Supply Chain Development in Tanzania

41675 2004 Executive Summary: Supply Chain Development in Tanzania Conceptual Framework: A review of recent development experience suggest that "liberalization" stimulates economic growth and that economies which are lightly regulated tend to grow faster than more intensely regulated economies. This is so apparently because markets allow private agents to direct scarce resources to their most productive applications when markets are unimpeded and unobstructed in their operation. This "superior targeting capability" is a direct consequence of competition and in particular of the kind of competition which takes place among independent private agents who bid for resources in open and contestable markets. Minimally restricting competition among producers assures under ideal circumstances that resources flow to their best and most efficient use. These ideal circumstances apply, however, only when information is equally available to buyers and sellers; when capital flows efficiently to both the "buy" and "sell" sides of transactions; when product storage and post harvest holding facilities are equally available to buyers and sellers; and, finally, when markets for management capabilities and for third party services also operate efficiently and equitably on both the "buy" and sell "side" of transactions within supply chains. When these conditions do not hold risks are unequally shared between buyers and sellers and opportunities to realize excessive profits, in the form of rents, accrue to those commercial partners who hold superior positions within chains---particularly within traditional chains whose linkages are based on one-off, arms length transactions. Under such circumstances incentives cease to be effective in motivating trading partners who enjoy superior positions within chains to invest in best technologies, to reorganize chains into more efficient industrial structures and to implement best management practices. Under circumstances where the advantages of " liberalization policies" tip over into disadvantages, trading partners who enjoy a superior position have the option of retreating into commercial safe harbors within the chains that they operate. In these safe harbors rents can be collected without contest and above average returns realized without putting fixed capital at risk. From these superior positions chain integrators are able to assign risks to other participants who are less well able to manage them effectively. Under ideal circumstances market prices established among equally well informed and equally well financed buyers and sellers reflect the marginal value of all goods and services traded. Unconstrained competition and the efficient resource allocation that follows from it should, over a significant period of time, accelerate economic growth. However, these "ideal" market conditions often fail to become operative in developing countries. Hence, efficient resource allocation is by no means assured when private sector agents are left to their own resources, unconstrained and unregulated. Indeed, as we find with the thee case studies reviewed here, the initial competitive conditions--the conditions that occur immediately upon loosening direct government involvement in specific sectors----matters a great deal in determining how efficiently resources are allocated to accelerate growth and to increase competitiveness within specific sectors. Under real world circumstances, government interventions themselves are often the cause of initial structural imbalances and subsequent inequities. Under circumstances where initial structural imbalances occur within supply chains, disengagement on the part of government may not suffice to move subsequent industrial organization toward pro-poor structures and more equable chains. Indeed, subsequent  regulation and/or strong incentives may be required in order to reinitialize the system and hence facilitate the escape of disadvantaged commercial partners from what otherwise become a poverty trap. For economies who are seeking to accelerate their economic growth and at the same time assure that that growth is pro-poor, cooperation in the accumulation of social capital among trading partners can be almost as important as competition in assuring the resources are efficiently allocated. Development economists have much less to say about cooperation than they do about competition. Why is cooperation important? Cooperation is essential to assure that transaction costs, incurred between trading partners, are minimized. Wealth does not accumulate as quickly or, indeed, at all in a high transaction cost sector. Moreover, competition itself is learned within sectors through some implicit or explicit form of cooperation among competing parties. Thus, cooperation is important first and foremost in establishing norms and standards for legitimate cooperation---competition which is socially beneficial in its net impact. Cooperation is essential, as well, for assuring that redundant commercial processes are avoided, that institutions ( including both market and supply chain institutions) are organized in ways that allows products, information, payments ( and credits) and ownership rights to flow efficiently among trading partners and that strategically interrelated industrial processes are allowed to combine into efficient industrial organizational structures. Increasingly, private companies compete with other private companies not on a one-on-one basis but as parts of larger industrial systems. Indeed, they compete as parts of supply chain systems. Supply chain systems that have rent collecting activities imbedded within them cannot compete effectively in global markets where new competing supply chain surface every year from new and unexpected directions. Innovative supply chain structures, moreover, are increasingly the primary means for creating and sustaining competitive advantage. Witness the global supermarket revolution which is underway in Tanzania and which is quickly substituting sophisticated supply chain structures for traditional farm market institutions and traditional trading chains. Importantly as well, supply chains have become the principle agents for the transfer of technologies and of advanced management techniques In the 21st