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Badilisha Lugha KISWAHILI

Transforming the informal sector 2: The artisanal fisheries for increased productivity

16th February 2013

In Tanzania fishing is carried out at both artisanal and commercial levels. Artisanal fishing is 100% informal and constitutes more than 90% of the total fisheries workforce. In other words, all people engaged in this sub-sector of the economy are not registered for tax and do not pay tax.  The fisheries industry is, however, an important sub-sector of the informal economy as it offers employment opportunities, income and food. It therefore requires close monitoring. Several attempts by Government to improve this industry have scored insignificant success. In the early 1970’s for example, Government constructed fish conserving and processing centres, including cold storage facilities, in major landing sites. The provision of these facilities was aimed at improving the quality of landed fish and the market value of fish. The ultimate aim was to increase the incomes of fishermen. These attempts did not succeed; partly due to administrative bottlenecks.

To ensure effective harvesting of the country’s fish resources and increase revenue earned from the fisheries sector of the economy, Government introduced fishing companies. The Tanzania Fishing Corporation (TAFICO) was established specifically to fish in marine waters; harvesting prawn resources. TAFICO could not survive its own administrative incompetence. Another fishing company, the Bagamoyo Fishing Company (BAFICO), was formed in the coast. This was a small company formed with the aim of harvesting several fish species of the Indian Ocean. BAFICO survived for a short period before its collapse in the 1980’s; for the same reasons as TAFICO. 
In Lake Victoria a private company, the Nyanza Fishing and Processing Company (NFPC), was formed in order to fish haplochromines, the fish was used for making fish-meal. This company also collapsed after operating for about 10 years. Its collapse was attributed to over-investment in haplochromine fishing and to heavy predation by the Nile perch, Lates niloticus fish. In the late 1990s, Government got a loan from the World Bank for the country’s fishing industry. This money was used for several activities including installing fish barges and improving the management of Lake Victoria through formation of Beach Management Units. The European Union also gave Government a grant for improving landing sites and for fish resource monitoring. At the end of these projects several beaches had a new face. The landing sites sanitary facilities, receiving bays, boat parking areas and roads infrastructure were improved. In addition to these visible improvements, an authority, the Lake Victoria Fisheries Organization (LVFO), was established to coordinate fisheries activities of the three countries sharing the Lake. Another authority, the Lake Victoria Basin Commission (LVBC), was jointly formed between Tanzania and five other countries within the Lake Victoria catchment area. The LVBC was charged with coordinating fisheries activities in the entire catchment area of the lake.
In Lake Tanganyika semi-industrial harvesting of the dagaa (Limnothrissa spp) was attempted by the Armed Forces, Jeshi la Kujenga Taifa, in Bulombora. This did not last long; partly due to administrative reasons. As with Lake Victoria, Government also established the Lake Tanganyika Authority, in collaboration with the five countries sharing the lake to coordinate fisheries activities.
Government has not lost the aim of improving the artisanal fishing industry nor that of increasing its productivity in order to realise increased earnings from this sub-sector. The 2005 Government vision, articulated in the National Strategy for Growth and Poverty Eradication (NSGRP) popularly known as MKUKUTA 1, is to achieve a semi-industrialised economy by broadening the tax base. This in turn is to be achieved by expanding the formal sector through transforming the informal sector of the economy. The fisheries sub-sector, being one of the largest sub-sectors of the informal economy, was a target. 
In this new drive, the lessons that were learnt from earlier unsuccessful efforts provided a good starting point. These lessons included, among others, that fishing ventures should not be run by Government. The second most important lesson learnt was that, in order to prevent over-harvesting, the level of investment in fisheries must be sensitive to standing stocks. These lessons provided grounds for mounting a fresh look at how this important sub-sector could be made more effective, more efficient and more capable of generating maximum earnings and hence revenue. 
This chapter aims at re-examining this sector, with a view to finding justifiable ways of expanding it, so that the sector can contribute to Government revenue through taxation. It discusses how artisanal fisheries can be improved and how its importance and potential can be tapped and reflected more concretely in the national economy. Using data from frame survey which is an inventory containing information (data) on size and area distribution of fishing sites; number of fishing boats (by type); size and composition of fishing labour force (migratory pattern of the fishermen); fishing gear owned (by type); and fishermen’s capital goods supply centres, the chapter examines the possibility of upgrading the artisanal fisheries industry to semi-commercial status. This up-grade would mean increased production by the fishermen, and subsequently improved living standards among them. These data are important in revealing the basic fisheries characteristics (Bazigos, 1974). The chapter also uses fish-landings data.
In this chapter the term “informal sector”, is used to mean all activities in the small-scale fisheries sector which are not formally taxed, which are without any form of licensing other than those of owning a fishing craft, and which do not appear in the formal statistics of the economy. 
