Affordable Financing Options for Artisanal Fishing
Affordable Financing Options for Artisanal Fishing
Business Model Description
Provide affordable and flexible finance with short-term repayment periods, targeting low-income fishing communities, for the purpose of developing artisanal fishing practices and improving technical capacity of artisanal fisheries.
Expected Impact
Increase the sectoral productivity and growth, while ensuring local nutrition to everyone and preserve the inshore coral reef ecosystem.
How is this information gathered?
Investment opportunities with potential to contribute to sustainable development are based on country-level SDG Investor Maps.
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Country & Regions
- Zanzibar: Kaskazini
- Zanzibar: Magharibi
- Zanzibar: Pemba
Sector Classification
Food and Beverage
Development need
Agriculture is one of the main sectors in Zanzibar, contributing 27.1% of GDP (1). Despite the sector's key status in the economy, Zanzibar lacks significant production and processing capacity as well as private sector investments in the sector which leads to food insecurity, import-dependency and food availability being highly determined by external factors (2).
Policy priority
The Government, through its Vision 2050, aims to ensure that everyone has equitable access to sufficient quantities of safe, nourishing, and culturally appropriate food at all times for an active and healthy life, as well as to protect the most vulnerable members of society from the negative effects of emergency situations on their food security and nutritional status (3).
Gender inequalities and marginalization issues
In Zanzibar, women are estimated to undertake 80% of the agricultural, forestry and fishing labor (9). However, statistics show that to only 23. 6% households reported that the decision for spending the income from agricultural crops comes from women (7).
Investment opportunities introduction
Although the local demand for agricultural products is increasing as the imports of fresh food is increasing as well, only less than half of the arable land is under cultivation in Zanzibar. Additionally, the growth of tourism attracts a high demand for fishery, aquaculture and agricultural products (6).
Key bottlenecks introduction
Low technical skills and financial investment among farmers are key challenges to the agricultural sector (4). Only 7,7% of the national budget is dedicated to agriculture. This low contribution of government leads to tempered sectoral advancement due to lack of research and development and human resource development activities (9).
Food and Agriculture
Development need
Only 139.415 hectare (43%) of arable land are under cultivation in Zanzibar (4). Essential food and food stuff are import-dependent to make up for the lack of domestic production. There is a need of diversifying agro-products to decrease import dependent sector, contribute to the local consumption, increase value addition and agricultural productivity (10).
Policy priority
The Government is committed to transform the agricultural sector towards higher productivity, commercialization level and increase farmer income for improved livelihood while guaranteeing food and nutrition security (6).
Gender inequalities and marginalization issues
Despite being the primary contributors to the agriculture industry, women have limited access to and control over resources used in production, (7) including land, agricultural inputs, market access and financing, and cutting-edge technology. Additionally, the majority of MSMEs are either wholly or partly owned/run by women and youth, which play a leading role in agro-processing (11).
Investment opportunities introduction
In Zanzibar the majority of the agricultural products are exported in raw form without any value addition (3) while imports on food stuff including process food is increasing (1). In addition to the food processing, crop development, modern irrigation systems and water management are other areas of opportunity in the archipelago (2).
Key bottlenecks introduction
A lack of a comprehensive framework for enhancing food security and technical expertise on post-harvest losses, an overreliance on rain-fed agriculture, inadequate budgetary support, an inadequate rural microfinance system, and poor marketing of agricultural products are some of the major challenges (8).
Agricultural Products
Pipeline Opportunity
Affordable Financing Options for Artisanal Fishing
Provide affordable and flexible finance with short-term repayment periods, targeting low-income fishing communities, for the purpose of developing artisanal fishing practices and improving technical capacity of artisanal fisheries.
Business Case
Market Size and Environment
< 5%
The annual per capita consumption of fish in Zanzibar is about 23 kg
The market size for fish and fish products in Zanzibar is estimated at 39,491,000 kgs per annum in 2021, increasing to 45,284,816 kgs in 2025, considering the average per capital consumption of 23 kg, this indicates a CAGR of 3% (2, 11).
Indicative Return
10% - 15%
According to a study done by Ministry of Blue Economy, a loan with financing cost of maximum 16% for the artisanal fishers, has a break-even point in 1 year for the borrower, while given repayment period of the loan is 5 years (11).
