Developing a sustainable small scale fishing insurance scheme in Tanz

02May 2022
The Guardian Reporter
The Guardian
Developing a sustainable small scale fishing insurance scheme in Tanz

GENERALLY, small-scale fishers (SSF) have limited access to financial services such as Bank accounts, Savings to facilitate implementation of sustainable insurance schemes. Our Correspondent GERALD KITABU caught up with head of Consulting, Dar es Salaam Merchant Group Dr. Kassim Mussa Mhina on how-

small-scale fishers can developing a sustainable small scale fishing insurance scheme in Tanzania. Excerpts.


Q: What hinders small-scale fishers from developing a sustainable small scale fishing insurance scheme?

A: There are several reasons. They include seasonality of income from fishing and high poverty rates among small-scale fishers, limited knowledge of fishing operations among most insurers also hinders implementation of the insurance schemes, large diversity of fisheries practices and fishers’ needs is a big challenge to designing sustainable insurance schemes.


Q: How do you help them?

A: An insurer- agent- fisher model can be adopted as an alternative model to small-scale fishers. However, improvement of vessels and gears, establishing cold and processing facilities and more importantly market access must be considered to strengthen this model. The general insurance theory stipulates a risk-transfer mechanism to ensure financial compensation for losses or damages caused by events beyond the insured's control. Small-scale fishing must not be excluded if the country is to ensure food security, employment, and a living for the more than 4,000,000 people involved in the sector. Small-scale fishers could be insured against natural disasters, loss or damage to fishing assets, crew injury and death, and, most importantly, increased access to credit for vessel upgrades.

Q: Have you conducted any research to determine  percentage  of the vessels along the Indian ocean that are equipped with outboard or inboard engines to enable them get big catch and so qualify for insurance?

A:According to the annual statistics survey conducted by the Ministry of Livestock and Fisheries, there are approximately 9,248 vessels in the Indian Ocean. More than 70 percent of the vessels are 2.5–5 meters long and fish within 12 nautical miles of the shore. Surprisingly, only 18.2 percent of the vessels are equipped with outboard or inboard engines. In addition to the low-tech vessels, the fishers have insufficient or no cold storage facilities at the landing sites, making it difficult for them to bargain their produce in the market. Despite these challenges, smallholder fishers provide the majority of income and food security, accounting for 1.74 percent of GDP. The subsector accounts for 98 percent of total fish catch (365,000 Tons), directly supporting nearly 238,053 smallholder fishers.

Q: Despite Tanzania having the best marine insurance policy, income for small-scale fishermen can be unpredictable and irregular depending on the success of a particular fishing.

This makes it difficult for private companies to jump on the bandwagon of small-fishers insurance. Again what is your views on this?

A:Regardless of the situation, Britam Insurance and NMB recently signed a contract to help fishing communities secure income and bring greater social and economic stability to Tanzania's small scale fishers. Because of the nature of the sector, there is more to add to develop a sustainable insurance scheme that will work better.

To begin, the Tanzanian government should devise a strategy to provide small-scale fishers with access to such insurance schemes, which, in most cases, would need to be subsidized at this early stage, in order to provide them with a comprehensive safety plan for attracting investment.

The government can begin to reinsure the private sector by establishing an insurance facility or guarantee fund to provide additional assistance in the event of sector-wide claims resulting from large-scale natural disasters.

Q: It is said that in general, small-scale insurance is an important tool for climate change adaptation and mitigation in the fisheries sector when combined with other strategies. What is your comment?

A: It is very true. Such strategies include measures to protect ecosystems. For example, insurance coverage for all types of vessels could be made mandatory, which could be a good strategy to reduce illegal fishing and thus protect the coral reefs, which are the foundation of most marine ecosystems.

Aside from insuring fisheries assets, health and life insurance can be included as part of a package in social security schemes.

To develop a sustainable small-scale fishing insurance scheme, it is necessary to address the issue of why the majority of small-scale fishers are uninsured.

Examining the nature of the fishery sector, the question can be attempted by taking into account the perspectives of fishermen, insurers, and the government. In the case of small scale fishers, accurate information must be available.

Insurance companies can allow for flexibility in case earnings during a specific fishing season are lower than expected in order to create a more sustainable insurance scheme.

Furthermore, the common perception is that insurance is expensive and coverage is frequently regarded as inadequate, necessitating the fishing communities to develop saving behavior through savings and deposit services.

Q: Now what are you advising the government?

A:In the case of the government, insurance coverage for certain types of vessels must be mandatory. The government can make it easier for insurers to invest in perceived high-risk, low-return sectors by facilitating the establishment of guarantee funds or facilities. On the insurance provider's side, must be available on their landing sites.

If a sustainable small scale fishing insurance scheme is in place, the small scale fishing sector can attract investments.

Analysis of market demand for insurance services related to fishing vessels, landing site infrastructure, and natural and man-made hazards that have caused losses in the past.

Because of this perception, most insurance companies are hesitant to enter the fishery industry. As a result, educating and empowering small-scale fishermen about insurance services is critical. The government should provide assistance in the form of guarantees and connections to existing safety net programs. Furthermore, policies for partnerships (insurer, private company, fisher representatives, government) that meet the needs and requirements of small-scale fishers are more important. 

Q: By the way which insurance model is best for small-scale fishermen?

A:An insurance company works with a local agent, such as a fishers cooperative or a microfinance institution, to provide insurance services to small-scale fishermen. The benefit of this model is that microfinance institutions frequently have a good network of offices in fishing communities, reducing information gaps for risk management. Furthermore, the model reduces transaction costs, easing the burden on small-scale fishermen. To ensure the model's smooth operation, the agent's staff must be trained to handle these challenges, and, of course, technological infrastructure may need to be improved.