NILE PERCH FILLET SUBSECTOR STUDY IN LAKE ZONE · 2015-08-13 · Nile Perch Fillet Subsector...

PORTFOLIO TEAM LAKE ZONE

NILE PERCH FILLET SUBSECTOR STUDY

IN LAKE ZONE

A QUICK SCAN

Draft 1

November 2005

Study initiated by SNV PTLZ and facilitated by Match Maker Associates Ltd

Tanzania

Nile Perch Fillet Subsector Analysis: Lake Zone ii

Acronyms BDS Business Development Services BMFU Beach Fishery Management Units DEDs District Executive Directors EAC East Africa Community EU European Union FD-T Fisheries Division Tanzania GMP General Management Plan LVEMP Lake Victoria Environmental Management Project LVFO Lake Victoria Fisheries Organisation PTLZ Portfolio Team Lake Zone MMA Match Maker Associates MoA Memorandum of Agreement MRA&LG Ministry of Regional Administration and Local Government NSEDA Nyanza Social Economic Development Association SSA Sub Sector Analyses SUFICO Subuti Fishery Cooperative TCCIA Tanzania Chamber of Commerce, Industries and Agriculture TAFIRI Tanzania Fisheries Research Institution TAFU Tanzania Fishers Union

Nile Perch Fillet Subsector Analysis: Lake Zone iii

Acknowledgement This assignment would have not been completed without support from various people. We would like to thank all who provided us much valuable information for this Subsector study. We are indebted to the field study team; their support and participation in the field survey was the basis from which this study was finalised. We also wish to thank and acknowledge the cooperation of the SNV PTLZ Team in Mwanza. Our specific thanks and gratitude goes to Gertrude Ngenda (Portfolio Coordinator), Casmir Makoye and Silas Olan’g. We thank and acknowledge cooperation from staff of various support institutions. We are especially indebted to staff of TAFU for their cooperation during this study. We are grateful to the private sector actors in the Nile Perch subsector in particular the fishermen for their cooperation and willingness to respond to our questions. Last but not least, we are indebted to all participants of validation workshop (whose list is attached as appendix B) for their critical comments on the conclusions and recommendations that were presented.

Nile Perch Fillet Subsector Analysis: Lake Zone iv

Table of Contents ACRONYMS ........................................................................................................................................................... II ACKNOWLEDGEMENT ....................................................................................................................................... III TABLE OF CONTENTS....................................................................................................................................... IV 1.0 INTRODUCTION .......................................................................................................................................... 1

1.1 BACKGROUND OF THE STUDY .................................................................................................................... 1 1.1.1 Phase 1: Induction ......................................................................................................................... 1 1.1.2 Phase 2: Sub Sector Selection ..................................................................................................... 1 1.1.3 Phase 3: Sub Sector Analyses ..................................................................................................... 1 1.1.4 Phase 4: Programme Design ........................................................................................................ 2

1.2 OBJECTIVE OF THESE SUBSECTOR ANALYSIS ............................................................................................ 2 1.2.1 General objectives ......................................................................................................................... 2 1.2.2 Specific objective ........................................................................................................................... 2

1.3 METHODOLOGY ......................................................................................................................................... 2 1.4 SCOPE AND LIMITATION ............................................................................................................................. 3 1.5 ORGANISATION OF THE REST OF THE REPORT ........................................................................................... 3

2.0 OVERVIEW OF THE NILE PERCH SUBSECTOR.................................................................................... 3 2.1 LAKE VICTORIA .......................................................................................................................................... 3 2.2 SNAPSHOT: GLOBAL PRODUCTION AND MARKET POTENTIAL OF PULSES ................................................... 4

3.0 NILE PERCH SUBSECTOR DESCRIPTION IN LAKE VICTORIA ........................................................ 11 3.1 BACKGROUND.......................................................................................................................................... 11 3.2 FUNCTIONS AND ACTIVITIES .................................................................................................................... 12 3.3 SUPPLY CHAINS ....................................................................................................................................... 15 3.4 VALUE ADDITION...................................................................................................................................... 15

4.0 INSTITUTIONAL AND REGULATORY ENVIRONMENT ....................................................................... 18 4.1 MAIN SUPPORTING AGENCIES/ORGANISATIONS ....................................................................................... 18 4.2 POLICIES ................................................................................................................................................. 21

4.2.1 National Policies .......................................................................................................................... 21 4.2.2 Export policies .............................................................................................................................. 23

4.3 SOCIO-ECONOMIC ISSUES ....................................................................................................................... 23 4.3.1 Environmental Effects ................................................................................................................. 23 4.3.2 Impact on Incomes ...................................................................................................................... 24 4.3.3 Impact on Women........................................................................................................................ 24

5.0 SUB SECTOR DYNAMICS ....................................................................................................................... 25 5.1 DRIVING FORCES ..................................................................................................................................... 25

5.1.1 Market demand ............................................................................................................................ 25 5.2 CONSTRAINTS.......................................................................................................................................... 25

5.2.1 Generic constraints ...................................................................................................................... 25 5.2.2 Input Supply ................................................................................................................................. 25 5.2.3 Fishing .......................................................................................................................................... 25 5.2.4 Processing ................................................................................................................................... 26

Nile Perch Fillet Subsector Analysis: Lake Zone v

5.2.5 Marketing/Exporting ..................................................................................................................... 26 5.2.6 Policies ......................................................................................................................................... 26

5.3 OPPORTUNITIES ...................................................................................................................................... 27 5.3.1 Generic opportunities .................................................................................................................. 27 5.3.2 Input Supply ................................................................................................................................. 27 5.3.3 Fishing .......................................................................................................................................... 27 5.3.4 Processing ................................................................................................................................... 27 5.3.5 Marketing/Export .......................................................................................................................... 27 5.3.6 Policies ......................................................................................................................................... 27 5.3.7 Organisational support ................................................................................................................ 28

6.0 PROPOSED INTERVENTIONS ................................................................................................................ 29 6.1 SCOPE ..................................................................................................................................................... 29

6.1.1 Generic solutions ......................................................................................................................... 29 6.1.2 Input Supply ................................................................................................................................. 29 6.1.3 Processing ................................................................................................................................... 29 6.1.4 Marketing/Export .......................................................................................................................... 29 6.1.5 Policies ......................................................................................................................................... 29 6.1.6 Organisational development ....................................................................................................... 29

REFERENCES ..................................................................................................................................................... 30 LIST OF APPENDICES ....................................................................................................................................... 31 List of Tables Table 1: Total EU imports of fresh and frozen Nile perch fillets – in tonnes 5 Table 2: Quantity and Value of Nile perch fillets exports to EU by main exporting countries 6 Table 3: Total Nile perch fillets exports to the EU in €1000(value) and tones (quantity) 7 Table 4: Netherlands imports of Nile perch fillets – in tones 8 Table 5: Belgium-Luxembourg imports of Nile perch fillets – in tonnes 8 Table 6: Belgium-Luxembourg exports of freshwater fillets – in tonnes 9 Table 7: Dutch exports of freshwater fillets – in tonnes 9 Table 8: Gross Profit Calculation Single Boat Fisherman 15 Table 9: Gross Profit Fisherman/Trader 15 Table 10: Monthly Gross Profit Large Trader 16 Table 11: Regulatory and supporting institutions and agencies in the Nile Perch Fillet sub sector 20 Table 12: Overview Loyalties, Taxes and Levies for Processors 22 Table 13: Overview Loyalties, Taxes and Levies for Fishermen 23 List of Figures Figure 1: Sub Sector Map Nile Perch Fillets 14

Nile Perch Fillet Subsector Analysis: Lake Zone 1

INTRODUCTION

Background of the study SNV Tanzania Portfolio Team Lake Zone (PTLZ) with facilitation from Match Maker Associates Limited (MMA) undertook sub sector selection (SSS) and sub sector analyses (SSA). The assignment was sub-divided into four distinct though interdependent phases. Phase 1 being the induction, phase 2 the sub sector selection, phase 3 the sub sector analyses and phase 4 is the programme intervention design. The approach for each of these phases differed (in spite of some overlap) and required different level of effort by the consultants as detailed below.