Investment Timeframe
Short Term (0–5 years)
Data from a pilot project under the Ministry of Blue Economy comprising of 1,000 groups of 20 artisanal fishers shows that a group will be able to repay a 31,372,500 TZS (approx. 13,408 USD) loan facility within one year while estimated repayment period is 5 years (11).
Ticket Size
< USD 500,000
Market Risks & Scale Obstacles
Capital - Limited Investor Interest
Market - High Level of Competition
Impact Case
Sustainable Development Need
Artisanal fishers are trying to meet the high demand for seafood through unsustainable fishing practices (11). Because there is a lack of adequate infrastructure and equipment, the underdevelopment of the value chain limits the potential of the fishery sector (12).
Sea surface temperatures (SST) in the intertidal zones are increasing due to intense harvesting which affects small and artisanal fisheries and result in the collapse of the coral reef ecosystems in the inshore fishing grounds (12).
Gender & Marginalisation
Fish is the major contributor of animal protein in the diet and the most affordable protein source for the lower income groups in Zanzibar where the annual per capita consumption is about 23 kg, while existing artisanal zones are deficient to meet the rising demand (11).
Expected Development Outcome
Affordable financing options for artisanal fishing would enable artisanal fishers to harvest in deeper waters, thus meet the high demand of seafood through sustainable practices.
Providing affordable financing options to artisanal fisheries will enable the development of technical capacity, infrastructure and equipment, resulting in improving the value chains and sectoral development.
Providing affordable financing options to artisanal fisheries will improve the production capacity of the artisanal fishers while contributing to the protection of coral reef ecosystem in the inshore.
Gender & Marginalisation
Providing affordable financing options to artisanal fisheries will improve the productivity of the artisanal fishers in Zanzibar, which will contribute to the improvement of the local supply and local nutritition level of lower income groups.
Primary SDGs addressed
2.1.1 Prevalence of undernourishment
2.3.2 Average income of small-scale food producers, by sex and indigenous status
Malnutrition rate in Zanzibar was reported at 0.23% in 2018 according to Zanzibar Health Bulletin (13).
N/A
N/A
N/A
14.4.1 Proportion of fish stocks within biologically sustainable levels
14.7.1 Sustainable fisheries as a proportion of GDP in small island developing states, least developed countries, and all countries. In particular, the proposed aquaculture is terrestrial and therefore conserves the marine biodiversity of the Gulf.
Number of fish stocks within biologically sustainable levels/number of fish catches was reported as 26,728 tons in 2019 (13).
The GDP contribution of the fishing sector was 5% in 2021 (1).
N/A
N/A
9.3.2 Proportion of small-scale industries with a loan or line of credit
N/A
N/A
Secondary SDGs addressed
Directly impacted stakeholders
People
Gender inequality and/or marginalization
Planet
Corporates
Public sector
Indirectly impacted stakeholders
People
Planet
Corporates
Outcome Risks
Increased capacity of the fishers may result in exploitation of fish resources as there are 56,000 fishing days per month in Zanzibar, which is nearly twice of the sustainable level (12).
Impact Risks
The existing government effort on capacity developing of artisanal fishing and the proposed business model may not align with each other, consequently the impact aimed might not be generated.
Impact Classification
What
Providing affordable financing options to artisanal fisheries will increase the productivity while protecting inshore environment as the artisanal vessels will be able to harvest deeper.
Who
Local community and traditional artisanal fishers will benefit from the increased supply of local fish supply and consequently improved local economic development.
Risk
Artisanal fisheries may fail to extend their fishing grounds even though they have the technical capacity due to slow implementation of the capacity development efforts of the government.
Contribution
IOA aims to improve the technical capacity of artisanal fishing, thus increasing the productivity of the sector and decreasing the increasing pressure on the exhausted inshore ecosystem.
How Much
The quantity of fish catch with mainly traditional techniques in 2021 was 47,114.6 tons.
Impact Thesis
Increase the sectoral productivity and growth, while ensuring local nutrition to everyone and preserve the inshore coral reef ecosystem.
Enabling Environment
Policy Environment
Zanzibar Fisheries Policy: The policy emphasizes on the private sector investments in the production and marketing of fish and fisher products (11).
Blue Economy Policy: The policy promotes sustainable fishing practices and enabling artisanal fishers to harvest deeper, preventing the exhaustion of inshore ecosystem (12).
Zanzibar Vision 2050: One of the prioritizations of Vision 2050 is effectively coordinating and managing the development of the ocean and its endowments for significant contribution to economic prosperity (3).
