The FAO/GRZ project staff is in charge of the technical execution of the scheme. This function consists in:
training the future loan applicants in all relevant aspects of fish-farming and associated animal husbandry;
surveying the location chosen for the establishment of the fish-farm and selecting appropriate sites for the ponds;
certifying the conformity of the ponds constructed with acceptable technical norms;
monitoring the operation of the farm regularly, which entails, in particular, the control of harvests.
The landing institution, on its part, acts as the exclusive agent for the FAO/GRZ Project Manager in its relationship with fish-farmers on credit matters.
| Credit scheme outline (Package solutions) | Pros | Cons |
| Scheme operated by the FAO/GRZ Project | May ensure a better (i.e., more integrated) control of the whole operation Avoids a possible conflict between the objectives of the project and that of the credit scheme | Not professionally managed (from a financial (credit viewpoint) Will end with the project |
| Scheme operated by FSL with supervision of borrowers by FAO | Scheme managed by professional credit administrators Will presumably continue after the project ends Repayment performance likely to be more satisfactory than with other solutions | Difficult to reconcile the selection of the future beneficiaries with the obligation of membership in a cooperative society |
| Through Lima Bank and simplified approvals following FAO clearance | FAO is in control until the Bank can administer the scheme itself | Lima Bank not yet operational Possible leftover from the former AFC (i.e., loose enforcement of repayment) |
| Operated on Lima Bank's own funds + $US 50 000 granted for strengthening the bank | Improve the chances of the scheme continuing after the end of the project Possibility to extend more loans No separate accounting for the scheme | Uncertainty on Lima Bank's operational capacity (as above) Processing of loans more complex (following the Bank's standard procedure) |
| Set up a $US 50 000 credit guarantee + the Commercial Bank lends on its own funds + FAO clearance of loanees | Makes possible a limited multiplier effect | The bank does not assume the full risk inherent in the credit The banks have no expericence in fish-farming and are reluctant to finance a new, unknown activity |
| The Commercial Bank funds the scheme with a credit guarantee of BOZ and the technical back-up of FAO | The multiplier effect (on future loans if the initial scheme is successful) has potentially no limit | The bank's reluctance to enter an uninterested activity (as above) |
It determines, in accordance with its own criteria, the credit-worthiness of all applicants (whether considered individually or in groups) and handles all financial transactions pertaining to the credit scheme, (viz., loan disbursements, collection of repayment, etc.). It also keeps appropriate records and accounts of these transactions.
The lending institution undertakes:
to operate the credit scheme as a Revolving Trust Fund under the control of the FAO/GRZ Project Management. Ultimately, when the said project is complete, the ownership and control of the fund balance will revert to the GRZ Department of Fisheries, which will continue to operate it as a revolving fund;
to use the fund monies exclusively for the purpose of extending loans to fish-farmers designated by FAO/GRZ Project staff and accepted by itself as being creditworthy according to its own criteria;
to make timely disbursements of these loans approved jointly with the FAO/GRZ project staff;
to administer the fish-farming loans granted under the agreed scheme, in accordance with its normal rules and procedures;
to apply to such loans the same interest and other charges which are applicable to other loans (with similar purposes, and comparable maturity), that it already administers;
not to grant loans from the FAO/GRZ Project Revolving Trust Fund to applicants who have not been approved by the said Project Management;
to produce periodically (on a semi-annual basis) account statements of payment made to loanees and of re-imbursements received from the same under the scheme.
In exchange, the management of the FAO/GRZ Fish Culture Development Project commits itself to:
refer to the lending institution only those applicants who meet the criteria for eligibility determined by the FAO/GRZ Project Management;
transfer to a bank account designated by the lending institution a maximum sum of $US 50 000 in successive instalments, according to an agreed time schedule;
survey the site proposed by every applicant for his fish-farming venture;
supervise, during construction, and approve, on completion, the ponds excavated;
monitor regularly each fish-farming operation approved under the scheme;
control harvest and actual fish sales;
avoid interfering with the application to the fish-farmers of the lending institution's normal rules and procedures;
refer the fish-farmers to the lending institution for all financial transactions pertaining to the credit scheme and to refrain from handling itself any such transaction;
adhere for the fish-farm loans to the credit terms and conditions agreed upon with the selected institution.
Eligible for loans under the scheme will be those applicants (and those only) who:
have undertaken to participate in an on-site training programme designed by the FAO/GRZ Project Management and carried out by the same project extension staff;
submit for the location of the fish-ponds a piece of land deemed adequate by the FAO/GRZ project extension staff (i.e., the latter must approve the topography, estimated water supply and soil composition of the proposed site). The applicant will thus need to own, lease or be assigned the land according to regular practice.
accept to manage personally (or through a person approved by the FAO/GRZ Project Management) the fish-farming operation financed by the loan;
formally agree to harvest and sell the harvested fish under the control of the FAO/GRZ extension staff until the loan is fully repaid.
Loan applications from existing fish-farmers for the renovation of these ponds (or for new ponds construction) will also be acceptable. In each case the amount of the loan required will be estimated by the FAO/GRZ project staff.
Each eligible application will be formally endorsed (i.e., countersigned by the person in charge of the nearest project station in Chilanga, Chipata or Mwekera) and forwarded to the selected landing institution which may then decide to complement it with further information, in accordance with internal requirements for approval. This simplified application could also serve as a loan contract between the lending institution and the borrower. A pro forma outline of this document is shown in Appendix 5.
Following the guidelines indicated previously (in Paragraph 3.4, under Credit Terms) the disbursement schedule will be established by the FAO/GRZ field staff in agreement with the lending institution.
For the purchase of the original stocks of seedlings and ducklings/weaners, payments should be made directly to the accountant/cashier of the FAO/GRZ station supplying these inputs, upon presentation of appropriate vouchers.
