LAKE VICTORIA FISH SUB-SECTOR STUDY - richard o. abila

Prepared by: Stanley Karuga (Team Leader) Dr. Richard Abila Muli Musinga Richard Asiaho

LAKE VICTORIA FISH SUB-SECTOR

STUDY

DELOITTE, TOUCHE TOHMATSU EMERGING MARKETS KENYA BDS PROJECT PREPARED UNDER USAID CONTRACT NO ---------

DRAFT REPORT OCTOBER 2003

FISH SUB-SECTOR STUDY: DELOITTE, TOUCHE TOHMATSU EMERGING MARKETS –KENYA BDS PROJECT

PREPARED BY: STANLEY KARUGA (TEAM LEADER), RICHARD ABILA, MULI MUSINGA AND RICHARD ASIAHO.

TABLE OF CONTENTS

1. INTRODUCTION.................................................................................................................................. 4

2. OVERVIEW OF FISH SUBSECTOR.................................................................................................. 5

3. TYPES OF FISH AND MAIN NATIONAL PRODUCTION AREAS.............................................. 7

4. NILE PERCH EXPORT MARKETS AND SUBSECTOR TRANSFORMATIONS...................... 8

5. MAIN FISH SPECIES AND KEY PRODUCTION AREAS AROUND LAKE VICTORIA....... 11

5. SEASONALITY OF FISH PRODUCTION....................................................................................... 12

7. FISH MARKETS.................................................................................................................................. 13

(I) PROCESSED FISH EXPORT MARKET ..................................................................................................13 7.1 PROCESSED FISH EXPORT MARKET ..................................................................................................13 7.2 ANIMAL FEED FISHMEAL MARKET ...................................................................................................14 7.3 DOMESTIC PROCESSED FISH MARKET ..............................................................................................15 7.4 DOMESTIC HOUSEHOLD FRESH FISH MARKET ..................................................................................15 7.5 DOMESTIC INSTITUTIONAL FRESH FISH MARKET .............................................................................15

8. THE FISH SUBSECTOR MAP .......................................................................................................... 16

8.1 SUBSECTOR FUNCTIONS AND PARTICIPANTS .................................................................................16 8.1.1 Inputs Supply..............................................................................................................................16 8.1.2 Fishing .......................................................................................................................................17 8.1.3 Lake Transport...........................................................................................................................20 8.1.4 Assembling and Grading............................................................................................................21 8.1.5 Road Transport ..........................................................................................................................21 8.1.6 Processing..................................................................................................................................22 8.1.7 Wholesaling................................................................................................................................23 8.1.8 Retailing.....................................................................................................................................24

8.2 FISH SUBSECTOR MAP ....................................................................................................................25 8.3.1 Channel 1: IFP Processors Channel ........................................................................................27 8.3.2 Channel 2: Artisanal Fish Processors Channel ........................................................................28 8.3.3 Channel 3: Fresh Fish Trader Channel.....................................................................................29

9. KEY SUBSECTOR SERVICES AND SERVICE PROVIDERS..................................................... 29

10. GROSS MARGINS AND TRANSACTIONAL COSTS................................................................... 31

11. INSTITUTIONAL AND REGULATORY ENVIRONMENT ......................................................... 32

11.1 MAIN SUPPORTING INSTITUTIONS ..................................................................................................32 11.1.1 Department of Fisheries/Competent Authority..........................................................................32 11.1.2 Kenya Bureau of Standards .......................................................................................................34 11.1.3 Kenya Fish Processors and Exporters Association (AFIPEK)..................................................34 11.1.4 Export Promotion Council (EPC)..............................................................................................35 11.1.5 Kenya Marine Fisheries and Research Institute (KMFRI)........................................................35



11.1.6 Lake Victoria Fisheries Organization (LVFO)..........................................................................35 11.1.7 East Africa for Management of Lake Victoria Resources (ECOVIC) .......................................36 11.1.8 OSIENALA .................................................................................................................................36 11.1.9 Local Authorities.......................................................................................................................37 11.1.10 Micro-financial Institutions ........................................................................................................37 11.1.12 Food and Agricultural Organization (FAO)...............................................................................38

11.2 POLICY ISSUES.................................................................................................................................38

12. SUBSECTOR DYNAMICS ................................................................................................................. 39

12.1 SUBSECTOR DRIVING FORCES ........................................................................................................39 12.1.1 Heavy on Nile Perch for Export Markets ..................................................................................39 12.1.2 Fish Cooling Technology...........................................................................................................39 12.1.3 Animal Feeds Market.................................................................................................................40 12.1.4 Fish Imports from Uganda and Tanzania..................................................................................40 12.1.5 Domestic Urban Demand for Tilapia ........................................................................................40

12.2 KEY LEVERAGE POINTS ..................................................................................................................40 12.2.1 Systems Nodes............................................................................................................................41 12.2.2 Institutional Nodes.....................................................................................................................41

12.3 GEOGRAPHIC CLUSTERS .................................................................................................................41

13. SUBSECTOR CONSTRAINTS AND OPPORTUNITIES............................................................... 42

13.1 INPUTS CONSTRAINTS .......................................................................................................................42 13.2 FISHING CONSTRAINTS .....................................................................................................................42 13.3 MARKETING CONSTRAINTS ...............................................................................................................43 13.4 TRANSPORT CONSTRAINTS ...............................................................................................................44 13.5 PROCESSING CONSTRAINTS...............................................................................................................44 13.6 FINANCIAL SERVICES AND ISSUES ....................................................................................................44 13.7 INSTITUTIONAL, POLICY AND REGULATORY CONSTRAINTS .............................................................45

14. RECOMMENDED INTERVENTIONS AND CLUSTER AREAS................................................. 46

15. ANNEXES ............................................................................................................................................. 47

ANNEX1: ITINERARY.....................................................................................................................................47 ANNEX 2: LIST OF PEOPLE INTERVIEWED..................................................................................................48 BIBLIOGRAPHY .............................................................................................................................................50 SCOPE OF WORK ...........................................................................................................................................50



1. Introduction The Kenya Business Development Services Program (KENYA-BDS) is a five-year program funded by the United States Agency for International Development (USAID) and implemented by Deloitte Touche Tohmatsu Emerging Markets. The central goal of the Kenya BDS program, which commenced in 2002, is “to increase micro-enterprise growth through improved business services delivery”. The program is a microenterprise development program that combines the subsector approach with business development services market development. The main intended program results include; increased rural household incomes; increased sales in selected sub-sectors; increased outreach and sustainability of BDS activities offered by multiple providers to large numbers of micro-enterprise clients; and a better skilled and more competitive MSE sector. The main aim of the program is to work in product markets of high growth potential, and identify market inefficiencies along the supply chain. As critical constraints are identified, the program will facilitate the delivery of appropriate business development services on a commercial basis. This approach will be replicated in 2-3 sub-sectors over the life of project. The “tree fruits” subsector was the first to receive assistance through the Kenya BDS programe, and the relevant activities are being rolled out accordingly. During September 2003, the fish sub-sector was selected as the second area for support, with a focus on fish in the Lake Victoria region. This study entails an in-depth analysis of Kenya’s fish sub-sector whose aim is to provide greater understand of the market dynamics and critical transactional relationships between actors within the subsector supply chain, as well as the relevant constraints to growth for rural microenterprise. In line with the Kenya BDS program approach, the study uses the sub-sector analysis approach in combination with business development services market development. A sub-sector is defined as a network of related firms that transform raw materials into finished products and distributes them through supply channels to final consumers. The approach offers a tool for analyzing and understanding in as great detail as possible all aspects and issues pertaining to a subsector. It offers a framework for rapid and systematic evaluation of subsector constraints and opportunities, subsector dynamics, driving forces, and leverage points, with a view to establishing cost effective interventions to achieve the intended project objectives. This particular report entails the fish subsector study focusing on Lake Victoria as the main source of fish. The study was carried out between 13th October and 7th November 2003, by a team comprising Stanley Karuga (Team Leader), Muli Musinga, Dr. Richard Abila and Richard Asiaho. The study methodology comprised the review of relevant document and field interviews of key horticultural subsector stakeholders. Specifically, the study activities aimed at validating or ground-truthing secondary data through primary research and stakeholder vetting; identifying subsector supply-chain constraints and mapping commercial relationships; and providing greater understanding of key actors participating in the supply chain from a business services perspective.



2. Overview of Fish Subsector The global fish industry has been expanding for several decades emerging as one of the most important sources of livelihood worldwide. Major producers include China (35%), India, Bangladesh, Uganda, Indonesia, Russia, Tanzania, Egypt, Cambodia and Kenya in that order. In terms of exports, Thailand leads with a total value of US$ 4.4 billion followed by China with an estimated value of US$ 3.7 billion. In 2001, world production was estimated at about 128.8 million MT; with marine capture accounting for 64% though it is gradually giving way to inland fishing1. Kenya produces fish from three important areas, which include inland fresh water lakes, natural dams and rivers; marine; and fish farming based on artificial ponds and dams scattered across the country. However, fish and fisheries products are commonly categorized in two broad groups, namely; freshwater fish; marine fish, crustaceans and other marine products. Statistics for the period 1998-2000 indicate that the country produced an overall annual average of about 200,000 MT of fresh water, marine and related fish products, all valued at about Kshs 7.4 billion. Despite accounting for a mere 0.3% of GDP, the subsector plays an important role in poverty alleviation through providing income and employment, export earnings, food, raw materials for animal feed industry and government revenue. The bulk of the subsector activities take place around Lake Victoria, where poverty levels are among the lowest in the country. Employment and Income Earnings: The exact number of people deriving livelihood both directly and indirectly is not precisely known. However, the Department of Fisheries (DoF) estimates that about 798,000 people there are currently deriving their livelihood directly and indirectly from fishing and related activities. For comparison purposes, a recent study2, estimated that the employs over 500,000 people in various activities including supply of inputs, fishing, transport, processing, marketing and retailing. It is estimated that there were 42,187 fishermen country wide in the year 2000. According to data from the Central Bureau of Statistics, the fish subsector and related activities earned the fisher folk approximately Kshs 7.6 billion in the year 2000. The DoF estimates that the fisher folk in Lake Victoria alone earned an estimated Kshs 6.9 billion in 2002, having declined from an estimated Kshs 7.3 billion in 2001. Export Earnings: Before mid 1980s, fishing in Kenya was a local enterprise in terms of markets. However towards the end of that decade, an unprecedented export demand market for the Nile Perch emerged in Europe, transforming the fishing into an export oriented subsector, with the Netherlands, Germany, Belgium and Spain being the main markets for the predominant Nile Perch chilled fillets. Consequently, both the volume and value of fish exports increased significantly between late 1980s and early 1990s reaching a pick in 1996, with the EU accounting for over 90% of export volumes of fresh and chilled fish fillets and 60% of frozen fish fillets. With the three-time EU bans on Lake Victoria fish exports which between November 1996 to November 2000), the volume of landed fish and exports from Lake Victoria

1 Kenya Exports of Nile Perch-Impact of Food Safety Standards on an Export Oriented Supply Chain: By Spencer Henson and Winnie Mitullah (April 2003). 2 As indicated by “A Study Leading to the Establishment of the Fish Levy Trust” (A workshop discussion paper July 2002). Report prepared by SMEC International for the Ministry of Environment and Natural Resources.



in particular dropped considerably especially for the popular Nile Perch. Exports of fresh and chilled Nile Perch fillets dropped from 1,004 MT of in 1996 to a mere 51 MT in 2000. Export of frozen fish fillets also declined from 15,000 MT in 1996 to about 11,000 MT in 1998. Efforts to export to alternative markets such as Japan, USA, Israel, Hong Kong, Venezuela and Malaysia despite facing high freight costs and logistical problems have since become important export destinations especially for the Nile Perch fillet. Of the total national sales value of landed fish, amounting to Kshs 7.6 billion in the year 2000, a total of Kshs 4.7 billion or nearly 60% was derived from domestic sales, with the balance of Kshs 2.9 billion being in the form of foreign exchange. The Nile Perch chilled and frozen fillets are the most important fish export products though the former account for a smaller percentage, but fetches better market prices. Other Nile Perch by-products which are exported especially to Japan and China include the blander (maws). Kenya also imports fish and fishery products mainly comprising mackerels, sardines, fish fillets and salted fish. In 1999, official import volume was estimated at 2,200 MT, but declining to about 300 MT in the year 2000. Food: Fish is an important source of human food in the country with the Dagaa and the Tilapia species constituting the bulk of fish species consumed in the domestic market. These comprise both markets within the immediate hinterland of the production areas, and the domestic regional markets of which the main clusters include Nairobi, Kisumu, Mombasa, Nakuru and Eldoret. Animal Feeds: The fish subsector plays a significant forward linkage role in providing inputs to the animal feeds industry, especially the beef, dairy and poultry subsectors. Animal feed, commonly known as fish meal is derived from the processing of Nile Perch skeletons (frames) and guts, which remain after the popular fish fillet is extracted and mainly exported and the Dagaa (omena). Gross Domestic Product and Government Revenue: The contribution of the fish subsector to GDP has increased significantly with the emergence of export markets for the Nile Perch. The value of output increased from Kshs 0.8 billion in 1991 to Kshs 2.2 billion in 2001. Despite this growth, the subsector’s contribution to GDP has remained relatively small accounting for a mere 0.3% in 2000. In terms Government revenue, the subsector is also relatively small, though observers contend that this could be much higher if only the revenue correction systems were more effective and efficient.