century it is supply chains that provide the basic mechanisms through which supply and demand are matched in retail end markets which are located some distance from where products are produced. For all these reasons cooperation in the form of refined industrial structures matters a great deal for development. The study which follows deals with these and related issues in the context of the development of the agro-industrial sector of Tanzania's economy. First, however, some background information on supply chains....what they are and what they do......may be useful to set the stage for the more specific-to-Tanzania findings that follow. What then are supply chains? Supply chains are forms of industrial organization, which link together economic agents all of whom add value to primary products as these products move from primary production points to retail markets. Supply chains operate primarily within specific products or commodity sectors. Indeed, they are the industrial organization that informs specific product sectors. Supply chain participants typically include the producers of primary products, value adding processors, manufacturers, intermediate merchandisers and retailers. Importantly, supply chains are supported by specialized third party service suppliers who furnish essential services of various kinds to chain participants. These third parties operate on the periphery of most chains and their relationship to chain participants is typically arms length and transactional. Both the level of competition among third parties and the state of customized service development greatly effect the level of transaction cost absorbed by chain participants. Thus the state of third party service providers materially effects supply chain productivity and agility. Arms length relationships between service providers and supply chain principals evolve over time as the need for more specialized and more dedicated service support intensifies. Thus, in response to external  competition supply chain principals and third party service providers sometimes share risks with one another in ways which reduces the net investment risk for the entire chain. Thus, they form service partnerships of various kinds. Risk sharing based on the assignment of specific risks to specific supply chain partners who are best equipped to manage them is an important source of competitive advantage which supply chains provide. In high risk economies like Tanzania's supply chain organizational structures can provide a natural immune system against multiple categories of systematic risk. Like other forms of industrial organization supply chains establish and enforce rules which effect the behaviors and the performance of individual economic agents who become principals in the chains in which they participate.. Together with corporations (which create value by coordinating multiple value adding functions efficiently and by accessing different forms of investment capital efficiently), product markets and industrial clusters, supply chains populate the diverse ecosystems of most developing economies. Importantly, in the ecosystems which they populate they either enhance or degrade industrial competitiveness depending on the way that they are structured, depending on their collective capacity to absorb new productivity enhancing management methods and technologies and their adaptability to respond quickly to new types of competition. The least developed forms of supply chains and the form which predominates in most sectors of Tanzania's economy involve "arms length", transaction relationships among a set of economic agents whose chain relationships are essentially reinvented with each individual buy/sell transaction. These are high cost and high risk forms of industrial structure. Within these structures risks tend to reside with the weakest link, instead of being assigned to those links which are best able to manage them. The supply chain structures found within specific economies can and do have a significant impact on economic development. How do supply chains help to reduce transaction cost and transaction risks? Supply chains allow participants to impose contingent claims on each others and to enforce those claims effectively. Mutual and contingent claims are enforced in one of four primary ways: i) though contracts which contain incentives for risk sharing and for efficient process coordination; ii) through unified corporate control and joint or cross ownership of corporate assets; iii) through the joint development and management of specific supply chain assets, including distribution channels, brands and order fulfillment systems; increasingly, iv) through the mutual adoption of common IT and business management and control software, and finally v) through the development of social capital within trading communities and the leveraging of that capital to effect compliance on the part of individual agents. Compliance is induced typically under threat of exclusion from the trade or other forms of social sanctions. One of the reasons that supply chains seem to develop more often among ethnic minorities in Tanzania is the social capital that accumulates among principals who share rich community ties. Different forms of organizational adhesion apply in different competitive circumstances. Supply chain development is highly circumstantial. Since supply chains are typically anchored at both their production and the consumption ends in contestable markets, under normal competitive circumstances prices at both the primary production and the retail distribution end of chains are market determined and set independently of the policies of the chain. Under these circumstances it is the efficiency with which chains themselves operate more than any other single factor that determines both the competitiveness of chain participants and the well being of affiliated, primary producers who are, in the Tanzanian context, small scale farmers or small scale fishermen. Supply chains operate more or less efficiently depending on the velocity with which working capital absorbed within the supply chain turns over or, said another way, depending on the return which is realized on end-to-end investment in working capital. Supply chains which  are effectively integrated move products quickly, they