The chapter begins with an introduction of the artisanal fisheries; followed by a review of the sector, looking at relevant legislation.  Arguments justifying the formalization of the sector as a way of increasing production in artisanal fisheries are explored. The paper further gives the results of both desk and field studies on artisanal fishing; and in discussing them, builds a case for the formalisation of the sub-sector. The paper concludes by giving several recommendations whose implementation can bring a positive change to the fisheries sector and increased Government revenue.
2. Review of the Fisheries Sector
2.1 Legislation on fisheries
The fisheries sector in Tanzania is guided by the National Fisheries Policy (MNRT, 1997), the Fisheries Act of 2003 and the Fisheries Regulations of 2009. According to the MNRT, the main fisheries goal in Tanzania is to promote the conservation, development and sustainable management of fisheries resources for the benefit of present and future generations (MNRT, 1997). The objectives of the Policy include among others:
i) to put to efficient use the available resources in order to increase fish production so as to improve fish availability as well as contribute to the growth of the economy; 
ii) to improve fisheries’ products utilisation and their marketability; 
iii) to promote small-scale, semi-intensive aquaculture with simple technologies and low capital investment; and 
iv) to ensure effective utilisation of the Exclusive Economic Zone (EEZ) resources. 
To achieve these objectives, the Policy identifies and lists about 18 strategies whose implementation should improve the sector. One of the most important developments is the completion of the National Aquaculture Development Strategy (NADS) launched in August 2009 (Mkakati wa Kitaifa wa Ukuzaji Viumbe Kwenye Maji, 2009). The strategy covers a period of 16 years (from 2010 to 2025); during which time multiple institutions will implement its programmes. Emphasis is laid on the use of simple technologies and the promotion of sound utilisation of the ecological capacity of water bodies to promote diversification of income sources and diet. A gender perspective is promoted in the development of this sector. 
One of the proposed cornerstone programmes of NADS is the training of fish-farmers on fish culture. As laid out, it falls short of linking training to the provision of loans to successful farmers. In China, for example, the "Green Certificate" for fish-farmers who had passed examinations after this training, was adopted on a trial basis in the early 1990s.  The “Green Certificate,” holders would enjoy priority in obtaining production contracts, technical information, service and loan support. This acts as an incentive to learning and therefore attracts many people to the training. In Tanzania some farmers may attend training for the sake of, perhaps, getting some allowances. Many finish the training period without grasping the subject. This should be avoided in the NASDP.
The Fisheries Policy also emphasizes the importance of strengthening the revenue collection system in the fisheries sector, in order to ensure harmonisation with other agencies. The Fisheries Policy, the Fisheries Act and the Fisheries Regulations all are designed to assist develop the industry, conserve fisheries resources and improve the well-being of fish farmers. The different fees charged on fisheries activities are pegged on USD. This has caused concerns in many fishing communities since the charges are changing each time the dollar rises/falls against the Tshs. Actually this has been a disincentive for paying taxes in the remote fishing areas. It is suggested to use the Tanzanian currency instead.
2.2 Legislation on Aquaculture
The National Aqua-cultural Strategic Development Programme (NASDP) has been developed with the aim to commercializing the newly established sector; and of promoting sustainable development of aquaculture. The Programme aims at supporting the livelihood of fish farmers and other stakeholders, through increased incomes accruing from fish products. Other advantages to be reaped as a result of this push include the increased availability of high quality protein food (NASDP, 2009). Government is putting in enough efforts to revolutionise aquaculture from the present traditional informal system. The purpose of the strategic NASDP is to ensure that the aquaculture industry in Tanzania is developed economically, is commercially viable, socially acceptable and environmentally sustainable. NASPD aims at increasing the levels of production, consumption and marketing of fisheries products while conserving the environment. This 16-year Programme is in line with the goals set in the National Strategy for Growth and Reduction of Poverty (NSGRP). By the year 2025, there should be an aquaculture sub-sector which is largely commercially-run, vibrant, diversified and sustainable. This sector should ensure food security, employment and improved income not only for fish-farmer households, but for the nation at large. All sector activities should be carried out in a manner which ensures the conservation of the natural environment.
2.3 Legislation on Fisheries Taxation
The payment of taxes in the artisanal fisheries sector in Tanzania is not well defined since each district council is charging her own kind of tax. This creates loopholes and makes fish-fish-farmers to look for ways avoiding paying such taxes. Fish-farmers argue that since fish is a natural resource, they have a natural right to harvest them and no obligation to pay any taxes for doing so. This contention is subject to challenge. Natural resources require management so that they can be sustainably exploited for the benefit of present and future generations. The most appropriate way to achieve this is through taxing the users and ploughing back these taxes into the management of the resources. It seems that these fish-farmers have not realized that other users of natural resources such as wildlife and forestry, pay taxes. 
