Ghana - Fisheries Project

(i-I RETURN TO R X PCFRTS DESK RESTRICTED Report No. PA-7 ONE 1vWE K This report was prepared for use within the Bank and its affiliated organizations. They do not accept responsibility for its accuracy or completeness. The report may not be published nor ma3e it be quoted as representing their views. INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT INTERNATIONAL DEVELOPMENT ASSOCIATION FISHERIES PROJECT GHANA September 8, 1969 Agriculture Projects Department  CURRENCY EQUIVALENTS 1 New Cedi (NO) - US$0.98 1 US$ - N01.02 WEIGHTS AND MEASURES British/U.S. System 1 nautical mile - 1.15 statute miles - 1.85 kilometers 1 fathom - 6 feet - 1.83 meters 1 ton - 2,240 pounds - 1,016 kilograms 1 U.S. gallon - 3.79 liters ABBREVIATIONS ADB - Agricultural Development Bank ED - Boatyards Division GFC - Ghana Fishing Corporation GIHOC - Ghana Industrial Holding Corporation  GHAN A 1I'SH5-.RIES PROJECT TABLF OF CONTENTS SUMMARY AND CONCLUSIONS I. INTRODUCTION 1 II. BACKGROUND 1 General 1 Current Position of the Fishing Industry 2 DeeD Sea Fishery 3 Inshore Fishery 3 Freshwater Fisheries 4 Ti2na Transshipment Fisheries Research and Training 4 Fisheries Administration 5 Fishing Boat Construction in Ghana Fisheries Credit 6 Fish Marketing in Ghana 1 Fisheries Ecpansion 7 III. THE PROJECT 8 Project Description 8 Purse Seine Fishing Vessels 8 AssiFtance to Boatyards Division 9 Reorganization of Tema Fishing Harbor 9 Preparations for Second Stage Project 10 Project Costs 10 Financing 12 Terms and Conditions of Sub-Loans 12 Procurement and Disbursement 13 LV. ORGANIZATION AND MANAGEMENT 13 Sub-Borrowers 13 The Agricultural Tevelopment Bank 14 Boatyards Division 1 V. OPERATING ARRANGEMENTS AND FINANCIAL PROJECTIONS 15 VI. JUSTIFICATION 16 VII. RECOl2ENDATIONS 16 This renort is based on the findings of an IDA appraisal mission in September/ October 1968, to Ghana composed of Messrs. M.J. Wnlden and F,A. Brume (of IDA), C. Beever and 0. Gulbrandsen (cf F'AO).  -2-- ANN3X5_ Annex 1 - Animal Protein Sources, Fish Production and Imports - Table 1 - Supply and Consumption of Marine Fish in Ghane Annex 2 - Fish Marketing and Processing Annex 3 - Composition of the Fishing Fleet Annex L - Deep Sea FiFhing Vessels Annex 5 - Fisheries Administration Annex 6 - Boatyards Division, CGhana Industrial Holding Corporation - ThbL[! - U.mmarized Consolidated Balance Sheets - Tema and Sekondi Boatyards - Table 2 - Summarized Consolidated Income Statements - Tema and Sekondi Boatyards Annex 7 - Fisheries Credit - Table 1 - Agricultural Development Bank - Balance Sheets Annex 8 - Outline Specifications of Purse Seiners Annex 9 - Cost T7stimates - One Purse Seiner Annex 10- 3S-timlated Income Statement of One 48 ft Purse Seiner - Table 1 - Sstimated Income Staternent of One 48 ft Purse Seiner Annex 11- Estimated Cash Flow Statement of One 48 ft Purse Seiner Annex. 12- Sub-Borrowers' Appraisal,Procurement and Other Procedures 11PS Manp 1 - Fishing Harbors and Grounds Off Ghang Map 2 - Tema Fishing Harbor DRAWINGS 1 - 0L3-foot Purs-e Seiner - Chine Cott:truction 2 - Comparison of Roound and Chine Con-truction  GHAIA FISHERIES PROJECT SUMMARY AND CONCLUSIONS i. The project comprises the construction of 40 purse seiners by the Boatyards Division (BD) of the Ghana Industrial Holding Corporation - a state- owned enterprise; technical assistance to BD; and studies of the harbor fa- cilities needed for expansion of fisheries beyond the proposed project. ii. The borrower would be the Government of Ghana who would lend the proceeds of the credit relating to construction of purse seiners to the Agri- cultural Development Bank (ADB) at 00, interest. ADB would on-lend to approved sub-borrowers at 9% interest. Loans to sub-borrowers would be for six years, including one year of grace. ADB would repay the Government as repayments were receivable from sub-borrowers. iii. The proposed addition to the inshore fishing fleet would increase fish supplies for domestic corsumption by an estimated 9,000 tons annually with a landed value of US$1.3 million. The purse seiners would operate in the Atlantic close to the Ghanaian coast. These vessels would fish mainly sardinella, locally called "herring". The boats would be similar to those at present in use in Ghana, though technically improved. iv. Ghana has become one of the largest producers and consumers of marine fish in tropical West Africa; its production has increased three times the 1961 level. The supply of animal protein to the population is still too low and much of it is imported. Fish is a preferred source of protein in the country. Consequently, the project would contribute to the improvement of nutrition while saving foreign exchange. v. Assuming a ten-year operating life for the boats, the project would yield a financial rate of return of about 30%. The rate of return to the economy would be considerably higher than this. The project cost would be about US$2.3 million of which US$1.3 million would be in foreign exchange. The project is suitable for an IDA credit of US$1.3 million to finance such foreign cost.   