PEOPLE'S DEMOCRATIC REPUBLIC OF YEMEN CASE STUDY OF FISHERIES CREDIT

Ali Mohammed Suliman

Ministry of Fish Wealth

People's Democratic Republic of Yemen

1. THE FISHERY INDUSTRY

The People's Democratic Republic of Yemen (PDRY) lies in the south-west part of the Arabian peninsula, with an area of about 330 000 km² and is divided into six governorates. The total population was about 2.2 million in 1986.

Upon achieving independence, the government faced many social problems including unemployment. The closure of the Suez Canal greatly reduced the demand for the services and facilities of Aden harbour, on which the PDRY economy had depended to a great extent. To re-build the country's economy the PDRY government focused their efforts on agriculture and fisheries.

In the fisheries sector, attention was paid to the development of industrial and small-scale fisheries. The strategy adopted for small-scale fisheries was that of building up a cooperative movement among poor fishermen living along the coast in isolation. These efforts resulted in the formation of 13 fisheries cooperatives along the east and west coast, with a total of 2 936 members who control about 896 traditional fishing crafts (sambuks and houris). The total cooperative landing was estimated at around 20 000 tonnes in 1986.

It is PDRY government policy that the Public Corporation of Fish Wealth (PCFW) should control internal fish marketing. Until its promotion to the status of a fully fledged state-controlled corporation in 1979, the PCFW functioned as the internal marketing division of the Ministry of Fish Wealth. A work force of about 1 200 is employed by the PCFW to operate its chain of cold stores, ice plants and retail fish shops.

The fisheries cooperatives' catch is normally landed along the beach and taken over by the Internal Marketing Division of the PCFW after weighing and providing a receipt to the cooperatives. The fish is then transported by insulated trucks to the freezing and cold storage plants of the PCFW Marketing Department for processing and subsequent disposal through its retail outlets.

The price of fish per kg in YD is as follows:

The fisheries cooperatives in PDRY sell their catch to the internal marketing division of the PCFW at a low price fixed by a political committee and they receive no subsidy from the Government. The low prices earned by the fisheries cooperatives have contributed to the unsatisfactory rate of sub-loan recovery.

In 1980 the government effected a major policy change in fish marketing to benefit the fisheries cooperatives, who were permitted to dispose of 40 per cent of their total production on the open market, handing over the 60 per cent balance to the Yemen Fish Marketing Corporation. The price rates of fish were also revised, the new prices being the following:

The domestic fish marketing system suffers from poor fish handling practices and insufficient transport. The Ministry of Fish Wealth has taken positive steps to improve the existing facilities, construct new facilities and organize necessary extension programmes.

2. FISHERIES PROJECT IDA 370 - SAMBUKS CREDIT SCHEME

In April 1973 the IDA approved a credit of US$ 3.5 million to assist the PDRY to exploit the considerable marine resources through traditional coastal fishery. The first fisheries project was financed by this credit.

Subsequently an additional credit of US$ 1.6 million was approved on 21 January 1975 with a corresponding increase of governmental contribution from US$ 550 000 to US$ 800 000 to cover the increased local cost of the project.

The main objective of the the project was the development of traditional coastal fishery. The project components cover:

• construction of 800 tonnes cold storage and related facilities at Mukalla and a fish receiving station at Shihir in Hadramout Governorate;

• construction of 100 improved 45 hp inboard IDA sambuks equipped with modern fishing gear;

• technical assistance for development of fisheries industry and operation of shore facilities through the provision of engineering and management consultants and the appointment of a cold store manager and refrigeration engineer to train local counterparts;

• the provision of consultants to study fisheries development in the sixth governorate, and

• the provision of consultants to study the possibility of agricultural development in the Wadi Hadramout area.

In the first IDA Fisheries Development Project, 100 45-feet inboard sambuks equipped with fishing gear were provided on credit. Thirty-six boats were handed over to the Ministry of Fish Wealth's small boat division and the remain 64 distributed to the fisheries cooperatives.

2.1. Lending policies and procedures

The lending policies and procedures for subloans to fisheries cooperatives are as follows. The cooperative department recommends the beneficiary, with details of the name and address of the person authorised to sign the loan contract. The Chairman of the Public Corporation of Fish Wealth (PCFW) approves the recommendation. On receipt of the above, the Fisheries Project Department prepares the contract document with details of date of delivery of the sambuk from the boatyard and of the fishing gear. Each contract is given a number and signed by the Director General, PCFW and the authorised representative of the cooperative. The original contract with signed copies is then distributed as follows:

• two copies including original with a covering letter to the Chief Accountant, PCFW by the Fisheries Department, with instructions to recover the credit in installments with interest according to the repayment programme as per the Sambuk Loan Contract;

• one copy of the contract with several copies of form IDA/FA/1 to submit monthly statistics of fish landing to the fisheries cooperative;

• one copy to the Co-operative Department;

• one copy retained by the Fisheries Project Department for its records.