Phase 1: Induction This phase aimed at establishing a good and common understanding of the whole processes i.e. methodology and tools, the role and contributions of each of the actors (portfolio coordinator, PTLZ, consultants) during each of the phases. Through a workshop the work plan and timetable were also updated. The consultants - in close collaboration with the PTLZ prepared the workshop and facilitate it. The workshop outcomes were documented in a report.

Phase 2: Sub Sector Selection SNV PTLZ had already prepared a short list of six sub sectors prior to commencement of this assignment. This list provided the starting point for the sub sector selection. The first step in sub sector selection was to agree about the parameters for the sub sector selection. Clear understanding about the parameters (and their definitions) assisted the study team to be focused during data collection (desk study and field work). SNV subcontracted independent consultant to do this exercise. After data collection, analysis and compilation, a workshop was held to select the sub sectors for further study. This was an internal (SNV) workshop (facilitated by the consultants). The four sub sectors selected were: Pineapple, Nile perch, Chickpeas and Vanilla. It was decided to study them all with exception of Vanilla as a consultancy report was produced recently.

Phase 3: Sub Sector Analyses The sub sector analysis is typically a participatory approach, involving organisations that either already have a stake in the sub sector of study or wishes to promote the sub sector. To enable staff of these organisations to participate in the study teams and to contribute to the SSA, it was necessary to capacitate them prior to the start of the study. This was done though a workshop. The additional advantage of conducting a preparatory workshop was that it helped the study teams to agree about the teamwork, including a work plan. The consultants (MMA) facilitated this workshop. Three study teams were to be formed in order to parallel conduct the three sub sector analyses and the main steps in the SSA were: - Mapping the sub sector (actors and channels), adding essential information through overlays

(added value, volume, technology, specific considerations like gender, environment) - Narrowing down and redefine the subsector and identifying opportunities and constraints of the

subsector. Analysing the external factors and actors (regulatory framework, BDS providers, and etcetera) and sub sector driving forces and Identify commercial viable solutions


Midway during this study internal workshop was held to assist the teams to narrow down and redefine their subsectors more clearly. During this workshop the rest of the timetable was also refined. The subsector studies were concluded by a consultation workshop for which representatives of all stakeholders were invited. The aim of these workshops was to validate the data and conclusions as well as to build consensus about the interventions needed. The consultants (MMA) facilitated the workshop.

Phase 4: Programme Design The last but most challenging phase is to programme the interventions needed to exploit the opportunities identified (as well as address the constraints) in the two sub sectors. In line with SNV strategy and the BDS market development paradigm, SNV will not implement activities itself but will capacitate others to do so. This implies that there must be a good understanding of the services needed (the demand side) and the (existing) suppliers of these services. It is assumed that these insights are obtained during phase three though experience has shown that additional research is occasionally needed.

Objective of these subsector analysis

General objectives To help improve the subsectors’ competitiveness, researchers and practitioners, fishermen, processors, traders, BDS providers, NGOs, CBOs, development agencies and policy makers must seek to relax both production and marketing constraints. Designing strategies to accomplish this will require a more informed understanding of key production and marketing constraints within the subsector, best understood through the analysis of micro-level data. The general objective of this study is to use farm- and trader-level data to analyze existing market linkages and identify constraints facing chickpea traders and farmers, which limit the sub sector’s productivity within the context of an evolving regional and international market. The specific objectives of this study are to: Describe the subsector production system, including the salient characteristics of subsector’s

farmers and the technologies they utilize; Analyse the subsector’s market structure and its behaviour with respect to main product types

and narrow down the product range to refine the subsector of study Highlight the implications of this analysis for both government policies and future socio-

economic and further research agendas.

Specific objective The specific objective of the study is for the PTLZ to find entry points to support the private sector development in Lake Zone within the practice area “Market Access for the Poor” through sub-sector market development approach. SNV PTLZ would like to identify and support clients who perform a specific function within the sub-sector value chain. SNV clients are primarily ‘meso’ level organizations.

Methodology This study employs a Multi-disciplinary Subsector Approach1 to better understand subsector actors key production characteristics and establish the relevance of the existing linkages between 1 The original subsector paradigm was proposed by Shaffer (1973) as the study of "the vertical set of economic activities in the production and distribution of a closely related set of commodities." The vertical set of activities by which a commodity’s value is increased includes input provision


production-level decisions and the market structure. Its goal is to identify constraints and opportunities for increasing the sub sector’s productivity. In the Tanzania setting and particularly Lake Zone regions, this methodology contributes to generating a greater understanding of the particular subsector by prioritising the study of productivity opportunities and constraints and identifying interventions to tap opportunities and relax constraints. Byerlee and Franzel (1993) point out that the subsector approach generates information especially useful for policy makers and scientists when "a commodity or a region is undergoing rapid changes due to demand and supply factors or policy reforms."

Scope and Limitation This study covers Lake Zone where SNV PTLZ is currently active. The study team have visited fishermen, service providers, and processors in Mwanza and Shinyanga regions. Various supporting organisations were also visited such as the Association of Exporters and the Tanzania Fishers Union. Some Government agencies and research institutes were also visited. Though the aim was to conduct a fully fledged sub sector analyses, in reality it proved not to be possible. One set back was that the research teams went into the field without an experienced team leader and in spite of their great efforts and work, it effected the data collection. This initial set back was partially overcome by a field visit by a MMA consultant later during the research. A bigger stumbling block was the resistance of the processors to share important economic data. Hence, the research was more like a quick scan than an in-depth analysis.

Organisation of the rest of the report This report is subdivided into eight chapters. After the introductory chapter, the subsector overview will be explored and narrowing exercise will be elaborated. Chapter three will describe the subsector channels, functions and participants and chapter four will highlight the institutional and regulatory environment within which the subsector operates. Chapter five brings forward subsector constraints and opportunities and emphasises subsector driving forces before finalising the report by proposing possible commercially viable solutions and recommendations to SNV PTLZ in chapter six.

.0 OVERVIEW OF THE NILE PERCH SUBSECTOR

.1 Lake Victoria Lake Victoria is the second largest freshwater lake in the World, with an area of 68,000 km². However, the lake is relatively shallow, with a maximum depth of 84m and mean depth of just 40m.

(including research), extension, farm production, processing, storage, assembly, transportation, exporting, wholesaling, retailing, financing, and consumption. Since it first appeared in the literature, many researchers have modified the subsector approach to accommodate their specific research objectives and resource constraints (Morris 1986; Boomgard et al. 1992; Tschirley 1988).


The lake is divided into the national waters of bordering countries, with Kenya owning 6%, Uganda 45% and Tanzania 49% of the area. The Nile Perch fishing and processing is of enormous economic importance for Tanzania. The 12 factories in Mwanza, Mara and Kagera region are exporting close to 100 million Euros worth Nile Perch Fillet by 2003, and the workforce employed by them is estimated to have reached over 3,000. Due to the artisan nature of the fishing, it is estimated that around 30,000 fishermen are engaged in the Nile Perch sub sector. In addition, thousands of people of (self-) employed in related activities, including the service industry.