GHANAT FISITFFIES PROJECT I. INTRODUCTION 1.01 The Government of Ghana has requested an IDA credit of US$1.3 mil- lion for the construction of medium-5ized purse seine fishing vessels to expand its inshore fishing fleet, and for harbor feasibility and cost studies. The total cost of the project is estimated at US$2.3 million of which US$1.3 million would be in foreign exchange. 1.02 The project was identified by a Bank identification mission in October/November 1966 and prepared with the help of an FAO/IBRD Cooperative Program mission in June 1967. The Government's request for finance was re- ceived in August 1968 and this report is based on the findings of an IDA appraisal mission in September/October 1968 to Ghana, composed of Messrs. M.J. Walden and F.A. Brume (of IDA), C. Beever and 0. Gulbrandsen (of FAO). II. BACKGROUND General 2.01 Ghana has an area of 92,100 square miles. In 1968, the population Was estimated at eight million and the per capita income at US$225. The economy is based on agriculture, principally cocoa, and between 1962 and 1967, cocoa annually averaged 64% of exports. 2.02 Although the Government has designated agriculture as the top priority sector in its development efforts, progress is not encouragqing at present. The Government's development plan, mid-1968/mid-1970 anticipates no significant increment in farm output per unit of labor during that period. The Government is not satisfied with the current performance and appreciates the necessity for careful planning to improve it. Accordingly, the Ministry of Economic Affairs has a resident Harvard University Advisory Group which includes an agricultural officer. The planning group of the Ministry of Agriculture is being strengthened by technical advisors from FAO and USAID. Sector studies are being undertaken by a firm of consultants into agriculture, water resources, transport and telecommunications. Those in agriculture and water resources are designed to produce short and medium-term programs for development and priority programs for immediate development. 2.03 The Bank undertook an agriculture sector review in depth in 1965 as part of a Bank economic mission. Resulting from this, a Bank identifi- cation mission to Ghana in October/November 1966 identified a number of agricultural projects. The project now proposed is the first for Bank/IDA finance in the agriculture/fisheries sector; the Bank/IDA is, in addition, currently assisting the Government in the preparation of an oil palm and a cocoa project.  - 2 - 2.o4 Ghana has a low per capita consumption of animal protein, approxi- mately 65% of that which nutritionists consider adequate 1/. Fish, both imported and domestically produced, contributes 68% of animal protein supplies. The Government seeks to increase the local production of animal protein and to reduce imports which now account for 31% of total supplies. The further development of fisheries would materially assist in achievement of these objectives. 2.05 With its coast about 50 north of the Equator, Ghana is favorably located in relation to Atlantic deep sea fishing grounds, particularly those of Southwest Africa and the Canary Islands. Further, the coastal waters of -<-^aare rich in fish, particularly sardinella, locally called "herring". Mrost irportantly, Ghanaians are very enterprising fishermen. Current Position of the Fishing Industry 2.6 Ghana has become one of the largest producers and consumers of marine fish in tropical West Africa, and its 1967 production of 92,000 tons, three times its 1961 production (Annex 1), is exceeded only by that of Senegal. 2.07 Consumption of fish has risen erratically from 78,000 tons in 1961 to 113,000 tons in 1967 2/; an overall annual growth rate of between 6% and 7%. The Government forecasts the long-run growth of demand to remain the same. Demand could be considerably increased, however, by a wider distri- bution of fish beyond the coastal areas to the north of the country (Annex 2). In the past, demand exceeding local production has been met by imports, mainly from foreign fishing vessels landing their catch for direct sale on the Ghanaian market. Such direct landings have accounted for 25-30% of total consumption in the past, but decreased sharply to about 14% in 1967. Since imports are subject to stringent controls they provide no reliable indication of overall demand. 2.08 Domestic fishing operations involve a wide variety of fishing vessels and fishing techniques and employ some 60,000 full-time and about 6,500 part-time fishermen. Operations are based on 195 village centers and 220 beaches in addition to the port of Tema. Map 1 shows the dispersal of operations over the Ghanaian continental shelf 3/. The present composition 1/ Republique Francaise: Societe Centrale pour l'Equipement du Territoire Cooperation: "Etude technique et economique comparee de la distribution du poisson de mer dans less pays de l'ouest africain: Ghana". 2/ These figures relate only to marine and not to freshwater fish; statistics on the latter are unreliable. With the exception of Volta Lake production, the quantities of freshwater fish are too small to be material. All other references to fish production and consumption in this report are similarly restricted to marine fish except where specifically indicated otherwise. 3/ To the 100 fathom depth line (l4ap 1).  - 3 - of the fishing fleet is outlined in Annex 3. Major changes over the last six years have been the introduction of large, long-distance trawlers, now numbering 47, and an increasing number of smaller mechanized inshore purse seiners, operating mostly from the fishing port of Tema. The traditional fleet of about 10,000 dug-out canoes is still a major source of fish supplies but, whereas in 1961 it provided almost all domestic production, in 1967 it accounted for only 43%. Deep Sea Fishery 2.09 Encouraged by its strategic location to the deep sea fishing grounds off West Africa, which were being exploited internationally, Ghana decided in 1961 to give priority to the development of a deep sea fishing fleet. As a result of this the present fleet comprises 47 vessels between 75-300 ft. However, the expansion has been too rapid and the fleet has not been efficiently operated. Therefore, current government policy is to hold back on further expansion of the deep sea fleet while raising the produc- tivity of the existing fleet. Further details of deep sea fishing vessels are given in Annex 4. Inshore Fishery 2.10 Some 10,000 dug-out canoes and over 200 mechanized vessels of 27 to 45 ft fish in inshore waters overlying the Ghanaian continental shelf. Additionally, some 1,800 beach seines, and many cast nets and traps are operated directly from the beach. The inshore catch accounted for over 66Z of Ghana's domestic production in 1967. The canoe fleet, while not expanding, is still ixportant, especially during good sardinella seasons. Its pro- duction has remained relatively stable for some years and its contribution to inshore fish production is declining in relation to that of the growing fleet of mechanized, plank-built inshore vessels. The latter fleet has been built up since 1953, and is comprised largely of vessels of 27-30 ft in size. These vessels, while representing an important first stage in the modernization of the Ghanaian fleet, have only a slightly better fishing range than the canoes. Accordingly, over the past 5 years there has been a growing preference for 40 and 45 ft vessels of which about 80 are now in operation. These larger boats have a higher profitability due to their longer range, greater capacity, and their capacity to use large modern purse seines of much greater catching power than the nets used by the smaller boats. Ghanaian inshore fishermen are highly skilled and have acquired considerable proficiency in the use of this modern equipment. 2.12 The greater part of the income of the inshore fishing fleet derives from the sardinella season, July to October. During this period upwellings of colder water occur which attract the sardinella to the surface where they can be caught with the gear of small vessels.  -4- Freshwater Fisheries 2.12 Fishing is carried on in numerous rivers, dams and small ponds. By far the largest freshwater resource is the 3,000 sq miles of artificial lake created by construction of the Volta Dam 1/. A rapid and considerable migration of fishermen to the lake is taking place and approximately 3,000 canoes are now operating there. The canoes are planked boats of 20/30 ft in length which operate gill nets in the shallow fringe waters of the lake. Bottom fishing is precluded by submerged vegetation, and so far there has been no commercial exploitation of the much deeper water in the center of the lake. Fish caught find a ready market in villages near the lake, and it is estimated that 10,000 - 12,000 tons are caught annually by these simple traditional methods. Since the lake is an entirely new body of water it is not yet possible to determine its fisheries potential, but this is being investigated in the Lake Volta Project (para. 2.14(b)). Tuna Transshipment 2.13 Ghana has a well-established transshipment trade in tuna which is landed by foreign vessels fishing off the West African coast, and sub- sequently shipped abroad. In 1967 such transshipments amounted to nearly 8,000 tons. During the early part of 1968 this trade was running at double the 1967 level. Hitherto, Ghana has not participated directly in tuna fishing. However, one of the private local companies is contemplating direct participation (para. 2.28). Fisheries Research and Training 2.14 Three Government research programs related to fisheries have been established, with the assistance of FAO/UNDP(SF): (a) The Fishery Research Unit, concerned with marine stocks. (b) The Lake Volta Fisheries Project, concerned with the fishery development of the Volta Lake. (c) The Food Research Center which is attaching high priority to the development of the fish-based food industry. 