2. EMPIRICAL ANALYSES

Even though the methodological issues discussed in section 1 have universal application and cover, to a great extent, different types of subsidies in all the countries, it should be noted that the present state of data collection in the countries is such that additional investment has to be made by each country in data gathering. At the present, inadequacy of information and the tendency to initiate a programme without an in-built mechanism for monitoring and evaluation does not allow for a rigorous analysis of the many complex issues involved in subsidy impact evaluation.

Before analysing the available data in each country, the difference between “financial support” and subsidy must be recognized. Financial support describes the totality of government expenditure, both capital and recurrent, on the fishery sub-sector of the economy. It describes the amount of resources allocated to the fishery sub-sector at any given time. Subsidy on the other hand describes that amount of resources transferred either in cash or in kind to the fishing industry (artisanal and industrial) in order to induce investors to invest in fisheries or such other purposes as related to government objectives. Subsidy may be, and usually is, part of the financial support. And inasmuch as government budgetary allocations may include capital expenditure on buildings, purchase of furniture or vehicles and other expenses not directly transferred to the fishermen, the subsidy component is usually a fraction of government allocations.

Finally, in analysing the situation in the countries under study, attention will be focused on the objectives, types and the mechanism of the subsidy programme as well as the social and political issues involved.

2.1 NIGERIA

2.1.1 Objectives of the Subsidy Programme

The objectives of the fisheries development programme in Nigeria reflect the general or overall objectives of the economy as a whole. As far back as the late seventies it was realized in the country that if balanced growth were to be achieved the earnings from petroleum had to be injected into all sectors of the economy. Moreover, high rates of urbanization and the increasing rate of population growth called for immediate action if the deteriorating food situation were to be arrested. To achieve this requires both monetary and fiscal policy instruments of which subsidy is one.

With respect to the fishery sub-sector of agriculture the following objectives were clearly stated in the 1980/85 Development Plan.

1. Increase in domestic fish production. This objective was adopted as a way of arresting the increasing dependence on fish imports while the country resources remain underutilized.

2. Increase in supply of fish products. The rationale behind this was to exploit the scientific research information of transforming underutilized species of fish into by-products such as fish meal for the local industries.

3. Foreign exchange generation. This objective was addressed to the harnessing of the exploitation of such finfish resources as tuna and shellfish resources such as shrimps for the foreign market. It was the desire of the nation to diversify its sources of foreign exchange earnings for stabilization purposes.

4. Provision of employment opportunities in fish production and fish processing. Fish production, like any other primary production activity generates secondary benefits in processing, packaging and distribution. The government aimed at using investment in fisheries as a way of solving some of the unemployment problems facing the country. For every fishing unit assisted secondary employment is generated in industries servicing the fisheries as well as in the service sector in fish handling and distribution.

5. Improvement in the standard of living of small-scale fishermen. According to the government, the basic objective was the improvement in the environment and living conditions of fishing communities through the provision of water, roads, health and educational facilities in the hope that such measures would contribute to increased productivity.

Other objectives include provisions of cheap sources of protein, balanced development, introduction of new technologies into fisheries and the training of Nigerians in marine and navigational sciences.

2.1.2 The Subsidy Scheme

Subsidy in Nigeria embraces a number of activities; primarily among them are (1) the purchase of fishing materials and distribution to fishermen at 50% of the purchase price; (2) the provision of infrastructure such as construction of landings or jetties, cold rooms, refrigerated vans and so on; (3) the provision of credit at less than commercial bank rates; (4) the establishment of institutions such as extension networks and cooperatives.

Between 1979 and 1983 various inputs (see Table 1) were procured by the government and distributed to artisanal fishermen or groups. Government expenditure on the inputs totalled nearly ₦ 500 000 in 1979, but by 1980 it felt to about ₦ 0.09 million. Between 1980 and 1983 it increased ten-fold when compared with 1980 figures (Table 2).