Financial Environment
The Zanzibar Fisheries Act: Provides guidelines for the stakeholders interested in investing in the fishery sector. These include inter alia, licensing application procedures, methods of propulasion for vessels operating in Exclusive Economic Zones (EEZs) (14).
Fiscal incentives: General incentives are exemption from payment of import duty, excise duty, VAT and similar taxes on capital good for any investor. Strategic investors have more comprehensive benefits which consists long-term exemption from duties and tax, resident permit, etc. (8).
Other incentives: 100% foreign ownership, 33 to 99 years of land lease agreement, employment of expatriates in key positions, 100% allowance for R&D activities (2).
Regulatory Environment
The Zanzibar Fisheries Act: Provides guidelines for the stakeholders interested in investing in the fishery sector. These include inter alia, licensing application procedures, methods of propulasion for vessels operating in Exclusive Economic Zones (EEZs) (14).
Marketplace Participants
Private Sector
Kaskazi Fisheries Ltd, Zanzibar Big Game Fishing Ltd, Kusini DC Company Ltd, Blue Reef Sport & Fishing Lodge.
Government
Ministry of Blue Economy and Fisheries, Deep Sea Fishing Authority, Zanzibar Business and Property Registration Agency (BPRA), Zanzibar Investment Promotion Authority (ZIPA).
IFAD, World Bank, European Union.
Non-Profit
Japan International Cooperation Agency (JICA), The State University of Zanzibar (School of Agriculture), Tanzania Horticultural Association (TAHA), The Tanzania Growth Trust (TGT).
Public-Private Partnership
Zanzibar Fisheries Company (ZAFICO).
Target Locations
Zanzibar: Kaskazini
Zanzibar: Magharibi
Zanzibar: Pemba
References
- (1) Office of the Chief Government Statistician. 2022. Zanzibar Statistical Abstract, 2021. https://www.ocgs.go.tz/php/ReportOCGS/ZANZIBAR%20STATISTICAL%20ABSTRACT%202021.pdf
- (2) Zanzibar Investment Promotion Authority. 2020. Zanzibar Investment Guide. http://www.zipa.go.tz/pdf/guide2020.pdf
- (3) Zanzibar Planning Commission. 2020. Zanzibar Development Vision 2050. http://planningznz.go.tz/doc/new/ZDV2050.pdf
- (4) Ministry of Finance and Planning Tanzania. 2021. Tanzania National Five Year Development Plan. https://www.effectivecooperation.org/system/files/2022-02/FYDP%20III%20English.pdf
- (5)Tanzania Ministry of Agriculture. 2017. Tanzania Agricultural Sector Development Strategy Phase Il. https://asdp.kilimo.go.tz/
- (6) Zanzibar Investment Promotion Authority. 2022. Zanzibar Investment Guide with Sector Profile.
- (7) Office of the Chief Government Statistician Ministry of Finance and Planning Zanzibar. 2020. 2019/20 Household Budget Survey. https://www.ocgs.go.tz/php/ReportOCGS/HBS%20Main%20Report_final%2031.12.2020%20printing%20(2).pdf
- (8) Revolutionary Government of Zanzibar. 2007. Zanzibar Strategy for Growth and Poverty Reduction. https://www.unpei.org/files/sites/default/files/e_library_documents/tz-zanzibar-strategy-growth-poverty-reduction.pdf
- (9) Zanzibar Agricultural Transformation for Sustainable Development, 2010-2020. 2009. https://www.gafspfund.org/sites/default/files/inline-files/ATI.pdf
- (10) Revolutionary Government of Zanzibar. 2008. Zanzibar Food Security and Nutrition Policy.
- (11) Ministry of Trade and Industrial Development. 2020. MSME Policy.
- (10) FAO, 2021. Financing fisheries in Africa, Case studies from the United Republic of Tanzania and Zambia
- (11) Ministry of Blue Economy and Fisheries, 2021. Intervention Plan for Zanzibar Fisheries Sector
- (12) The Revolutionary Government of Zanzibar. 2020. Zanzibar Blue Economy Policy. https://faolex.fao.org/docs/pdf/tan208265.pdf
- (13) Zanzibar Planning Commission. 2020. Annual Sustainable Development Goals (SDGs) Implementation Report, 2019/2020 Zanzibar.
- (14) Revolutionary Government of Zanzibar. 2010. The Zanzibar Fisheries Act. https://trade.tanzania.go.tz/media/The%20fisheries%20Act,%202010.pdf.