move them at low cost and with a minimum of physical loss. Supply chains create internal incentives which encourage the rapid movement of goods, the minimization of excess inventory and the efficient use of working capital. Their effectiveness in integrating the work activities of multiple economic agents who are broadly disbursed geographically is determined, in significant part, by the kinds of control systems used within chains, as well as by the effectiveness of the incentives which encourage collaboration and process coordination among separate agents. What is the relationship between supply chain development and poverty alleviation? Three parameters are crucially important in determining the "pro-poor" or the "anti-poor" effects of specific supply chain structures. These three defining parameters include: i) efficiency; ii) adaptability; and iii) equity. Supply chain "efficiency" relates to the speed and the integrity with which products, information, ownership rights and credit ( or cash) more through supply chains. From one perspective supply chains can be viewed as conduits through which these four flows move more or less rapidly and more or less securely. "Adaptability" has both a short term and a long term aspect. In the short term adaptability relates to the flexibility with which supply at one end of the chain is matched with demand at the other end. To make this point in more operational terms, adaptability relates to how production is scheduled and how closely it is matched with demand. Over the longer term adaptability relates to how efficiently new technology is incorporate into chains, to how quickly new products are designed and delivered to market, and to how efficiently basic business models are changed in response to changes in the business environment. For example, business model changes may relate to how responsively critical process steps within chains are either in-sourced or out-sourced depending on where essential work can most efficiently be performed or how quickly new niche markets can be accessed through strategic affiliation with new distribution channel partners. Finally, supply chain "equity" relates to the economic power relationships which prevail within chains. Operationally this parameter relates to whether information and working capital credits flow with equal efficiency in both directions within chains, to whether the efficiency with which risks incurred by individual participants within chains are assigned to chain participants who have the best capability to manage these risks, to how open are supply systems to new participants and, finally, to how contestably chains themselves are governed and to how they are organized in ways that benefit one set of participants over others. Relative returns on working capital among individual participants typically reflect the prevailing economic power relationships within chains. Equal returns among chain participants signify high levels of equity. Whereas, skewed returns signal low levels of equity. Thus, for example, chain integrators who originally organize the industrial structures of chains typically enjoy higher returns than do passive chain participants whose participation is more subject to possible competitive replacement. What holds supply chains together? Supply chains are typically integrated in one of four ways. Said another way, the organizational " glue" which binds value adding activities together within a single chain include, either: i) ownership or cross ownership interests among chain participants. Thus, chains expand their vertical domain within vertically integrated corporations through some combination of in- sourcing, merger, acquisition or joint venturing; ii) agreement to act jointly and to coordinate production/ distribution/ merchandising processes across the economic boundary lines of individual agents. Contracts in the form of marketing franchises, long term supply agreements and preferred vendor contracts are examples of this form of integration ; iii) shared assets including both fixed and network assets. Assets can be differentiated by the function they perform. Supply chain assets typically facilitate the work of linking production functions to sales functions. Productive investment in this category of assets depends on the strength of the linkages which exists among end to end participants in chains. Thus, investment preference for production assets signals weak supply chain linkages whereas investment in distribution, order fulfillment and inventory management assets signals strong supply chain linkages. Increasingly, it is the joint and shared use of IT networks, process control software, resource management systems and other "management ware" which  distinguishes the "inside" from the "outside" of supply chain structures; iv) social capital developed between and among trading partners and end to end commercial agents. Social capital is important in reducing transaction costs and in setting the background conditions for productive investment in other forms of supply chain assets. Social capital takes, however, multiple forms. To take one example: One form of social capital are standards for value differentiated products or product quality grades which are shared among trading partners. These standards together with the quality control systems which preservation value grade distinctions are critically important to improving chain competitiveness. Similarly generally accepted terms and conditions for product credit sales and institutions which create and preserve security interests in product inventories can substantially reduce supply chain financial risk and improve chain bank-ability. Social capital is typically developed within a community of trading and/or processing partners with the objective of excluding value subtracting agents and value subtracting process steps from chains and hence improving the residual returns on working capital realized by the remaining value adding agents. Where social capital is depreciated supply chains operate as ` zero sum' or as ` negative sum' games among participants. Reversing this situation and creating incentives for social capital accumulation is one path that can lead to escape from a poverty trap. What is the relationship between individual companies, product