CREDIT FOR FISHERMEN: THE EXPERIENCE IN YEMEN ARAB REPUBLIC

S. Shetty

Agricultural Credit Bank

Hodeidah

1. INTRODUCTION

A project for the development of the Fisheries sector of the Yemen Arab Republic (YAR) was identified by a FAO/World Bank mission at the request of the Government of the YAR. Subsequently, three feasibility studies were conducted; a fish marketing survey, a survey of shrimp resources and an identification of suitable fish landing sites, together with the design of marine and shore facilities. On the basis of these studies, the project was appraised in October 1979 and a Development Credit Agreement was signed between the Government of the YAR and the International Development Association (IDA) on 6 June 1980. IDA sanctioned a credit of US$ 17.0 million. A parallel loan of US $4.0 million was sanctioned by the Government of Denmark.

The main objective of the project was to increase fish production and improve the economic conditions of the fishermen, at the same time providing infrastructural facilities for improved handling, marketing and transport. To achieve these objectives, it was important to increase the number of fishing vessels and fish transport vehicles. With this in view, it was proposed to channel US$ 1.4 million to the fisheries sector through the Co-operative and Agricultural Credit Bank (CACB).

It was further proposed to finance the purchase of 30 sambuk trawlers, 60 modified sambuks (wooden boats fitted with inboard diesel engines), 30 houris (plank-built canoes with outboard engines) and 6 insulated trucks.

2. THE FISHERIES SECTOR

2.1. Fish capture

YAR has a coastline of about 250 nautical miles with a continental shelf area of 9 100 sq. miles. Fish landing at the time of project appraisal was 11 600 tonnes per annum. Fishing in the YAR is undertaken throughout the year. The fishermen are mostly migratory, going northwards from October and southwards from April.

Only two types of traditional fishing crafts, houri and sambuks, are used in the YAR. These crafts are plank-built, fitted with iron fastenings. The houri is a plank-built open boat of 5 to 12 m in length powered by a 8–75 hp outboard engine. The smaller boats are manned by the owner and one crew member who start fishing by hand line close to the shore for about 4–5 hours before daybreak. On larger houris, fishing methods are usually handlining and gill netting with 4–5 crew members. Sambuks are boats of 10–21 m in length powered by inboard diesel engines of 22–165 hp, depending on the size of the boat. A half deck on the boat facilitates the handling of net or hook and line with the help of 8–15 crew members.

Fishing practices

Fishing in the YAR is confined to inshore waters, on average 4–5 km from the fishing villages. Some of the sambuks with higher range and power travel greater distances, touching Jizan and Djibouti. The time required to reach the fishing area is normally one to four hours.

The fishing hours at sea per day for houri vary from four to eight hours. Fishermen operating sambuks remain at sea for four to six days. During such periods, 32–48 hours of fishing is possible. The general practice is for houri fishermen to leave for the fishing area in the evening hours and return to the landing centres in the early morning hours.

Various types of traditional fishing gears, such as gillnets, hook and line and trawlnets, are used. Gillnets are operated both by sambuks and houris. The operation involves either drifting the boat as well as the net along with the current or setting the net in a particular area. These gillnets are mainly used for catching king fish and Indian mackerel. Hook and line fishing is mainly used to catch king fish, groupers, emperors and carangids. Indian mackerel is used as bait. On a houri about four to five fishermen undertake hook and line fishing whereas on a sambuk 8–15 fishermen are engaged. The use of trawlnets is of recent origin in the YAR. Traditional sambuks used for gillnetting and hook and line operation are used for trawling without any modifications. Catch from trawling operations is satisfactory due to the low level of exploitation of shrimp resources.