3. Types of Fish and Main National Production Areas

Freshwater fish is by far the most important accounting for an average of approximately 185,000 MT or 97.4% over the period 1998 to 2000, valued at approximately Kshs 7.1 billion or 95.5% of total landed fish value. Other fresh water fish come from fish farming which occurs in scattered around the country in natural dams and artificial ponds producing mainly Tilapia, Carps, Bass and Trout. Production from these sources is relatively small having stagnated at about 1,000 MT over the last few years. Marine fish, crustaceans and other marine products, together account for an average of about 5,000 MT annually or 2.6% of total national output.3 Dermasal fish species such as scavengers, rabbit fish, snappers and parrot fish dominate the marine catch, accounting for about 36.5% of landed catch, while the Pelagic and Crustaceans fish species account for about 16% and 12% respectively. Figure 1 below indicates the relative importance of fresh water fish and fishery products in the country.

As indicated in figure 1 above, fresh water fish accounts for the bulk of fish produced in the country. Table 1 below indicates that Lake Victoria by far the most important source accounting for approximately 93% of total volume of landed fish and nearly 96% of total value. The rest of the fresh water fish sources include Lakes Turkana, Baringo, Naivasha, and Jipe, as well as fish farming, and other freshwater all of which account for a mere 4.2%

3 Data from the Economic Survey 2001-by Central Bureau of Statistics (Ministry of Finance and Planning.

Fig. 1: Relative Importance of Fresh Water Fish in Kenya (1998-2000)

4,998 5,232 5,486

204,430 208,164 167,847

-

50,000

100,000

150,000

200,000

250,000

1998 1999 2000 Year

MT

Fresh Water Fish Marine Fish



Table 1: Fish Production and Values in Kenya (1998-2000)

1998 1999 2000 Average Percentage Type & Source (MT) (MT) (MT) (MT) Share (%) Freshwater Lake Victoria 158,876 200,159 196,714 185,250 93.2% Lake Turkana 4,268 5,237 5,305 4,937 2.5% Lake Naivasha 50 452 14 172 0.1% Lake Baringo 141 409 392 314 0.2% Lake Jipe 97 99 103 100 0.1% Fish Farming 994 887 899 927 0.5% Other Areas 3,421 921 1,003 1,782 0.9% Sub-total 167,847 208,164 204,430 193,480 97.4% Type & Source (MT) (MT) (MT) (MT) Share (%) Marine Fish 3,966 4,090 4,261 4,106 2.1% Crustaceans 800 880 927 869 0.4% Other Marine 232 262 298 264 0.1% Sub-Total 4,998 5,232 5,486 5,239 2.6% Grand Total 172,845 213,396 209,916 198,719 100.0% Value by Type Million Kshs Million Kshs Million Kshs Million Kshs Million Kshs Freshwater Fish 6,446,840 7,401,515 7,310,855 7,053,070 95.5% Marine Fish 185,660 201359 233,639 206,886 2.8% Crustaceans 132,020 96,533 101,274 109,942 1.5% Other Marine 14,240 14,721 16,223 15,061 0.2% Grand Total 6,778,760 7,714,128 7,661,991 7,384,960 100.0%

Source: Economic Survey 2001-Central Bureau of Statistics: Ministry of Finance and Planning 4. Nile Perch Export Markets and Subsector Transformations The Nile Perch (NP) is not a native species of Lake Victoria, but was introduced by the colonial Government in 1954 as an effort to offset the declining supplies of other fish species in the lake. From 1960s through to 1970s, the fishing industry around the lake comprised entirely of local village fishermen of whom 80% depended local and regional markets with exports being non-existent. During this period total landed fish catch from Lake Victoria oscillated round 100,000 MT per annum. Fishing during this period was characterized by rudimentary technology with local fishermen using simple equipment such as wooden crafts propelled by sail, with very few of them having motorized propulsion. A vibrant artisanal processing and trading sector located near the landing beaches co-existed with the fisheries activities under the regulation of community customary norms. Fish trade and artisanal processing was dominated by small-scale operators, mostly women from the local community. Fish that was not sold fresh was smoked or sun-dried and sold in the local inland markets. Wholesale marketing was very small and most fishermen sold fish to a limited number of fishmongers. The first significant transformation in the subsector occurred in mid 1980s, when an unprecedented a sudden increase occurred in the demand level for the NP species in the world market, especially in the EU markets which were experiencing a decline in their local supplies of the Cod and Halibut fish varieties. In response to this new development, the number of fishermen, fishing vessels, industrial fish processors (IFP) and fish traders increased



dramatically. From just under 20,000 in 1980, the number of fishermen increased to nearly 40,000 to date. From just over 4,000 registered fishing boats in 1980, the number had increased to nearly 12,000 by the year 2000. The volume of landed fish (all species) also rose dramatically from just 4,300 MT in 1980 to over 100,000 MT in 1985. In the last two years, landed volume of fish from the lake has been around 115,000 to 150,000 MT Except for a short spell of decline during 1992-1993, landed volume remained around the 200,000 MT mark until the three-time export bans into the EU. The first ban was by Spain and Italy in November 1997 leading to an immediate drop in export volumes by 33% and export earnings by some 13.1%. The second ban, which occurred in January 1998, was on chilled fish by the EU in general on account of cholera outbreak. This second ban reduced the volume of fish exports to the EU by an unprecedented 24%, mainly affecting the Nile Perch. The ban was lifted in June 1998 fish handlers under went medical tests and certification. The third ban occurred in April 1999 due to reports on use of chemicals for fish harvesting by one of the three East African countries. The ban was finally lifted in November 2000 following investigations and recommendations of the Veterinary Committee of the EU. The second transformation was triggered by the export bans in the form of increased search for alternative export markets especially to Middle East, USA, and the Far East. As a result, Nile Perch exports to countries such as Japan, USA, Israel, Hong Kong and Malaysia has increased considerably to reach some 3.1 million MT worth over Kshs 730 million in the year 2001. A third factor leading to subsector transformation relates to over exploitation of the Nile Perch in response to high export prices with no control on the methodology of fish harvesting. This has been a major factor in the declining volume of landed fish from the lake. Overexploitation has mainly been attributed to the use of small mesh nets, indiscriminate gears and mass target fishing methods. In support of this, it has been observed that the average mesh size of the gill used to target the Nile Perch in the lake has fallen from 12 inches in 1981 to 6 inches in 1996 (Osewe-Odera 1996). Due to reduced fish population in the lake, the mean catch per unit of effort and catch sizes have also generally declined in the past decade. While less than five hours on average were spent fishing each day in early 1980s, this had increased to 12 hours by mid 1990s. According to Bwathondi et al 2001, maximum sustainable yields are estimated at 39,200 MT, which is well below the recent average landed volume of 200,000 M, implying continued overexploitation. The overall effect of over exploitation and the past EU export bans have been to reduce landed fish volume from the average of about 200,000 MT during 1994-1995 to about 150,000 MT in 1997-1998 and further to about 115,000 MT in the year 2002. A fourth form of subsector transformation was the displacement of much of the artisanal processing technology that previously characterized the industry by the Industrial Fish Processing, though some artisanal processing in the form of frying, and sun drying of juvenile NP, Tilapia and Omena still continue. Owing to the lucrative export markets for processed NP, the IFPs facilities expanded very rapidly from just – in 199—to 15 in the year 2000. Many of the IFPs which were mostly situated in Nairobi and Mombasa re-located to the lake region, mainly around Kisumu. However, due to over-exploitation of the NP fish species, landed catch was beginning to dwindle by late 1990s, a problem that has continued to date. Many IFPs have responded by being more competitive. Down stream the supply chain, many IFPs have tended



to compete for NP supplies by offering equipment and credit to fishermen, often through their agents under agreed sole-buyer contractual arrangements. Other IFPs have invested in collector boats to help assemble fish from deep lake waters and remoter beaches. Despite all these attempts some IFPs experienced excess processing capacity which has persisted to date with many factories operating below 50% of installed capacity. The decline in the availability of the NP fish species together with the disruptions caused by the previous EU export bans have led to closure of a number of these IFP factories. Around the lake, only 4 IFP factories are operational, down from…. In 19…. Some of the investors relocated Uganda and Tanzania Lake Victoria shoreline where supplies were much larger A fifth major change in the subsector was in the form of participants in the subsector. As the IFP sector developed, it led to changes in the upstream of the supply chain. Most notably, was that agents and traders who bought fish on behalf of industrial processors replaced the traditional fishmongers who were previously the main buyers of fish from fishermen. The fishmongers that remain today largely deal in juvenile NP, Tilapia and the Omena predominantly for the local market. According to a study entitled “Kenyan Exports of the Nile Perch: Impact of Food Safety Standards on an Export-Oriented Supply Chain” (April 2003); this development, combined with the decline in artisanal processing has resulted in the decline of the number of people employed in the marketing of fish, with women being the main casualties. A sixth form of subsector transformation has been in the form of a new business line of processing fish waste materials including skeletons (frames), off-cuts and skins, which now operate within the proximity of IFP facilities have emerged. In recent years, this business line has faced stringent competition in the purchase of fish waste from yet another business line on fishmeal processing mainly for beef, poultry, dairy and household pets. While fish processing has become more industrialized in terms of scale and processes employed, actual fishing and landing methods have remained fundamentally artisanal in nature. With the exception of the few trawlers that operate illegally, fishing is carried out using wooden boats with a crew of 2 to 5 fisher folk. Few of the fishing boats are motorized and the only significant technological change has been in the form of the type and size of nets4. Many of the landing beaches remain rudimentary and are often restricted to a covered area where fish are sold in some cases a landing jetty. There is rarely portable running water, toilets chilled storage facilities or fencing to prevent entry of rodents and other animals to the fish landing areas. What is clear from the forgoing observations is that the Nile Perch remains the most important fish species in the region and that the recent emergence of export markets for this species triggered fundamental changes in the structure and modus operadi of the fish industry around Lake Victoria. Despite the continued artisanal nature of fishing, the hiccups occasioned by the EU fish export bans, infestation by the hyacinth weed and the decline in the Nile Perch population, Lake Victoria remains an important local and international resource. Fish production and marketing, has now become a vibrant and modern business with fairly established and integrated supply chain that are pre-dominantly export-oriented for the Nile Perch species.

4 Smaller mesh nets in response to the decline in the population and average sizes fish, especially the popular Nile Perch.



The Nile Perch is manly exported in the form of frozen and or chilled fillet to account for about 58%. Both the Tilapia and the Dagaa species or omena are nevertheless also important with respect to the local and regional markets. The former is consumed locally around the lake region and also sold to traders who supply to urban markets throughout the country predominantly as fresh fish but also after having undergone the rudimentary processing in the form of smoking. The Dagaa species is sun-dried around the landing beaches and consumed by local communities around the lake and in other regions in the country. These three species account for about 97% of fish landed from the lake. In light of this, the rest of this report focuses on fishing in Lake Victoria, with more emphasis being given to Nile Perch fish species, which dominates in terms of landed volume and value estimated in 2002 at 51% and 77%. In addition, the species accounts for virtually all Kenya’s fresh fish exports. 5. Main Fish Species and Key Production Areas around Lake Victoria Lake Victoria, which is the most important source of fish in Kenya, is also bordered by Uganda and Tanzania. It has a total area of 68,000m2 of which Kenya’s part is 41,000m2 or a mere 6%. Uganda accounts for 45%, while Tanzania accounts the rest 49%. Despite having the smallest proportion of the lake waters, Kenya’s part is critical to the fish industry in the region in terms of breeding which occurs at the river mouths, of which the country has five important rivers including Kuja, Awach, Miriu, Nzoia and Sio. Prior to 1950s, over 300 species Haplochromis made up about 80% of the lake’s fish species. Six Tilapia species were introduced during the period 1950 and 1962. The Nile Perch was introduced into the lake in 1954. The number of fish species found in the lake today is not precisely known but informed observers estimate that originally there were between 200 and 300 species, but most of them are now extinct. Most of the extinct species were of no important commercial value, though in retrospect, it has come to be realized that they were important for the sustainability of the lake’s ecosystem. As shown in figure 2 below, the three main species today, which together account for 97% of the landed catch in Lake Victoria include the Nile Perch-Lates Niloticus (51%), Dagaa-Rastrineobola Argentea (31%) and the Tilapia-Oreochromis (15%). Other important fish species from the lake which account for about 3% include, Alestes, Barbus, Labeo, Synodontis, Schilbe, Protopterus, Clarius, Mormyrus and the once abundant Haplochromis.