.2 Snapshot: Global production and market potential of pulses Europe, with the only exception of the United Kingdom, is a good market for Nile Perch. Spain and Portugal are excellent markets for headed and gutted Nile Perch. Italy, Germany, Austria, France, Belgium and of course the Netherlands are now good markets for Nile Perch fillets. The new member countries such as Slovenia, Hungary and Poland could become interesting in the near future. Statistics for each country are very difficult to analyze as Nile Perch is not specified in the EU statistics. In addition most of the quantities consumed in Europe are imported via Belgium or the Netherlands, but the main markets seems still to be Spain even if the consumption decreased compared to the early 1990s as a result of various negative press campaigns. Spain is the EU country with the most important tradition in fish consumption, so demand for Nile Perch is often influenced by the availability of fish locally. In Spain supermarkets chains are the most important distribution channels for the Nile Perch. Considering that the fillets represent at least 90 percent of the form in which the Nile Perch is marketed, it is easy to see that the final consumers are the families. A reasonable estimate for total consumption of Nile Perch in the EU are 600 – 800 tons of fresh fillets per week, which is very much in line with the total import figure shown in the table below Table 1:


Source: Fishinfonetwork, Nile Perch Market Report – April 2005, www.globefish.org The above table shows very clearly the drop of Nile Perch fillets trade in 1999, during the EU ban on imports from Kenya, Uganda and Tanzania, and the recovery in the following years. In 2003, total imports into the EU reached a new record of 45000 tons, with Belgium and the Netherlands as the main importers. Though exports increased from 39303 tons in 2003 to 45113 tons in 2004, the total value of Nile Perch fillets decreased from € 194 million in 2002 to € 169 million in 2003. The following tables show the export trends, both in volume and value.


Table 2:

Source: Fishinfonetwork, Nile Perch Market Report – April 2005, www.globefish.org Tanzania is the main exporting country of Nile Perch fillets to the EU. The country was the first one to comply with the EU requirements after the ban, while it took Uganda a bit longer, and Kenya was behind for a long period. At present, Tanzania exports fillets worth € 100 million, thus accounting for 60 percent of the total EU imports of the product. Tanzanian exports have experienced quite some up and downs in recent years. While export earnings declined in 2003, total Nile Perch exports from Tanzania to the EU increased to reach 27000 tons, 15 percent more than in 2002. The unit value of Nile Perch fillet has grown strongly in the past years, with a risk that the product prices itself out of the market. In 2002, the unit value was reported at almost €5.00/kg, areally high unit value for any fillet. In 2003, prices collapsed, as competition of cheap catfish basa from Vietnam became apparent also on the European market. Unit value declined in 2003 to €3.80/kg. It has to be kept in mind, however, that in 2003 the € gained value against the $.


Table 3:

Source: Fishinfonetwork, Nile Perch Market Report – April 2005, www.globefish.org Fresh fillets exports to the EU have grown impressively during the last past years to reach 36200 tons in 2003 as the above table shows. Improved flight connection – very often the fresh Nile Perch fillet is done with dedicated charter flights – and better handling of the whole way of distribution is the main reason behind the increase of fresh fillet exports. The unit value of fresh Nile Perch fillet is obviously higher than the one of frozen products, but not as much as one would expect. In 2002, fresh fillet unit value was €5.12/kg, while the one of frozen fillet was €3.91/kg. These figures went down to €3.90/kg and €3.20/kg respectively in 2003. When considering only imports statistics, the Netherlands seems to be the most important market for the Nile Perch but in reality the consumption in the domestic market is very small. The reason of the discrepancy is the fact that an important part of the Nile Perch is marketed in Europe arrives in the Netherlands, where also the main Nile Perch importing companies are based. All the Nile Perch is immediately dispatched by trucks al over Europe. Generally speaking the Netherlands are not a fish consuming country (with the exception of herring) and Nile Perch does not make an exception considering that Dutch consumers are not willing to pay a high price for the fish they buy. In the Netherlands, Nile Perch fillets are sold in supermarkets chains inn retail packs of 200-400 grams. It is generally very expensive, reaching a price of more than €20/kg. Nile Perch is also marketed by the small wholesalers all over the country. The domestic market absorbs about 20 tons a week, and it is mostly consumed at home while consumption in restaurants is very low. The consumers are not willing to go for other even more expensive items like Nile Perch steaks or loins.


Table 4:

Dutch imports reflect the overall trend in the EU, changing from frozen fillets to fresh fillets in recent years. The Netherlands has equaled the Belgium-Luxembourg import for the first time in 2003 and the trend is likely to continue in 2004. Table 5:

Belgium is a main entry point of Nile Perch products into the EU, and a huge part of the Nile Perch is immediately dispatched to other European countries. Most of the Nile Perch consumed in the domestic market is imported from the Netherlands and the Belgians are estimated to consume 30 tons of Nile Perch per week. Fish is a popular feature in the Belgian diet, and the Belgians are willing to pay the price for quality and service. It is very common to find specialized fishmongers. Supermarkets play an important role in selling Nile Perch.


Table 6:

Table 7:

The above tables give an indication of Nile Perch fillet exports from the main importing countries (Netherlands and Belgium) but it has to be considered that under the general trade code freshwater fish also several other freshwater species are included like catfish and tilapia. Nevertheless, the tables give some indications on the trade flows of Nile perch. Italy is the main market, especially form the Netherlands, followed by Spain and France. Germany is an important market for fish fillet and freshwater fish in particular. In the last 7 years, German imports of frozen freshwater fillets almost tripled from 3600 tons in 1997 to 10700 tons in 2003. Russia is the main exporter with 4200 tons in 2003. The United States’ ban on catfish has had an impact on Vietnamese exports to Germany. In fact from 2002 to 2003 exports from Vietnam to Germany have almost doubled to reach 2500 tons. It is interesting to note that the United States’ catfish industry was hit by the ban as well. The well established German market was taken over by the cheaper Vietnamese product. Some of the Dutch products are probably Nile Perch fillets re-export. Catfish from Vietnam is sold at a very low price. The unit value of exports is €2.50/kg, which compares to €3.10/kg for the frozen Nile Perch fish. These figures show, even taking into account the different size of the two species that it is very difficult to compete for the African product on the European market.