System of sharing fish catch

Generally, fishermen belonging to the same family fish together. The system of sharing catch is similar all along the coast; 50 per cent of net income (gross income - total expenditure excluding cost of repair and maintenance) will be shared by all the crew members whereas the 50 per cent balance will be retained by the boat owner. Gross income is reached after paying commission to the auctioneers, the user fee to the General Corporation for the Development of Fish Resources (GCDFR) and membership fee to the cooperatives. Five per cent of the total value of the catch goes to the auctioneers, 3 per cent to GCDFR and 2 per cent to the fishermen's cooperatives.

Species composition and annual landing

The percentage landings by most important species are king fish (12 %), emperor (14 %), Indian mackerel (26 %), snapper (8 %) and prawns (2 %). Other varieties of fish caught include mullets, baracuda and cat fish. The total annual landing increased to a level of about 22 000 tonnes per annum with the development of infrastructural facilities and availability of credit facilities to the fishermen.

Maximum sustainable yield (MSY)

The MSY was estimated by FAO in 1978 to be 30 000 tonnes of pelagic and demersal fin fish and 850 tonnes of prawns.

2.2. Marketing

Sale points and ultimate markets. In the Yemen Arab Republic (YAR) the most important fish landing centres are Hodeidah, Khawbha, Medi, Abin Abbas, Luhaiyya, Ras Isa, Taif, Khawhka, Mocha and Babal Mandab. Most of the fish landing centres, with the exception of Hodeidah, Khawkha and Mocha, are only accessible to four-wheel drive pickup vans as they are connected by desert tracks. Fish from these landing centres are sold either by private auctioneers or the fishermen's cooperatives. Wholesalers, hoteliers, retailers, processors and consumers buy fish from the auctioneers. The wholesalers transport fish to inland markets such as Sanaa, Ibb, and Dhaman and sell it to processors and retailers (see organization chart of fishing, fish processing and marketing below).

Ninety per cent of the fish landed is sold in fresh (iced) condition. Only 10 per cent of the fish landed is preserved, mostly by salting and smoking. About 60 per cent of the Indian mackerel catch is preserved on board by gutting and salting and subsequently sundried before marketing. Due to the lack of freezing and canning plants, icing, salting and smoking are the only forms of preservation.

Ultimate sales points depend largely on the existing road network. Important inland centres served by the fresh fish traders are Sanaa, Taiz, Dhaman and Ibb. Preserved fish is usually transported to less developed interior markets. Significant quantities of fish and shrimp are also transported to Saudi Arabia by road.

Prices realised by fishermen and retailers. Prices realised by the fishermen depend on the size of the catch, its composition, the season, demand and access to marketing channels. The size and form (fresh or dried) in which fish is sold also determine the price. For the fishing villages as a whole the normal wholesale price realised by fishermen for various varieties is given below.

Of the quality fish, king fish fetches the highest prices, followed by cobia and emperor. Shrimp fetches the maximum wholesale prices at YRIs 40–50 per kg. The retail prices realised are higher by 70–100 per cent than the wholesale prices, depending on demand. There is no great variation in wholesale prices at different fish landing centres along the YAR coast. However, the price realised by the fishermen operating off Hodeidah, Khawbha, Khawkha, Mocha and Medi, where project facilities are installed, is marginally more than that of the other fish landing centres.

YEMEN ARAB REPUBLIC ORGANIZATION CHART FISHING, FISH PROCESSING AND MARKETING

Selling and packing. As mentioned above, about 90 per cent of the fish landed is sold whole, either by the basket or by heaps, after sorting by variety. Fish and shrimps are normally sold by auctioning to the highest bidder. Shrimps are auctioned by the box as they are stored on board in medium-size insulated iced boxes. Small fish are sold either in heaps or lots. Quality fish of bigger size are auctioned in lots containing 5–10 fish.

Shrimps once auctioned and purchased by the wholesalers will be repacked into the medium-sized insulated box with ice and then transported on a pickup truck to inland markets and to Saudi Arabia. Fish purchased by wholesalers at auctions will be washed and packed with ice in an insulated box mounted on a pickup truck and then transported to inland markets and to Saudi Arabia.