Source: Department of Fisheries (Kisumu).

Fig. 2: Landed Volume of Fish by Species from Lake Victoria (2002

Nile Perch 51%

Dagaa31%

Tilapia 15%

Others3%

Nile Perch DagaaTilapia Others

1



In Kenya, fish is produced in all the eight districts bordering Lake Victoria. As indicated in figure 3 below, the main producing areas are Suba, Bondo and Busia districts, with the Nile Perch constituting the largest percentage of landed catch. Other relatively less important producing districts include Kisumu, Rachuonyo, Migori, Nyando and Homa Bay in that order.

Fig 3: Lake Victoria Fish Production by Species and District (2002)

-5,000

10,000

15,00020,00025,000

Suba

Bond

o

Busia

Kisu

mu

Rachu

onyo

Migori

Nyand

o

Homa Bay

District

MT

Nile Perch

Dagaa

Tilapia

Others

Source: Derived from data provided by Department of Fisheries (Kisumu). 5. Seasonality of Fish Production

Measured on the basis of catch rate, there is evidence that fish production experiences seasonality which nevertheless varies with fish species. The seasonality largely follows rainfall patterns arising from its implications on food availability, water quality, temperatures, macrophyte growth, and the moon cycle in the case of the Dagaa among others. These factors determine the natural production cycle for some of the fish species. Data from Kenya Marine and Fisheries Research Institute (KMFRI) indicate that the peak supply period for fish in Lake Victoria is during the long rains in March-May. Unfortunately, this is the time when most roads in the region become impassable leading to high spoilage of fish and fishermen receive the lowest average returns because of the relatively higher supply and poorer functioning of the distribution systems. High supply seasonal for the Tilapia and the Dagaa species occur during April-September but is far more evenly distributed than that of the Nile Perch. For the Nile Perch, the peak supply season in Lake Victoria occurs during May-December which unfortunately is the hot season leading to high losses as the fish quality deteriorates faster and also resulting in higher costs because the fishermen and agents’ fish scouts have to go deeper into the waters to catch more fish. The low season is experienced during January April when the weather is cool and the fishing ban is in force.



7. FISH MARKETS Broadly speaking, fish markets in Kenya can be divided into five main categories, with the Nile Perch, Tilapia and the Dagaa species being the main species:

(i) Processed Fish Export Market (ii) Animal Feed Fishmeal Market

(iii) Domestic Processed Fish Market (iv) Domestic Household Fresh Fish Market (v) Domestic Institutional Fresh Fish Market

The supply chains for export, domestic local and regional markets differ fundamentally in their structure and modus operandi. The supply chain of the local (lakeside) and regional markets (within Kenya around the lake regional) is characterized by high levels of diversity of marketed fish species, extent and types of processing including, smoked and dried as well as fresh. The supply chain for the local and regional market has little or no integration, with marketing especially in the distant local urban centers and being characterized by a large number of intermediaries. In contrast, the export market supply chain is characterized by high integration of functions, low diversity of fish species and fish product handled, with frozen and/or chilled Nile Perch fillet being the dominant product, and more sophisticated investments in fish processing, cooling and packaging which is often in bulk packs. As will be shown in the next sections, processed Nile Perch fillets almost exclusively for export, sun-dried Dagaa species and smoked Tilapia species for the domestic market are the main products.

7.1 Processed Fish Export Market

The main fish export products from Lake Victoria and Kenya in general comprise frozen Nile Perch fillet accounting for nearly 88% of total fish and fishery exports value and about 92% of total volume exported from the country in 2001. Over 95% of all Nile Perch fish fillet from Lake Victoria is exported. About 90% of the adult Nile Perch is processed by IFPs into frozen or chilled fillets exported, with the EU being the main market which in 2001 accounted for about 8.3 million MT or 73% of total Nile Perch exports worth some Kshs 851 million. Despite the very sharp decline in exports of fish and fish products to the EU after 1997, the market is still the single most important market block for Kenya’s fish exports. The main traditional importing countries are the Netherlands, Belgium, Germany and more lately Switzerland. These are more lucrative markets for the Kenyan exporters than non-EU markets because of their high demand partly as a result of their dwindling stocks of Cod and Halibut fish species as well as their proximity to Kenya. The main product to these markets is frozen or chilled skinless fish fillet. Figure 4 below shows the relative importance of Nile Perch product exports by market destination in terms of volume and value. Other Nile Perch products that are exported include the swim bladders (maws), headless and gutted Nile Perch which are mainly exported to China and Japan5.

5 Except for a relatively small proportion that is consumed in the high-class tourist hotels in Nairobi and Mombasa, crustaceans and cephalopods are also important exports. Other fish export products include Molluscs



Fig 4: Exports of Nile Perch Fillet & other Products to EU & Non EU Markets (2001)

-

2,000.04,000.0

6,000.08,000.0

10,000.0

MT Mill Kshs

EU

Non-EU

Source: Derived from DoF data.

Important non-EU Nile Perch fillet export markets include Japan, USA, Israel, Venezuela, Malaysia, Columbia and Singapore. These are relatively new markets for Kenya, which were captured during the time of EU export bans. These markets mainly consume “skin-on” Nile Perch frozen fillet. Table 5 below shows the relative importance of the non-EU export markets.

Fig 5: Nile Perch Export to Non-Eu Markets (2001)

-200,000400,000600,000800,000

1,000,0001,200,0001,400,000

Japa

nUSA

Israe

l

Hong Kon

g

Vene

zuela

Mala

ysia

Columbia

Sing

apore

Reunio

n

Dubai

MT

000' Kshs

Source: Derived from DoF data.

7.2 Animal Feed Fishmeal Market

Industrial fish processing generates a number of by-products and wastes that have economic value and whose business volume has become quite significant in recent times. In addition to the maws that are exported to niche markets in China and Japan, IFPs produces by-products for local market consumption including fish skeleton (frame), skin, off-cuts, and fat that are sold to local artisanal processors either for human consumption around the lake region or for further processing into animal feed fishmeal. The IFP sell the by-products directly to the

(mainly octopus and quid), crustaceans (lobsters, prawns, crabs and fresh water crayfish), live ornamental fish, shark fins, fish meals, marine shells, dried salted fish, Bonitos and Beche-der-mers, which are mainly destined for Singapore.



animal feed processors in various parts of the country or through traders. Other fish product inputs into the fishmeal processing include the rejects of all types of fish from the lake. The fishmeal factories are often located within the proximity of industrial fish processing plants in the lake region. The processed fishmeal is bagged and sold to animal feed processors who mix it with other ingredients at various ratios. Some of the fishmeal processors do also sell the product directly to large consumers such as KenChic and Farmers’ Choice for further for final recipe production and further using it internally of sale to wholesalers. Data and information regarding export of fishmeal is not available. The number of number of fish meal processing enterprises in the country is not precisely known but there are --- in Kisumu and 1 in Busia.

7.3 Domestic Processed Fish Market

The domestic market depends entirely on fish products processed through artisanal technology and almost non from IFP. The main processing involved includes deep-frying, sun-drying and smoking. The main processed fish and fish products consumed in the domestic market are dominated by the Dagaa species, which is normally sun-dried near the landing beaches and sold by around the lake region and in domestic regional markets. Kisumu is a major local market while Nairobi, Mombasa Nakuru, and Eldoret are the main regional markets.

Other processed fish and fish products comprise by-products of the Nile Perch species which are generated during the processing of fillet by the IFPs. The main Nile Perch by-products which are sold raw by IFPs to artisanal processors include the Nile Perch skeleton (frame), off-cuts (fish chips), chest which are further processed through deep-frying for human consumption. Fats and skins are other by-products used as sources of fuel for deep-frying the aforementioned Nile Perch by-products. IFP rejects of whole Nile Perch is also sold to local artisans for further processing, though this comprise less than 5% of into factory deliveries.

Processing of Tilapia from Lake Victoria is minimal with the bulk of the fish being consumed fresh in the local and regional areas of the country by household, institutional or hotel industry6. Processing of this species involves removal of the guts and sun-drying or smoking for purposes of preservation.

7.4 Domestic Household Fresh Fish Market

Fresh fish market for the Lake Victoria fish subsector is quite small compared to the processed fish market. Of the three main species from the lake, only the Tilapia is consumed fresh with the regional markets especially Nairobi and Mombasa being the key destinations. The proportion of Tilapia harvests consumed fresh is estimated to be small but is however not precisely known.

7.5 Domestic Institutional Fresh Fish Market --------------------------------------------------

6 The proportions are not well known.



8. THE FISH SUBSECTOR MAP The subsector map is a schematic representation of the structure of a subsector, essentially showing how products flow through the subsector systems. The map presents the various functions and markets, and distinguishes alternative supply channels where a channel is a vertical chain of firms that transforms raw materials and ultimately delivers to consumers as finished goods. In other words, a subsector map traces the product flow and the transactional relationships between various actors in a subsector right from inputs supply and production to the consuming markets. The following sections discuss different participants and their functions within Kenya’s fish subsector, followed by presentation of a graphic depiction of the map and brief discussions of the identified subsector marketing channels.

8.1 Subsector Functions and Participants The main functions in the fish subsector in Kenya are: (i) Input supplies (ii) Fishing; (iii) Assembling and Grading; (iv) Processing; (v) Lake and Road Transportation; (vii) Exports; (viii) Wholesaling; and (ix) Retailing. The main actors in the subsector include the boat owners, fisher folk, fishmongers, IFP agents, IFP and artisanal processors, transporters, retail traders and vendors.

8.1.1 Inputs Supply Inputs used in the fish subsector are numerous and diverse making it one of the most important subsectors in terms of forward and backward linkages. For fishing, the main inputs include; labour, wooden boats (with inputs such as wood, nails, rubber, blankets, plain galvanized iron sheets, paint, tyre rubbers, sealant, screws and nails), gill and seine nets, floaters, sail masts, motorized boats, boat engines, ice for preservation, life baits and fishing flies, hooks, fishing lines, nylon ropes, pressure lamps (for Dagaa fishing), and plastic containers. At the landing sites key inputs include bandas, jetties, and ground paving materials, fences, water, baskets and weighing machines. At the marketing level the main inputs are refrigerated trucks, open or insulated trucks, packaging materials well as ice for preservation. There two types of input suppliers who consist of importer who also perform the role of wholesaling and retailing mainly for inputs that cannot be provided by local artisans, and suppliers of locally sourced inputs. Inputs that are commonly imported include gill and seine nets, motorized boats, boat engines (mainly Yamaha from Japan), fishing lines, hooks, ropes and twains, floaters, pressure lamps, sealant, and knitting threads. Some of the suppliers source some of the inputs from local manufacturers. Ice blocks, is the only significant input that some of these large input suppliers manufacture locally, and specifically in Kisumu town. Some of these suppliers also source some of the inputs from local sources whenever quality fits to the consumer’s requirement. Local sourcing was found to be relatively small due to what most importers referred to as poor quality. The imported input suppliers source directly from various markets mainly China and Norway. According to available information, there are only 6 such importers in the country with



the lake region having 4 all of whom are located in Kisumu7. They have no distribution network around the landing beaches and most of the retailers and end users along the landing beaches find it quite costly to travel all the way to Kisumu. Of the 4 subsector importers of input in Kisumu, two of them combine the business of wholesaling and retailing imported inputs with ice block making. The team was informed that this strategy was prompted by the declining g business in the sale of imported inputs as a result of the declining catch from the lake. One factory, by the name Victoria Ice Mart was producing ice only and was doing a good business with fresh wholesale fish dealers from Nairobi and other parts of the country, particularly those buying from Port Victoria in Busia. The ice blocks cost about Kshs 40 per piece to produce and retail for Kshs 70 to 80. Other sellers indicated that the business was not performing well but the team was able to attribute this to quality. Other sources of ice for the small traders are the Coca-Cola, and the IFP agents who somewhat illegally sell part of the supplies provided to them by the contracting IFPs. Overall, it was established that lack of ice and affordability among the small fishmongers was a major constraint in the subsector, leading to a lot of losses on both lake and land transport.