Table 1
Nigeria: Fishing inputs supplied to fishermen at 50% subsidy (1979–1983)

Source: Fisheries Development in Nigeria, FDF Lagos. Paper presented at the 6th Session of the CECAF Sub-Committee on Fishery Development, Banjul, 11–13 October 1984

For fish distribution under the Fish Storage, Processing and Marketing Scheme, twelve fish processing complexes each consisting of 20 t capacity cold store, an ice-making plant capable of producing 3–5 t of flake ice per day, a 10-t ice storage box, a stand-by generator and bore-hole for water supplies were provided in various locations as at 1984. With each complex valued at about ₦ 0.5 million, the total expenditure was ₦ 5.0 million. Since each complex was handed over to the fishing communities without charge, the entire value of the project can be regarded as a subsidy.

Other infrastructure provided are the fishing terminals at Ebughy, Barokiri and Igbokoda, all valued at ₦ 10.3 million.

Table 2
Value of fishing inputs distributed to artisanal fishery (1979–1983)

Source: Federal Department of Fisheries, Lagos

Unlike the inputs distributed to individual fishermen or groups, the infrastructure provided was collective property of the state through which services were rendered to both artisanal and industrial fleets. Lack of adequate information makes it difficult to quantify the rental cost as specified for these infrastructures in section 1. And since no user charges were reported, the benefit of the services provided does not lend itself to easy calculation.

The third most important form of subsidy provided is through loans granted to fishermen by the Nigerian Agricultural and Cooperative Bank (NACB). Although other sources of credit were available, the NACB was specifically set up to provide loans to agriculture, fishery and livestock at interest rates lower than commercial bank rates.

In Table 3 are presented the cumulative loans granted to the fishery sub-sector, the interest rates chargeable on the loan and the extent of transfer resulting from the rate to the beneficiaries.

Table 3
Calculation of subsidy on credit to the fisheries

Source: Basic Data from Central Bank Annual Reports - various issues

In computing Table 3 it was assumed that the loans were short-term, payable over a period of two years. Now, if the loan had been procured from the commercial banks, the interest chargeable would be the then ruling rate of 12%, and the subsidy rate 7%.

As assumed before, at the end of two years principal and interest rates (compounded) payable could have been ₦ 1.8 million and ₦ 2.2 million more in 1980 and 1981–83 respectively under commercial banks than the NACB. This amount represents the transfer (subsidy) resulting from government credit schemes under the NACB.

Although other services as grants were also provided, because of their multi-purpose use, and because they do not enter directly into fish production activities, these cannot be valued.

From the calculations the total “direct” transfer of resources to the fishermen is as in Table 4.

Table 4
Transfer through subsidy to the fishing industry (₦ million)

n.a. = not available

2.1.3 Direct Impact of the Subsidy

Subsidy, in economic analysis, is regarded as transfer payments, and like taxes is not included in the economic analysis of benefit-cost calculus, nonetheless the intention is to focus on the impact which such a transfer may have on the fisheries sub-sector, and examine the extent to which the objectives it is designed or used for has been achieved. As discussed in section 1.2, the direct effect of the subsidy is to lower input prices such that the low price generates increased demand and application of the input. In Nigeria the primary objective was to increase fish production. In this section the impact of the subsidy on the level of fish production will be measured.

Tables 5 and 6 show the quantity, in metric tonnes, and the value of fish production between 1979 and 1983. This period coincides with the time when economic activities were at the peak in the country and when government was focusing serious attention on the agricultural sector.

Table 5
Fish production in Nigeria, 1979–1983

Source: Federal Department of Fisheries, Lagos

Table 6
Value of fish production (artisanal and industrial, ₦ million)

* Unit prices used for computation are ₦ 5.0/kg for fish and ₦ 9.0/kg forshrimp (FAO Commodity Yearbook, 1984)

N.B. - Figures in parentheses are percentage rates of increase/decrease

Between 1979 and 1983 fish production in artisanal fishery ranged from 0.5 million t in 1982 to nearly 0.52 million t in 1979. Over the five years under consideration artisanal fish production averaged 493 282 t/year.

