Fiscal reforms for Kenya fisheries

by
Nancy K. Gitonga^[11] and Robin Achoki^[12]

1. Introduction

Kenya’s Fisheries sub-sector has the potential to significantly contribute to the national economy through employment creation, foreign exchange earnings, poverty reduction and food security support. The annual fish production in Kenya is approximately 200 000 tonnes earning the fishers over Kshs 7 billion (approximately US$90 million). The common nature of the natural fishery resources renders it vulnerable to mismanagement because they are open to use by everyone and, therefore, not looked after by anyone.

The Department of Fisheries is mandated to facilitate the development and management of the fisheries sub-sector. The potential of the sub-sector has not been fully realized due to low prioritization of the sector by policy makers, perhaps due the poor knowledge of the sector’s potential. The current top-down policy decision-making processes, which do not involve stakeholders, lack of coherent development plan, and the low priority given to the sector in terms of resource allocation, has adversely affected its growth. Frequent movement of the Department from Ministry to Ministry, demonstrates the low priority accorded to the sector.

Kenya Fisheries and Marine Research institute (KMFRI) is mandated by an act of Parliament to carry aquatic research including fisheries research. The low funding levels for research and the unclear collaborative system for research data sharing between the institute and the key players of the sector, has also inhibited fisheries growth. Perhaps the main constraints contributing to the poor development of the fisheries sector, especially marine and aquaculture sub-sectors are institutional. These constraints include lack of information from research institutions on distribution, abundance and sustainable yields of capture fisheries, and lack of adequate information on factors that would expedite aquaculture growth. The absence of a comprehensive policy and a fisheries master plan exacerbates the problem.

1.1 Vision for the sub-sector

To increase fish production on sustainable yield basis in order to improve fishers’ and fish farmers’ incomes, alleviate poverty, reduce unemployment and enhance food security at both household and national levels.

1.2 Policy mandate

The policy mandate of the Fisheries Department is fisheries development and management. The legal mandate is derived from the Fisheries Act Cap. 378 of the Laws of Kenya.

1.3 Mission statement

To facilitate sustainable management and development of fishery resources to ensure an increasing supply and consumption of fish and fish products in order to achieve socio-economic benefits in an ecologically viable environment.

1.4 Strategic objective

To facilitate utilization and conservation of natural fishery resources and promote aquaculture development and recreational fisheries.

1.5 Policy objectives/goals

1.5.1 To maximize fish production on a sustainable yield basis, so as to permit fishers and fish farmers to achieve optimum socioeconomic benefits and contribute to food security.

1.5.2 Reduce post-harvest losses of fish by introducing appropriate technologies to the fishers, processors, traders and fish farmers.

1.5.3 Ensure the safety of fish and fish products for consumer through improvement and stabilization of fish products.

1.5.4 Increase per capita fish consumption.

1.5.5 Enhance fish marketing to expand and maintain local and international market share.

1.6 Functions of the Department

• Facilitation of management and conservation of natural fishery resources

• Promotion of aquaculture development

• Fish quality and safety assurance

• Fish marketing regulation

• Promotion of recreational fisheries

• Fishing technology development

2. Importance of fisheries in Kenya

Fishing is a way of life for fishing communities. There is considerable social importance attached to fishing activities such as making/or mending fishing nets, boat building, fishing competitions, etc. Fishery products provide high protein diet and, therefore, contribute to improved nutrition and health of the communities living in fishing zones.

Fisheries contribute to the country’s economy through employment creation, generation of income and foreign exchange earnings. The Fisheries sector also promotes other auxiliary industries such as net making, packaging material industries, boat building, etc. Over 500 000 people are directly employed by the sector, while over 1 million benefit from it. The freshwater fisheries, especially Lake Victoria, support about 35 000 fishers and the marine fisheries over 8 000 fishers. The majority of these fishers are artisanal using unmechanized fishing vessels. The country earns about Kshs 4 billion (approximately US$50 million) in foreign exchange and the fishers over Kshs 7 billion, thus contributing to poverty alleviation in rural Kenya.