8.1.2 Fishing

Fishing which is the activity of going into the lake and catching fish is one of the most important functions of the subsector. Despite the rapid transformation of the fish market during 1990s, fishing technology has not changed much and with the exception of a few illegally operated trawlers, fishing is predominantly undertaken using wooden boats. Use of metal trawlers is prohibited in the lake as part of the conservation measures and there are relatively few motorized boats in the lake. The only significant technological changes have been on the fishing gears by way of type and size of nets as well as the line gears. These gears fall into four broad categories: Traditional Gears, such as weirs, barricades, baskets and traps, which are no longer used in the lake but tends to be used mainly in river systems or areas of the lake close to river openings, to catch anadromous riverine fish species.

Gill Nets, which are of various mesh sizes although the legal standards for the Tilapia in the lake is the 5 inch mesh stretched across the diagonal. The riverine fisheries require lower mesh sized nets. Over the last 5 years, drifting gillnets (locally known as tembea), have become popular in some areas, though they have the disadvantage of damaging stationery gears set by other fishermen.

Seine Nets, which despite having been banned in the lake due to its indiscriminate catch is still somewhat used mainly targeting the Nile Perch and tilapines, but nevertheless ending up catching other species of all sizes. These nets are particularly destructive when used at the river mouths as they tend to catch anadromous fish on their way to spawns. The mosquito seine is a special kind of seine used to target the Dagaa species and which is the only kind of seine legally permitted in Lake Victoria.

7 These include (Kavirondo Fishnets Ltd, Wananchi, Webuye Fishnet Wholesalers, and ---------?)



Line Gears, which use baited hooks, placed at regular intervals along the nylon ropes to catch the Nile Perch, although a simple angle line is a cheaper way of catching Tilapia.

Fishing in the lake is undertaken commonly using wooden boats propelled by sail masts and human labour using paddles. There are only a few motorized boats, mainly because of the high cost to most fisher folks8. Presently, only about 66% of these fishing boats are propelled by paddle while about 28% are by sail. Only about 6% are propelled by engine mainly in the form of outboard engines. Other than the boat, sail masts and paddles, the rest of the items carried into the lake for purposes of catching fish depend on the type of fish being targeted. For the adult Nile Perch and the Tilapia, hooks, baits (life or fishing flies), and fishing are critical items. For the Dagaa, the net, pressure lamps, and floaters are the most important. Normally, the boat carries a fishing crew of 3 men who set off into the lake at different times depending on the type of species targeted. Although the men have fishing skills for all varieties, different crews commonly target one species at a time. Both the Nile Perch and the Tilapia are caught during the day, while the Dagaa is caught only in the night when there is no moon light because catching this species requires the use of artificial light (pressure lamps) to attract the so called lake flies (insects) which in turn lure the Dagaa fish into nets that are spread and submerged in water by the use of weights. For day fishing, the men normally set off into the lake waters at around 6.00 AM and return to the landing beaches at between 3.00 and 6.00 PM. For the Dagaa fishermen, they set off at about 6.00 PM and return at around 5.00-6.00 AM. The fishing boat (which costs about Kshs 50,000-for the average 25 feet long boat), are often owned by a boat owner who in many cases does not accompany the crew. The fishing crew often operates the boat on behalf of a boat owner with payment being in the form of sharing of the catch on a 50/50 basis between the owner and the crew on return to the landing beaches after netting out the operational costs (fuel, food etc). The Boat owner is also responsible for providing accommodation of the fishing crew. Other forms of payment include the provision of the entire catch for designated days in a week which the fishing crew can divide between themselves, while the remaining days’ catch goes to the boat owner. The activity of fishing does not occur every day as the fishermen also carry out other activities outside fishing such as farming. Although rare, some IFPs have their own vessels which are operated by fishers’ crew employed on salary-basis by the fish processors. An estimated 83% of the fishermen operate as crew on behalf business boat owner and they neither own the vessel nor the fishing gears (Asowa-Okwe). In 1993, the number of fishermen operating in Lake Victoria was estimated at 82,3009 but this has declined considerably in the recent years. According to more recent statistics10 the lake

8 The common Yamaha engine for example costs about Kshs 150,000 per unit. 9 Institutional Response to Global Perch Market: The case for Lake Victoria Fish Cluster-By Dorothy McCormick and Winnie Mitullah (October 2002); 10 Diagnostic Report-Kenya Fish Subsector –December 2002 by Department of Fisheries (Ministry of Agriculture and Rural Development, Kenya Fish Processors and Exporters Association –AFIPEK; and Export Promotion Council); Funded under Joint Integrated Technical Assistance Programme to Selected Least Developed and other African Countries-JITAP, ITC, UNCTAD, and WTO).



accounted for 30,000 or nearly 75% of the total number of fishermen in the whole country estimated at 38,715 in 1995. This decline was largely attributed to the reduced catch rate forcing some fishers to shift to other economic activities mainly agriculture and livestock. These fishermen operated some 10,793 wooden fishing vessels of which fishing boats and transport craft accounted for approximately 97% and about 2.5% respectively. The lake accounted for about 8,000 or approximately 74% of these fishing vessels. Of the total estimated 42,187 fishermen and 13,127 fishing vessels registered in the country in 2000, Lake Victoria accounted for 33,037 or 78% and 9,985 or 76% respectively. As indicated in figure 6 below, Lake Victoria remains most important fishing cluster in the country despite past declines in fish supplies and operators.

Source: Based on Data from Diagnostic Report-Kenya Fish Subsector –December 2002 by Department of Fisheries (Ministry of Agriculture and Rural Development, Kenya Fish Processors and Exporters Association –AFIPEK; and Export Promotion Council); Funded under Joint Integrated Technical Assistance Programme to Selected Least Developed and other African Countries-JITAP, ITC, UNCTAD, and WTO).

As indicated in figure 7 below, Suba and Bondo districts have the highest concentration of fishermen. In the year 2000, the two districts together account for 18,634 (56.4%) of fishermen and 5,444 (55%) of fishing vessels operating in Lake Victoria.

Figure 6: Number of Fishermen by National Fish Production Clusters (1995 & 2000)

- 5,000

10,000 15,000 20,000 25,000 30,000 35,000

1995 2000 Year

Fish

erm

en

Lake Victoria

Marine Fisheries

Lake Turkana

Lake Baringo

Lake Naivasha

Lake Jipe & Dams

Tana River Dams



Fig. 7: Distribution of Fishermen and Fishing Vessels Around Lake Victoria (2000)

-2,0004,0006,0008,000

10,00012,000

Suba

Bond

o

Rach

uony

o

Migori

Busia

Kisu

mu

Hom

a Ba

y

Nyand

o

District

Num

ber

Fishermen

Active Vessels


Figure 8 below indicates the distribution of landing beaches around the lake. It is clear that Suba and Bondo districts have also the highest number of beaches, together accounting for 164 of them or 55% of all 297 beaches found around the lake,

Figure 8: Distribution of Beaches in Lake Victoria (2000)

97

67

38 27 23 327 6

020406080

100120

Suba

Bondo

Rachu

onyo

Migo

ri

Busia

Kisumu

Homa B

ay

Nyand

o

District

Beaches


8.1.3 Lake Transport

Lake transport is commonly by way of the same wooden boats, with fish heaped together on the floor of the boat. With the increasing competition for limited fish supplies, the fishing fleet now often moves further off-shore to seek better catches. Consequently, the function of collection/assembling in deeper waters and delivery to beaches has emerged, especially on the Tanzanian side. Although, not common, IFP agents go into the water and other beaches using relatively larger boats that are motorized to pick and assemble the fish and deliver them to the landing beaches.



8.1.4 Assembling and Grading

The landing beaches distributed around the lake shores (estimated at 297) comprise the only assembling, selecting/grading and weighing points11. The majority of the fishers sell their landed catch at their home beach though a significant number also sell their catch at multiple of beaches. Facilities at the landing beaches around the lake are still rudimentary consisting of simple covered structures and in some cases just a landing jetty where landed fish are sold. There is rarely a source of potable running water, toilets, or fencing to prevent entry of rodents and animals from accessing the landing site. Chilled storage facilities are completely non-existent as of now. A few of the beaches are using containers stacked with ice for preservation purposes. According to a study entitled “Kenyan Exports of the Nile Perch: Impact of Food Safety Standards on and Export-Oriented Supply Chain” by Henson and Mitullah, in April 2003, only 26.9% of landing beaches had bandas, 20.2% had access to all weather roads, 9.1% had electricity, 5.4% had a fish store, 3.7% had a pontoon or jetty, and 0.3% had a cold room. The fisher folk often have no ice for preservation and some of the catch end up being rejects once landed at the beaches. At the assembling points payments a number of cash transactions take place including payment of fishing crew, sale of fish to agents or traders, payment of county council cess.

8.1.5 Road Transport

Once fish is landed at the beach, selected/graded and weighed, it is transported by road to processing factories or other consumer destinations. The processing factories commonly provide means of transport from the landing beach to the factory and ice but do not possess the fish until it has been off-loaded at the processing plant and graded. Where fishers association or cooperatives are involved in the supply to processors, they may use their own vehicle or hire one from transporters. The commonest mode of road transport from the beaches for the Nile Perch destined for IFP processing is 3-5 tons insulated truck loaded with ice blocks weighing 3-5 tons as the ratio recommended for fish to ice is 1:1. The truck is normally manned by an IFP employee driver and the accredited agent. Some Nile Perch catch (especially rejects) are also transported to various destinations by bicycles. For the Tilapia which the domain of large fish mongers, the means of transport to Kisumu is often a insulated trucks of varying sizes or ordinary pick-ups that are not insulated but have ice blocks loaded onto them. Once in Kisumu, the fish are repacked in baskets containing ice and polythene paper and loaded onto buses to various destinations in accordance with secured markets. For the Dagaa, it is first sun-dried in the vicinity of the landing beaches and transported in baskets by trucks to the regional markets or bicycles for the local market. According to interview results as reported in a recent study entitled, Exports of the Nile Perch: Impact of Food Safety Standards on an export Oriented Supply Chain-April 2003 by Henson and Mitullah,

11 Though fish selection occurs both in the waters and at the landing sites (if gills are yellowish or fillet is spongy that is bad fish).



approximately 20% of interviewees considered poor roads as a major constraint leading to deterioration of fish quality as well as physical losses during the wet season.

With the emergence of industrial fish processing in 1980s, changes were induced upstream the fish supply chain. Most notably, the traditional system which consisted of fish mongers who had long established relationship with fishermen has been replaced with the system that now typically consist of traders and agents who purchase the Nile Perch fish on behalf of industrial processors12. According to the aforementioned study, the commonest buyers of landed Nile Perch fish at the beaches are agents of the industrial fish processors (IFP). In most cases there are long established business relationship between an agent and the IFP. A typical agent handles 3-5 tonnes of fish daily earning a gross margin of about Kshs 10 per or a commission of 10% of the value. The prices and quality are normally pre-agreed between the two parties. The few remaining fish mongers largely deal with the juvenile Nile Perch, Tilapia and the Dagaa purely for the local market. Agents act as sole suppliers to particular fish processors. Normally the process is for the processor to agree on a price with their agents who make their income from the difference between the agreed price and the price paid to fishermen. The processors normally provide and cater for transport although they do not take possession of the fish until it is graded at the processing plant. In some cases the fish processors provide their agents with funds to purchase fish and fishing gears to supply to fishermen. 8.1.6 Processing

Fish processing is commonly in the form of filleting and freezing or chilling, smoking, frying and sun-drying for preservation purposes given the high perishability of the fish and fish products. Before 1980s, fish processing was mainly artisanal in nature, largely comprising sun-drying, frying and smoking. The bulk of industrial processing is for the Nile Perch which gained momentum with the emergence of the export market for the species which occurred in mid 198013s. In order to meet the rising demand especially in the EU markets, industrial fish processing factories with support from different donors14, begun to spring up first in Kenya, and later in Tanzania and Uganda. Today industrial Nile Perch fish processing mainly into fillet has displaced much of the artisanal fish processing at the landing beaches. Nevertheless, some artisanal processing still continue to take place especially frying, sun-drying and smoking of the juvenile Nile Perch catch (that can not meet international standards), Tilapia and the Dagaa (omena). Of the total landed Nile Perch, approximately 90% of the adult fish is processed into fillets and exported. The Bladders (maws) are also exported mainly to China and Japan.