Currently Government collects revenue from fish-landings through the Beach Management Units (BMU) or through the district councils. This is done in a few districts because of the difficulty in collecting such taxes and the credibility of those collecting the taxes. The difficulty lies in the manner in which the tax is collected. In some districts, tax collectors who are also extension officers, are poorly paid and sometimes work for long hours without overtime or allowances. This tempts the unfaithful ones to evade remitting all tax collections. Tax collection by different districts, as cess or as a fee fish per boat landing or in-kind contribution, has been subjected to abuse and is therefore being discouraged. Consequently, it is recommended that a proper and justifiable system be developed to make fishers-farmers pay taxes. The most difficult group of fishers-farmers to collect taxes from is that of the dago. The majority are migratory fish-farmers while a few live in fishing camps. They will always escape whenever tax collectors or fish extension officers approach them. To overcome this problem, it is recommended that fishers-farmers be required to pay the respective taxes once a year, upon renewal of their fishing licenses.
Successful attempts have been made in the past to levy taxes on different fish products, particularly those that are exported such as fish maws, fish fins, and fish fillets. Even in this category, fishers-farmers are attracted to sell their fish across the borders where there are higher prices paid for a kilo of fish. Fish traders in neighbouring countries are able to pay more for a kilo because they are not required to pay any taxes by their districts/counties.  This encourages the smuggling of fish across regional borders (Maliyamkono et al., 2009). In Tanga, smuggling of fish and octopuses is due to the absence of local fish dealers and payment of higher prises for the octopus as compared to the local fish processing company.
The major moral problem on attempting tax collection from fish-farmers is the fact that they are always considered the poorest (see Onyango, 2009 and Onyango and Jentoft, 2010). Fish-farmers in the past have had the support of politicians against paying taxes. Based on the production statistics of about 350,000 tonnes per annum and a minimum beach price of Tshs 3,000 per kilo, it is estimated that we produce fish worth more than Tshs 1,050 billion in a year. Divided among fishers-farmers, this would give each person some Tshs 3.5million, per annum. This figure looks very high compared to annual incomes in Tanzania. One fails to believe that the majority of fishers-farmers are poor. Politicians however, always stand in their support; arguing fishers-farmers are poor and should not pay taxes. This is probably the reason why Onyango and Jentoft (2010), considering the fate of  fishers-farmers  in Lake Victoria, came to a conclusion that social values are crucial entry points in addressing poverty in small-scale fisheries. They considered poverty in small-scale fisheries to be a “wicked problem’ rather than a problem of low incomes. Fishers-farmers can rid themselves of absolute poverty by developing a savings culture and by organising themselves into groups/cooperatives in order to access external funding. 
2.4 Fishing activities
Tanzania is well endowed with water bodies. The vastness of the country’s natural aquatic endowments has resulted into great diversification of biota in is aquatic ecosystems such as the wetlands, coral reefs, mangrove swamps, and sea grass beds. Tanzania has the potential of being a significant fishing nation: reaping both rich food value as well as internal and external trade benefits. As a foreign exchange earner, fisheries exports contribute about 3% of GDP. It employs more than 300,000 fish-farmers with Lake Victoria accounting for about 40% of these.
Tanzania produces more than 350,000 metric tonnes of fish annually from capture fisheries, while a small amount comes from aquaculture. The actual potential of exploitable fish resources in the territorial inshore waters is estimated at 700,000 metric tonnes. Due to the concentration of many fish-farmers in the same fishing grounds, higher tonnage cannot be realised. It is therefore important that the fish-farmers are enabled to engage in distant fishing. 
Currently, the contribution of the artisanal fishery sector to the economy of the country is fairly substantial. Lake Victoria fisheries, for example, constitute more than 60% of the total fish exports of the country, valued at more than US$100 million. There are 300,000 fishermen involved in fishing in the whole country and many more are engaged in fish-related activities. The fisheries sector is, therefore, an important employment sector.
Activities included in the artisanal fisheries sub-sector are, among others, small-scale fishermen, fish dealers, and fisher folks of all types. The chapter uses small-scale fishery interchangeably with artisanal fishery. Activities in this sub-sector are labour intensive. They make a significant contribution to the national economy, as they provide rural employment and help diversify local economies. For example, in the Lake Victoria region in 2008, the largest single employer was the fisheries sector, engaging not less than 105,000 fishermen (Frame Survey, 2008). Many more were engaged in fisheries-related jobs like fish traders, boat repairers, fuel sellers, vendors, “mama ntilie” engine repairers, net makers, fish net sellers, fish smokers, fish oil extractors, fish traps manufacturers and repairers and fish auctioneers.
Small-scale fishermen, unlike people engaged in other informal sectors, are supposed to be registered when they pay for boat licenses. There are no correct statistics that give the actual numbers of people in this sector. We take the figure of four million given by the Fisheries Department to inform this paper (NASDP, 2009).  The group consists largely of uneducated individuals (as confirmed by our results). Except for those operating on Lake Victoria, they have little access to organised markets. They also find it difficult to access funding from financial institutions. 