2.15 Two simple training course, for inshore boat coxswains and engineers respectively, are provided by the Fisheries Department at Takoradi. These provide training in elementary navigation and pilotage, and in the operation, maintenance and repair of small marine diesel engines. Forty- eight engineers and 107 coxswains were trained during 1967. At present, there is no institution in Ghana providing training for the deep sea fleet. Until now such training has been provided abroad, and so far 153 fishermen 1/ IBRD Loan No. 310 GH  have been, or are being trained, in IVorway, the United Kingdom and the U.S.S.R., in fish processing, engineering, navigation and radio. Under a recent bilateral assistance agreement, Norway will help to establish special courses at the Nautical College near Accra. These courses are expected to start in 1969. Fisheries Administration 2.16 Primary responsibility for fisheries is vested in the Fisheries Division of the Ministry of Agriculture. Many matters directly affecting fisheries, however, fall within the responsibility of other ministries: foreign assistance in the fisheries sector is under the Ministry of Economic Affairs; port and shore facilities for fishing vessels at Tema and Takoradi come under the Ministry of Communications; the construction and sale of fishing boats is under the Ministry of Industries; and the provision of credit finance in the fishing industry is under the Ministry of Finance. Fortunately, development of the inshore fishery does not appear to have suffered as a result of this diversified responsibility. Fishing Boat Construction in Ghana 2.17 The traditional Ghanaian fishing craft is a dug-out canoe, 25 to 40 ft long with a beam of about 4 ft. The canoe is built in the forested hinterland and brought to the coast. In 1952, as a part of Government's efforts to develop and modernize the fisheries industry, a Government-owned boatyard was established in Sekondi for the construction of plank-built 27 ft length fishing boats powered with inboard diesel engines. In 1962, a second Government boatyard was established in Tema to construct boats of 40 ft length and upwards. Both yards now construct 40 and 45 ft vessels, although some 30 ft boats are still being constructed at Sekondi (Annex 6). 2.18 The 45 ft boat appears to be very suitable for Ghanaian inshore fishing operations. However, the current design of this boat has several construction disadvantages. It is complicated, time consuming and requires the use of expensive copper nails and brass screws. Moreover, the local hardwoods, required because of their resistance to marine borers, often split when bent into the curves needed in the round-bottom hulls. Conse- quently, the introduction of e. hard chine hull design 1/, requiring less costly materials, less craftsmanship and less construction time, is desir- able and is proposed for project vessels. The boatyards have wanted to modernize their designs in this way for some time but have lacked the neces- sary expertise. 1/ Descriptions of, and differences between, the round and hard chine construction (which involve, respectively, "U"-shaped and "V'-shaped hulls) are given in Annex 8 and in Drawing 2.  6 2.19 Until July, 1968 the boatyards were run as a statutory corporation, the State Boatyards Corporation, and enjoyed considerable autonomy. The State Boatyards Corporation subsequently became a division, the Boatyards Division (BD) of the Ghana Industrial Holding Corporation (GIHOC). GIHOC was formed to amalgamate State-owned manufacturing enterprises for reasons set out in para. 4.07 and Annex 6. BD is currently the largest producer of plank-built vessels in tropical Africa. 2.20 BD has been operating effectively and since 1965 has made net profits on its operations despite a number of difficulties, including a shortage of foreign exchange for import of parts, which has caused periodic underutilization of capacity. Despite the resulting relative inefficiency, boat costs compare favorably with those of foreign boats that could be imported. This is largely because: (a) timber is relatively cheap; (b) high quality labor is cheap; (c) apart from a nearby African country which does not have the advantages of (a) and (b) above, foreign builders would have to meet the high costs of freighting vessels from Europe or Asia. Foreign competition and prices are discussed and quantified in Annex 6. It is unlikely that foreign yards could deliver boats to Ghanaian fishermen at lower prices than BD. 2.21 Over the last two years, BD management has acted effectively in overcoming its problems and delivering as many boats as possible to fishermen at reasonable cost. There have, however, been some minor deficiencies in BD administration, notably in the financial and cost accounting systems; but these have not been serious and their improvement would not be difficult. Fisheries Credit 2.22 Credit to fishermen in Ghana provides for the purchase and equipment of fishing craft. The credit institutions involved are the Fisheries Division of the Ministry of Agriculture, the Agricultural Development Bank and, to a lesser extent, the National Investment Bank. Non-institutional credit is also uvailable, although at a high cost; the principal source being the "rmammies" who dominate the marketing and distribution of fish (para. 2.24). 2.23 In the past, the Fisheries Division played the paramount role in fisheries credit. Currently, the Agricultural Development Bank (ADB) is the most important fisheries credit institution for the inshore fleet (Annex 7). Since mid-1967, the Government has allocated funds to ADB for lending to purchasers of boats from BD. Because ADB lacks experience in this type of lending activity, and has little knowledge of the fishermer, it relies on BD for the screening and selection of credit applicants, and for the collec- tion of repayments. For these services, BD receives a margin of 1