Recorded industrial inshore coastal fishing peaked in 1980 with production reaching over 16 000 t. Shrimp production also increased from 1980 through 1982 with a relative decline in 1983.

In computing Table 6 an average shore price for fish of ₦ 5/kg was used. This is because over the period of study prices of fresh fish ranged from N 3.50 (Federal Department of Fisheries subsidized price) to ₦ 11.0 in most landing sites in the country. To estimate the FOB value of shrimps, figures in the FAO Yearbook of Fisheries Production Statistics, Commodity Trade, were used. For fish exported from Nigeria the average cost is estimated at N 9.0/kg.

The total value of fish production was ₦ 2 682.89 million in 1979. By 1980 there was a slight decline by ₦ 284.91 million. From 1980 through 1982 positive increases were recorded. In 1983 output and its corresponding value also declined. To measure the impact of the subsidy on production the incremental value of fish production can now be compared with the incremental value of the subsidy. This is shown in Table 7 and Figure 6.

Table 7
Relationship between fish production and the level of subsidy

Figure 6 clearly illustrates the relationship between fish output and the level of subsidy granted to the sub-sector in Nigeria. As the level of subsidy increased so did the level of production and when the level of subsidy declined, output of fish similarly declined. Although at this stage it is not possible to determine the optimum level of subsidy, the policy implication of the finding is obvious. A reduction in subsidy, all other things being equal, will lead to reduced output. Second, as long as the increment in output is greater than the increment in subsidy, the subsidy scheme should continue unless there are other fiscal measures that are as effective as the subsidy scheme. Third, estimates from the study from the available data show that the undiscounted value of fish production from 1979 to 1983 was ₦ 12 755.91 million while the undiscounted value of subsidy was only ₦ 11.0 million. That is, the subsidy element constituted about 0.09% of the value of production. Even assuming that only a one-tenth of the output can be ascribed to the subsidy, evidence still shows that the subsidy scheme assisted in no small way in increasing the contribution of fish output in the context of the national income.

2.1.4 Indirect Impact of the Subsidy

To measure the indirect impact of the subsidy only two parameters will be examined here because of inadequacy of information. First, for every item of fishing material imported into the country the government imposes a tariff. In Nigeria fishing materials imported between 1979 and 1983 attracted an ad valorem tax of between 25% and 45%. Outboard engines attracted 25% ad valorem tax while other fishing materials beside nets were taxed at 45% of the CIF price.

Figure 6 Incremental benefit/cost ratio of the subsidy scheme

Another indirect benefit resulting both from the demonstration effect of the introduction of the Polish-built GR13 trawlers and the generous interest rates from the bank was the increase in the number of in-shore fishing trawlers. As shown in Table 8, the number of in-shore fishing trawlers increased by over 200% from 35 in 1980 to 116 in 1985. No current statistics are available on the number of motorized fishing boats but there is no doubt that this could also have increased in at least the same proportion as in-shore trawlers.

Table 8
Number of licensed in-shore fishing trawlers in Nigeria

Source: Federal Department of Fisheries, Lagos

To what extent the increased fleet and consequent effort the subsidy has influenced the biomass is difficult to estimate given the available data. But as at 1983 recorded landing figures showed that only 31% of the potential resources of the Nigerian waters were being exploited (Mabawonku, 1984).

If the aim of the subsidy was to lower fish prices and make fish affordable there is no evidence that this objective has been achieved. Rather, with tight monetary policy, high interest rates and the devaluation of the currency, the price of fish domestically produced has increased by more than 200% compared with imported products.