Figure 1: Total fish production and value in Kenya in 1996-2002

Fishery resources provide for recreation through sport fishing and angling. These activities promote fisheries tourism in Kenya. The marine big game sport fishing significantly contributes to coastal tourism, but its importance in the fisheries sector is subdued due the prevailing poor licensing and monitoring system, which need to be reviewed in order to correctly reflect its contribution to fisheries. The review process for sport fishing earmarked to start with stakeholder consultation is envisaged establish a system that would lead to sustainable management of the popular fish stocks for the sport and ensure commensurate resource rent is derived from this fishery. Angling as a sport in trout rivers and the lakes is yet to be developed to the desired levels. There is need to re-establish and intensify the trout rivers stocking programme though modernization of the existing hatcheries and development of new ones.

3. Freshwater fisheries

This includes fishery resources in inland lakes, dams and rivers. Lake Victoria is the major contributor of fresh water fish production in the country as it contributes over 90% of the total Kenyan fish landings (Figure 2). The major freshwater commercial species include Nile Perch (found mainly in Lake Victoria and a small percent in Lake Turkana), Tilapia and freshwater sardines locally known as omena, with Nile perch contributing over 50% of Lake Victoria fish landings (Figure 3). Lake Victoria is shared among the three East African Partner States, i.e. Kenya, Uganda and Tanzania, with Kenya enjoying the smallest share of 6% and Tanzania the largest share of 49%. Kenya’s portion is very productive due to the many inputting rivers into the Lake.

4. Marine fisheries

This includes the 12 nautical miles territorial waters and the 200 nautical miles of the Exclusive Economic Zone (EEZ). The marine resources have considerable quantity and range of coastal and offshore marine fishery resources with good potential for economic development (Habib, 2003).

Kenya’s marine zone is bordered by a coastline measuring roughly 420 km in a straight line and expanding to some 880 km if coastal contours are taken into account. The country lies just south of the equator between 0^o40’ and 4⁰40’ latitude S. A great part of the coastline is fringed by mangrove forests and swamps. The total area of the Kenyan EEZ is about 230 000 km².

South West Indian Ocean waters, particularly East African coastal waters, are characterized by two distinct oceanic environments. The South East monsoons season from May through to September characterized by strong winds, rough seas and low productivity and the North East monsoons from October through to April with calm warm weather, moderate winds and increased productivity.

Kenya’s known marine inshore fishing grounds include the rich inshore grounds around Lamu Archipelago, Ungwana Bay, North Kenya Bank and Malindi Bank. The bulk of the marine catch is taken in shallow inshore waters, mainly by artisanal fishers using simple boats and gears including gillnets, shark nets, hook-and-line and traps. These fishers operate some 4 800 mostly unmotorized boats to produce around 6 000-7 000 tonnes of fish annually, valued at over Kshs 500 million. The annual catches have fluctuated between 4 000 and 10 000 tonnes over more than a 20-year period. The prawn fishery from which approximately 400 tonnes are landed each year are fished by commercial trawlers from the two fishing grounds with brackish waters, sometimes causing conflicts between them and artisanal fishers, when the latter’s nets are destroyed.

In the 1970s, two surveys were carried out to estimate marine fishery potential. The surveys estimated the potential yield of demersal fish outside the reef of the order of 5 000-7 500 tonnes. The surveys had their own limitations and appear not to have been well designed to test distribution and abundance of tropical water resources and were also part of larger regional surveys that did not concentrate on details relative to Kenya’s marine fishery resource.

The offshore fisheries zone is exploited by vessels from Distant Water Fishing Nations (DWFNs) without any local component on the catch and effort. The main species sought are the highly migratory tunas including skipjack, yellowfin and bigeye tuna. Some of the fish are landed in Kenya and transshipped overseas. Others are landed directly in the Distant Nations by the fishing vessels. A tuna factory in Mombasa partly processes the catch from the foreign vessels and the product is exported as tuna loins. Up to 38 foreign fishing vessels have been licensed to fish in the Kenya EEZ. Licence fees earn the Government on average Kshs 30 million per year (approximately US$400 000). The fees charged are US$20 000 per vessel for all foreign fishing vessels, but only purse-seiners pay for their licences. The longliners may find fees inhibitive because according to them, fish is available in Kenyan waters only approximately 3 months a year. This is a situation that needs to be addressed in terms of revision of licence fees. Very little work has been done on fishery resources in the deeper waters of the Kenyan zone as to establish species composition, distribution, behaviour, and migration. The Kenyan zone is part of the East African coastal region where lack of information on fishery resources and limited financial, material and human resources to carry out research are major constraints to sector’s development. Despite of the lack of information, there has been an increase in offshore fisheries in the region beginning in the early 1990s.