Having declined from 22, in mid 1990s, operational Nile Perch processing factories in Kenya today are only 8 of which 4 are in Kisumu, 1 in Migori, 1 in Homa Bay (1) and 2 in Nairobi. The rest are in Nairobi but happen to be owned by some of the processors currently operating in Kisumu. These remaining factories have been forced to apply stringent quality controls

13 An Industrial Fish processing facility will cost between Kshs 100- 300 million. 14 Particularly the ADB, IFC, Aga Khan Foundation and NORAD.



procedures such as the HACCP and have been issued with EU factory numbers. However, due to declining supplies, most of these factories are operating at below 50% of installed capacity. Victoria Fisheries Management Project estimates that as whole the fish processing subsector is operating at around 48% of installed capacity.

The IFPs buy and collect fish from the landing sites using refrigerated trucks using agents. As business competition has increased with the decline in NP supplies from the lake, the IFPs and their agents have become more innovative sometimes in the form of providing credit/cash advances to purchase fish, fishing nets, supply fishing gears, and engines to clients with whom they have well established trade relationships. The repayment of such credit in kind is normally done within an agreed time frame with deductions occurring at every time of fish delivery.

In response to the dwindling supply of the Nile Perch species, and the concomitant competition for fish some industrial processing factories adopted various strategies including; provision of credit, nets and fishing gears to fishers through their agents; building of bandas, storage facilities and even jetties at the landing beaches in order to create leverage in the emerging competitive market atmosphere; Investment on motorized boats to collect fish from fishers’ wooden boats off-shore and deliver the supplies to insulated trucks at the beaches; Processing Tilapia for export which has started in a modest way; Mergers, for example the recent purchase of three other factories by Kendag Ltd; Establishment of sister companies in Tanzania and Uganda where fish are more plentiful, and which until recently were used as sources of raw material supplies; and diversification into other businesses such as bakery, meat and ice making and ice cream processing.

Close to the fish processing facilities, processing of fish waste materials such as skeletons (frames), off-cuts and skins to make fish meal for the dairy, beef and poultry subsectors has emerged.

Abila and Jansen (1997) estimated that in Kisumu alone about 600 people, of whom 75% were women, were employed in the processing of the Nile Perch frames and other products, while the estimate for Nairobi and in Homa Bay was about 400 people. Artisanal processing of the by-products is now threatened by the competition for fish waste processing by the industrial fish fishmeal processors, which are now estimated to be processing about 17,000 MT per day accounting for approximately 59% of total fishmeal supplies in the country. 8.1.7 Wholesaling

Wholesaling is the function of buying and selling products in large volumes and consequently selling to retailers in terms of smaller volumes as per the needs of the buyer. There are two types of wholesalers. Firstly, the wholesale fish traders who buy processed or fresh fish to sell to retailers for on-ward sale to household consumers, and secondly, wholesalers (exclusively IFP accredited agents), who buy fresh fish (i.e. the Nile Perch species) to sell industrial processors. In either case, the mode of payment is cash though payment to agents by IFPs may be in the form of cheques, at least for part of the money. Payment to fishermen is exclusively in the form of cash. These wholesale traders tend to specialize in a single species (Nile



Perch, Dagaa or omena). It is rare to find a wholesaler who is dealing in a diverse range of fish species at the same time. The function occurs at several levels depending on the type of fish species.

For the Nile Perch species, the first wholesaling function occurs in the lake waters. That is the IFP agents going into the lake in larger boats packed with ice and buying fish directly from fishermen in the waters or in other beaches and then move the catch to a specific beach where their accrediting IFP trucks are stationed. Once transported to the IFP processing plants, a further wholesaling function takes place, this time the agent selling to the IFP. After the IFP has extracted the fillet, yet another wholesaling function occurs in the form of sale of by-products (off-cuts, skeleton, skins and fats) to animal feed fishmeal processors or directly to artisanal processors or through traders. Further up the supply chain, the IFP undertakes the function of wholesaling (fillet only) to exports markets often under established business relationships.

For the Dagaa species, wholesaling function occurs at two main levels. First, wholesaling at the landing beaches around the bandas where fishermen sell to traders who subsequently undertake artisanal processing in the form of sun-drying or frying. This function is almost entirely undertaken by women. Only after sun-drying do some men participate in Dagaa wholesaling. Second, wholesaling the sun-dried or fried fish either to other large traders for onward transport to regional markets and sale to retailers (who in turn sell to domestic household consumers), or directly to animal feed fishmeal processors or their agents. The artisanal processors may also sell to retailers in the locality for onward sale to local household consumers. Processing, wholesaling and retailing of Dagaa species is undertaken predominately by women.

For the Tilapia species, wholesaling function occurs at two levels. First, wholesaling occurs at the landing beaches where the fishermen sell fresh fish mainly to regional wholesalers. These wholesalers then transport and sell the fish to retailers mainly in the major urban centers in the country for onward sale to household consumers and the restaurants and hotel industry. Gikomba and the City market in Nairobi are major wholesale fresh Tilapia fish markets. Some of the retailers who buy fresh Tilapia from these and other markets, first sun-dry or fry the fish before deep frying it further and vending to consumers. Other sales, especially to institutions and the restaurants and hotel industry are in the form of fresh fish. Like the for the Dagaa species, retailing of Tilapia species is undertaken predominately by women.

8.1.8 Retailing

Retailing of fish only occurs for the Dagaa and Tilapia species as the Nile Perch is predominantly for the export market, except for the rejects. The retailers buy their fresh fish (i.e. Tilapia species) from wholesalers/large traders who are distributed around the country. For the processed fish (mainly sun-dried Dagaa) the retailers buy them from wholesalers who deliver them from various beaches. For the Nile Perch by-products (i.e. off-cuts which make fish chips) the retailers often buy them from wholesalers who specifically buy them from IFPs.



8.2 Fish Subsector Map A subsector map is a schematic representation of the structure of a given subsector, essentially showing how products flow through the subsector systems. The map presents the various functions and markets, and distinguishes alternative supply channels where a channel is a vertical chain of firms that transforms raw materials and ultimately delivers to consumers as finished goods. In other words, a subsector map traces the product flow and the transactional relationships between various actors in a subsector right from inputs supply and production to the consuming markets. The following sections discuss different participants and their functions within the Kenya’s fish subsector, followed by presentation of a graphic depiction of the map and brief discussions of the identified subsector channels.



Figure----: Lake Victoria Fish Subsector Map

Markets

Nile Perch IFP

IFP Agents N= ?

Assembling Point/Landing Beaches (N=297)

Channel 1: Industrial Fish Processor Channel

Channel 3: Fresh Fish Trader Channel

Channel 2: Artisanal Fish Processor Channel

Imported Input Suppliers (N=6) Local Input Suppliers (N=??)

Artisanal Processors (Dagaa & NP By-Products & Rejects) (N= ) Fi

shm

eal

Proc

esso

rs

Processed Fish Wholesaler (N= )

Processed Fish Retailer (N= )

Fresh Fish Retailers (N= )

Fresh Fish Wholesaler (N= )

Artisanal Fishermen (Nile Perch, Dagaa & Tilapia)

(N=33,000)

MOL&FD (DoF & KMFRI)

Fishing

Inputs Supply

Lake Transport

Assembling & Grading

Road Transport

Processing

Export

Wholesaling

Retailing

R&D

Export Processed

Animal Feed (Fishmeal)

Domestic Processed

Domestic HH Fresh

Domestic Institutional Fresh

Animal Feeds Retailers

Animal Feed Wholesalers



8.3 Lake Victoria Fish Subsector Channels

In the context of subsector analysis, a channel is a vertical chain of firms that transform raw materials into finished products and deliver them to consumers directly of through various agents. For Lake Victoria fish subsector, there are three main channels:

• Channel 1: Industrial Fish Processor (IFP) Channel; • Channel 2: Artisanal Fish Processors Channel; and, • Channel 3: Fresh Fish Trader Channel.

The IFPs and Artisanal channels together account for the bulk of marketed fish and fish products from the lake. The two employ the largest number of people through direct employment, especially in processing factories as well as self employment in the form family-owned micro and small business enterprises. Much of the direct and indirect employment is to be found around the lake region and the main urban market centers in the country. The channels described below differ by the type of fish species dealt with and more importantly the extent and level of processing used. What is common to all channels is that all fish caught in the lake pass through the land sites or beaches where weighing, selection, assembling and payment of local authority cess take place.

8.3.1 Channel 1: IFP Processors Channel Industrial fish processors are those operating large modern industrial processing plants which perform fairly integrated operations in that they undertake processing, wholesaling and exporting. Despite shrinking in recent days due to the decline in the Nile Perch catch rate and the stringency on quality standards in the EU markets, the channel has been one of the most dynamic in addition to being the only earner of foreign exchange. The main actors in this channel are the large and modern industrial fish processors, who specifically undertake the processing of the Nile Perch to make frozen fillet for export. The market destinations include the EU, and the newly established markets of Japan, USA, Israel, Venezuela, Malaysia, Columbia and Singapore. When the Nile Perch exports market to EU was booming during early to late 1990s, the country had a total of 16 factories but this has declined with the shrinking of the EU market and the declining availability of the Nile Perch fish species. Today, there are only 8 operational IFP plants distributed as follows: Kisumu (4), Migori (1), Homa Bay (1) and Nairobi (2). While the cost of putting up such plants ranges from Kshs 100-300 million, the level of employment is not well known but with an estimated average of 150-200, the industry may be providing employment to between 1,200-1,600 people. The IFPs deal only with the Nile Perch species, with the procurement of supplies being undertaken specifically through agents who are accredited on the basis of their integrity, honesty and ability to deliver as per agreed supply contracts. The IFP first agree with the agents on the into factory price (per Kg). Once this is agreed, the agent is given a proportion or the full amount in cash or in the form of cheque equivalent to the agreed into-factory price currently between Kshs 75 and Kshs 80 per kg. The agent and an employee driver of the IFP are provided by the processor a truck (commonly 3-5 tons) and the two travels to preferred landing beaches to buy



fish. At the landing beaches, the agents assemble fish in two ways. By using their own or IFP motorized and larger boats to buy fish from fisher folks in the waters and also by buying from fishermen at the landing beaches at negotiated prices. Buying prices seem to vary widely across the beaches depending on availability and extent of market information among the fisher folks. The agents hire fish selectors at the point of buying (in the lake or at the beaches) to ensure that only specified quality and sizes are purchased and the fish is weighed, recorded and put into the truck in layers separated with ice flakes for preservation services. Fish with yellowish gills and/or soft fillet and sizes below 50 cm are normally rejected and the fisher folks sell the same to local markets at lower prices. Such rejects account for 5-15% depending on the preservation and handling techniques employed by the fisher men. The current beach level fisher prices for good quality fish range from Kshs 60 and 70 per kg, though for a long term in the past the prices had remained around Kshs 105 per kg15. Due scarcity of the Nile Perch species, the purchasing crew often take from 2-3 days around the beaches before they can accumulate enough to deliver to the processing plants. At the processing factories, the fish is selected again by IFP selectors, and acceptable quality are weighed and taken into processing into fillet. The agent is paid for the accepted amount and for any rejects, the agent often sell to artisanal processors though at lower prices. From this point, the process starts all over again. By-products of the Nile Perch (off-cuts, frames, fats, and skins16) generated by the IFPs are sold to artisanal processors or the fishmeal processors.

8.3.2 Channel 2: Artisanal Fish Processors Channel

Artisanal processors are small family business enterprises whose technologies of processing are simple and rudimentary in nature with the operations occurring around homesteads, beaches and more recently in the slum areas of towns around the lake. The channel depends on three main sources for fish and fish products. First, the Dagaa species which is processed by way of sun-drying for human consumption, and more recently for the animal feed fishmeal market. The supplies come directly from fishermen who sell the catch to traders around the beaches, with over 95% being women. The human consumption market for Dagaa has been more lucrative (but with excess supplies from Tanzania and Uganda which do not observe closed fishing seasons, the bulk of Dagaa fish is currently being diverted to the animal fish meal industry. Sun-dried Dagaa for human consumption is currently selling at Kshs 30 per Kg while that for animal feed is about Kshs 19 per Kg. Second, Nile Perch whole fish rejects and by-products whose processing involves deep frying of the frame and the off-cuts (using fish skins as cooking fuel and fat for frying) mainly for human consumption. The by-products come from the IFPs through traders or artisanal processors themselves who buy from the IFP factories, while the whole fish rejects often come from IFP agents.