2.2 THE GAMBIA

2.2.1 Objectives of the Fisheries Development<

The objectives of fisheries development, as contained in Gambia's 1975/76–1979/80 five-Year Development Plan relates to the level of exploitation of the fishery resources of the country and the nutritional situation of the population. According to the Plan document the following specific objectives were identified: (a) to use local fish as a means of improving the nutritional standard of the population; (b) to effect a rational long-term utilization of coastal and inland fisheries resources; (c) to the extent that it will be consistent with the above, to increase employment and net foreign exchange earnings in the sector and (d) to achieve a 10% annual rate of growth in production.

In pursuance of these objectives, the country itemized the following as strategies to be adopted over the Plan period: (1) the improvement of fish marketing, especially in the rural areas; (2) the provision of storage, distribution, handling and processing facilities for the artisanal sectors; (3) the expansion of extension effort and appropriate credit facilities to give wider usage of techniques developed to improve artisanal productivity. Others include research, review of industrial fishing companies ownership patterns, protection of the country's territorial waters and the promotion of regional cooperation.

2.2.2 The Subsidy Scheme

In pursuance of the objectives, a number of incentives programmes were designed. The subsidy instruments used were (1) removal of duty on fuel for both artisanal and industrial (Gambian registered) vessels, (2) subsidy on outboard engines, nets and other fishing materials for artisanal fishery, (3) provision of credit at less than private market interest rates.

Between 1978 and 1987 the country received a considerable amount of foreign aid from countries such as Japan (1982–86), Italy AFDP 1987), EEC (1978–85). In addition, through registration and licensing of foreign fleets, the country received appreciable financial resources to pursue its objectives.

As regards the duty-free allowance on fishing materials all the inputs supplied through Japanese (as well as other countries) grant-in-aid were imported into the country duty-free. The inputs so provided can be roughly estimated as 160 outboard engines, 60 000 m of gillnets, 12 000 m of surround nets, ropes, float lead, vehicles of undisclosed quantities.

According to official sources, the import duty on outboard engines for private importers is 15% ad valorem while they are sold at a current price of D 10 000 per unit. On the other hand, those distributed to fishermen through the aid programme carried a per unit price of D 8 000 and when sold on credit an interest rate of 6% was charged (for inputs distributed between 1978 and 1982) or 11% as from 1983.

Using outboard engines (OBE) as an example, the total subsidy through this scheme is estimated as follows:

Value of OBE supplied by Project = 160 × 8 000 = D 1 280 000
      "      "      "      "      "      "      at an average interest rate of 8.5%

and payable within 2 years equals D 1 506 848.

Value of OBE at market price of D 10 000 = D 1 600 000.
Value of OBE at market prices and commercial bank interest rate of 14.5%¹
average for two years will be D 2 097 640.
Estimated transfer to fishermen = 2 097 640 - 1 506 848 = D 590 792

Besides supplying inputs at subsidized prices and subsidized interest rates, The Gambia also provides loans to fishermen. Indeed this was the case with the EEC funds. At its early inception loans to fishermen were administered by the Gambian Commercial and Development Bank, and all foreign grants to the fisheries sector were handled by the bank.

For the purposes of this study, a review will be made of such loans as were granted between 1980 and 1985 as this covers the period when the lending rate was rather high compared with earlier periods and when different institutional arrangements were made to make the loans more effective and directed at those who were bona fide fishermen.

Computed in Table 9 are the subsidy rates to the fishing industry. In computing the value of subsidy given to the fishermen the average interest rates in both commercial banks and in project-lending activity was used. The value of the subsidy is the difference between what the fishermen could have paid over same period of two years if he had borrowed from commercial banks and what he would have paid had he obtained the loan from credit scheme. From the calculations the average rate of subsidy on loans was about 11.4%/year.

The third kind of subsidy made available was the provision of infrastructure such as smoking ovens and drying racks estimated at about D 50 000 over the plan period. In the case of fuel subsidy, no clear and comprehensive record could be obtained. It is nonetheless considered a relatively modest amount judging from the fact that as of 1984 only 159 boats were motorized (Robinson, M., 1985).