5. South West Indian Ocean region

The ocean bordering the East coast of Africa is one of the last areas in the world where fishing is largely unregulated. Although countries in the region, which include Kenya, Tanzania, Mozambique, Comoros, Madagascar and South Africa, have declared 200-mile Exclusive Economic Zones (EEZs), most of them (excluding South Africa) lack the institutional and financial capability to exercise their jurisdictions. While fisheries in the narrow coastal strips are harvested by coastal states, in general, the most valuable and largest offshore fisheries are exploited by European and East Asian distant-water fishing fleets and the greatest part of catches are landed and processed outside the region. Access arrangements are poorly organized and so distant-water operators do little in the way of reporting catches to national authorities in the region. The result is that there is hardly any information on species composition or quantities being taken in commercial catches, let alone the sources and timing of those catches (Habib, 2003).

The tuna fishery has yielded a fair return to the country over the last 5 or 6 years in the form of income from licensing foreign tuna vessels, mainly purse-seiners from Europe. If Kenya is to hold on to this rather ad hoc form of income and even improve its value it must find out more about the offshore tuna fishery than is currently known. One way to that end would be to join the Indian Ocean Tuna Commission, a fisheries management body specializing in gathering information on the tuna fisheries in the region. Another way would be to propose that tunas be considered as one of the groups of fishes to be researched by the South West Indian Ocean Project. Ultimately, Kenya must look at the prospect of promoting involvement of its own nationals in tuna fishery, as well as in the more affordable small vessel fishery for large tunas.

6. Fishing access agreements

Kenya has not entered into any fishing access agreements with Distant Fishing Nations but would be willing to negotiate with them for fishing access rights in accordance with the provisions of the United Nations Conference on the Law of the Sea (UNCLOS). However, before the commencement of such negotiations, the country would wish to have sufficient knowledge of its stocks. Towards achieving this knowledge base, the Government requested for technical assistance from Commonwealth Secretariat and was provided with a consultant to carry out a desk study on stocks and come up with recommendations and costs for stock assessment project. The Department would, therefore, seek advice before negotiations on the form and contents of a potential access agreement that would tie DWFNs into a formal relationship with the Kenyan Government with regard to:

• Number of vessels to be licensed by method (gear dimensions to be specified), size, engine capacity, carrying capacity, refrigeration type, etc., with full range of data to be collected on each vessel.

• Access fees and payment arrangements (consideration should be given to minimum five-year or even longer term agreements, with annual escalation of fee levels, or fixed fee for the period of the agreement).

• Marking of vessels, authorized fish species, catch recording systems and areas of authorized access.

• Crewing arrangements to include local content.

• Rules and conditions for permits.

• Rules for disposition of by-catch.

• Rules for transshipping or offloading catches in Kenya and port call requirements.

• Reporting requirements of ship’s position and other information.

• Requirement to carry observers and scientific staff, and provide them with access to catches for sampling purposes, when requested and meet the cost of supporting them while aboard the vessels.

7. Fish marketing

The Government has endeavoured to comply with international fish quality and safety standards and needs to build capacity in trade agreements skills, in order to broaden and maintain international market share for fishery products. The marketing of fishery products is vulnerable to unfair application of non-tariff trade barriers such as Sanitary and Phytosanitary (SPS) measures by importing countries. It is, therefore, important that the country actively participates in World Trade Organization (WTO) Agreement protocols and builds capacity in trade issues to help deter unfair trade barriers for Kenyan fish products.

