The government of Uganda recently cancelled the Fisheries Development Project (FDP) fund, worth an equivalent of USD 2 million, when local banks and microfinance institutions (MFIs) refused to help finance the project. The FDP, a joint project of the Ugandan government and the African Development Bank (AfDB), was intended to provide local fishermen with loans to invest in modern fishing gear and increase annual incomes. However, banks and MFIs decided against funding the project, due to what they perceived as high risk associated with the provision of long-term loans. It is estimated that it would have taken six months for the fishermen to simply start repaying their loans, and the loan itself was considered too costly in the long term and too risky of an investment for local banks and MFIs. Thus, the government, who could not afford to fund the project on its own, dismissed the project.
About the African Development Bank [2]:
Established in 1964, the African Development Bank (AfDB) is a development bank that provides loans and grants to governments and private companies in Africa. AfDB commits approximately USD 3 billion annually to African countries. Owned and funded by member governments, the bank has a public-interest mandate to reduce poverty and promote sustainable development. The AfDB is controlled by a Board of Executive Directors, made up of representatives of its member countries. The current president is Donald Kaberuka.
Bibliography:
[1] AllAfrica.com. “Uganda: Govt Scraps U.S. $2 Million Fisheries Credit Fund.” http://allafrica.com/stories/201001070090.html
Original Source Article: AllAfrica.com
“Uganda: Govt Scraps U.S. $2 Million Fisheries Credit Fund”
January 6, 2010
Kampala — THE Government has scrapped a $2m (about sh4b) fisheries credit fund after local banks and micro-finance institutions refused to finance it.
Under the African Development Bank (AfDB)-funded Fisheries Development Project (FDP), fishermen were to be given loans to buy modern fishing gear to ensure good harvesting practices and reduce post-harvest losses.
The project, under the fisheries ministry, was also aimed at increasing income of fishermen, according to last year’s status report on the fisheries development programme formulated in the 1990s.
In November 2002, the Government signed a contract with the AfDB to roll-out the project, five-months after approval of the loan.
Work on the project that had five components, including infrastructure development, quality assurance, aquaculture research and development and project management started in May 2003.
According to Edward Nsimbe Bulega, the national FDP coordinator, sh4b was re-allocated to construct landing sites and fish markets.
“Micro-finance institutions were reluctant to finance long-term loans, saying the risks were high,” he says.
If the project had taken off, fish farmers would have taken six months to start repaying the loans.
But banks considered this to be too long. Accordingly, the Government scrapped the fund as it could not fund it alone, the report indicated.
However, over 1,000 fish farmers, processors, boat builders were trained in management skills aimed at turning the sector commercial using part of the money that had been disbursed before the problems came up.
Thirty landing sites, 20 fish markets and an extension of the fisheries laboratory at Entebbe were build, and eight ice plants were secured. Monitoring and surveillance were also strengthened through the procurement and deployment of eight patrol boats and 31 motorcycles.
The training, Bulega said, was aimed at improving the quality of fish products and aquaculture production through reinforcing research and development.
Uganda fish exports have been declining over past few years. It earned $20m less from fish exports in 2008 compared to 2007. Fish exports to international markets fetched $155m compared to $117 fetched in 2007. In 2005, Uganda earned $45m from fish exports to international markets.
Compared to 2005 which was Uganda’s best year of fish exports, there was a loss of $30 million.
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