1. This report presents the findings of a short study into the fiscal arrangement in the fisheries sector in Tanzania, carried out in the last quarter of 2003. Fisheries is not a union issue in The United Republic of Tanzania allowing the governments of mainland Tanzania and Zanzibar to act autonomously when dealing with any fisheries issues. Analysis for the two are therefore kept separate.
2. The fiscal strategy for the sector on the Tanzanian mainland focuses on revenue generation from exports, shrimp fishing licences and Exclusive Economic Zone (EEZ) fishing licences. The primary instruments available include vessel registration and licensing, export royalty and fish levy (charged on the sale of fish). Fish levy accrues to local governments, whilst export royalty and licence fees for vessels greater than 11 m/20 gross registered tonnage (GRT) accrue to central government via the Fisheries Department.
Fiscal strategy for Zanzibar is similar, only revenues from the licensing of all vessels (irrespective of size) accrue to the Zanzibar government, via the Fisheries Department. Fish landing levies and access fess for migratory fishers accrue to local village committees.
3. In mainland Tanzania, charges for vessel registration, licensing and fishing vary with vessel size, flag and whether the owner has an approved onshore processing facility. Export royalty on principle fisheries exports is charge on a per kilo basis, approximating to six percent of free on board (FOB) value. Fish levy is charged at a maximum of five percent of landed value. The legal basis for all charges in the sector is the Fisheries Act of 1970, last modified through regulation in 2000. The act is currently being re-written and should be in force early 2004.
Revenues collected for central government (2002) totalled US$6.9 millions (mainland only), of which 97 percent was from export royalties. Of export royalties, 85 percent was collected from the export of Nile perch related products from Lake Victoria. Decentralized revenue collection is estimated at US$1.5 million per year, of which 99 percent is due to fish levy, and 62 percent from freshwater fisheries. Total tax burden on the fishery is estimated at nine percent of landed value, and the sector contributes approximately one percent of total government revenue collection.
There are no signs of any significant changes in behaviour in any of the major fisheries as a result of charges made to the fishery. A brief analysis of effort and catch per unit of effort (CPUE) in the shallow water shrimp and Nile perch fisheries underlined the need for further management measures.
4. In Zanzibar, charges for vessel registration are made at a fixed rate, whilst licences vary with length and means of propulsion. Export royalty is charged on the basis of six percent of FOB value. The legal basis for charges is set out in the Fisheries Act of 1988, last modified in 2000. The act is also currently being re-written and should be in force early 2004.
Revenues collected for the Zanzibar government (2002) totalled US$0.06 million, of which 73 percent was collected from royalties. Of export royalties, 84 percent was collected from the export of dried seaweed, produced by extensive small scale mariculture. Local revenue collection from the fishery is estimated to be US$0.22 million, more than 3.5 times that accruing centrally. Total tax burden on the fishery is estimated as 2.5 percent of landed value.
Data shortages did not permit analysis of the impact of charges on the fishery in Zanzibar, but it is not considered to be significant.
5. On mainland Tanzania, the Ministry of Finance allows retention of part of earned revenues in the fisheries sector. For the fiscal year 2001/2, 48 percent of earned revenue was sent back to the Fisheries Department, six percent was taken as overhead by the Ministry of Natural Resources and Tourism and the remaining 46 percent retained by the treasury.
In Zanzibar a retention scheme is started in 2003. For the fiscal 2001/2 the department spent 170 percent of collected revenue and required net support from the treasury.
6. On mainland Tanzania, centralised revenue collection was found to be efficient and effective, whist decentralized revenue collection is considered to be less efficient, with only 30 percent of potential revenue actually accruing to local governments. Local revenues could be increased significantly through improvements in mechanism for the awarding of contracts for revenue collection. The total tax burden (nine percent of landed value) appears to be high.
7. In both mainland Tanzania and Zanzibar the greatest potential for increasing government revenue from the fishery is in the licensing of vessels to fish in the EEZ. This will however require the development of appropriate institutions and management mechanisms (including MCS) as well as further investigation as to the real potential of EEZ fisheries.
8. Aquaculture and mariculture makes no significant contribution to mainland government revenues, but plays an important role in coastal communities in Zanzibar. The mariculture of shrimp has potential in mainland Tanzania which is yet to be realized.