Kenya has been able to penetrate the international market for fishery products and compete well in a liberalized economy, because of its advancement in implementation of fish quality and safety standards. Fish exportations mainly consisting of Nile perch-based products, earn the country approximately Kshs 4 billion in Foreign exchange. There however exist enormous fisheries potential in the Kenyan EEZ whose resources are currently exploited by DWFNs, without commensurate returns from the resource. There is need, therefore, to put in place an effective Monitoring Control and Surveillance System (MCSS) to ensure the DWFNs operating in Kenya’s EEZ pay the Government appropriate dues either through negotiated fishing rights and agreements or payment of fishing licence fees. Kenyans are also being encouraged to invest in the EEZ through acquisition of fishing fleets and establishment of fish processing plants along the Kenyan coast.

The Nile perch export business has suffered three fish export bans by the European Union (EU) since 1996, which resulted in decline in fish prices as other markets were sought (Figure 4). The Department, embarked on corrective measures to remedy the situation as well as to ensure that the country is in harmony with EU safety and quality standards in order to fully access the EU market. Currently marketing of fish to the EU, the main importer of Kenyan fish, is through bilateral agreements with individual EU, Member States.

The Ministry is giving priority to the improvement of infrastructure at selected landing sites and other fish quality and safety facilities in order to enhance fish marketing and reduce post-harvest losses. Modernization of fish depots, upgrading of fish roads, provision of electricity, telecommunication access, availability of clean water, establishment of chill rooms and ice making plants are some of the developments planned in the medium term. Other planned developments include establishment of three accredited fish quality laboratories and one referral laboratory in the country. The improvement of fish standards for quality and safety will guarantee fish markets which in turn guarantees revenues for the government and earnings for fishers.

8. Aquaculture development

Aquaculture in Kenya includes fresh water (cold and warm) fish farming and mariculture. The Ministry of Livestock and Fisheries Development has recognized that fishery resources play an important role in sustaining rural and urban livelihoods in Kenya. Despite this crucial role, the per capita supply of fish is declining due to increasing population and demand for fish. The available natural resources are not able to meet this demand. The Ministry is, therefore, taking steps to bridge this gap by facilitating aquaculture growth. These steps would also assist in reducing fishing pressure on the natural fishery resources.

Figure 4: Effect of fish bans on Kenyan fisheries in 1996-1999

During the preparation of Poverty Reduction Strategy Paper for the Agriculture sector, aquaculture was targeted as one of the core activities that can contribute to poverty alleviation in rural Kenya. In this regard, the Ministry is focusing on commercial fish farming through application of research results in the field with contact farmers. It is expected that the contact farmers would in turn participate in extension service delivery to other farmers. This collaborative approach of fisheries Department with farmers has been successfully demonstrated in field days in Central and Western Kenya. The Ministry will continue to promote fish farming by expanding fish farming demonstration centers, improving service delivery systems and developing and introducing enterprise budgets and business plans to facilitate credit access to fish farmers.

In view of the important role aquaculture can play in poverty reduction, the Ministry is focusing on expediting commercialization of fish farming through appropriate transfer of technology in the field by involving contact farmers besides the Government extension workers. Research on pond dynamics has demonstrated that small-scale fish farming can be commercialized through good pond management. The ministry is encouraging and facilitating sharing of information among fish farmers, researchers and extension officers, through field days and farmer’s training sessions. The multiplier effect of field days in advancing commercial aquaculture is very encouraging and is being viewed as an appropriate avenue for extension of new and successful technologies. The Ministry will also expedite commercialization of small and medium-scale fish farming by revitalizing departmental fish farming research and demonstration centres throughout the country to enhance service delivery systems.

9. Fisheries potential

Kenya’s fisheries potential has not been realized due to various reasons. The Government is now aware of the potential and has started putting measures in place aimed at realizing this potential in the short and medium terms. The first commitment towards achieving this target has been the recent deliberate recent split of Ministry of Agriculture and Livestock Development into two Ministries in order to bring out fisheries and livestock potential. The newly created ministry is now named Ministry of Livestock and Fisheries Development and for the first time in the History of Kenya “fisheries” appears in the name of a parent ministry, a significant step towards realization of fisheries potential.