Germany is now importing important quantities of fresh Nile Perch directly from Africa, rather than going through Belgian or Dutch importers. In 2003 these imports reached 3800 tons, while before the ban, in 1997, they totaled about 2200 tons. Tanzania took advantage of the opening of the German market: in 200 3total exports of fresh Nile Perch fillets from Tanzania to Germany were 2000 tons, more than double the 2002 amount. The margins Dutch re-exporters are putting on the product is impressive. The average unit value of fresh water fillets from Africa is €3.80/kg; the one of Netherlands is €6.80/kg. The real opportunity for the African exporter is in the field of improving the quality and the presentation of the fresh Nile Perch fillets, as on the frozen fillet markets there is no possibility to compete with the Vietnamese product. Outlook bleak The EU is already now the main market for Nile Perch taking about 80 percent of total production. The market is still growing but various issues have to be taken into account. Vietnamese catfish is rapidly entering the market, which will have a major impact ion the price conscious Northern European market. Furthermore, logistics prove to be another bottleneck. The air space is the main issue. The mixed (passengers/cargo) regular lines from Nairobi are not so frequent and from Tanzania/Uganda the cargo charters still remain the main possibility to deliver fish to Europe. This mean that it is very difficult to find room from Nairobi to transport to Europe small quantities of product (500 to 1000 boxes of 6kg) and only a few companies that sell fish all over Europe can afford to fill up a charter (7500 boxes of 6kg.). The competition from other goods in the high season (mainly flowers) and the problem to find a south bound in the low season makes it even more difficult to book regular air space for companies that are not specialized. These bottlenecks do not attract new Nile Perch importers. The trans-shipment of the product through the Netherlands and Belgium to Spain, Italy and Germany represents another additional step and creates additional transport costs. The direct imports of Nile Perch from the producing countries should be promoted. As a recommendation which is linked to the own nature of the European market, it is worth mentioning the opportunity of eco-labeling. In fact, the European market is extremely environmentally conscious, especially in the Northern part of the continent. The option of eco-labeling should hence be taken into consideration: a product which is labeled a ‘”sustainable” or “eco-friendly” (e.g. through the Marine Stewardship Council) has the potential to attract more purchases in developed countries, where it may be markets at a high price. Clearly, this could be done once achieved an acceptable level of sustainability of the fishery.


3.0 NILE PERCH SUBSECTOR DESCRIPTION IN LAKE VICTORIA

3.1 Background The Nile Perch – Lates Niloticus – is a large freshwater fish found extensively in the rivers and lakes of Africa. Also known as capitaine, mputa or sangara, it can grow up to 200 kg and two metres in length. It is a predator, and lives and feeds throughout the water column. It main attractions are its abundance, ease of catching with a variety of artisanal and industrial techniques, its large size and very palatable bone-free white flesh. Nile Perch first appeared in Lake Victoria in the late 1950s, when it may have been introduced deliberately. The ecology of the Lake has been significantly affected by this action. Most of the fishing is undertaken from small boats, using mostly outboard but sometimes paddle power. Typically fishermen will use drift nets, set overnight, although some fish is also caught with baited long lines. The fish are landed at numerous small landing sites on the shore or off-lying islands, where they are bought by traders or directly by processors for onward water or road transport to the factory or market. Only the best quality fish are selected for export processing. There is only a limited use of ice by the fishermen. Most of the fish are iced by the merchant or processor after purchase at the landing site. Conditions at beach sites are poor, lacking potable water supply, clean auction places and toilets. However, there is now a trend to improved control of the distribution chain, with some of the main buyers operating collection vessels to receive and ice fish directly on the lake. Although Kenya owns the smallest part of the lake, the country has been instrumental in developing the processing and export activity, and both Ugandan and Tanzania fishermen have historically landed their catches in and around Kisumu, which is the Kenyan centre of Nile Perch industry. Here there are 12 operating factories (although some fish is processed in Nairobi and even Mombasa. Now, however, both Uganda (with 12 factories at Entebbe, kampala and Jinja) and Tanzania (with 12 factories around Mwanza, Mara and Bukoba) have both developed processing capacity. The processors in each of the countries have formed strong national associations to represent their members. At the processing factories, most of which meet standards of design and construction specified in the EU hygiene directive (91/493/EEC), the fish are washed and sorted. They are chilled and kept in ice until ready for processing (up to one day). The fish are then filtered by hand without gutting and the fillets are then skinned and trimmed. The skinning is usually done by hand as well, although some processors have installed mechanical skinners. The skinning process adopted depends on the market. The Northern Europe, American and Australian market require a deep skinned fillet (30% yield), so at to remove the layer of subcutaneous fat. All dark flesh and pin-bone are removed. Southern European markets (Spain and Gree) prefer a higher yield (35%) fillet, which is not so heqavily trimmed (with pin-bone) and


has a lower price. The Israeli market allows for a much higher yield (40%), which leaves a portion of the skin attached. The Japanese market demands a skin-on scaled fillet (in which case the yield is 42%). Filets sizes vary, from 300 to 1500 gram. Large fillets above 1500 g are portioned and are always frozen, since the premium fresh markets do not accept very high oil content. The oil content of the flesh increases with size of fish, and ranges from 4 to 20% in fish over 50kg. Individual fillets and portions are packed in polythene. If the fish is to be frozen it is packed immediately into waxed cartons of 6 kg or 10 kg depending on the market and then blast frozen. Some factories have recently installed plate freezers to achieve a more rapid freezing of fillets. There is some production of headed and gutted fish and steaks, but these form only a small proportion of the total. Exports of fresh Nile Perch have developed over the last five years. As with most fish from tropical waters, if well handled, it has a long shelf-life (up to 27 days on ice). For exports of fresh fillets, the cartons are held in chill store until the consignment is ready for despatch, then packed into polystyrene boxes. They are transported either by charter flights from Mwanza or line flights from Nairobi to Europe. The cost of air freight to the European market is in te range of US$ 1.50 to 2.0, which is moor than recovered from the premium over frozen fish (where the freight costs is in the region of US $ 0.50). Many of the by-products of processing are used. The swim-bladders (maws) are sun-dried and find ready export markets in the Far East. Belly flaps (with their high oil content) and visceral fat can be rendered to produce high quality fish oil. In the last years, some tanning industry has developed, producing high quality leather from the skins. Fillet frames are sold on the local market, where they are dried and sold fro consumption by street traders. There is also some artisanal processing of Nile Perch, particularly the rejects of the factory, employing smoke-drying over wood fires to confer a degree of preservation for distribution to interior markets.

3.2 Functions and Activities The main primary actors in the Nile Perch sub sector include vessel owners (large, medium and small), fishermen, dealers/collectors, mongers, fish processors/exporters and their agents. Large vessel owners may have up to 2000 boats though most (the medium ones) will have much lesser boats (between 50 to 100 boats). The small vessels owners have up to 10 boats. Some of these small vessel owners rent boats from the larger ones and there are even fishermen who don’t own boats at all. They merely rent. Many of the small and medium fishermen also buy fish from other fishermen in order to meet their requirements. The fish is bulked and sorted at the landing sites and transported by either cargo boats or refrigerated trucks to the processing factories. Most of the factories have their appointed agents who buy for them and deal with the payments (to the fishermen) and the logistics. After processing, the fillet is either exported as deep frozen fish or as fresh fish via charter flights (Mwanza) or line carrier (Nairobi) to mainly Europe. The side products may take another route to mainly the Far East (Asia and Australia)


Vessel owners/Fishermen Own and maintain a (large) number of fishing boats The larger among them also own cargo boats (with cold storage room) They hire peace workers (vibarua) to go out on the Lake and fish They send (and often accompany) cargo boats to the processors They buy and maintain the equipment Some of their boats they rent out to others They (co-)manage landing sites Fishermen/Dealers They may own a few boats but also rent boats from others They hire people to undertake the fishing They buy from other to meet their orders They hire cargo boats – often with others – to deliver the cargo They either own and maintain their equipment or hire it They pay the local (council) levies Agents Are commissioned by a processors to handle his interest They grade and buy the fish on behalf of a processor. They pay the fishermen for the fish They arrange the logistics to the factory They handle the support services – nets, ice, and sometimes working capital – to selected

fishermen They scout for the best fish available

Processors Have processing capacity between 20 to 40 tons fresh fish per day They select and buy the fish either directly from the fishermen/dealers or via their agents. They process the fresh fish in fillet and side products They package the fillet, either deep frozen or chilled, and side products They ship the fillet and side products to the various market destinations They comply with the international hygiene, health and safety regulations They pay a manifold of royalties, levies and taxes to different ministries and local authorities They combine forces with the other processors to lobby for a more conducive environment Mongers Buy undersized and oversized Nile Perch Process it locally (smoke drying) or sell it fresh Fillet frame traders Buy fillet frames from the factories Dry and sell it on the local market. These functions and respective activities are further shown in the map below;