2.2.3 Direct Impact of the Subsidy

In measuring the impact of the subsidy, the methodology discussed in section I will also be used. Available statistics reveal that the level of fish production in The Gambia varies from one year to another. Official

¹ Commercial bank rate between 1978 and 1982 was about 10–15%. By 1985 it has increased to 19%

Table 9
Estimate of loans granted to the fisheries sector

Data from Fisheries Department, Banjul

sources however indicated that the variations were due to insufficient statistical coverage resulting either from lack of funds, inadequate manpower for field work and the remote and scattered nature of the fishing settlements.

Table 10
Fish production in The Gambia

Source: (1) Fisheries Department, Banjul
(2) The Gambia Trade Directory, Trade Division, Ministry of Finance and Trade, Banjul, 1988

Table 10 summarizes the total fish production, both artisanal and industrial, from 1981 to 1985. Fish production in physical terms declined by over 6 000 t between 1981 and 1982. A further decline of nearly 1 000 t was witnessed between 1982 and 1983. But by 1984 and 1985 appreciable increases of between 7 000 and 8 000 t were recorded in the country. On the average the value of fish produced was about D 6 million with a range of 5.7-6.6 million over the period under review.

In order to measure the impact of the subsidy on resource exploitation the subsidy to fish production between the period 1981 to 1985 will now be examined.

Table 11 shows that the impact of the subsidy on output has been positive throughout the period under review. Beginning from 1982/83 for every Dalasi invested in the subsidy output increased from D 8 to D 50. Given that it is possible that the estimated subsidy is lower than the actual figure, since each motorized and non-motorized canoe is taxed at between D 14 and D 75 (which is a transfer to the government) the percentage of underestimation cannot be greater than the taxes paid by the fishermen. Again attributing only 10% of value of fish production to the subsidy, the figures still show that for every Dalasi spent on the subsidy no less than D 1.8 is obtained.

Table 11
Impact of subsidy on resource exploitation

As can be seen from Figure 7, there appears to be an upward trend in the benefit/cost ratio of the subsidy scheme in The Gambia. Subsidy expenditure, in other words, is small compared with the size of landings. This implies that no harmful effect has so far occurred to the resource as a result of the subsidy. With a potential yield of over 50 000 t/year, the level of current production appears relatively low.

2.2.4 Indirect Impact of the Subsidy

Subsidy to Gambian fisheries appears relatively low even when compared with the amount the government makes from vessel licensing and registration. Between 1980 and 1986 government derived about D 1.5 million annually from such exercises. Also by taxing the fishermen it is possible, given its present tax rate, for government to realize as much as D 30 000/year.

Figure 7 The Gambia - Incremental benefit/cost ratio of the subsidy scheme

According to official sources, the four fishing settlements where the integrated fishery development project were located have attracted many people from neighbouring villages who are engaged in such occupations as boatbuilders, engine repair mechanics, fish handlers and so on.

One of the major indirect benefits which the officials associated with the fuel subsidy was to put Gambian fishermen in a competitive position with the Senegalese fishermen operating in Gambian waters.

2.3 SENEGAL

2.3.1 Objectives of the Subsidy Programme

A major primary concern of economic development programmes in Senegal is the effect of drought and desertification on its agricultural resources. Within the last six years its important primary export commodities were seriously affected both in the quantity of output and the declining world prices. Attention therefore has to be turned to the fisheries sector with a view of maximizing the abundant resources of the country which were hitherto being exploited by foreign fleets for an extremely small fee.

Promotion of development of fisheries was addressed to fulfill the following objectives. First is the promotion and development of a national fleet capable of replacing the foreign fleets and creation of employment opportunities for the Senegalese. Second, the need for food self-sufficiency and improvement in the dietary conditions in the country had to be given priority. Third, given the resources of the country, substantial foreign exchange could be earned through the exportation of fish and fish products, and this would give a vital boost in the rescheduling of the national debt. Moreover, according to official pronouncements the present contribution of fisheries to GNP, estimated at about 2.2%/year, has to be raised to over 3% before the end of the decade.