The Government is currently focusing on the aquaculture development and exploitation of the EEZ to bring rapid development in fisheries, with a view to alleviating rural poverty, and expediting economic growth. The demarcation of the EEZ in accordance with provisions of the UNCLOS is in progress and strategies to ensure profitable exploitation of the Zone are being put in place. The commercialization of the small-scale aquaculture and transfer of appropriate technology for sustainable utilization of dams and small lakes are some of the short-term plans envisaged to expedite sector’s growth.

The surveys on territorial waters carried out in 1970s found that small vessel tuna long lining is feasible from Mombasa in Kenya. A fleet of ten small vessels could comfortably operate out of Mombasa, to fish local stocks of adult yellowfin and bigeye, for the high-priced sashimi market (Habib, 2003). A FAO publication put the potential catch at around 3 125 tonnes per year by such a fleet. Another FAO publication predicted that a ten-vessel fleet fishing 100 days per year could catch 5 000 tonnes annually, at roughly 500 tonnes per vessel.

The Ministry of Livestock and Fisheries Development recognizes the importance of fisheries especially in the poverty alleviation of rural population, due to its rural-based activities. The Ministry is, therefore, supporting the Department to ensure that significant fisheries potential in the country is realized within the medium term.

9.1 Constraints in the fisheries sub-sector:

The sub-sector is unable to realize its full potential due to the following, among other factors:

• Institutional weaknesses;

• Stagnant aquaculture sub-sector;

• Overreliance on capture fisheries, leading to overexploitation and decline in fish stocks

• Environmental degradation;

• Uncertain export market;

• Underexploitation of EEZ by the country;

• Low investment in the fisheries sector, especially the marine fisheries;

• Low funding levels for the Fisheries Department and the sector;

• Fish safety, quality and post-harvest issues;

• Lack of a comprehensive fisheries policy and fisheries master plan for focused development;

• Conflicts between various users of fishery resources.

Some of these bottlenecks are caused by stakeholders weaknesses in articulating a programmatic policy environment which should address incentive regimes. Greater investments require fisheries infrastructure such as roads, electricity, landing beaches, cargo space and fiscal reforms in the area of taxation, exemptions of duty for fishing gear, processing equipments and jet fuels. Deliberate support to aggressive marketing of the fishery products in overseas marketing is also important. Due to these constraints, the sub-sector is projected to grow by only 0.8 percent per year between 2002 and 2007.

10. Fiscal reforms in Kenya

10.1 Economic Recovery Strategy (ERS)

The Government has just finalized the preparation of an Economic Recovery Strategy Paper geared towards the realization of wealth and employment creation covering the period 2003-2007. The Economic Recovery Strategy is a clear road map for the future, which emphasizes specific priority actions that will be implemented to achieve an economic turn around.

To achieve the desired growth and employment creation targets, Kenya will require an increase in the ratio of gross fixed capital formation to Gross Domestic Product (GDP) from 16.8 percent in 2002 to about 23 percent in 2007. Investments, particularly by the private sector, are envisaged to recover through improved governance following implementation of the proposed far reaching reforms. Much of the investment recovery will be financed with domestic savings, which are projected to rise from 10.7 percent of GDP in 2002 to 15.8 percent in 2007. To finance the remaining resource gap, external resources of at least US$2.2 billion will be needed by public sector and US$1.1 billion by the private sector over the next five years.

The Government is also putting in place an investment code to consolidate investment incentives, protection and institutional framework in a single legislation to establish a one-stop office for investment promotion activities. Creating an enabling environment agenda is guided by the country’s policy of maintenance of a stable macroeconomic framework within the context of structural reforms that will lead to wealth and employment creation aimed at poverty reduction.

10.2 Fiscal reform and sustainable fisheries

The Kenya Government recognizes and is committed to the Policy of sustainable development through the judicious exploitation and use of its natural resources. This Government commitment is clearly demonstrated by the fact that Kenya has a Ministry of Environment, Natural Resources and Wildlife and recently, the Fisheries Department has been elevated into a full fledged Ministry. The new Ministry of Livestock and Fisheries is responsible for policy formulation in the development and sustainable resources use of fisheries in the country.