Figure 1: Sub Sector Map Nile Perch Fillets

Key: Whole Nile Perch: Rejects (under-/oversized): Grade 1 Nile Perch Fish Fillet: Swim-Bladders (Maws): Grade 2 Nile Perch Fish Fillet: Belly flaps & visceral fat: Dried and salted fish: Dried fillet frames

RETAILING

WHOLESALING

TRADING

FISHING

CHANNEL II CHANNEL III

CONSUMERS IMPORTERS

DEALLERS/ COLLECTORS

PROCESSING

Large and Medium Vessel Owners/ Fishermen

Retailers

Fish oil Industry

CHANNEL I

SMALL FISHERMEN

MONGERS

EU market

Far East Market

Local High Income Earners

Local Low Income earners

Export Grade 1

FISH

ERME

N/DE

ALER

S

AGENTS

FISH PROCESSOR

Grade 2 Soft Fillet

Grade 1 Fillet

Maws

Fillet

Fra

me

Trad

ers


3.3 Supply chains The Nile Perch fillet sub sector is export driven. Hence, it is no surprise that the channel 1 – export to the European market – dominates the sub sector. Though channel 2 concerns side product, it is extremely important for the viability of the whole processing industry. The same counts for what is sold to the fish oil industry and to a much lesser extent for the remains to the fillet frames traders. All the side products combined contribute significantly to the profitability of the processors. Channel 3 is a small channel, trading the so-called soft fillet for the local market. The trade of reject via the mongers is important, especially from the perspective of income generation, but as it deals with whole fish and not with fillet it is not regarded as channel within the Nile Perch fillet sub sector. The same reasoning holds for the fish oil industry, animal feed industry and the fillet frame trade. These are all important economic activities but in actually sense belonging to another sub sector. As these activities add to the dynamics of the Nile Perch fillet sub sector, they have shown in the map.

3.4 Value Addition It has been extremely challenging to establish the value addition by the various actors in the chain. At the end only anecdotic evidence of the cost/benefits at the level of the fishermen could be collected, mainly based on interviews on Zilagula Island. These are presented in table below. Table 8: Gross Profit Single Boat Fisherman Item Unit No of units Unit value Sub Total TotalRevenueNile Perch kg 100 1800 180,000CostsRent boat 1 30000 30000Labour person 4 30000 120000Total 150,000Gross Profit 30,000 The above is the scenario of a fishermen who hires a boat and based on an average daily catch of 100 kg, his gross profit is TShs 30,000/=. However, most fishermen are also traders and they buy and sell fish from other fishermen. The next table shows the difference in benefits when also undertaking trading activities. Table 9: Gross Profit Fisherman/Trader RevenueItem Unit Unit cost Unit price Margin No of units TotalNile Perch kg 1200 1800 600 3500 2,100,000CostsItem Unit Unit cost No of units Sub TotalRent boat trip 200000 1 200,000Fuel litres 1200 400 480,000Ice kg 5 5000 25,000Workers person 20000 4 80,000Council Levy trip 40000 1 40,000Total 825,000Benefit 1,275,000


It may take a fishermen/trader a week to load a cargo boat, assuming they at least have one boat to fish themselves and average buy between 700 to 1000 kg Nile Perch from others. It is obvious that it is much more profitable to trade than to fish. It has also been possible to estimate the monthly returns for a larger fisherman. Table 10: Monthly Gross Profit Large Fisherman Item Unit No of Units Unit costs Sub Total TotalRevenueNile Perch kg 40000 1800 72,000,000Rejects kg 35000 500 17,500,000Total 89,500,000

CostsDirect costs for fishing boatsLabourers kg 75000 500 37,500,000Fuel trip 125 60000 7,500,000Maintenance boat 10 150000 1,500,000Council Levy boat 10 20000 200,000Sub Total 46,700,000Indirect costs for fishing boatsMonthly contribution living costs labourers 360,000Costs of mechanics on monthly bases 45,000Monthly depreciation for fishnets 200,000Monthly depreciation for boats 835,000Sub Total 1,440,000Direct costs for cargo boatBoat trip 6 480000 2,880,000Labourers trip 6 200000 1,200,000Ice trip 6 60000 360,000Maintenance kg 75000 100 7,500,000Council Levy trip 6 40000 240,000Sub Total 12,180,000Indirect costs for cargo boatMonthly depreciation for cargo boats 335,000Total 60,655,000Gross Profit 28,845,000 The calculations are based on the following facts established by the interview: 10 motorised boats are used for daily fishing; these boats make together about 125 trips monthly; the cost of a fisher boat is roughly 5 mio TShs; The lifetime for boat and outboard engine is estimated at 5 years He also owns two cargo boats; Each cargo boat is costing roughly 12 mio TShs, including the 2 outboard engines and cold

storage room The lifetime is projected to be 6 years;


Each of the cargo boats make 3 trips per month; Total tonnages transported on monthly bases is 75 tons; Of every 15 tons about 7 tons is rejected by the factories; The factory price for Nile Perch is TShs 1,800/=; The rejects can be sold on the local market for TShs 500/=; The average catch per fishing boat per trip is 600 kg; Per trip a fishing boat uses around 50 litres of fuel at TShs 1,200 per litre; The cargo boats together uses about 400 litres fuel monthly; The workers on the fishing boats are paid TShs 500/= per kg catch; The council levy for fishing boats is TShs 20,000/= per boat and for the cargo boat TShs

40,000/= per trip The above calculations show that fishing on Nile Perch is a profitable business even though most interviewees claim that the profit has decreased substantially in the last decade. The major factor is the decreasing catch per trip. It is the effect of over fishing and environmental degradation. Another factor is the high percentage of rejects, which apparently was less in the past. A major cause of the (high) rejects is that most fishermen do not have cold storage on their boats and before it is ferried to the factories it may take sometimes 2 days. Another cause is the specific requirements of the market with respect to the size. Last but not least the profitability is also affected by the increasing costs, such as fuel costs and capital costs like outboard engines. Anecdotic evidence for this trend is that interviewees had all more boats in the past and also younger boats and outboard engines. It shows that many fishermen experience financial stress. The profitability of the other actors, in specific the processors, could not be established. The mission failed to collect financial data from the processors as they were shying away from receiving the researchers and sharing the information. However, it is common knowledge that the profitability of the processors depend on the sales of all products derived by processing Nile Perch. The fillet alone is not enough to make the factories profitable, also due to the declining market prices, but its contribution to the total profit can only be guessed.


