreign investment is associated with local capital. On this condition, however, foreign capital is welcomed. Thus in Senegal, for example, the investment law provides for a five-year tax holiday and the unrestricted import of equipment for fishery operations. The extent of the concessions granted is governed by the amount of investment the foreigner is prepared to make and the employment effect of the proposed venture. All ventures conducting fishing operations must have local majority shareholding and are eventually to be completely “naturalized”. There are also limitations on the employment of foreign skippers and other staff. In Nigeria, also, specific guidelines have been issued regarding the establishment of fisheries joint ventures and the proportion of shareholdings. Thus local participation in equity ventures is to be related to the size of the venture, with the percentage of required local shareholding decreasing where larger contributions are made by the foreign partner. Differentiation is made between various types of fishery ventures, with the domestic share of the equity higher for financing more attractive export ventures, such as those based on shrimp, than for ventures which are to supply fish for domestic markets.
20. Ghana's investment policy distinguishes between areas reserved for the State, areas where foreign ownership must be associated with local interests, and areas where complete foreign ownership is permitted. The first schedule issued by the Government under the law listing projects which may be jointly owned includes “fish processing” and “fish and shrimp trawling”. Ghanaian equity participation increases with the size of capital investment and annual turnover, with a minimum of 50 percent local ownership mandatory for ventures that have an “employed capital of at least (¢ 500 000, or an annual turnover of at least ¢ 1000000.”
21. In other countries in the CECAF area, fisheries joint ventures, while not “compulsory” for foreign investors, are nevertheless classified as “desirable” investments or deserving of special support. This classification may be reflected in financing arrangements. In the Ivory Coast, for example, investors who commit themselves to investments considered desirable may obtain additional loan capital equal to their investment on very favourable terms from the local banks. This incentive is in addition to other concessions concerning taxation, customs duties, etc.
22. The offering of investment incentives, however, is not the only or even the most important factor in attracting foreign investment. Thus in some countries, relatively attractive incentives have not so far led to substantial growth in joint ventures, because, among other reasons, of a fear of possible nationalisation or an apprehension concerning administrative difficulties likely to arise in the actual negotiation of concessions.
23. In order to obtain the concessions provided in the investment law, many countries have instituted “ordinances” under which the provisions of specific ventures have to be negotiated. Sometimes it is at the point of negotiation of specific benefits, such as tax holidays, under these circumstances, that the real difficulties in concluding agreements arise.
24. On the other hand, development certificates negotiated under the ordinance sometimes may provide benefits not specified in the investment act. In Sierra Leone, for instance, there is a possibility of including in the certificate a clause limiting competition by other enterprises, although the investment law does not contain a relevant provision.
25. Finally, some countries in the region have adopted an investment stance of not encouraging international joint ventures in fisheries, preferring to rely instead more on local development supplemented by the employment of expatriate skippers for larger vessels and by buying vessels and other equipment on a hire-purchase basis, or alternatively relying more on wholly owned foreign enterprises.
Types of agreements found in the area
26. There are presently upward of 50 fishery enterprises in operation or in the process of being established in the CECAF area that include some degree of non-local participation, and could thus be described as international joint ventures.
(a) Joint
venture arrangements involving partners outside the CECAF area
(i)
Agreements with local government participation
27. Apart from the general agreements dealing with cooperation
in fisheries matters referred to above, there are a few agreements in force or
projected between governments in the CECAF area and governments or public sector
enterprises outside the area for the establishment of joint fishing companies.
Examples are the recent agreement for the establishment of a joint
Spanish-Moroccan fishing company, in which both the Spanish and the Moroccan
Governments would hold equal shares, and the Algerian-Mauritania commercial
fisheries agreement presently under negotiation.
28. Most existing or projected joint commercial ventures to which a CECAF government is party, however, involve private foreign partners. Such government private enterprise ventures exist in most of the CECAF countries. Of interest in this connection is the variance in the proportion of equity taken up in such ventures by the various governments and the nature of the government institution holding that equity. The size of the government holding varies between a formal 10 percent in one country to 70 percent in a proposed joint venture in another country in the area. In a few countries such as Nigeria the policy appears to be for the government to take a majority equity position in joint ventures in which it is involved. In other countries there appears to be a move toward parity of holdings by foreign and local partners, the local partners in some cases being a government body and in other cases government and local private enterprises. Government contributions to the equity of international joint ventures may be made in cash, however, it is now more common for such contributions to be made up, at least in part, of leases over land, and other rights and services, including tax holidays and other investment incentives. In Morocco, the Government holds shares and participates in the operation of joint ventures through the Fisheries Department. In several other countries, however, the government partner, at least on paper, is the national development bank or investment corporation or the Ministry of Industry, and the Fisheries Department appears to be less directly involved, even where the government has a majority holding.
29. In some countries in the area, such as Senegal and Mauritania, present government participation in international joint ventures appears to concentrate more on service sectors of the fisheries industry, such as cold storage and marketing, leaving the fishing sector itself to private enterprise and/or wholly owned government enterprise. Where integrated fisheries operations are involved, there are several instances of joint ventures involving two or more foreign partners where one foreign partner is given primary responsibility for fishing operations, and the other for marketing and sales. Not all partnerships between foreign and local fisheries interests in the CECAF area countries are constituted as equity joint ventures. Under one arrangement, for instance, the foreign partner has provided financing and expertise and assumed obligations for the training of local staff and is being compensated by being allowed to charge a commission on product sales of the company.
(ii)
Agreements without local government participation
30. There are a large number of international joint ventures
in the CECAF area operated solely by private enterprise without government
participation. The general trend of the capital structuring of these ventures
appears to be in form of equal shareholding by the partners (i.e., 50-50 percent
or 33 1/3 - 33 1/3 - 33 1/3 percent), except in the case of Nigeria and Senegal
where the national legislation in some cases requires a 51 percent holding by
the local partners.
(b) Joint
venture arrangements involving partners within the CECAF area - Intraregional
agreements
31. Some mention has already been made of formal and informal
agreements on reciprocal fishing rights between countries of the CECAF area as a
means of bringing together reserves, markets and capital in the CECAF area. The
trend now appears to be toward intraregional joint venture arrangements as a
means of achieving this cooperation, mainly within the private sector itself,
but also in some cases with public sector participation.
(i)
Agreements with government participation
32. Examples of agreements of this kind are the joint venture
between the Government of Sierra Leone and a Liberian private company, based on
equal shareholding, and projected agreements between the Governments of
Mauritania and Morocco with companies in Ghana, Liberia and Nigeria. Plans for
intraregional projects with local public and private participation in both
fishing operations (shrimp) and fishing gear supply have also been under
discussion.
(ii)
Agreements without government participation
33. Several intraregional joint ventures in the private sector
involving companies in Ghana, Liberia, Nigeria and Sierra Leone are in operation
and several others involving other countries are under negotiation or are
projected. In this respect a number of the larger private companies in the area
have expressed interest in foregoing further joint venture ties with private
companies in neighbouring countries. An interesting development is also the
evolution of a few joint venture arrangements with foreign partners in which the
local share is held by an intraregional joint venture company.