Quality control. Most fishermen and buyers, when questioned about how they determined the quality of fish, indicated experience. Gill colour, smell and texture are the principal criteria fishermen and buyers consider in assessing fresh fish. The quality of dried fish is determined by smell and colour.

Transport. Fish is transported from small fish landing centres to the main fish landing centres or from the main fish landing centre to the inland markets in four-wheel drive pickup trucks in insulated boxes. Refrigerated/insulated trucks are not used at present due to the prohibitive cost of importing them and the multi-purpose aspect of ordinary pickup trucks.

Auctioneers and wholesalers. Auctioneers play an important role in the development of fisheries. They give loans to the fishermen by way of margin money contribution to obtain institutional credit, to buy diesel and to meet other recurrent expenses. In the larger markets such as Hodeidah as many as eight auctioneers operate, while in smaller centres an average of two auctioneers are present. They are residents of the fishing village where they operate and generally belong to the same community. Auctioneers earn 5 per cent of gross income as commission. They sometimes deliver directly to inland markets and to hotels in major cities.

Wholesalers generally buy fish at the auction, transport it iced in pickup trucks and sell it to inland processors and retailers.

Fishermen's cooperatives. The fishermen's cooperative also acts as auctioneer in Hodeidah, working side by side with private auctioneers. The entry of the cooperative into fish marketing has little impact as it does not have a network of agents in inland markets, and is unable to deliver fish to inland retailers on a credit basis or to cater to the pressing credit needs of fishermen to buy fuel and meet other expenses. As all transactions such as buying and selling are on a cash basis, some wealthy fishermen auction their fish catch through fishermen's cooperatives.

Market trends. The market for fresh fish is expanding rapidly in the YAR. Due to the lack of freezing facilities it is not possible to ascertain the exact demand and acceptability of the frozen product. Inland markets such as Mareb and Hajja are still unexplored. Though substantial quantities of fish and shrimp are reported to be exported, particularly to Saudi Arabia, there is no official record as it is unauthourized. There is certainly scope to develop the export market. All other aspects of fish marketing are virtually free of government intervention. Private traders control all aspects of fish marketing.

Government schemes, interventions and policies for promoting fish marketing. The General Corporation for the Development of Fish Resources (GCDFR), with a new to promoting fish marketing, constructed inland retail fish markets in Sanaa, Taiz, Inn and Dhaman, which are leased out to private traders.

GCDFR also prohibited fish exports, in order to satisfy local demand first. This policy has led to unauthorised export to Saudi Arabia. The lifting of this ban would be of great importance to fishermen for further fisheries development.

GCDFR has established shrimp processing factories in Hodeidah and khawbha which are inoperative due to problem with suppliers of the plant and GCDFR's inability to organise commercial operations.

3. INFRASTRUCTURE DEVELOPMENT WITH IDA ASSISTANCE .bl IDA sanctioned a credit of US $17.0 million and a parallel loan of US$ 4.0 million was provided by the government of Denmark. The credit was sanctioned with a view to:

• improving overall productivity through the development of manpower capabilities and the introduction of more advanced fishing technologies;

• increasing and improving domestic fish supplies and those to neighbouring export markets, and

• raising the level of income among the fishermen.

To achieve these objectives the provision of the following facilities was envisaged:

• an artisanal fishing port at Hodeidah with facilities for fish landing, marketing and storage and a small boat yard;

• an artisanal landing pier at Khawbha with facilities ashore for shrimp and fish processing and storage;

• shorebound fish handling, marketing and storage facilities along the remainder of the coast;

• inland fish distribution and marketing facilities;

• credit facilities for sambuk trawlers, fishing vessels and transport vehicles;

• coastal road link, and

• technical assistance and trading.

The General Corporation for the Development of Fish Resources (GCDFR) was established to oversee the implementation of the project. Infrastructural development at different fish landing centres with IDA credit are described below.