It has been observed that in the fisheries industry, noted that there is only one classification in the fishing crafts in terms of size: those above 11 metres and those below. Therefore the licensing was categorised on “below or above 12 metres length over all”1. This ignored the fact that the ‘below 11 metres class’ contained boats and canoes which had different carrying and fishing capacities. This brings unfairness in the licensing system as owners of smaller boats felt they were being overcharged compared to those owning larger vessels.  As a result, those owning smaller crafts avoided paying fees. In this project fishing boats will be classified and each class charged a reasonable fee. This should encourage many small boat owners to pay for their licenses appropriately.
In the frame survey of the artisanal fishery sub-sector, we normally classify the fishing economic unit (FEU) into two categories. Category one is the usual fishing unit which consists of fishing crafts, fishing gear, and fishermen to carry out fishing operation. In category two is the minor fishing unit which consists of fishing gear and fishermen (without fishing crafts) who carry out fishing operations. Fisherman in this report means a person, man or woman, who engages in the actual operation of capture or culture of aquatic resources. This definition would exclude family members who usually assist in unloading and loading the fish and fishing gear. It also excludes net repairers and processers of fish. Fishermen are further classified in terms of their employment status as fishermen who own boats; fishermen with gear only; and assistants. In spite of this definition, there is a perennial problem of boat and gear ownership. Most boat owners are not fishermen even in the small-scale fishing industry. Boat/gear owners actually employ the fishermen who, at the end of the day, sell their catch to the boat/gear owners at reduced price. One would therefore expect the boat owners to pay higher taxes than the fishermen. In this chapter more attention is paid to the fishermen since boat owners are considered employers. The latter should be dealt with according to national tax payment requirements.
3. Justification for formalisation of the artisanal fisheries in Tanzania
Work in Lake Victoria on the distribution of economic benefits from fishing in the lake noted great disparities. Fisheries have made important contributions to the social and economic development of riparian states through linkages and externalities. Studies reckoned that data is lacking to make reasonable comparisons (Odongkara et al 2005). A number of challenges have been identified in overcoming the challenges in lake fisheries. Among the most important challenges included in the report by Odongkara et al (2005) are:
1. This was noted by Bwathondi while working on safety in the Fisheries industry in early 2002.
(i) unequal distribution in production assets of fishermen;
(ii) lack of capital and skills for fish processors and traders; 
(iii) inadequate access to sufficient market and other useful information;
(iv) limited opportunities and choices among fishers;
(v) lack of fishers’ organisation to strengthen their bargaining power and support their activities;
(vi) limited investment horizons and opportunities among fishers, which hinder their capabilities  to reinvest surplus earnings most profitably;
(vii) lack of access to credit especially to fishermen to enable them improve their operations and invest in alternative income sources; 
(viii) lack of saving avenues and savings’ culture among fishermen for better utilization of earnings and the building up of savings for future use/investment; 
(ix) inadequate post-harvest handling facilities and skills to ensure quality maintenance for better market and prices; 
(x) inadequate policies to deal with inequitable distribution of benefits for the good of the disadvantaged groups; and 
(xi) inadequate data and skills for distribution analyses to support the policy process. 
The over-all fisheries sector, as distinct from the lake fisheries sub-sector, faces similar challenges in Tanzania. This chapter argues that one of the major remedies to these challenges is to revolutionise the overall fisheries sector and to unite fishermen and their associates. 
There are however, a few barriers that prevent the transformation of artisanal fisheries to the formal sector. These include the prevailing Government policy of assisting and developing the artisanal sector rather than transforming it (NFSPSS, 1997). Some Government officials think that the costs of formalizing the artisanal sector far outweigh the benefits. There is also the view that any steps taken to revolutionize the sub-sector would be viewed as too much Government interference. Currently, different district councils’ taxes on fisheries are viewed by fishermen to be too much tax on their sub-sector; making them reluctant to pay taxes or to avoid paying altogether.
When one looks at the number of fishermen in artisanal fishery, one is tempted to conclude that there are too many people involved in this sub-sector. One is left wondering whether the number could not be reduced without necessarily reducing production. It is a fact that better equipment could be used to replace the current large number of fishermen and increase production at the same time. Such equipment would, in addition, help in the management of the fisheries resource as the managers would be dealing with a few well-organised fishermen. The surplus manpower currently engaged in artisanal fishing could then be deployed in fish-farming. In his study, Bwathondi recommended the deployment of better fishing gear and advanced boats to exploit Tanzania’s territorial waters which are currently exploited at 30% capacity (Bwathondi 2007). This initiative can only be done by formalising all fisheries.


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