2.3.2 The Subsidy Scheme

Achievements of the objectives stated earlier required that the fishing industry (both artisanal and industrial) be given incentives in the form of subsidies, tax rebate and exemption in order to foster investment in new techniques, and the replacement of ageing vessels.

The major subsidy scheme in Senegal takes the form of fuel subsidy, value-added taxes and export promotion by waiving duties on exports of fish and fish products. Estimates of the total fuel subsidy given between 1980 and 1985 are presented in Table 12.

As at 1985 the price of fuel to canoe fishermen was 155 CFAF/litre, for industrial fleet 150.0 CFAF/litre of petrol and 210 CFAF/litre of gas oil. From this can be estimated what was the transfer to fishermen during the period under review. Using these 1985 figures, it is discovered that canoe fuel was subsidized at 46% while industrial vessels received a subsidy of 71%. Valuation of the transfer payment is shown in Table 13.

Between 1980 and 1985 total transfer payments to canoe fishermen increased gradually, reached a peak in 1983 and declined thereafter. For the industrial fishing fleet a similar trend is observable from the table with a peak in 1983, but while the rate of decline was slower in the canoe fishery, the reduction of transfer to the industrial fishery was at a higher rate.

Table 12
Estimated expenditure on subsidy on fuel in Senegal

Source: Sectoral Meeting on Marine Fishery: Action Programme for Marine Fishery. Ministry of Rural Development. Dakar, 1986

Table 13
Calculation of Transfer Payment through Fuel Subsidy
(CFAF million)

This shows that over time there was a tendency of favouring the canoe fishery in relation to industrial fishing, even though the proportion of total transfer received by canoe fishery was less than that of the industrial fishery.

In addition to fuel subsidy an export subsidy (rebate) was instituted in 1980. Its basic aim was to promote exports of canned fish products and frozen fish and to act as an incentive for fuller utilization of existing capacities. The total payment between 1980 and 1985 is shown in Table 14.

Table 14
Summary of Export Subsidy Payments in Senegal, 1980–85 (CFAF million)

Source: As in Table 12

To measure the transfer payment to the fisheries sector, the payments under the fuel subsidy and those resulting from export subsidy should be summed together. The calculation is shown in Table 15. Total transfer payments increased by CFAF 1 256.3 million between 1980 and 1981. Between 1981 and 1982 it fell by 50% and betwen 1982 and 1983 increased again to CFAF 1 500 million; this is followed by a decrease in 1983/84 and an all-time increase between 1984 and 1985.

Table 15
Total Transfer Payment to the Fisheries Sector (CFAF million)

2.3.3 Direct Impact of the Subsidy

If transfer payments are measures to induce increased effort and hence productivity, the extent to which this is achieved can be measured by the incremental output or addition to national income generated over time. It will be assumed that there is no lag between when the inducement is given and when its effect is felt.

Fish production in Senegal is generated through the activities of canoe fishermen and the industrial fleet owned by the Senegalese. As shown in Table 16, total fish production had been increasing steadily from 1981 through 1985 with the canoe fishery contributing between 60% and 75% of total output, while at the same time suffering a slight decline.

Table 16
Senegal: Fish Production 1980–85

Source: As in Table 12

Over the same period the value of fish output also increased but at a lower rate relative to overall output. This may be due to market forces which tend to force price downward as output increases. This is reflected in the incremental value of total production. Between 1980 and 1981 the value of output declined by CFAF 1 300 million. Between 1981 and 1982 it rose by CFAF 4 300 million and since then it has been increasing until 1984/85 when incremental earnings fell to only CFAF 400 million.