An artisanal fishing port of Hodeidah with facilities such as an auction hall, fresh fish storage, ice storage, landing berth and foot brides with breakwater for protection of the fishing boats has been constructed and is in use. There is a great deal of activity in this fishing harbour during the morning and evening hours when fish is landed. A boat building yard has been constructed next to the fish landing centre. There is also a service station to supply diesel and fresh water to the fishermen. With the installation of these facilities there has been a steady increase in the quantity as well as the quality of the fish landed. At present about 18–20 tonnes of fish is landed at Hodeidah every day by about 80 sambuks and 50 houris. Another development which can be attributed to the fisheries development project is the landing of about 350 tonnes of shrimp per annum at Hodeiah. Hodeidah dominates the fishing industry in the YAR due to its well-developed infrastructures and other supporting services.

In Khawbha, a landing pier, a shrimp processing factory, an ice plant and other shore facilities have been constructed, but apart from the ice plant, none of these facilities is being used due to the lack of shrimp landing at Khawbha. The fish landing pier can only handle about eight to ten fishing boats at a time and it is now silted up. It is difficult for the local fleet of 35 sambuks and 80 houris to land their catch at the landing pier. Hence, fishermen beach-land their catch. Efforts are now being made with the help of Danish aid to dredge the silt around the landing pier, increase the capacity of the ice plant and provide shore-based facilities for the entire local fleet.

Shore-based facilties in Khawhka consist of a fresh fish storage and an auction hall. On average 20 sambuks and 60 houris operate from this base. Similar facilities have been installed in Mocha, from where about 65 houris operate.

Fish markets equipped with slab tables and washing facilities were built under this project in inland centres such as Sanaa, Ibb, Taiz and Dhamar. These fish markets are leased out to private operators.

The coastal road link from Khawbha to Jebel-al-Milh is yet to be completed; the tendering process is nearing completion.

4. FISHERMEN

The fishermen of the YAR were of a migratory nature until infrastructures were constructed under the fisheries development project. They were also controlled by powerful auctioneers who not only marketed their catch but also provided credit facilities. Most of the fishermen used to work on the boats owned by the auctioneers, sharing the income. At the time o the project appraisal, the fishermen working as crew members earned about YRIs 6 000–7 000 per annum. The sector at present employs about 7 000 fishermen, of whom 2 000 are boat owners/partners and the rest crew members. Incomes are estimated to range from YRIs 10 000 to 50 000 per annum per houri owner and YRIs 70 000 to 150 000 per annum per sambuk owner. The income of the crew members has also increased substantially to YRIs 13 000 and YRIs 20 000 per annum for fishermen working in houris and sambuks respectively.

With the installation of the project facilities, migration is diminishing; fishermen have started building homes the project facilities. The ownership pattern has charged and the influence of the auctioneers is decreasing with the Co-operative and Agricultural Credit Bank stepping in to provide credit assistance to fishermen under the fisheries development project.

5. CO-OPERATIVE AND AGRICULTURAL CREDIT BANK (CACB) .bl CACB was formed in January 1982 from the merger of the Agricultural Credit Bank and the National Co-operative Development Bank. CACB's objectives are to finance projects for the development of agriculture, irrigation, forestry and fisheries, and to support agricultural and artisanal cooperative associations and organizations by financing their projects.

CACB also performs all the banking business and services which are generally carried out by agricultural cooperative credit banks and organizations, including the acceptance of deposits, the opening of accounts, issue of guarantees and provision of the materials, equipments and machinery needed for implementing the cooperative and agricultural projects.

The authorized capital of CACB was fixed at YRIs 300 million. As of 31/10/88 equity capital of CACB stood at YRIs 198 million. The paid-in capital of the bank has been stationary at YRIs 198 million for the past four years.