The fisheries sub-sector contributes to the country’s gross domestic product. The contribution of fisheries to local incomes, subsistence and nutrition is significant as it occurs in areas with the highest incidences of poverty. The ERS is predicated on the country’s Poverty Reduction Strategy Paper which seeks to deal with poverty reduction initiatives with the attendant government implementation action plan to emphasize on sustainable development of the huge potential of the fisheries sub-sector in the country.

10.3 Policy reforms in fisheries sub-sector

In order to identify and realize the sector’s potential, the fisheries institutions need to be able to perform all the tasks optimally and, therefore, should be given some measure of independence from the larger agencies such as line ministries. Kenya must recognize this reality and give priority to the fisheries sector by either designating agency or authority status to the Fisheries Department or allowing it to plough back some of the revenue it raises for research and development. Such action would enable the country’s fisheries agency to properly promote the fisheries sector so that over time, the full potential of the resources can be realized.

To remove the bottlenecks and exploit the enormous potential in fisheries sub-sector to facilitate a sustainable development, the Government is committed to the following policy reform agenda:

• Develop facilitative infrastructure which includes landing beaches, cooling plants and access roads to reduce wastage and achieve the required sanitary and health standards.

• Promote aquaculture to improve food security, nutritional status and incomes.

• Enter into agreements to promote closer regional cooperation in the management and regulation of the transboundary fishery resources including the control of water hyacinth.

• Encourage growth of micro-finance institutions to provide credit to the sub-sector.

10.5 Recommendations

To enhance the growth of fisheries sub-sector, specific sector incentives within the framework of fiscal reforms are urgently required to deal with cost of exploiting fishery resources, processing, preservation and export of the products.

• Exemptions on duties for jet fuel could reduce the transportation costs to the industry by encouraging more exports and increasing market share and foreign exchange earnings.

• To increase funding to the sub sector to enhance research in production and preservation of fisheries species marketable in both local and overseas markets.

• To increase funding for equipments and surveillance of the country’s EEZ to stop encroachment by foreign fishing vessels would contribute to wealth and employment creation.

• To integrate the fisheries sector into the country’s agricultural commodities export strategy to reduce marketing costs to the sector.

• To develop a strong regional integration networks to benefit from economies of scale and infrastructure development to facilitate export of fishery resources on a sustainable basis.

• Promote local and foreign investments in establishment of fishing processing plants and fishing fleets to tap EEZ resource especially tuna fishery.

• To develop a comprehensive fisheries policy, to include a fisheries master plan in order to expedite growth of the sector through focused strategies.

• Carry out stock assessment and based on information gathered negotiate fishing access agreement that would benefit Kenyans and ensure sustainable exploitation of fishery resources.

• Build institutional capacity through training and involvement of community participation in fisheries management.

• Promote effective use of natural resource rent, through appropriate extraction methods.

All these should provide a situation where benefits to the people engaged in the sector and increased revenues to the exchequer and food security are assured.

12. Conclusion

It is a recognized and accepted fact that the natural resources in the world are under threat from overexploitation and environmental abuse. However, with responsible management, the aquatic harvests which are largely unaffected by natural disasters such as drought or flood, can be sustained for many years to come. It will, therefore, be in the interest of all countries of the world with natural fishery resources to utilize them sustainably through responsible fishing methods so that they can benefit the present and future generations. It is necessary also for the countries harvesting these resources to develop quality assurance systems that will assure safety and quality of fish products to consumers and reduce post-harvest losses. This can be achieved by establishing national, regional and international knowledge bases on the fishery resources and quality assurance system to enhance exchange and transfer of knowledge and technology. The developed world can play a lead role in this initiative and is, therefore, called upon to transparently assist the developing countries manage their fishery resources and fish quality assurance effectively and efficiently.

Références

Ababouch L. 2001, Fish Safety and Quality: A global perspective (unpublished). Paper presented at FAO/COMESA Workshop in Seychelles.

CFFA-CAPE. 2000 “Who benefits at what costs from EU-ACP Fisheries Relations”.

Habib, G. 2003, The Kenya marine fisheries. A final report of the Commonwealth Secretariat consultant on Stock Assessment. A desk study.