markets and supply chains? The role of supply chains is critical both in enhancing the competitiveness of individual companies and in assuring the efficiency of specific product markets. Without effective integration into supply chains individual economic agents experience high transaction costs. Thus, supply chain integration almost always reduces transaction costs by improving coordination among participants and by excluding rent collecting ( value subtracting) agents from participating. Importantly, individual agents are limited in their ability to enhance their own productivity by the limited number of factors within the control of their managements. Supply chain integration extends effective management control forward to retail customers and backward to primary supplies of essential inputs. Efficiently designed chains always improve access of participants to information, to customers, to productivity enhancing technology and to additional degrees of freedom with respect to potential management responses to unanticipated adverse circumstances. Supply chains allow producers both to differentiate their products based on quality parameters and to adapt their product offerings to changing consumer demands Supply chains likewise improve the efficiency of the markets that they serve. Without being effectively supported by supply chains, markets fail to clear at production levels where marginal cost and benefit are equal. Supply chain systems schedule production and manage inventory so that demand and supply balance at the retail end of chains. Importantly as well, when supply chain support is weak markets are limited in their geographic scope and are products are further limited in their ability to adjust to dynamic price changes through in-effective spatial and temporal arbitrage. When chains fail to preserve and protect product value which results from quality differentiating product characteristics, refined market segments cannot emerge and the wealth creating opportunities that niche market development can open are simply foreclosed. The bottom line is simply this: Effective integration of value adding activities through the development of efficient and flexible supply chain organizational structures is essential to rapid economic development. In its need to improve both the efficient and flexibility of its supply chain structures, Tanzania, is representative of many other African countries. Study Objectives:  The study which is summarized below was undertaken because the Government of Tanzania has become increasingly concerned about the growing differences that exist between farm-gate prices, at one end of traditional supply chains, and retail or export prices, on the other end. Indeed, evidence cited in the study suggests that at least for one important farm sector marketing margins were increasing....this in a sector which has been " liberalized." The policies of market liberalization and of regulatory disengagement implemented by the Government of Tanzania over the past ten years may, indeed, have lead to an increase in marketing margins for maize because of the structural effects these policies have had on farm-to-market chains. The implication of increasing farm-to-market price spreads are that transaction costs within traditional farm to market chains are growing and that value is being somehow removed from these chains. The initial objective of this study then was to provide an etiology for these "rent" collection activities. If rents were being removed from specific product/ commodity chains what was the cause or causes? Thus, one line of inquiry was to determine whether some form of monopoly control had taken effect over specific key activities in farm to market chains---activities which for some reason had become closed to contest and to new entry. Another potential set of explorations involved determining whether redundant processes had somehow become structured into farm to market chains---processes which removed more value than they created within chains. Thus, for example, one hypothesis was that redundant trading was taking place because information flows among chain participants was asymmetric or because credit was unequally accessible to different categories of traders. Still a third line of inquiry was that the provision of third party services inefficient and that for various reasons markets for chain support services had failed. Thus, for example, it might be the case that transport service providers for a number of reasons had failed to price on a marginal cost basis or that intermodal competition was insufficient to assure that the limited supplies of rail or barge services were being allocated efficiently. However, if initial set of objectives provided an initial entry point, the supply chain studies that followed lead to other objectives that revealed themselves only in the context and the process of carrying out the study. The comparative nature of the study, provided a opportunity to assess what forms of government intervention appeared to be most effective in guiding the structural development of specific sectors of Tanzania's economy. A second objective than was to assess what policies appeared to be most effective and which least effective in guiding pro-poverty growth. As it turns out the regulatory role which government plays at the level of specific commodity or product sectors appears to have a major effect not only on chain efficiency but also on chain adaptability and equity. Still a third objective was to envision a program of post-liberalization, post-privatization reform for specific sectors of Tanzania's economy. This agenda was to be based on the findings that emerged from this study. Study Approach: The study which is summarized below focuses on three supply chain structures which the Government of Tanzania selected jointly with the World Bank for critical analytic scrutiny. The basis for selecting these three chains was threefold: i) The three should provide a degree of diversity in the competitive market challenges which each chain faces in accessing either domestic, regional and/or global markets or some combination thereof; ii) The three should provide a degree of diversity in their level of organizational development and in the initial conditions under which each chain was launched