The credit component of the fisheries development project was channeled through CACB. Under this project a sum of US$ 1.7 million was allocated for lending to the fishermen. The purchase of 30 sambuk trawlers, 60 modified sambuks and 6 insulated/refrigerated trucks was proposed under this project. A Fisheries Credit Advisor was appointed to oversee the credit component of the project and posted to Hodeidah Branch of CACB. Necessary counterpart personnel were also appointed for coordination with the Hodeidah branch. Various activities undertaken for the successful implementation of the project are described in the subsequent paragraphs.

6. CREDIT SURVEY

The main objective of the credit component of the project was to increase fish production and improve the economic conditions of the fishermen. As a first step in the implementation of this project, a credit survey was undertaken along the coast of the YAR to assess the demand for credit and the constraints on the expansion of the credit portfolio and to formulate lending policy and guidelines for financing the fisheries sector.

Demand for credit

During the credit survey, a considerable demand for credit from CACB was observed. The fishermen from isolated fishing villages were unaware of the services available from CACB and were in any case unable to provide the guarantees and security required. Based on the demand for credit, a lending programme was prepared with yearly targets for financing the fisheries sector for four years. The lending programme prepared during the beginning of the project is shown below.

This lending programme was based on the assumption that the marine engines required by the fishermen would be freely available.

Constraints on the expansion of the fisheries credit portfolio

Lack of marine engines. At the time of the credit survey, there was an acute shortage of marine inboard and outboard engines. Accordingly, work on several sambuks at different stages of construction was held up. Furthermore, several sambuks were operating at a lower efficiency level due to their inability to replace the worn out engines. At the time of conducting the credit survey, it was anticipated that the private dealers would import these engines.

Lack of extension and development services. The fishermen were using traditional fishing methods, with no improvements to boat or gear type. Many improvements and modifications were necessary in boat construction. Net haulers, winches and other fishing aids were also required to make fishing easier and more effective. Most fishermen were not exposed to improved fishing techniques, thus hindering the flow of credit to the fisheries sector.

Lack of CACB branch network. On account of the migratory habits of the fishermen, it was proposed to extend credit to fishermen living along the coast of the YAR through the Hodeidah branch of the CACB. Due to poor public transport in the YAR, fishermen either find it extremely difficult or expensive to travel to Hodeidah to obtain a loan from the bank, so prior to the project implementation, CACB loans were concentrated around Hodeidah.

Lending procedure. CACB formerly applied the same lending procedures to both agricultural and fisheries loans, insisting on guarantees from the auctioneers through whom the fishermen sold their catch or from the fishermen of Hodeidah. This conservative approach was adopted earlier to make bank loans secure.

7. LENDING POLICY, NORMS, PROCEDURES AND OPERATIONS

7.1. Lending norms and policies

Purpose of the loans. Initially, it was proposed to extend credit in the form of homogeneous loan packages of sambuk trawlers, modified sambuk or houri to be constructed or imported under the project. However, at the time of implementation of the credit component, local boat building activities were improving and were considered sufficient to cover local demand. Furthermore, it was considered preferable to extend credit on the basis of fishermen's needs rather than provide homogeneous loan packages. This was discussed with the IDA review mission, who agreed to CACB extending credit to all activities related to hull construction, engine and gear procurement, purchase of fish transport vehicles and boat repair. This gave enough flexibility to CACB to extend credit to any requirements of the fishermen.

Type of loans. Medium-term loans are usually granted to finance various activities. The repayment period depends on the project costs, the time required for completion of the project and the incremental income accrued from its operation. Short-term loans are granted for the repair of boats and engines.

Delegation of lending power

Rate of interest and subsidy. The interest rate on a loan is 10 per cent per annum. A penal interest rate of 4 per cent per annum over and above the prevailing interest rate is charged on the overdue amount. There was no subsidy component for the fishermen. The interest rate of 10 per cent was very low compared to commercial interest rates. Under the project CACB could get reimbursement from the IDA for all loans sanctioned to the fisheries sector through the Central Bank of Yemen. IDA had stipulated in the credit agreement with the YAR government that the amount reimbursed to CACB should be to increase its equity capital. Hence, CACB was given interest-free funds in the form of equity for its long-term needs. This could be termed an institutional subsidy.