The relending of the sambuks with fishing gear was based on the following terms:

• the interest rate shall be 8 per cent per annum and repayment in 16 half-yearly instalments over eight years;

• according to the contract, the cooperative would undertake to sell their fish production to the PCFW and would submit monthly statistics on Form IDA/FA/1 on fish production to PCFW, and

• according to the signed contract, the improved sambuk with fishing gear is considered the property of the PCFW and the cooperative has no right to sell or transfer the sambuk or part of the fishing gear without the written approval of the PCFW until such time that the loan is repaid in full.

The fisheries cooperative is responsible for the utilization of the sambuks for fish production and their regular maintenance. The sambuk is subject to periodical inspection by the PCFW representative to ensure that the cooperative undertakes to utilize the sambuk for the intended purpose.

2.2. Project implementation and results

By January 1980 all 100 sambuk had been fully equipped and delivered. Twenty-six were delivered to the Ministry's coastal fishing corporation, ten to the fisheries cooperatives in the first and third governorates and the balance of 64 to the fisheries cooperatives in the fourth and fifth governorates.

The distribution of the improved sambuks was made in accordance with the subsidiary loan agreement amended in May 1987 between the government and the Ministry of Fish Wealth.

The benefits derived include the construction of the shore facilities at Mukallaa (fifth governorate) which consisted of a cold storage of 800 tonnes, a fish freezing plant with a daily capacity of 25 tonnes, ice storage of 150 tonnes, chill storage of 50 tonnes and the fish receiving station at Shihir consisting of fish chill storage with a capacity of 15 tonnes and ice storage of a 24-tonne capacity.

The introduction of the sambuks provided jobs for over 700 fishermen and gave them the opportunity to increase their incomes. Most of the project sambuks landed an average 120 tonnes of fish per year.

With the project's assistance, the cooperative initiated collection and submission of catch and operation data. Fish capture was improved by using high quality fishing gear provided under the sambuk credit scheme.

The construction of the improved sambuks by local contractors provided employment to 70 carpenters at the two boat yards in Aden and Mukalla. They were trained in special fastening techniques and economic use of timber and other materials resulting in substantial improvement of the sambuks.

Training of three Marine Assistant Engineers was provided in Japan by the engine suppliers.

The cold store in Mukalla and the fish receiving station in Shihir provided employment to 100 persons and in-service training in fish handling and plant operation.

The actual total project cost was as follows:

Information on the annual catch by each sambuk was not available, but careful examination of the cooperatives' and coastal fishing corporation's statistics for 1986 and of field visits and investigations revealed that the catch of the sambuks varied widely, from 70 to 170 tonnes per annum.

For the purpose of assessing the economic performance of a sambuk, it is considered that the average catch of fish per annum by each sambuk was 90 tonnes, which exceeded the appraisal estimate of 56 tonnes.

The daily earnings per fishermen was YD 19 in 1986. This is 27 times more than the appraisal estimate (YD 0.7), but using the cost of living index for 1986 of 355.9 (base year 1969) and the 1972 index of 116 (base year 1969), the daily real earnings per fishermen was YD 37 or 10 times more than the appraisal estimates.

Crew of a sambuk = 7 fishermen.

The statistics of fish production by cooperatives for the years 1981 to 1986 is given below:

2.3. Loan recovery

The recovery of the subloans was the responsibility of the PCFW. The loan recovery programme mainly consisted of the collection of loan repayments by the Coastal Fisheries Corporation and the cooperatives, and the maintenance of all accounts connected with this programme. The details of loan recovery collection from the Coastal Fishing Corporation and the Fisheries Cooperatives are given in Tables 5 and 6 respectively. It can be seen that the rate of loan recovery collection for the first three years, 1976–78, was quite satisfactory, but in the case of the Coastal Fishing Corporation no collection was made from 1979 onwards and in the case of the cooperatives the rate of collection declined from 1979. Despite repeated requests by the Fisheries Project Department, no progress was made by the Accounts Department of the PCFW to effect recovery of the sambuks loan. In December 1977, the responsibility for sambuk loan recovery was transferred to the Fisheries Project Department. This transfer of responsibility did not show the desired results, mainly due to the lack of adequate means of communication with the indebted cooperatives located in remote areas along the PDRY coast. There was also no support from the administrative representatives of the Ministry of Fish Wealth based in various governorates.
¹ YD = Yemini Dinar. YD 1 = US$ 2.89524

The main reason for the ineffectiveness of loan recovery may have been the lack of proper training of personnel regarding the objectives of loan provision and the collection process. There was no clear organization with regard to loan recovery, and no authority delegated to responsible personnel. It is important to study these aspects and to take steps to improve the problems of the IDA First Fisheries Project, to ensure a successful future for loan recovery schemes in the coastal fisheries sector.