4.0 INSTITUTIONAL AND REGULATORY ENVIRONMENT

4.1 Main supporting agencies/organisations There are a wide range of regional and national regulatory and supporting institutions and agencies promoting the sustainability of Nile Perch fishing. Obviously, many issues concerning the lake are of regional level, based on the fact that the lake is bordered and owned by three countries. Kenya, Uganda and Tanzania – together the East Africa Community – already recognised at an early stage that they a coordinated and coherent approach, supported at the highest level, is needed to face the many (environmental) issues threatening the sustainable development of Lake Victoria fishing. For this purpose the Lake Victoria Fisheries Organization (LVFO) was established by a Convention (mandate) signed on 30th June 1994, in Kisumu, Kenya by the "Contracting Parties" who consist of the Governments of the Republic of Kenya, the Republic of Uganda and the United Republic of Tanzania. The objectives of the LVFO are: To foster co-operation amongst the contracting parties, in matters regarding Lake Victoria; Harmonize national measures for the sustainable utilization of the living resources of the lake Develop and adopt conservation and management measures to assure the lake’s ecosystem

health and the sustainability of the living resources. Recently, the efforts of the LVFO received renewed political support at the highest level within the EAC through the Lake Victoria Fisheries Conference, conducted on 24th- 25th February 2005 in Entebbe, Uganda. The so-called Entebbe Declaration acknowledges the importance of sustainable management of the Lake Victoria natural resources and it endorses a wide range of measurements. These include among others: measures for accelerating harmonization and implementation of environmental and fisheries

policies, laws and regulation; strengthening the existing beach management units and facilitating the creation of new

ones; strengthening national and regional institutions for fisheries research; enforcement of laws to protect the fisheries resources from abusive harvest and destructive

extraction; et cetera Another project of importance is the Lake Victoria Environmental Management Project (LVEMP). The project evolved through the process guided by the Tripartite Agreement signed on 5th August 1994 by the Republic of Kenya, the United Republic of Tanzania and the Republic of Uganda which provided for both the preparation and the implementation of the Project. The fundamental objective of the Project is to restore a healthy, varied lake ecosystem that is inherently stable and can support, in a sustainable way, the many human activities in the catchment and in the lake itself. The project is implemented through relevant national government departments and institutions. Regional and national coordinating mechanisms are in place to ensure timely and quality implementation of the various components of the Project. LVEMP phase II is under preparation but its future is still unknown.


The LVFO is supporting various national institutions; in Tanzania these are the Fisheries Division (FD-T) and Tanzania Fisheries Research Institution (TAFIRI). Under the current government structure, the Ministry of Natural Resources and Tourism formulates policies, laws and revises fisheries legislation. It has the role to ensure that the resources are managed in a sustainable way and optimally utilised for the benefit of the people. The Fisheries Division resorts under this Ministry and is responsible for the Beach Fishery Management Units (BMFU). The BFMU will be given responsibility for managing fisheries resources at the village level subject to the basic fisheries law, rules and conditions which are set by the Fisheries Division. This will require a formal memorandum of agreement (MoA) between the Fisheries Division on behalf of the government and each BFMU on behalf of fishing community in a particular fishing village. The BFMU will develop a general management plan (GMP). The GMP will be regarded as a guideline for fisheries management activities at the village level. The GMP will describe strategies for implementation of fisheries management activities. It will also contain basic information on geographical parameters, demographic data, livelihood data (occupational structure), traditional knowledge and socio-economic status of the fishing village. The GMP becomes effective once it has been certified by the Fisheries Division. It is estimated that currently 50 to 60 beaches of the total 500 to 600 landing sites at Lake Victoria are managed though BFMU. It is obvious that still much need to be done in this respect Tanzania Fisheries Research Institute (TAFIRI) is a parastatal organization established in 1980 to cater for fisheries research in the country. The Institute comprises five centres: Mwanza and Soti on Lake Victoria, Kigoma on Lake Tanganyika, Kyela on Lake Nyasa (Malawi) and Dar es Salaam on the Indian Ocean. The last is also the Institute's headquarters. Its main objectives are: To promote, conduct and coordinated fisheries research within Tanzania. To improve and protect the fishing industry through developing and promoting better methods

and techniques of fishing, fish farming, processing of fish and fish products. To investigate fish diseases so as to develop ways of controlling or preventing their

occurrence. To document and disseminate research findings for use by the Government, public institutions

or persons engaged in the fishing industry in the country. To advise the Government, public institutions and persons or bodies engaged in the fishing

industry in Tanzania on the practical applications of findings of research done by or on behalf of the Institute.

To promote and provide facilities for instruction and training of local fisheries research and management personnel in cooperation with the Government or any persons within or outside Tanzania.

To assume responsibility for the control and management of the business and affairs of any center which may be established or vested in the Institute.

To do anything or enter into any transaction which, in the opinion of the Board, is necessary or desirable for the purposes of the better performance of the functions of the Institute

The above are the major regional and national regional and national institutions governing the Lake Victoria natural resources.


The private actors in the Nile Perch sub sector are represented by the Tanzania Fish Processors Association and the Tanzania Fishers Union (TAFU). All the fish processors around Lake Victoria, with the exception of one, are member of the Fish Processors Association. What brought them together are regulatory issues that affect the conduciveness of the business environment such as: the royalties to be paid by the processors, the high electricity costs, and the many other levies and taxes they have to pay to various ministries and local authorities. TAFU was formed by the fishermen in 2001 and presently has over 100 members. In November 2004 it was registered as a Non Governmental Organization under the Societies Ordinance, Cap 337. TAFU has a wide range of objectives but the most important ones among others are: To cooperate and bind together all fishers purposely in solving problems confronting their

activities; To advocate and supervise price of fishes so as to remove tension/misunderstanding; To negotiate among the buyers – the fishing industries – concerning price of fish and fish

products; To involve in natural environment protection. There are some other smaller associations that represent the fisherman, including Subuti Fishery Cooperative (SUFICO) in Musoma and TAFLEC in Mwanza. Other organizations that play a (minor) role in the Nile Perch sub sector are the Tanzania Chamber of Commerce, Industries and Agriculture (TCCIA) and some NGO’s like the Nyanza Social Economic Development Association (NSEDA) Some major development organizations, such as DANIDA, have undertaken missions in the lake Zone region with a special focus on the fish industry but the extent to which this has resulted in concrete programmes and projects could not be established. It will require some further probing. A brief overview of the regulatory and support organizations is presented in the table below Table 11: Regulatory and supporting institutions and agencies in the Nile Perch Fillet sub sector. Function Supporting organisations Regulation and monitoring

EAC, LVFO Ministry of Natural Resources and Tourism

Research and development

TAFIRI LVFO

Environmental protection

The above and LVEMP FD-T (BMU)

Stakeholders representation

Tanzania Fish Processors Organisation TAFU, SUFICO, TAFLEC

Supportive Agencies

TCCIA NSEDA


4.2 Policies

4.2.1 National Policies The National Fisheries sector policy and strategy statement was adopted in December 1997. The statement focuses on the promotion of sustainable exploitation, utilization and marketing to provide food, income, employment foreign exchange earnings and effective protection of aquatic environment to sustain development. The overall goal of the National Fisheries Policy is to promote conservation, development and sustainable management of the Fisheries Resources for the benefit of present and future generations. The main policy strategies are:

Instituting effective mechanism for monitoring fishing activities especially in deep water fishing for export to minimize unrecorded exports and to ensure that appropriate government revenue is collected.

Establishing conservation centres in all lake waters and sea waters and ensure effectiveness in maintaining quality and managing the natural ecosystem.