Security. The following security norms were applied to the sanctioning of loans to fishermen without property or collateral.

Insurance and credit guarantee. Insurance of the fishing boats remained an impossibility due to the inability of local insurance companies to offer a package with a reasonable premium. The fishermen's cooperatives collect 2 per cent of the landed value of the catch and deposit the same with CACB. The total balance in the accounts of different fishermen's cooperatives is of the order of YRIs 3 million. The members of the cooperatives were persuaded to act as an informal accident insurance agency and to help its members compensate loss due to accident. Credit guarantee schemes do not exist in the YAR; it was thought that such a scheme would worsen the loan recovery performance.

Down payment/borrower's contribution. On medium- and long-term loans, borrower's contribution was revised as follow:

The down payment norm could be relaxed by the Branch Manager at his discretion depending on the security available and past transactions of the borrower with the bank. In the case of loans for boat and engine repair, 50 per cent of the borrower's contribution was stipulated to prevent misutilization of the loan.

7.2. Operational features

Disbursement. The loan amount for construction and repair of sambuks and houris is disbursed directly to the carpenter in stages depending upon the progress in work after the necessary authorization from the borrower. With regard to engines and nets, the loan amount is directly disbursed to the engine and net dealer. Subsequently, CACB started importing the engines and delivering them to the fishermen.

Preparation of simplified application forms, appraisal techniques and procedure for obtaining a loan. During the preparatory phase of the project, a set of simplified application forms for loans up to YRIs 25 000 and another set of more elaborate application forms for loans above YRIs 25 000 were prepared for use by the Hodeidah branch. An instruction manual outlining the procedure for credit administration, appraisal techniques, follow-up and monitoring of loans was prepared for use by the Credit Supervisors working in CACB. Vessel budgets were prepared for different types of investments for loan appraisal by the credit personnel. Benefit cost analysis is used for appraisal of loans up to YRIs 25 000, while for the appraisal of the larger loans the discounted cash flow technique is used.

The general procedure for obtaining a loan from CACB is the following. The prospective borrower makes an application in writing to the Branch Manager who refers it to the Credit Supervisor. The Credit Supervisor makes initial enquiries and if satisfied fills in the prescribed application, enclosing the quotations and title deeds provided by the applicant. The application is registered and numbered and survey fees paid, and a date is fixed for conducting pre-sanction inspection. Subsequently, a credit supervisor will undertake pre-sanction inspection and submit a feasibility report to the Branch Loan Committee for taking a decision on granting financial assistance. After the committee sanctions the loan, the fisherman is required to execute documents such as promissory notes and hypothecation agreements. After executing the documents, the loan will be disbursed to the carpenter constructing the boat or to the net dealer. This system was found to cater to the demand of wealthy fishermen, but excluded small poor fishermen with no access to credit. It was therefore decided to introduce a system of credit camps and group guarantee to ensure smooth flow of credit to the fishermen.

Credit camps. As it was decided to channel credit for the fisheries sector through the Hodeidah Branch of CACB, it was impossible for the fishermen living in distant fishing villages to obtain credit from CACB. Lack of good public transport and the time and money to travel to Hodeidah were the main factors affecting smooth flow of credit to the fishermen living in remote villages, creating regional imbalances. To overcome this problem, it was decided to conduct credit camps in different fishing villages along the coast of YAR. Initially, a programme was drawn up indicating the place and date of the visit. This programme was given wide publicity through television and distribution of pamphlets. On the appointed day, the fisheries credit personnel visit the fishing villages. Fishermen's applications for loans are received and identification cards are checked to ascertain the correct name, age, and place of residence. Subsequently, identification of the fishermen will be completed through enquiries with the Sheikh (head) of the community or the Chairman of the fishermen's cooperative. The credit personnel then undertake presanction inspection to verify the cost of construction of the boat, type of fishing method, infrastructural facilities available and cost and returns of the fishing operation. The fishermen will be advised to go to Hodeidah to execute the loan documents and receive the loan generally four days after the visit to the fishing village. The credit personnel return to Hodeidah branch with these papers and prepare reports to the Loan Committee for sanctioning the loan. The fishermen are required to come to Hodeidah only once to execute the documents and obtain the loan. This system reduces considerably the cost of borrowing and the time span required to obtain a loan, helping CACB to expand the fisheries credit portfolio.

