It is widely acknowledged that the lack of institutional credit is an obstacle to the further development of the small-scale fisheries sector of many developing countries.
Credit is needed not only for investment in fishing craft and gear, fish ponds, fish handling, processing and marketing facilities and services, but also - or even more - for the smooth day-to-day capture, culture, handling, processing and distribution of fish. Fishery equipment and facilities have to be replaced or repaired, salary advances provided for crew members and labourers, working capital requirements have to be met and rarely does liquidity generated by previous earnings match current expenditure.
Credit is also important for youth, particularly those belonging to the poorer sections of fishing communities and wishing to acquire boats or to start up a marketing business of their own. The improvement of the socio-economic role of women in fishing communities, too, needs strong credit support.
Non-institutional sources of credit available to small-scale fisheries comprise fish merchants, professional money lenders and boat owners. The amounts of credit obtainable from these sources are rather limited and mainly intended for working capital requirements and for short-term finance. Non-institutional credit has a number of disadvantages, such as high costs and the unfavourable terms and conditions attached to loans. Furthermore, the prevalence of non-institutional credit arrangements in the fisheries sector has contributed to the segmentation of rural financial markets. With few exceptions, savings and credit associations do not play as significant a role in the provision of credit for fishery activities as they do in agriculture.
In view of credit needs and the shortcomings of non-institutional credit arrangements, financial institutions, such as commercial, rural, agricultural, cooperative and development banks, have entered the scene. In some cases, government departments responsible for fisheries development and administration directly handled credit programmes for the fisheries sector without involving financial institutions. Many institutional credit programmes have been planned and implemented as part of externally financed investment projects, while other credit operations have been carried out in the context of the expansion of national banking services to rural areas or in the framework of anti-poverty programmes.
So far as the overall results of institutional fisheries credit are concerned, utilization of loans and credit recovery have not been entirely satisfactory. In some cases - mostly in externally financed investment projects - loans were not even disbursed, mainly because of unsuitable lending programmes and procedures and lack of borrowers' collateral. Institutional credit programmes which achieved the desired economic impact and related socio-economic benefits and at the same time succeeded in loan recovery are rare, which is why in many countries the flow of fisheries credit is presently stagnating if not declining.
Many financial institutions and regional and inter-regional development banks and funds are reviewing their fisheries credit operations at present, but the lack of well-documented information with regard to the reasons for the success or failure of credit programmes impedes progress in the design and operation of new programmes.
In order to gain more information in areas which had previously received little attention, the Fishery Industries Division of FAO initiated a series of case studies in Asia, Africa, the Middle East, Latin America and the Caribbean. The original intention was to describe only successful cases of credit delivery and recovery. ‘Successful’ was defined by an overall positive socio-economic impact, the full utilization of credits for their intended purpose, achievement of disbursement targets and satisfactory loan recovery. Some of the cases, however, could not be considered entirely successful according to all these criteria. However, they contain interesting information about various operational aspects regarding credit delivery and recovery, particularly in regional comparisons with more successful examples of fisheries credit.
Each region is represented by two or three case studies, selected on the basis of various institutional and operational circumstances, in order to cover all major settings of fisheries credit operations.
The Middle East, for example, is represented by two externally financed investment projects; in one case chanelled through a fisheries development agency to fishermen's cooperatives and in the other through a development bank to individual fishermen. Asia is represented by three case studies, the first one (India) being normal bank lending by local commercial and rural banks to individual fishermen and women with refinancing by the central bank and extension support from the Fisheries Department. The second case from Asia is a foreign-financed investment project in Nepal where funds are channelled through a development bank to fish farmers, while the third case (Philippines) concerns credit support to groups of women from fishing communities, where the funds originate from an external development agency and the entire programme is operated by the fisheries administration with community support.
The three case studies from Africa depict credit programmes executed in the framework of fishery development projects - FAO projects in Tanzania and Rwanda and GTZ project in Benin, in the first case with involvement of a rural development bank and in the other two cases without bank involvement. Credit recipients are groups of fishermen in Benin and individual fishermen in Tanzania and Rwanda.
Latin America and the Caribbean are represented by one case (Mexico) where a variety of agencies including a fish marketing corporation provide credit to members of fishermen's cooperatives and by another case (Barbados) where credit is provided through a development bank to individual borrowers.
In addition to the differences regarding the institutional arrangements for credit disbursement and recovery, the credit programmes described in the case studies cater to different fishery activities such as fish culture, inland fisheries and marine fisheries, some oriented towards domestic consumption and others towards export, sometimes combined with special marketing arrangements. When comparing these studies, the different geographical, macro-economic, socio-economic, biological and environmental contexts should be considered.
As the case studies will show, there is no single blueprint for the successful delivery and recovery of fisheries credit. Different arrangements can produce equally good results in terms of credit utilization and recovery. However there are certain principles which seem to facilitate successful credit operations, such as:
direct access of borrowers to the credit institution. Fisherfolk should be able to approach the credit institution directly without going through committees and other intermediary organizations;
need-oriented and flexible credit programmes which reflect both the objective investment requirement and opportunities and the subjective demand of fisherfolk, and at the same time take into account the organizational preparedness of the financial institution and other cooperating agencies;
short time span between loan application and disbursement, through quick and technically sound appraisal of loan applications;
close cooperation between financial institutions and fisheries administration extension services and/or fisherfolk organizations and associations;
proper monitoring and supervision of loan use and repayment;
special arrangements for arrears control and appropriate mechanisms for treatment of bad and doubtful debts.
The case studies presented in this volume reflect the opinions of their authors who, in some cases, have been closely associated with the design and implementation of the credit programmes. Some editorial changes have been made to facilitate presentation and comparison, but the substance of the studies and the conclusions reached are those of the authors.
