Fishery modernization and cost reduction policies

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3.2 Fishery modernization and cost reduction policies

3.2.1. Tax free fishing equipment

In the Senegal, annual tax reductions granted in connection with the purchase of outboard engines and small-scale fishing equipment averages 5 billion CFA francs US10 millions. The impacts of this policy are considerable from both the technical and the economic points of view. The use of engines significantly extended the capacity of small-scale fishing vessels by enabling them to reach previously inaccessible distant fishing areas. It greatly reduced travel times and substantially extended the time available for fishing operations. This policy encouraged migration of Senegalese small-scale fishermen along the West African coast and the development of distant fishing. There is no doubt that the introduction of outboard engines in small-scale fishing has been the main factor in promoting the enlargement of pirogues, thereby facilitating their adaptation to all fishing techniques. Subsidization has accelerated and intensified the motorization and expansion of the small scale fleet. Today, almost 90 of Senegalese pirogues are motorized. In The Gambia, dutytax concessions on the importation of fishing and fishing related equipmentmaterials as established in March 1985 boost the small scale fisheries sub-sector which has experienced an important influx of fishers, from 1,299 canoes and 1,319 fishermen in 1983 to 1969 canoes and 1,785 fishermen in 1997.

3.2.2. Fuel subsidy

The Senegalese artisanal fleet consumes up to 40 million liters of fuel yearly DPM, Senegal table 12. Through subsidization, the price paid by fishermen is less than that paid by the general consumer. An average fixed subsidy of 125 CFA francs US 0.25 per liter was prevalent these last ten years. The average yearly total fuel subsidy granted to the small-scale fishery reached almost 5 billion of CFA francs US 10 million. Subsidies of fuel contribute to the use of more powerful engines and the exploration of new remote fishing areas as resources become scarce in the Senegalese EEZ. 27 Table 12. Yearly fuel consumption of the Senegalese artisanal fishery Years Number of liters 2000 41 155 290 2001 39 485 200 2002 45 996 900 2003 51 261 410 2004 45 346 000 2005 41 557 000 2006 43 235 400 2007 44 764 000 2008 36 729 000 2009 39 695 000 Source: DPM, Senegal The Senegalese industrial fleet also benefits from reduced fuel prices. The industrial fleet consume on average 70 million liters of fuel yearly. With an average subsidy of 229 CFA francs US 0.45 per litter consumed, the industry benefits from a total average yearly subsidy of around 16 billion CFA francs US 32 million. For the artisanal and industrial sub-sectors combined, the average annual fuel subsidy is around 21 billion of CFA francs US 42 million in Senegal. The fuel subsidy has considerably reduced the operating costs of both small-scale and industrial fleet; thereby keeping the price of fish caught at a reasonable level, contributing to the competiveness of the processing plants. Currently there is no subsidy on fuel for fishing and related operations within the industry in The Gambia. For both the artisanal and the industrial fleets, the prevailing fuel prices are similar to the commercial pump price. Price differentials in fuel cost in Senegal and The Gambia have production cost implications. They help Senegalese products to be more competitive in the international market. The high price of fuel is one of the reasons that Senegalese fishers based in The Gambia land their sole catch in Casamance to benefit from the higher sole landing market price and the lower cost of fuel.

3.2.3. Subsidized infrastructures

In 1995, as part of the “Support to the Restructuring of the Fishing Industry” project, the Senegalese authorities with the help of the French Government started a policy aiming to align export companies and industrial fishing vessels freezer ships to European standards. A subsidy of 1.7 billion CFA francs US3.4 million was granted to some companies in a bid to finance up to 30 of their investments in order to comply with health and sanitary requirements in the European market. This project focused in part on export platforms. 28 In 2004, the European Union health and consumer protection authorities visited some landing sites for the small-scale fishery and noted the need to establish acceptable standards for the artisanal fishery; mainly with regards to conditions on the pirogues, at the landing sites and in the vehicles transporting fish products. Following their recommendation, eight landing sites were identified along the coastline from north to south, and a process to bring them into compliance with European sanitary standards started. Subsidies for sanitary improvements, ice plants, freezing and refrigerated rooms for use by the small-scale fisheries at landing sites were provided photos 2 and 3. Subsidized infrastructure helped Senegalese exporters to consolidate their position in the international market and helped raise the level of exports. Figure 2. Laboratory for fish quality inspection in the quay of Mbour, Senegal Deme, 2011 Figure 3. Ice plants built by Senegalese authorities for the artisanal fishery, Senegal Deme, 2011 29 The industrial fishery fleet has the advantage of a functional fishery port with supplying facilities fuel, water, ice, and provisions, ship repair and maintenance facilities, freezing, and stocking facilities. Such infrastructure facilitates industry cost reduction, enhances competitiveness and has encouraged foreign fleets to unload their catch in Dakar. The Gambia lacks most of the necessary infrastructure to support a more competitive fishery sector and this has hampered the fish processing industry. All raw materials being processed in The Gambian plants currently originates from the artisanal fisheries. Most of the 11 landing sites along the Gambian coastline do not have fuel stations, access roads, water supply and sanitation facilities, ice plantschill and cold rooms, jettieswharfs and do not yet apply rigorous sanitation standards despite efforts put in the construction of Community Fishing Centers in some fishing villages photo 4. Figure 4. Community Fisheries Center in The Gambia Deme, 2011 As landing sites remain unsuitable for high-quality export oriented products, a limited number should be selected and investments made to bring them to European standards, as in the Senegal case. The Gambian industrial fishery suffers from infrastructural deficiencies, particularly with the absence of a dedicated fisheries jetty and ancillary facilities. Foreign fishing vessels do not land their catches in Banjul even though by policy they are required to land 10 of their catches in the country for local processing. The ongoing construction of a jetty for industrial fishing boats outside the commercial port at Banjul is expected to encourage greater off- loading of fish products for local processors. 30 Recent EU reviews of sanitary conditions and the application of HACCP principles in The Gambia put pressure to rigorously enforce sanitary and quality control and pressure on local processors to upgrade their plants to prevailing standards. If unable to meet EU standards they lose the authorization to export fish to the EU under regular procedures. Most Gambian processors have failed to meet the necessary required investments because of lack of financial resources to carry out improvements.

3.2.4. Electricity and other costs

The Gambia is confronted with very high electricity costs. The country no longer waives taxes levied on gasoline and diesel-fuel; therefore there is no subsidy for any category of users. Past attempts to provide duty-free gasoline reportedly were widely abused. Currently, the cost per Kwh charged by NAWEC Electricity Company as of December 2011 is 7.96 GMD US0.25 while for Senegal the current rate for industries is 72.99 CFA franc per kWh US0.15 and 116.79 CFA franc US0.23 according to time slots. The Gambian industrial processing plants currently pay more for electricity than their Senegalese counterparts. Electricity is the highest item in the cost structure of fish processing plants, but Government has not helped the sector with a lower tariff charge. Such policy would help the fishery sector to achieve its great potential in earning substantial foreign exchange and providing employment for the Gambian people. Water is charged at US6 per cubic meter in The Gambia compared with US2 in Senegal, while a ton of ice is sold around US108 in The Gambia and only US40 in Senegal.

3.3 Financing flows in the fisheries