Strengthening research and extension services for fishermen. Improving infrastructure for fish handling, processing, packaging preservation storage and

marketing. The fisheries Act (1970) is the major legal instrument for current fisheries policy. Other instruments are territorial sea and Exclusive Economic Zone Act (1989), the Tanzania Fisheries Research Institute Act (1980) and Marine Parks and Reserves Act (1994). Most of these need to be revised and subsidiary legislation updated. In addition, the conventions and agreements by the EAC concerning the sustainable management of Lake Victoria provide many relevant policies, laws and regulations. To cover all of these in the context of this sub sector study may not be realistic; however, issues of great importance are addressed under the socio-economic effects, i.e. environmental effects, later in this report. In Tanzania, the government operates fisheries management. The Fisheries Division of the Ministry of Natural Resources and Tourism is responsible for all fisheries management activities such as the formulation of national fisheries policy and rules, conservation of fisheries resources, monitoring, control and surveillance and quality assurance management (The Government of Tanzania 2000). Fisheries management activities are carried out by the Fisheries Division through the Ministry of Regional Administration and Local Government (MRA&LG) which is currently under the president's office. The role of MRA&LG is to co-ordinate and supervises regional (provincial) and district councils, development activities and administration. The President's Office nominates heads of district councils (District Executive Directors - DEDs) who are supposed to ensure good governance and deliver quality public services to communities in accordance with decentralization procedures and rules. The decentralization system in Tanzania was introduced in 1984. Local fisheries officers in the district councils have a dual role to play. They are responsible for technical support and fisheries extension services to the fishing communities through village/local authorities. They are also responsible for the implementation of fisheries regulations at the community level. Law enforcement is conducted jointly by fisheries officers from the Fisheries


Division and the District Council through patrolling and policing campaigns. In most cases, district council authorities do not have enough fisheries staff to conduct law enforcement. This has led to difficulties in implementation of monitoring, control and surveillance programmes. The current practice is that local fisheries officers report to the District Fisheries Officer who reports to DED. The DED reports to the Director of fisheries (head of Fisheries Division) through the Ministry of Regional Administration and Local Government. Hiring and firing of fisheries management personnel follows the same line as that of administrative responsibility. This system is cumbersome. It is characterized by long lines of communication, complex institutional structure and overlapping responsibilities. This has led to delays in the implementation of regulations and decision taken. This system probably significantly reduces the effectiveness of fisheries management activities. Royalties, Levies and Taxes can also be considered to be policies/regulatory issues. From both sides – processors and fishermen – there are many complaints about the costs imposed by the Government (national and local) on them. It is not only the cost that bothers them but also the inconveniences caused by the fact that there are (too) many institutions charging them. It is like everyone tries to benefit from the Nile Perch fillet sub sector. The next two tables present an overview of the main ones and to which institutions/department it has to be paid. Table 12: Overview Loyalties, Taxes and Levies for Processors Type Benificiary Base for Charging Remarks

Product Shipment Monthly Yearly Royalty MoF&NR2 0.15

USD per kg fillet3

Kenya: 0.02 $ Uganda: nil

Export fee Mwanza City Council

0.3% on FOB (export) value

Processing License MoI&T4 TShs 750,000 Export License MoI&T TShs 125,000 Export License MoNR5 TShs 200,000 Food Licence MoH6 TShs

50,000

Movement Certificate BoET7 TShs 20,000 per shipment

Certificate of Origin TCCIA TShs 20,000 per shipment

Cargo handling Airco USD 1,800 per shipment

2 Ministry of Fishery and National Resources 3 Based on export form and physical check at the airport by the Regional Fishery Department 4 Ministry of Industry and Trade 5 Ministry of Natural Resources 6 Ministry of Health 7 Board of External Trade


Table 13: Overview Loyalties, Taxes and Levies for Fishermen Type Benificiary Base for Charging Remarks

Product Monthly Yearly Others Local Government Levy

DC8 TShs 7 to TShs 15/kg raw fish

Fish landing Fee

Mwanza DC

TShs 7 per kg

Boat license MoNR TShs 40,000 per boat

Boat Sea worthiness Certificate

MoC&T TShs 109,000 per boat

Water Right Charges

MoW&L9 TShs 150,000 per boat once

Contribution LVB10 TShs 10,000 Contribution DC TShs 150,000 For Fish

Collectors Boats

Container Fee

DC TShs 50,000 per container

Containers belong to Processors

4.2.2 Export policies The EU hygiene, safety and health requirements are very stringent, especially after the 1999 ban. The processors/exporters set in place all systems and procedures to meet the standards and are in fully compliance with the EU hygiene directive and other relevant regulations and laws.

4.3 Socio-economic issues Due to the objectives of this study, there is a special need to highlight several socio-economic concerns as well as the business issues;

4.3.1 Environmental Effects Several environmental problems could adversely affect the fishery in the future. Development around the lake shore has caused increased pollution through agricultural, sewage and industrial effluents. Deforestation of the lake margins (to provide domestic cooking fuel) increases topsoil erosion and silting. In recent years the has been an explosion of water hyacinth, cutting off sunlight and oxygen to the water below and causing difficulties for shipping and fishing. Algal blooms occur, resulting in local de-oxygenation and fish kills. Environmental pressures on the Lake are tremendous and so far all efforts to manage both their causes and effects have proved fruitless. Fishermen hardwood boats manufacturing result in depletion of forests in the region. There is also strong evidence that Nile perch is being over-fished. The average size of landed fish has declined from over 50kg in 1980 to less than 10kg in 1996. Catch rates are also reported to be in decline. Fisheries scientists believe that the Nile perch fishery is being sustained only by 8 DC = District Council 9 Ministry of Water and Livestock 10 LVB = Lake Victoria Base


cannibalism of the young fish. Despite the attempts of several aid donors, there is still no systematic approach to the management of the fishery, which by definition will require the active support and collaboration of the three nations. Maybe this will change with the earlier mentioned Entebbe Declaration in 2005.

4.3.2 Impact on Incomes The Nile Perch sub sector creates great employment opportunities, either direct (e.g. factory workers and fishers on the lake) or indirectly through the related economic activities such as processing of rejects and off cuts. Moreover, there is a whole range of spin-off activities due to the Nile Perch fishing such as net making, boat making, food processing at the fishing camps, guesthouses, et cetera. Though the total number of people depending on the Nile Perch for livelihood is not known, some estimates go up to 1 million.

4.3.3 Impact on Women Women are involved at various levels in the Nile Perch sub sector. They are active in the service industry at the landing sites, such as restaurants, guesthouse and the entertainment sector. Many of them are employed by the processors/exporters and others are (self-) employed in related activities such as processing of rejects and off cuts. On the other hand there are also reported detrimental effects on women. For example, many men have gone to the lake to fish due to the lack of alternative income generating activities. There stay at the camp for longer period and the prevalence of adultery results in high occurrence of sexual transmitted diseases and aids is the cause of many deaths. Hence, there are many orphans as both parents have died premature. Even when the wife survives, it is a great burden as she single has to provide the income and care for the children.


5.0 SUB SECTOR DYNAMICS

5.1 Driving Forces

5.1.1 Market demand The Nile Perch sub sector is evidently export driven. After the collapse of the sub sector in 1999 due to the ban, it has experienced steady grow. Though fillet is by far the highest income earner, other (side) products like the bladders (maws) and belly flaps are also highly demanded. Though the market is still growing for all Nile Perch products, there are a number of threats. The biggest threat is the extinction of the fish due to over fishing and environmental pollution. The other major threat to the sub sector is the rapidly entering of the Vietnamese catfish, a good and cheaper substitute for Nile Perch.

5.2 Constraints

5.2.1 Generic constraints There is high level of mistrust in the supply chain, particularly between the fishermen and the

processors. The major complaint of the fishermen is the high percentage of rejects by the processors (an earlier example indicated up to 7 kg out of 15 kg). In the recent past these rejects were even retained by the processors but due to mediation by the Regional Government Authorities they are apparently now returned to the fishermen. Still, rejects causes major losses as these fish can only be sold for around TShs 500/= per kg while the factories pay currently up to TShs 1,800/= per kg. Another cause of the mistrust is the notion that processors are bias to some fishermen and they are supported with nets, working capital and even loans to buy boats and outboard engines while others do not get any support at all. Part of the preferential treatment is also better prices and a secured market. Some fishermen suspect a deliberate strategy of the processors in order to crowd out the ‘independent’ fishermen. This particularly counts for the TAFU members who experiences lots of difficulties in selling their fish.