Group guarantee. While conducting credit camps, a group of four to six persons will usually be formed. This group will be asked to come to the branch together for executing the documents and taking the loan. They also stand as guarantor for one another. This system of group guarantee worked well both for the fishermen and for CACB, who could exert social control over the fishermen in order to avoid the diversion of loans for other purposes and to improve recovery performance of the loans sanctioned under the project through group responsibility.

Watch dog panels. To assist CACB in borrower identification, and to get feedback with regard to loan utilization, the migration of fishermen and the clandestine sale of boats, watch dog panels were constituted in different fishing villages. To prevent this panel becoming a pressure group in the village, the members were changed at regular intervals to include the fishermen with good track records in loan repayment.

Loan follow-up and recovery. Due to the introduction of the credit camp system, the follow-up of loans and their recovery was considerably easier. The repayment schedule is generally fixed depending on the cost of investment and net incremental income. Sixty per cent of net incremental income is taken as the repaying capacity of the borrower. During a visit to a fishing village, the credit personnel of CACB carry notices to the fishermen of that village intimating the due date for repayment. They are required to inspect the fishing boat at least once in six months and to submit a report on the condition of the boat. If the borrower faces genuine difficulties in repaying the loan, recommendations are made to rephase the repayment schedule. At present efforts are being made to appoint collectors to receive repayment from the fishermen at each fishing village.

Other cases of default are dealt with separately, depending upon the situation. Generally, social pressure from the watch dog panels is sufficient. In some cases pressure may be brought to bear from the guarantor. In extreme cases, the District Administration will be informed of the default and necessary legal measures will be initiated to auction the boat and recover the dues.

The fishermen are informed of the recovery performance of their village as a whole during the credit camp. In the case of villages with recovery rates of lower than 60 per cent, a veiled threat of stopping further disbursement of loans has helped to improve the rate.

Training. Initially CACB appointed a counterpart to work with the Fisheries Credit Advisor. This counterpart was given on-the-job training in identifying the borrowers and their needs, appraisal techniques and loan account monitoring. Subsequently, he was sent to the College of Fisheries in Mangalore, India, for a six-month training in Fishing and Fish Processing Technology to provide him with an insight into modern methods in this field. Three more personnel connected with the fisheries credit operation were sent to the Agricultural Credit Bank in Khartoum, Sudan, for advanced training in credit operations.

Procurement. While formulating the lending programme it was assumed that the local dealers would import the marine inboard and outboard engines so that the fishing fleet would expand and the demand for credit from CACB would increase. Thereafter, the government of the YAR introduced import restrictions due to the deterioration in the level of foreign exchange reserves. This led to a virtual non-availability of marine engines and spare parts resulting in stagnation in the size of the fishing fleet and decline of its efficiency. As the expansion of the credit portfolio did not progress according to the lending programme, CACB approached the IDA to permit the import of marine engines and spare parts using the foreign exchange available under the fisheries development project. IDA agreed to CACB's suggestion and recommended a demand survey and the procurement of engines through international competitive bidding.