15 It is not clear why the fisher prices have fallen in a situation where scarcities of the Nile Perch and high market demand have been reported. A possible explanation is high market imperfections in terms transparency in market information and the weak organizational capacity among the fisher folks against what appears to be a cartel among the agents and among the IFPs themselves. 16 Fillet exports to USA and the EU are normally skinless while those going to other markets such as Japan are normally with skins.



Third, the Tilapia species which is smoked after the guts have been removed. The source is often the wholesale traders who purchase the fish from fishermen at the landing sites. Sales for this product are mainly targeted at the low income consumers in various local and regional urban centers in the country. Although not precisely know, all key subsector observers contend that this channel handles the largest volume of fish and has the largest number of MSEs.

8.3.3 Channel 3: Fresh Fish Trader Channel

The difference of this channel compared with the rest is that a significant proportion is consumed fresh. The channel essentially deals with the Tilapia species which is the only species from the lake that is partly consumed fresh and partly as smoked. To catch the Tilapia fish species, the fishermen use the same technology as the Nile Perch which involves the use of long fishing lines or gill nets. The fishermen normally sell the fish to wholesale traders at the landing sites, who then transport the fish to various local and regional in trucks stacked with ice. For markets in the lake region, transporters use pick-ups. For the more distant regional markets such as Nairobi and Mombasa, large wholesale traders use trucks with varying carrying capacities of 3-7 tons with fish covered with ice flakes for preservation. The fish ends up in large wholesale markets such as Gikomba in Nairobi and Kongowea in Mombasa. For the smaller to medium wholesale trader aiming to sell in the more distant regional markets fish is packed the supplies in papyrus made baskets also stacked with ice flakes, hire pickups (sometimes jointly with others) and transport from the landing sites to major towns in the lake region such as Kisumu and Homa Bay and load into long distance commuter buses for deliver to the target regional markets for onward sale to traders or other small to medium scale traders. Small and medium Tilapia traders sell the product in either of two ways. One, as whole fresh fish to household consumers or fillet to institutional consumers and two as smoked which is then deep fried for vending to individual consumers around various spots in the main towns. In Nairobi, common places where such vending includes Nairobi West, Kibera, Kenyatta market, Kariobangi and others. Women are exclusively the dealers in this type of business.

9. Key Subsector Services and Service Providers

Fishing and marketing of fish and fishery products involve a large number of actors. These actors include policy makers; researchers; development institutions (including NGOs and donors); input suppliers (e.g. wood for making boats, nets, ice, packaging materials; building materials for Bandas); sail masts, hooks; baits, etc), boat owners, fisher folks, transporters (including vehicle and bicycle owners); industrial and artisanal processors, credit institutions; and storage facility providers. These actors are sellers and buyers of various types of goods and services. The suppliers of such goods and services are known as business service providers and may be individuals, private for-profit firms, NGOs, parastatals, associations, community based organizations, regional or central government agencies.



The smooth functioning and development of the fish subsector critically depend on the ability to supply quality and affordable goods and services required in the subsector. An important opportunity for the Kenya BDS is to work closely with these business service providers to help them undertake their business in a better and more sustainable way with the ultimate aim of enabling them to deliver quality and affordable goods and services to MSEs in the subsector, including fisher folks and boat owners. Table 2 below summarizes key services and types of service providers with whom the project could work with to support the growth of MSEs in this regard.

TABLE 2: KEY SERVICES AND SERVICE PROVIDERS Functions Key Services Key Business Service Providers Exporting Packaging, labeling, loading,

transporting and shipping. Exporters (IFPs)

Wholesale and retailing

Loading, unloading, assembling, grading, storage, transporting and selling.

Individual wholesalers, fisher co-operatives, fisher associations and individual retailers.

Processing Industrial fish processing (filleting, grading, packaging etc.), artisanal fish processing (sun-drying, smoking, frying etc.), fishmeal processing (drying, milling, packing etc.)

IFPs, individual artisanal fish processors, fishmeal processors

Road transport Movement of fish from landing beaches to IFP factories, domestic local and regional markets and from IFP factories to port of export.

IFPs, IFP agents, sellers of transport facilities (e.g. Pick/ups, bicycles, refrigerated containers and public transport facility owners).

Assembling and grading

Off-loading, assembling, weighing, grading, selling and loading

Fisher co-operatives and associations, BMUs, Department of Fisheries, women and male loaders and off-loaders.

Lake transport Movement of fish from the lake to landing beaches

Fishermen and IFP agents

Fishing Fishing (catching fish by gillnets, long lines/ hooks, beach seines etc.), boat storage and transport etc.

Fishermen and boat owners

Input Supply Importing and/ or making, repairing, selling of fishing nets (threads, twines, buoys etc.), hooks and lines, boats (wood, nails, iron sheets, cloth, rubber etc), anchor, pressure lamps, weighing scales, plastic containers, wheelbarrows, ice, outboard engines, petrol and oil etc.

Local inputs suppliers (e.g. boats, paddles, life baits, fishing baskets, ice, plastic containers, paints, nails, floaters, transport) and imported inputs suppliers (nets, floaters, hooks, boat engines, pressure lamps, twines, and fuel).

Research and development

Primary fisheries research, fish products development, resource management etc.

Ministry of Livestock and Fisheries Development (DoF, KMFRI)



10. Gross Margins and Transactional Costs

The fish subsector around Lake Victoria is characterized by a large number of transactional activities that involve the exchange of cash between buyers and sellers of goods and services. This is particularly so between the landing site and the retailing point of either fresh or processed fish for human consumption as well as for animal feed. Gross margins in this case simply refer to revenue minus direct or variable costs. It does not take into account overheads, capital investment, or cost of borrowed capital. This is partly because fisher folk do not often incur much of these costs as the boats commonly belong to a boat owner. Thus data provided below should not be misconstrued to represent profits, but rather its proxy. Fishing labor was costed where data on local wage rates was provided.

Table:---------------------Estimated Gross Margins in Kshs (2002)

Nile Perch Dagaa Tilapia Average Catch/Day (Kgs) Total Catch/Month

FISHEREMEN

FIXEDCOSTS-Kshs

Boat-25ft long 50,0000 50,000 50,000 Dagaa Mosquito Nets

Floats 250

Main Rope 880

Clothe pieces 640

Corner material 200

Thread 400

Float Holder 750

Marker 20

Fishing Lamps 6,500

Adjoining Rope 160

Sail 2,000

Oars/peddles 1,100

Labour (3 men/day)

Subtotal

Average Selling Price-Kshs/Kg 51.60 18.15 24.40

Total Revenue

Gross Margin

WHOLESALER

RETAILER



11. Institutional and Regulatory Environment

Though not normally presented in the subsector map, institutional support; regulations and policies are often key environmental factors that influence the dynamics and viability of different subsector channels. Support institutions often include Government ministries, departments and local authorities; research institutions; trade institutions; donors; NGOs and Community-Based Organizations (CBOs). Regulations and policies commonly relate to Government subsidies; export and import regulations; tariffs, labour laws; investment codes and price controls.

11.1 Main Supporting Institutions

Though not normally presented in the subsector map, institutional support; regulations and policies are often key environmental factors that influence the dynamics and viability of different subsector channels. Support institutions often include Government ministries, departments and local authorities; research institutions; trade institutions; donors; NGOs and Community-Based Organizations (CBOs). Regulations and policies commonly relate to Government subsidies; export and import regulations; tariffs, labour laws; investment codes and price controls. The fish subsector around Lake Victoria is supported by several national, regional/local level and international institutions. At the national level, the institutions include:

• Ministry of Livestock and Fisheries/Department of Fisheries (DoF); • Kenya Bureau of Standards (KEBS); • Association of Fish Processors and Exporters of Kenya (AFIPEK); • Kenya Marine Fisheries and Research Institute (KMFRI); and, • Export Promotion Council (EPC)

At the lake regional/local level, the institutions include:

• Lake Victoria Fisheries Organization (LVFO); • East Africa for Management of Lake Victoria Resources (ECOVIC); • HEMNet: • OSIENALA • Local Authorities; • Local Community-Based Organizations (BMUs, Fishermen Associations and

Cooperatives). At the international level, the main institutions currently providing support to the fisheries sector around the lake and the country as whole include FAO and IUCN:

11.1.1 Department of Fisheries/Competent Authority

The Fisheries Department (DoF) was established in 1964, taking over the management of fishing in Lake Victoria from the Victoria Fisheries Union whose predecessor was the Lake Victoria Fisheries Services. Until 1989, the rules and regulations of fishing in the lake were weak and poorly enforced.



But with the onset of commercialization of fisheries, brought about especially by the emergence of lucrative export markets of the NP, the Government of Kenya became more concerned about the conservation issues and enacted a new fisheries Act (CAP 378-380) in 1989. This Act spelt out who can fish, when and how. The regulations were implemented through three institutions; Public Health Department (Ministry of Health), Fisheries Department (Ministry of Agriculture and Rural Development-now Ministry of Agriculture) and Kenya Bureau of Standards (KEBS).

In 2000, it was felt that involvement of several institutions in the management of the subsector had led to duplication of effort and was faced with a lot of coordination problems. Consequently, the Government introduced a supplement to the Act, “Fisheries (Fish Quality Assurance) Regulations 2000” through which DoF became the sole technical implementing arm of the Competent Authority17 (CA) in the form of a Standing Committee comprising the Permanent Secretary-Ministry of Agriculture, Director of Fisheries and Director of Veterinary Services. Under these new arrangements, the DoF is responsible for all matters pertaining to quality assurance of fish and fishery products in Kenya. The Fisheries (Fish Quality Assurance) Regulations 2000” stipulates that the DoF/Competent Authority will work in collaboration with KEBS in establishing the country’s standards of fishing practices, fish transportation, handling and processing through its country-wide network comprising the headquarters in Nairobi, 7 Provincial Fisheries Offices and 49 district fisheries offices.

According to the Presidential circular 1/98 the main functions of the department include: management and conservation of fishery resources, promotion of aquaculture development, fish quality control and fish marketing regulations. Other minor functions include: promotion of recreational fisheries, ice production and cold storage, operation of fishermen’s loan scheme and boat building. The CA handles fish subsector issues including establishment of new processing facilities, approval and registration of fishing vessels, quota allocation, certification of compliance and exporter registration. The Authority also collects various fees on export and import based on weight and value as declared by traders. Fees are prescribed under the General Regulations of fishing such as registration and licence fees and landing site fees. Fees are also chargeable under the Fish Quality Assurance Regulations for issuing certificates of compliance and fish export health certificates. Revenue derived from these sources is currently estimated at about Kshs 14 million annually. More specifically, the CA’s main responsibilities include:

• Issuance of fishing, processing and fish trade licenses; • Maintenance of quality standards, stock and statistical recording of the entire industry; • Inspection of fishing and fish processing facilities; • Enforcement of the fisheries legislation • Running aquaculture promoting projects in the country.

The Fish Quality Control and Inspection Unit of the Fisheries Department is responsible for the day-to-day operation of the so called Competent Authority including:

• Coordination of fish inspection, quality control and assurance; • Formulation and updating of the generic HACCP plans and GMP and SSOP;

17 See detailed structure in the annexes.



• Approval of HACCP and SSOP documents for processing establishments; • Training inspectors, auditing and verification of field reports, • Formulation and updating of legislation and standards for fish and fishery products; and, • Formulation and updating of inspection procedures and documentation.

Under the Act, the Department is empowered with the fulfillment or compliance with the EU Competent Authority Protocols:

• Quality assessment under the Fish Quality Assurance Regulations of 2000. • Assessment of hygiene levels on boats, landing sites and processing facilities; • Certifying fish exports and monitoring lake water pollution for heavy metals and

pesticides among others. • Testing samples of fish and water quality from factories and beaches to ensure that there

are no pathogens; • Ensuring that fish collection points have appropriate sanitary facilities fenced to protect

harmful rodents from entry; paved and adequate drainage and that only accredited laboratories are used for analyzing water and fish.