It is clear from Table 17 that except in 1980/81 and 1984/85 the increment in the value of output was greater than the incremental subsidy. For the remaining years the table shows that for every one unit of CFAF spent on the subsidy, between CFAF 4 and 37 was generated. That is, in 1980/81 while the value of output declined by over 1 000 million CFAF, subsidy increased by nearly the same amount. Also in 1984/85 addition to output was valued at CFAF 400 million while increment in the subsidy was more than six times the value of incremental output.

Comparison of Table 13 with Table 16 shows that the transfer payments to canoe fishery made little significant difference to the level of production. This may account for the disparity observed above. On the other hand, this disparity may be due to the falling prices of fish which tends to erode the value of landings despite an increase in fish production.

Table 17
Comparison of Subsidy with Output Level

Figure 8 Senegal incremental benefit/cost ratio of the subsidy scheme

The incremental output value-incremental subsidy ratio is shown in Figure 8. Two peaks were recorded; a lower one in 1981/82 and a higher one in 1983/84. Also at two points, the ratio was almost zero. Unlike the case of Nigeria where output declined as the level of subsidy was being reduced, the Senegalese evidence shows that, prices remaining constant, further increases in the level of subsidy beyond the 1982/83 level could be injurious to the fishery resources of the country. As to what a reduction in subsidy would do, the answer is at best speculative.

2.3.4 Indirect Impact of the Subsidy

Available evidence shows that as at 1982/83 there were 5 300 motorized canoes in Senegal. Assuming that each fishing unit comprises at least a crew of three, the direct employment generation effect will be nearly 16 000 people. Also assuming that it takes five wholesalers to move 1 t of fish, an additional 30 000 employment opportunities will be generated. Sustaining canoe fisheries can therefore lead to increase in employment - an objective of the country's development plan.

An important indirect effect of the Senegalization of industrial fishery is the transfer of technology by which Senegalese nationals could benefit from learning by doing. To the extent to which more Senegalese nationals could be trained to manage industrial fishing fleets, the present cost of importing experts will be proportionately reduced.

A major negative impact of the subsidy is the support given to the processing factories, when due to increased local demand and increased demand for frozen fish their capacity utilization continued to fall. Fish is a commodity that can be sold in different forms and if equal returns can be made without having to support costly processing plants, the negative impact of the subsidy could be substantially reduced. In general, the subsidy scheme in Senegal is at a turning point and a thorough reappraisal is imperative if national income and national interest are to be optimized.

2.4 COTE D'IVOIRE

2.4.1. Objectives of Fisheries Development

As in other countries of West Africa, Côte d'Ivoire has the following objectives for fisheries development: (a) the supply of protein for domestic consumption, (b) the modernization and replacement of ageing vessels in order to increase efficiency, (c) the promotion of fish exports as a source of foreign exchange in the face of declining earnings for other primary products, (d) carrying out a detailed scientific investigation in order to obtain an accurate knowledge of the country's potentials in fish resources.

In pursuing these objectives various strategies were identified both for the short and the long run. These strategies include the strengthening of the activities of small-scale fishermen through the provision of credit and other infrastructure such as cold rooms, fuel depots and refrigerated trucks for fish distribution. For the long run the construction of more efficient boats, training of adequate fishing crew and the gradual replacement of the ageing fishing trawlers were to be pursued.

2.4.2 The Subsidy Scheme

The type of subsidy scheme existing in other countries is virtually non-existent in Côte d'Ivoire. Traditionally, support had been given to industrial fisheries - support which was limited to the construction of a fish harbour complex. Within the last ten years, however, a recognition that some form of support was necessary for the artisanal sector led to some token assistance being granted. These included: through government budgets and with funds from various external sources, seven outboard engine repair workshops were established between 1978 and 1986. In addition, twenty smoking ovens valued at CFAF 1 400 000 were constructed in various locations and sold to fishermen groups at cost. Also provided were fuel depots, cold-rooms, canoes, refrigerated trucks valued at CFAF 43 million. The number of beneficiaries of these infrastructure is estimated at about 3 000 fishermen.