or re-launched as a result of a shift in government policy, privatization action, market  liberalization, etc.; iii) direct and significant effects derived from the structure and efficiency of each chain selected should be significant on the welfare, income and potential for asset accumulation of poor farmers, factory laborers and fishermen. On this basis three products/ commodities were initially selected. These were discussed with and ultimately agreed upon with the Government of Tanzania. The three include supply chains through which maize, fish and sugar move from producers in Tanzania to market. The table below summarizes the basis on which these chains were assessed and subsequently selected for further study. Number of Primary Ratio of Policy/ Degree of Annual Degrees of Poor Markets Farm Regulatory/ Competitiveness Rate of Freedom Families into Gate or Investment vis a vis Production Available to Involved which Fisherman's Conditions Alternative Growth Primary in Production/ the Dock Sources Producers, Distribution Product ( for fish) Which Allow is Sold. Price to Them to Align Retail Themselves Price with Alternative Chains Maize 500,000 local Still to be Liberalization of the sector and minimal erratic Limited government disengagement from direct and added interventions in maize markets except regional for the emergency food program. No system of governance or of consultation exists between either the Food Security Department or other branches of government involved with maize markets and the private sector. Fish 110,000 local Still to be The Fisheries Act sets out the legal significant 3-4% Expanding framework for the environmental and and added economically sustainable management of global fisheries in Tanzania. It provides specific authorities of government to determine who can fish, what fishing and processing methods can be used and what commercial methods can be used to process and trade fish. The Act does not create any specific counterpart institutions in the private sector with whom the Fisheries Department is required to consult or liaise. Sugar 90,000 local Still to be moderate 5% Open and added Expanding  The methodology used to complete the ESW project is described in detail elsewhere in the study. Very briefly, however, the approach taken was to apply systematically a methodology for measuring and assessing the economic value addition which takes place in each link in each end-to-end supply chain. To this end, each chain was first mapped into all of its component value adding" economic activities. Next, cash flow requirements or " activity costs" were estimated for each value added process step in each chain. In addition, the timing of each of these working capital investment activities were estimated, so that a full cash in to cash out cycle was constructed for each chain. At the same time, redundant, non value adding and/or inefficient processes were identified and isolated. Comparisons were made with respect to the unit cost of providing essential activities across production platforms where these comparisons were available. On this basis, inefficient processes or non competitive third party provided services were identified. Returns on working capital were then calculated for the entire end-to-end chain and for the activities of each discrete economic agent within the chain. On this basis, the efficiency of the entire end to end industrial structure was determined and the relative economic power of each of the principle agents in the chain determined. Next a set of " what if questions" were posed concerning alternative chain structures, improved process efficiency, new market and other institutional developments, etc. Again returns on working capital were calculated in response to each " what if scenario." On the basis of this kind of interactive testing of initiatives, reforms and industrial restructuring initiatives an agenda of policy recommendations, initiatives and tactical programs emerged. In addition, an assessment was made of the adequacy of key institutions which support efficient chains in specific sectors. A great deal of supply chain development involves the accumulation of social capital in form of shared quality standards, shared commercial rules and trading protocols, trusting and transparent transactions and mutual support among cooperating members of a production/ processing/ merchandising chain. Institutions are the reservoirs that contain social capital. Thus, an important element of the study involved the assessment of existing institutions. Thus, for example, the study found that relatively few mezzo level organizations ( e.g. organizations which fall half way between public sector organizations and individual private firms) have emerged in Tanzania. The prevailing cultural inclination is to compete and to act on private access to opportunity and on privileged information. Thus, a set of negative sum games have been organized among trading partners who perceive that the best way to succeed in business is to diminish the value received from or deliver to other trading partners. Reversing this prevailing predilection is only possible through a series of social capital accumulation exercises and through institutional renewal. The end result will be the partial transformation of Tanzania's negative sum game commercial culture into a culture that supports a positive sum game among supply chain partners. Fish Supply Chain Two very different supply chain systems, which support lake and ocean to market commercial operations, co-exist in Tanzania. The two systems serve two distinct markets: one international and one domestic. One of these supply chain systems is sophisticated. It entails low transaction costs, is well invested and falls just a half step below best international practice. The other is rudimentary in technique and technology and is poorly organized. It entails high transaction costs and incurs substantial risk for fishermen and boat operators. The amount of investment in the domestic supply chain, moreover, is de minimus compared to the level of investment in the parallel export chain. The same primary products move through both channels. However, the way in which they are processed and marketed is quite different. Some of  the markets into which Tanzanian fish move