The DoF is currently involved in various fisher folk support initiatives under co-management systems including training of fisheries officers, setting up a pilot project to improve 16 beaches, establishment of Beach Management Committees and Beach Improvement Units. So far 20 beach inspectors have been trained to manage the handling of fish and ensure good sanitation in 10 beaches where fish for exports are expected from. The beaches will be paved, provided with soak pits, septic tanks, and drainage systems to accommodate sipping trucks. The Department has also set aside Kshs 10 million for fisher folk capacity building in 16 pilot beaches. The training which has started has exposed fisher folks to good fisheries management, sensitization on quality, use of appropriate fishing gears leadership and governance.

11.1.2 Kenya Bureau of Standards

The Kenya Bureau of Standards (KEBS) which was established under the Standards Act is the official arm of government with the mandate of formulating and foreseeing implementing of quality standards in Kenya. KEBS is responsible for metrology, standardization, and testing and quality management issues in Kenya. The aims and objectives of KEBS include preparation of standards relating to products, measurements, materials, processes, and their promotion; certification; assistance in the production of quality products; improvement of measurements accuracies and dissemination of information relating to standards. As regards fish, the KEBS undertakes microbiological laboratory testing for fish and fishery products.

11.1.3 Kenya Fish Processors and Exporters Association (AFIPEK)

AFIPEK, which was established in the year 2000, is a professional association of the fish subsector with membership drawn from processors and exporters of fish and fishery products from Kenya. All fish processing/exporting companies are members of the Kenya Fish Processors and Exporters Association (AFIPEK). It is coordinated through a secretariat based in Nairobi which serves the various members located in Kisumu, Nairobi and Mombasa. The role of the secretariat includes:



• Market promotion of fish and fish products; • Liaising with government and other relevant organizations in promoting subsector

development; • Formulating and facilitating implementation of fisheries’ industry code of practice

(COP); • Ensuring quality standards across the country; • Training of member companies on quality standards; • Implementing projects which promote the fisheries sector, either as an institution or

jointly with other development partners.

11.1.4 Export Promotion Council (EPC)

The EPC was established in 1992, and is the main arm of governments charged with the responsibility of promoting Kenya’s exports across the board in order to increase the level of performance of the economy, including the fish subsector. Its responsibilities are in the formulation and establishment of conducive policy environment, facilitation of export market development, product development and adaptation, and development of exporting skills, as well as in providing leadership in the co-ordination and harmonization of Kenya’s export development and promotion activities. Its key mandates revolve around two things (i) Formulation of Kenya’s export market strategy; and (ii) Identification of export opportunities and assisting exporters to seize the identified opportunities.

11.1.5 Kenya Marine Fisheries and Research Institute (KMFRI)

The Kenya Marine Fisheries and Research Institute (KMFRI) is the institution specifically charged with conducting research on fisheries and general aquatic systems in Kenya. KMFRI was established by an Act of Parliament (Science and Technology Act Cap 320.) in 1978, following collapse of the East African Freshwater Research Organization (which collapsed with the East African Community). KMFRI conducts research in six broad areas, namely; fisheries biology (stock and catch assessment, fish production, genetics and breeding etc.), aquaculture (pond construction, stocking, reproduction, feed formulation etc.), aquatic environment (water quality, pollution etc.), fisheries socio-economic (fisheries development, management, livelihoods etc.), fish quality and post-harvest fish technology (fish quality standards, fisheries products development etc.), and fisheries database management (fisheries statistics, data management etc.). KMFRI has eight research centers in Mombasa, Kisumu, Sangoro, Lake Turkana, Kegati, Lake Baringo, Lake Naivasha and Nairobi. Research on Lake Victoria is coordinated by the Kisumu Research Centre. The main beneficiaries of KMFRI’s research are the Department of Fisheries, IFPs, artisanal processors and traders and fishermen.

11.1.6 Lake Victoria Fisheries Organization (LVFO) The LVFO, which was established in 1994, is a regional organization whose objectives are to foster co-operation among the supporting parties (Kenya, Uganda and Tanzanian governments); harmonize national measures for the sustainable utilization of the resources of Lake Victoria; and to develop and adopt conservation and management measures to assure the lake’s ecosystem health and



sustainability of the living resources. Its secretariat is based in Jinja (Uganda). Its responsibilities include: Promoting the proper management and optimum utilization of the fisheries resources of the lake, enhancing capacity building of existing institutions and develop new ones, and provide a forum for discussions of the impacts of initiatives dealing with the environment and water quality in the lake basin and maintain liaison with existing bodies and programmes among others. The LVFO is headed by the council of ministers consisting of persons responsible for the fisheries in Kenya, Uganda and Tanzania, or their representatives. Below the council of ministers, the organization also has various committees consisting of heads of fisheries departments in the three countries, as well as other organizations involved in fisheries. The organization has a great potential of achieving an improved resource management in Lake Victoria through implementation and enforcement of common management strategies.

11.1.7 East Africa for Management of Lake Victoria Resources (ECOVIC) ECOVIC was registered in the year 2000, and is a membership-based organization with members drawn from the fisher folk registered CBOs and NGOs. The organization’s headquarter is in Arusha (Tanzania) and has representatives in each district bordering the lake. The main goal of ECOVIC is to address socio-economic and political issues facing the fisher folk in the entire lake region with the main focus being on advocacy and lobbying.

11.1.911.1.8 OSIENALA OSIENALA (Also referred to as Friends of Lake Victoria) is a national NGO registered in Kenya in 1992 and currently operates mainly in Nyanza and Western Provinces. The main objectives of the NGO are to create environmental awareness for the conservation and protection of Lake Victoria and its catchment area from further degradation; to serve as a forum for exchange and expression of the views on environmental matters in the lake; provide necessary training to community members involved in reducing environmental degradation around the lake region; to encourage and carry out research in relevant areas of environment with the aim of finding practical and sustainable solutions; to establish and maintain a resource center on matters and issues relating to the lake for purposes of improving the knowledge base of the community around it; and to articulate the views, concerns and aspiration of the lake resources stakeholders through the establishment of collaborative linkages with similar organizations with the aim of harmonizing issues related to the lake for the purpose of exploiting the resources judiciously. OSIENALA has been involved in a number of community development initiatives relating to provision of drinking water, improvements of sanitation, management of industrial waste, natural resource and environmental conservation, and wetland management. An important role in BDS-related activity has been in capacity building of the fisher folks, fishermen cooperatives and associations on simple business management, accounting, record keeping, promotion of the culture of saving and investment. Areas covered over the last 2 years include Migori and Busia where 300 fishermen cooperative/association members have been trained. The next phase will be in Suba and Rachuonyo districts. The organization is assisting the Suba Cooperative Union to raise finances and buy the Mbita Ice Plant which the government has agreed to sell. Osienala’s key supporting donors have been SIDA, IUCN, RELMA, DANIDA GEF-UNDP, and IDRC among others.



11.1.1011.1.9 Local Authorities

The local authorities involved with Lake Victoria fisheries include county councils and town councils in each of the eight districts bordering the lake as well as Kisumu and Homa-bay Municipal councils. The councils collect revenue in respect of fish sold in markets under their jurisdiction. However, the councils rarely provide any of the services that they should be doing for fishermen and traders, such as improvement of marketing facilities.

11.1.1111.1.10 Micro-financial Institutions

SAGA --- KREP----

11.1.11 Community-Based Organizations.

There are numerous community-based organizations dealing with fisheries around the lake region. These include the following: Beach Management Units (BMUs)-Currently, these are the most active and effective of the community Based Organizations. They are present at all designated landing sites. Each BMU committee is made up of 5 to 9 persons, about half of whom are elected by the local fishing community while the rest are nominated. BMUs are independent of government but they lack legal authority. They are maintained through a levy of 1 Kshs/kg imposed on all the landed fish catch. They have been found to be highly accountable to their communities and to be effective. The functions of the BMUs include resolving conflict, punishing offenders, convening community meetings, establishing beach hygiene and sanitation facilities, providing security on the beach and in the fishing ground, receiving visitors, registering beach members, facilitating search and rescue, and the establishment and maintenance of beach infrastructure. Since members of these units come from the community, it can be easily recognized when the BMU’s have failed to deliver according to the community’s expectations. Fishermen Associations- During 1950s, fishing was managed under loose community based associations often under an existing clan constitution within the framework of traditional structures. The first attempt to centralize the management of fishing communities was the establishment of the Fisheries Unit in 1960s, taking away the control of beaches from the community. During the 1970s, fisher folk organizations were converted into Fishermen Cooperative Societies administered under the Cooperatives Act and promoted and managed by the Ministry of Cooperatives Development. The aim was to assist the fishing communities in the marketing of fish, mobilization of savings for beach improvements, and to provide credit to fishermen. However many of them were poorly managed and ultimately collapsed. Beginning 2000, fisher folk Associations emerged as the new form of organization as a way of avoiding problems encountered under the Cooperative system. Those transformed into associations have registered themselves with the Ministry of Culture and Social Services and have been running side by side with those still under the Cooperative system. Some fishermen have remained as members of both though many are inclined to market under the



Associations. By 2002, there were only 35 active cooperative societies with approximately 7,900 members with Kisumu, Suba and Migori accounting for about 73% of the membership. In every beach, a beach leader supported by a committee of 5 to 7 people is appointed by the community to ensure fishing is undertaken in compliance with the laid down rules and regulations, promote peace and security at the beach, resolve conflicts, receive and approves immigrants. The committee intermediates between the community and the Fisheries Department, although he or she is not recognized in the Fisheries Act. Fishermen Co-operative Societies- In most fishing clusters, fishermen have formed cooperative societies which are responsible for marketing fish for their members as well as ensuring that member’s interests are protected. Unfortunately, these cooperatives are often ineffective and most members tend to evade marketing through them. There are about 46 fishermen co-operative societies around the Lake Victoria districts alone. They operate under the authority of the co-operative societies act. Their functions include providing fishing gears, material for boat maintenance, fuel, fish transport, fish preservation facilities and organized marketing. Just like all the cooperative circles in Kenya, most of these cooperatives have not been doing well and to survive, some of them are edging in providing banking services.

11.1.12 Food and Agricultural Organization (FAO) The FAO has projects that look at various issues in fisheries, including offering training to senior fisheries inspectors on quality management systems.

11.1.13 IUCN

The IUCN contributes to Kenyan fisheries mainly through its programme on socio-economics of Lake Victoria, which is implemented in collaboration with government research institutions and local NGOs in Kenya, Uganda and Tanzania. The programme promotes involvement of the local community in management. The objectives of the project include: understanding the socio-economic conditions of various stakeholders; and building capacity of the stakeholders to manage the fisheries in a sustainable manner.

11.2 Policy Issues

Key regulatory issues of fish subsector relate to resource sustainability, development of fishing technology, food safety, including hygiene in product handling and limiting microbiological contamination. The EU has provided detailed requirements regarding fish capture methods to guarantee sustainability and safety. There is also much attention paid to fish quality and safety. Among the safety features are proper structures of wholesale and auction markets and processing facilities (e.g. construction of walls and floors, lighting, refrigeration, ventilation, and staff hygiene among others), processing operations, transportation, storage, packaging, checks on finished products (including visual, organoleptic, chemical and microbiological), laboratories, and water quality. More generally, it is required that the processors undertake “own checks” broadly based on the principles of the Hazard Analysis Critical Control Point (HACCP). Key elements of HACCP include



identification of critical points in the processing establishment, establishment of methods of monitoring, undertaking quality analysis in approved laboratories, maintaining proper records etc. 12. SUBSECTOR DYNAMICS This section is essentially concerned with answering questions such as; which channels are dying and which ones have the most secure prospects for growth, and therefore having the prospects for generating income and employment? What role can subsector MSEs play in those channels and how can their ability be enhanced to participate effectively in the market that has prospects for growth? The following sections summarise the main driving forces for the fish subsector in Lake Victoria.

12.1 Subsector Driving Forces

Driving forces refer to those factors that are at the root of the dynamics and change within the subsector. These often relate to market demand, technological change, market barriers to entry, input supply, and profitability level of different market or product niches, risks or policies. The following sections summarise the main driving forces for the fish subsector in Kenya, and more specifically around Lake Victoria which is the focus of this study.