5.2.2 Input Supply Ever increasing costs of the gill nets and the outboard engines, i.e. the 9.9 HP, as well the fuel

price increases results in declining profits for the vessel owners and fishermen; Mninga wood is not readily available and expensive. Hence, more fishermen have to rely on

softer word which durability is much less.

5.2.3 Fishing Decreasing stock results in lower catch, longer working hours and decreasing returns to the

fishermen. Only few of the fishing camps are well managed under the BMU and most of them miss basic

facilities like portable water and toilets and as a result the health of the fishermen is at risk. Increasing cases of piracy which forces fishermen to stay overnight on the lake and hence,

they risk their lives. Poor handling of fish due to overall poor landing sites, lack of awareness regarding quality and

hygiene, and lack of cooling facilities on the boats results in high level of rejects and lower income.


Long stay at isolated fishing camps increases risks to acquire terminal diseases and as a results high (financial) pressure on the remaining relatives, including a high occurrence of orphans.

5.2.4 Processing High entry barriers in the EU markets, i.e. health, safety and hygiene standards, forces

processors to make huge investments in the factory set up and compliance with procedures which increases the processing costs.

Poor handling of fish at the source, i.e. the landing site, results in inadequate supply of good quality fish and results in underutilization of the factories.

High infrastructural costs, i.e. costs of electricity (the bulk consumer pays a higher rate), as well as high transport costs due to especially poor feeder roads increases the transaction costs and reduces the profitability.

5.2.5 Marketing/Exporting Increasing competition with substitutes like Vietnamese catfish puts prices under prices under

pressure and results in declining returns for all the actors in the chain. Limited availability of air space and high costs due to lack of south bound cargo constraints the

export and affects the sectors’ overall competitiveness. Control of the market by a limited number of importers, mainly in Belgium and the Netherlands,

creates additional trans-shipment transport costs. The higher royalty paid by processors to the Ministry of Natural Resources and Tourism

compared with the royalties paid by the processors in Kenya and Uganda (15 $ cents compared with respectively 2$ cents and zero rate) affects the competitiveness of the Tanzania processors.

5.2.6 Policies The wide range of loyalties, taxes and levies for both the processors and the fishermen to be

paid to various ministries and local government departments creates loss of inconveniences, increased costs and reduced profits and income.

Long lines of communication, complex institutional structure and overlapping responsibilities lead to delays in the implementation of regulations and decision taken and probably significantly reduce the effectiveness of fisheries management activities.

Lack of fisheries staff at especially district level to conduct law enforcement gives ample room for illegal fishing practices and environmental destruction and threatens the sustainability of the sector.

The harmonization of the laws and regulations in the EAC as well as the challenges of a coordinated support and approach by the three countries and their donors regarding the fisheries management makes the gains made in the recent years not yet sufficient to turn around the environmental degradation.


5.3 Opportunities

5.3.1 Generic opportunities Increased transparency in the chain by all the actors may do a lot in increasing the trust and

improving the efficiency between the suppliers and the processors and as a result the transaction costs can be reduced.

A common and shared objective, e.g. increasing the market share of fresh fish, by the actors in the chain may create a win-win strategy and increasing returns for all the players.

5.3.2 Input Supply Supply of affordable cooling equipment, e.g. powered by solar energy, will sustain the

freshness of the fish, reduce the percentage of rejects and increase fishermen’s’ income Polyester (fibreglass) boats as an alternative to the Mninga hardwood boats.

5.3.3 Fishing Promotion of sustainable fishing practices may safeguard the (self-)employment and income of

hundred thousands of people. Better beach management, e.g. by strengthening and expanding the beach management unit

programme, may increase the quality of the fish and increase the returns.

5.3.4 Processing Improved processing of rejects and off cuts may result in better quality, higher shelf life and

higher returns

5.3.5 Marketing/Export Direct marketing to importers in major EU markets like Italy, Spain and upcoming markets like

Poland reduces the trans-shipment costs and shortens the chain which may result in better margins and more competitive prices;

Further development of the fresh Nile Perch fillet market will increase the profitability along the chain due to its higher unit value and as it requires proper handling on the whole way of the chain (from the source to the market), it provides better opportunities for increased collaboration.

Sustainable or eco-friendly practices along the chain, certified by the Marine Stewardship Council, will enable niche marketing and a premium price on the environmental conscious EU market and hence provides a clear win-win strategy instead of the present antagonistic practices in the sub sector.

5.3.6 Policies Support to district fisheries departments, particularly for the purpose of monitoring and law

enforcement, may substantial improve the sustainability of the natural resources in and around the lake and hence, secure the livelihood of many.

Harmonization of laws and regulations in the EAC may provide a levelled playing field for the Tanzanian processors and will increase the competitiveness of the sub sector.

Streamlining the various national, regional and local taxes and levies will reduce costs, increase profitability and improve compliance with the (remaining) regulation.


5.3.7 Organisational support Organisational strengthening of fishermen associations like TAFU and SUFICO may improve

their bargaining power and result in better deals. Match making between the fishermen (associations) and new investors may facilitate forward

integration, i.e. processing, and access prime markets like fair trade and/or eco-friendly niches.


6.0 PROPOSED INTERVENTIONS

6.1 Scope The proposed interventions are still at a premature stage and need to be further developed. This could be done through a consultative workshop with the main stakeholders in the sub sector. Their feed back and inputs can help to come with more tangible interventions. Another way is by working concretely on some of the proposals and in this way to deepen the understanding of the sub sector and hence, develop practical approaches and interventions.

6.1.1 Generic solutions Facilitate the development of a common objective, e.g. deepening the market for fresh Nile

Perch fillet, among the actors in the chain and support the development of a win-win strategy (1)

Moderate trust among the actors in the chain by supporting them to work on projects of joint interest and with relatively easy gains, e.g. improvement of handling of the fish along the chain (2).

6.1.2 Input Supply Promote alternative and affordable cooling systems, e.g. solar driven, for the proper storage of

fish on the boats(3) Promote alternatives for the Mninga hardwood boats, e.g. polyester boats (4).

6.1.3 Processing Promote improved processing technologies and methods for the rejects and the off cuts (5)

6.1.4 Marketing/Export Explore the potential of fair trade and/or eco-friendly niche markets (6) Support the deepening of the fresh Nile Perch fillet market development (7) Match make between the fishermen (association) and potential new investors to provide an

alternative to the present supply chains (8).

6.1.5 Policies Support the monitoring and law enforcement at particular district level(9)

6.1.6 Organisational development Strengthen the capacity of fishermen associations, i.e. TAFU( 10)


REFERENCES Boomgard, James J., Stephen P. Davies, Steven J. Haggblade, and Donald C. Mead. (1992) A Subsector Approach to Small Enterprise Promotion Research. World Development 20.2: pp. 199-212. Gibbon, P. (1997) Of Saviours and Punks: The political economy of the Nile perch marketing chain in Tanzania, CDR Working Paper 97.3, June, 1997 Shaffer, James D. (1973) On the Concept of Sub-Sector Studies. American Journal of Agricultural Economics 55.1: pp. 333-335.


List of Appendices 1. Terms of Reference 2. List of participants attending stakeholders workshop

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