are domestic local markets and others are international markets. A substantial portion of Tanzania's fish move in a fresh product form, some move to market in a fast frozen form and still others are processed and distributed in a salted, smoked or cooked form. Distinct distribution channels access each of these two markets. Thus, fish distribution channels in Tanzania vary in sophistication from "near-World Class" to rudimentary, and from "best in class" food safety practice to "hit or miss" practices which are neither controlled nor regulated. Moreover, the service industries which have developed on the periphery of these two supply chains have also developed along separate tracks. Little cross over service provision and even less common use of assets ( e.g. cold chain, warehousing, information systems, etc.) takes place beyond the point at which primary fish products are landed, sorted and sold. In the chain which supports the domestic market, for example, transactions are executed directly between fishermen and a relatively small number of retailers, wholesalers, buyers agents and, even, consumers who buy at fish landing sites and pay for them on a cash and carry basis. Multiple buy/sell transactions separate producers from consumer. Market intermediaries in the domestic market are highly specialized by type of fish and by end market. They typically resell the fish they buy into specific markets in which they believe their superior knowledge and access to local commercial networks can realize above market returns. In many parts of Tanzania, fish marketing is limited to the local village in which fishermen are domiciled or, indeed, to neighboring communities within walking distance. Little trading takes place in support of long distance commerce. As a result no integrated market exists in Tanzania for fish. Wholesale markets develop where a minimum level of logistics and transportation competency develops and where price information services emerge. The two primary commercial clusters where these two pre-requisites exist in Tanzania are situated in Mwanza and Dar es Salaam. Thus, the Banda Beach Market in Dar es Salaam is probably the most sophisticated market center in the country for reef fish. Importantly it is also the primary wholesale center for reselling into Dar es Salaam which is the largest retail market in the country. The Kirumba Market in Mwanza has assumed a parallel function for Lake fish. It has become the logistics center, the focal point for price discovery and the primary base for wholesalers who are trying to develop a national market for artisan processed fresh water fish. In both of these market centers wholesalers, retailers, storehouse operators, transport operators and retail customers co-mingle and cooperate in forming the most efficient of the ad hoc domestic supply chains that serve Tanzania.. The Banda market handles more than 10, 000 tons annually of a variety of fish products. The Kirumba market handles 15,000 tons annually, including mostly artisan processed dagaa and Nile perch. In both markets larger lots are reserved for sale to wholesalers recognized by the market itself and are auctioned to these wholesalers using a set of rules that conform approximately to Dutch auction principles. Smaller lots of fish are sold through retail market stalls and informally through other wholesalers. For these transactions prices are negotiated on a sale by sale basis. Both markets acts as a focal points for price formation. Competition on both markets is quite intense. However, prices are not effectively transmitted beyond these two market centers and the governance principles which apply to trades within the two centers continue to advantage local traders vis a vis others. Other markets for fresh fish remain under developed and local. With that said, it must be pointed out that the wholesale link in the domestic supply chain for fish products is under developed. Thus, for example, only basic ice cooled surface transport exists to move fresh fish long distances. Significantly, no inter coastal or cross Lake shipping capacity, interior air or rail services operate to support the national fish trade. No security interest are created in fish inventories, no  intermediated transfers of fish products take place. Rather all trades are on a cash and carry, quid pro quo basis and hence require an expensive amount of time to negotiate. No regulatory framework exists either to protect customers or buyers/ resellers with respect to trading protocols, contract enforcement and/or liabilities related to safe food handling practices. Moreover, only limited market information is available and no third parties have entered the market for market information services. In other words, many of the essential components required to develop an integrated national market are missing. Hence, trading in fish remains an inefficient activity with high product losses, high trading risks and extremely high transaction costs. The only national market which has emerged to date is one for processes fish, e.g. dried, salted, fried and otherwise preserved fish products. With that said a growing market is developing within Tanzania for fresh fish. Supermarkets and fast food chains are leading this market development. In addition, an array of fish dealers, peddlers, small scale fried fish processor, fish retailers and restaurant owners buy fresh fish every day either directly from fishermen or indirectly through agents or, indeed, buy from each other. The short economic life of fish products requires expeditious trading, internal quality controls and rapid disposal of the product once it is purchased. Whatever other limitations they may have participants in the domestic fish supply chain clearly understand the need for expeditious trading, transporting and sale. Because of a lack of recorded data, the precise number of small-scale traders involved in the fish business is unknown. However, a rough estimate provided by one knowledgeable industry participant has this number exceeding 60,000. An informal survey of customers at the Kirumba market in Mawanza revealed that, with the exception of special species, most of the fish catch was consumed locally. From this survey the study team inferred that the distribution of fish products is on a small