A demand survey for marine engines was conducted along the entire coast of YAR. It was proposed to import 200 outboard engines of 8, 40, 48, 55 and 75 hp and 75 inboard diesel engines of 22, 33, 52, 74 and 165 hp International competitive bidding documents were prepared for the above requirements and advertisements issued after having the tender documents approved by IDA. Tenders received from different companies were evaluated and it was decided to offer the contract for the supply of 200 outboard engines to the Yamaha Motor Company of Japan for a contract price of US$ 354 840. The contract for supply of 75 inboard diesel engines was given to Yanmar Diesel at a contract price of J. Yen 146 573 604 and DM 16 375. These engines arrived in Hodeidah in November 1988. Their arrival was a major relief to the fishermen. The distribution of the engines is proceeding at a brisk pace; during the first two months of 1989, 100 engines were distributed to the fishermen.

Due to the success of CACB in finalizing the first phase of procurement, IDA was requested again to approve the import of 350 outboard engines of medium size, 15 hp and 25 hp and also 50 fibreglass canoes fitted with 40 hp outboard engines. IDA approved this proposal and allocated US$ 850 000 for this purpose.

7.3. Loan disbursements and recovery

Allocation and disbursement from IDA. CACB was allocated US$ 1.4 million. The disbursement from IDA to CACB is furnished below.

It is evident from the above that CACB exceeded allocations under the project. Furthermore, IDA allocated US$ 850 000 to procure medium-sized engines and fibreglass canoes.

Fisheries credit portfolio and recovery performance. The details of the loans disbursed to the fishermen in 1985, 1986, 1987 and 1988 and the recovery performance are provided in the table below. The overall recovery performance of fisheries loans in YAR is good. However, disbursement could not match expectations due to the lack of marine engines. The credit portfolio should expand considerably now, with the availability of marine engines with CACB. The loan utilization rate was 100 per cent due to social control factors.

The cost of lending by CACB works out at 14 per cent of the quantum of loans disbursed as compared to 10 per cent interest paid by the borrowers. Deficit is met by the profit from the sale of marine engines. Generally CACB has a profit margin of 10–15 per cent in this activity.

Extension-related activities. Under the project all the activities other than credit operations were entrusted to the General Corporation for the Development of Fish Resources (GCDFR). An expatriate Extension Specialist was appointed in November 1987, but GCDFR has been unable to provide him with the necessary equipment to conduct extension-related activities. CACB, however, conducted a training programme for the local mechanics with the assistance of service engineers of the Yamaha Motor Co. with regard to the use of special tools, assembly, disassembly and servicing of Yamaha outboard engines.

Another training programme for the fishermen was also conducted regarding the inspection of engines before taking delivery, the use of correct fuel oil mixture and periodic servicing.

8. CONCLUSIONS

The main reasons for the success of this project are:

• a single-agency approach to credit component implementation without interference;

• need-based loans granted by CACB and not homogeneous loan packages thrust on the fishermen;

• credit camps organized by CACB reducing borrowing costs as well as the costs of loan administration;

• group guarantee system introduced to encourage joint responsibility;

• watch dog panels formed to exert social control;

• capability of CACB to finalise procurement of marine engines swiftly;

• the dedication of CACB staff members and their response to the needs of the fishermen, and

• the flexible approach, timely advice and assistance from IDA.

As far as the linking of credit and marketing is concerned, the main objective of the credit project was to remove the traditional fishermen from the clutches of exploiting auctioneers, to improve their standards and increase their productivity. By directly linking credit and marketing, the fishermen are left in the clutches of auctioneers, thus defeating the original objective. Some means of linking a credit recovery mechanism to marketing arrangements, however, is vital to ensure repayment, for the recycling of the fund for further development efforts.

CACB has implemented its own method of linking the beneficiary fishermen with auctioneers:

• When a fishermen requests a loan from the CACB, he is required to furnish the name of the auctioneer to whom fish will be supplied.

• At the time of pre-sanction supervision, credit personnel visit the auctioneer and verify the details furnished by the fishermen. The auctioneer is also requested to sign the identification report of the fishermen with statements agreeing to notify the bank in the event of fishermen changing auctioneer and also agreeing to deliver the repayment notices to the fishermen.

• The repayment notices are generally handed over to the auctioneer who in turn hands them over to the fishermen when they come to auction the catch.