Two important elements of the subsidy scheme were (a) the provision of loans to fishermen through the National Bank of Agricultural Development at an interest rate of 9.9% (9% interest rate and 0.9% tax) while the interest charges to other sectors of the economy was 1.2%. Estimated total loans amounted to CFAF 1.4 million over a ten-year period; (b) the sale of fuel to both industrial and artisanal fisheries at CFAF 108/litre while the pump price was CFAF 245/litre. It is estimated that in 1986 the fuel consumed under this arrangement was 21 024 litres and in 1987 22 124 litres.

In order to compute the actual value of the subsidy it is necessary to make some assumptions in view of the fact that information available from the country does not lend itself to easy analysis. First, the figures will be disaggregated assuming that the subsidy was granted in equal amounts over the ten-year period. In the absence of the “rental cost” of the infrastructure, and as in the case of other countries, the expenditure will be noted without really including it in the calculus.

For the purposes of this study, and in the absence of any reliable time series data the following methodology is adopted. A situation in which there was no subsidy and a second situation when the subsidy began to be applied to the fisheries sector are assumed. At point T* in time an increment in output resulting from the subsidy is expected to occur. This is measured as DF in the figure below.

Figure 9 Illustration of changes in output as a result of the subsidy scheme

The total benefit (DF) associated with the subsidy assumes that no stochastic factors occurred to raise output in the non-subsidy situation.

Taking 1986 as T* the estimated transfer from the credit programme will be P (1 + r )² -P(1 + )²

(assuming the loan is repayable in two years) where P is the value of loan estimated at CFAF 0.14 million, r is the commercial interest rate (12%) and r equals 9.9% the government-supported rate; i.e., 1.4(1+0.12)² - 1.4(1+0.99) = 0.18 - 0.17 = CFAF 0.01 million.

For the fuel subsidy, the 1986 consumption figure for both industrial and artisanal fisheries was given as 21 024 litres. The subsidized price was CFAF 108/litre, while the pump price was CFAF 245/litre. The subsidy or transfer payment is therefore 21 024 × 245 - 21 024 × 108 CFAF. This is equal to CFAF 2.9 million.

Summing the two together the total transfer payment in 1986 will be 2.9 + 0.01 = CFAF 2.91 million.

2.4.3 Direct Impact of the Subsidy

In accordance with the methodology developed above, the value of fish production in 1986 shall be taken as the benefit accruing from government programmes. To calculate this the per unit value of industrial fishery products is used (the only value available; see Recueil des statistiques des Pêches de la Direction des Pêches, 1987) to multiply the total industrial and artisanal production.

Figures given in the fisheries statistics indicate that by 1986 production from artisanal and industrial fisheries was respectively 48 000 t and 49 174 t giving a total production of 97 174 t. The entire industrial output was valued at CFAF 6 600 million. This gives a per-unit price of CFAF 0.134 million/t. Multiplying this by the total production gives the value of total output as CFAF 13 021.3 million.

The benefit attributable to the subsidy can be measured either in net terms or as a ratio. In net terms the benefit secured was CFAF 13 018.39 million; as a ratio it is 44 737:1. That is, for every CFAF transferred to the industry a benefit of CFAF 44 737 was obtained. Assuming that only 10% of the benefit could be attributed to the subsidy scheme, the benefit/cost ratio will still be CFAF 447.4 million.

2.4.4 Indirect Impact of the Subsidy

Computing any indirect impact of the subsidy on Ivorian fisheries, in the absence of any reliable data or socio-economic studies can best be described as an academic exercise. With about 3 000 fishermen benefiting from the scheme and with no significant change in artisanal fish production between 1980 and 1986, it is not impossible that the subsidy was insufficient to generate any multiplier effect. Indeed it appears that there is little evidence of active support to small-scale fisheries despite the fact that production from this sub-sector represents about 50% of total annual landings in the country.