12.1.1 Heavy on Nile Perch for Export Markets

Exports of the Nile Perch fillet especially to the EU has been a major driving force on a number of key aspects especially quality standards, handling of fish in boats, landing beaches and while on transit. Except for the by-products the export market accounts for virtually all Nile Perch fillet produced in the country. The subsector is heavily reliant on this product for export to the EU which in 2001 accounted for 73% of total exports and 54% of the value. Indeed, when the EU banned exports of the Nile Perch fillet during 1997-2000, the subsector experienced a sharp decline in exports volume and earnings. Luckily, attempts by exporters to secure alternative markets have resulted in positive and promising trends, with the new acquired markets such as Japan, USA, Israel, and Hong Kong showing signs of growth. From very insignificant proportions in mid 1990s, these markets accounted for 27% and 46% of total volume and value of Nile Perch exports in the year 2001. Exports for the Nile Perch are far more lucrative than the local market and the species has been the main target for a majority of the fishermen. This has resulted in over-exploitation of the species by way of using indiscriminate fishing gears leading to significant decline in the availability and catch rate. As a consequence, the number of IFPs processing and exporting Nile Perch products has declined from 16 in mid 1990s in the whole country to only 8 at present. Even for the remaining IFP, capacity utilization has fallen to around 50% and many of those interviewed indicated hopelessness and possibility for diversifying to other businesses.

12.1.2 Fish Cooling Technology Fish is a highly perishable product and without appropriate preservation, it must be consumed within a very short time. Currently, only the IFPs have well developed preservation technologies which consists the use of ice flakes or ice blocks in insulated trucks at the transport level, and cold rooms at the factory level. Large wholesale traders also use ice in insulated trucks for long distance transport.



Mainly due to what many respondents indicated to be lack of cooling facilities and ice as well lack of money to procure or access to such facilities, virtually all the fishermen and small traders were not using such facilities. This has often resulted in two main problems to these actors. Firstly, losses in the form of rejection, which nevertheless is estimated at a 10-15% of total fish catch in the case of the Nile Perch. Secondly, many of these actors are forced to sell fish immediately and at prices that seem to be largely dictated by IFP agents to avoid losses. This has tended to weaken their bargaining power through prolonged storage buyers. Many of the respondents indicated that they are in desperate need for these facilities but are constrained by lack of availability of ice or cold rooms as well as lack of capital to invest in such facilities.

12.1.3 Animal Feeds Market The emergence of the animal feeds industry with high demand for fishmeal is another important driving force. This is specifically for the by-products of the Nile Perch and the Dagaa species. Most IFP problems associated with increased investments to meet export market requirements, the declining availability of the Nile Perch species and the concomitant under capacity utilization of the processing plants has partly been off-set by the growing demand for Dagaa species and by-products of the Nile Perch in the animal feed industry. This has somewhat kept the remaining IFPs in business. The proportion of revenue generated through this market outlet is not known, but most processors contend that it is growing.

12.1.4 Fish Imports from Uganda and Tanzania Kenya’s portion of the lake is only 6% and this coupled with the declining availability of fish in the lake in general has impacted negatively on the domestic market. As anecdotal evidence seems to indicate, an official imports from Uganda and Tanzania especially for the Nile Perch and the Dagaa species has been on the increase. Indeed, some IFPs acknowledged that a sigficant proportion of their supplies for the Nile Perch are coming from these external sources. Prices of fish in the Kenyan market are said to be relatively higher tending to attract supplies from the two neighbouring countries. In addition, Bondo Fishmeal Processors also informed the study team that they were currently purchasing Dagaa and Nile Perch by-products from Mwanza area in Tanzania. The volume of imports of these products is not known but a few respondents indicated that it is significant and also growing.

12.1.5 Domestic Urban Demand for Tilapia In recent years, the demand for Tilapia in the domestic has been on the increase with Nairobi and Mombasa being the main markets. These markets offer higher prices than the rest of the markets in country. In fact it was observed that it is difficult for consumers around the lake region to access or afford Tilapia. The exact proportion currently consumed by the two leading urban markets is not known, but probably around 40% of total supply.

12.2 Key Leverage Points

Leverage is the ability to reach large numbers of MSEs at a single stroke. Points of leverage are those



points where working with established groups of subsector players or organizations can achieve high outreach or the so called critical mass. These points of leverage are either system nodes along the subsector channels, institutions, geographic clusters or government policy and regulation.

12.2.1 Systems Nodes

Several subsector system and institutional nodes have a high potential for leveraging growth and employment in the fish subsector to the extent appropriate interventions to address relevant constraints are put in place.

(i) Assembly or collection points which constitute the landing beaches where fisher folks interact with traders of varying capacities and of different species. This is also the system node where Beach Management Units (BMUs) that manage a wide range of issues pertaining to fishing are to be found. These collection centers provide an important contact point between fishermen and fishermen associations, IFP agents, local and regional wholesaler traders. The system node forms and important point for outreach to a wide range of subsector players in terms of exchange of information regarding, product supply and demand, market prices, product quality issues, technology on production, storage and transport among others.

12.2.2 Institutional Nodes

(i) Fishermen and fishermen groups and associations who play the important role of fishing

with obvious implications on the sustainability of the lake fish resources and quality of fish. The system node has the potential to impact on a large number of fishermen currently estimated at over 33,000.

(ii) Industrial Fishing Processors who are in a central point for all Nile Perch destined for

export and have linkage to a large number of traders and fishermen through their purchasing agents;

(iii) Artisanal processors who play a critical role in the labour intensive and well linked

(backwards and forwards) artisanal processing of Nile Perch by-products, Dagaa (sun-drying) and Tilapia (smoking) for human consumption and animal feeds.

(iv) Beach Management Units, which are critical points for ensuring sustainability of fish

resources, and appropriate beach management among others.

12.3 Geographic clusters A geographic cluster is a region characterized with high concentration of Micro and small enterprises (MSEs). In the study area, a number of geographic clusters and main target actors have been identified as follows: TABLE -----: GEOGRAPHIC CLUSTERS AND KEY TYPES OF MSES District Clusters Beach Clusters Main Target Actors



Suba District • Kiumba, Roo, Korunga, Mbita and Litare

Fishermen, traders, Associations, Agents, BMUs, Artisanal processors, Transporters, and Ice Makers.

Bondo District • Wichlum, Usenge, Obenge, and Luanda Kotieno

Fishermen, traders, Associations, Agents, BMUs, Artisanal processors, Transporters, fishmeal processors, and Ice Makers.

Busia District • Port Victoria. Fishermen, traders, Associations, Agents, BMUs, Artisanal processors, Transporters, and Ice Makers.

Rachuonyo District • Mainuga, Awana, and Achuodho Fishermen, traders, Associations, Agents, BMUs, Artisanal processors, Transporters, and Ice Makers.

Kisumu District • Asat, Kaloka, Nyamware, and Paga

IFPs, Artisanal processors, traders, wholesalers, input suppliers, ice makers, fishermen, boat owners, and BMU.

These five district clusters account for 94% of total landed fish catch, which the Nile Perch, Tilapia and Dagaa account for 98% of the total. The clusters account for 86% of fishermen operating in the lake 85% of registered operating fishing vessels, 87% of all landing beaches, 4 of the eight operating IFP (all in Kisumu) and a large but unknown number of artisanal processors and traders. 13. SUBSECTOR CONSTRAINTS AND OPPORTUNITIES Constraints refer to factors that inhibit MSEs in a given subsector from performing their business in the best way. Opportunities refer to the prospects of businesses that can be undertaken as part of resolving those constraints. Thus behind every constraint there is an opportunity or opportunities for business. Thus, against each of the subsector constraints listed below there are opportunities for commercial business for the profit motivated enterprises as well as facilitative services for the non-profit motivated agencies. The subsector faces constraints of varying importance at various stages of the supply chain.

13.1 Inputs Constraints

a) Lack access to inputs. The bulk of the inputs used in the subsector are imported and the only 4 importers are situated in Kisumu city and have no out let networks. Many of the fishermen indicated that for some of the more expensive and specialized inputs such as engines, hooks, pressure lamps, floaters and nets, they have to source them from Kisumu costing them time and money.

b) High cost of inputs. This is particularly for imported inputs which comprise the largest proportion of inputs used in the subsector. Importers pointed out that part of the reason is the high import duties. Other reasons relate to the declining volume of sales forcing sellers to hike prices.

13.2 Fishing Constraints



a) Over-exploitation of fish leading to declining catch rate and consequently the landed volume of fish, especially of the popular Nile Perch species18. Due to high competition for fish, fishermen use smaller mesh sizes, leading to smaller average sizes of fish catch. Because stocks are increasingly depleted the catch per unit of effort (i.e. weight of fish per boat, per fisherman or per hour fished) are declining. Part of the problem is due to predation by Nile perch on other species, including its young ones and weak enforcement of mesh-size regulations. The declining catch and therefore availability have resulted in the time for assembling fish from the landing beaches to extend from what used to be one day to up to 4 days in some instances.

b) Poor fishing and fish handling techniques leading to spoilage and quality deterioration. The problem relates to the use of indiscriminate and destructive fishing techniques that catch juvenile fish and destroy fish habitats unhygienic product handling practices.

c) Lack of effective extension services on hygienic practices, fishing and fish handling techniques. The DoF, which is supposed to provide this service, lacks transport facilities and sufficiently trained personnel.

d) Lack of capital among fishermen to procure modern fishing gears including motorized boats to enable them to venture into deeper waters. Technology advancement in boat improvements has been stagnant for a long time and most fishermen rely on the traditional wooden boats whose carrying capacity, efficiency and appropriateness to carry ice is low.

e) Pollution of lake water by organic effluents, which adversely affects marine life and quality and promotes water hyacinth proliferation thereby hindering easy mobility of fishing vessels.

f) High competition for fish and occasional conflicts between Kenyan fishers and those from Uganda and Tanzania. This is partly caused by theft of fishing gear, unharmonized fishing regulations, lack of clear boundary demarcations and mechanisms for paying duties on cross-border fish trade.

13.3 Marketing constraints

a) Lack of appropriate fish handling facilities especially at the landing beaches. Many of the beaches have no portable clean water, proper floor paving, covered bandas, and fences. The facilities are rudimentary often consisting of a simple canopy or a landing jetty. Currently, there is little or no government support towards infrastructure development at the landing beaches or contribution to communal projects by stakeholders.

b) Lack of ice and cold storage facilities. None of the 297 landing beaches has a cold room. Fishing boats also have no ice or ice storage facilities for preservation of fish while in the waters, forcing many fisher folks to venture not far from the shore line, or to set of back early where they do so. Most beaches lack electricity which is necessary for running ice plants. Even with electricity, it appears unlikely that the fisher folks would have the ability to raise the required capital needed to construct an economically viable ice plant, which is estimated by some ice makers in the industry at as much as Kshs 5.0 million.

c) Lack of communication facilities at the landing sites and fishing grounds making information between fisher folks, traders and agents difficult.

18 Previous poaching by Kenyan fishermen from the more massive Tanzanian and Ugandan waters has been halted by more rigorous patrols by the respective authorities.



d) Lack of adequate business management skills: Many fishermen and traders operate in a very un-business-like manner. Many have no knowledge in accounting, record and book keeping. The fish business is not operated independently from other family activities.

e) Weak marketing organization among fishermen and small fish traders, placing them in a weak bargaining position with the IFPs and other regional traders. Fishermen largely operate individually and there has been no serious effort to organize them into effective fishing and marketing organizations.

f) Lack of adequate and reliable market information: Fishermen and small local traders have no reliable channels through which they can access market information especially on prices. In this regard, the regional traders and IFP agents (for the Nile Perch) tend to have an upper hand and operate in ways that safeguard their own interest. In support of this, the study team observed price differences of as much as Kshs 10 per Kg for the Nile Perch in beaches quite close to each other. In addition, most fisher folks and small traders have no knowledge regarding export markets, particularly the EU regulations on fishing and handling methods and quality standards.

g) High price fluctuations, which changes by as much as 25-30% in a short span of time. During the field interviews it was established in one case that the price of the Nile Perch had fallen from Kshs 85 to Kshs 60 per kg in some areas in less than two weeks.

13.4 Transport Constraints

a) Poor condition of roads: Most roads between landing beaches and from beaches to the regional markets are poor and become impassable during the rainy season. A major negative effect of this has been spoilage of fish and high cost of fish collection.

b) Inadequate exploitation of water transport as and alternative water transport system is not fully exploited. Many respondents interviewed argued that this is more expensive and there is need for further investigation to establish its viability.

13.5 Processing Constraints

a) Under-utilization of IFP processing capacity. Mainly due to scarcity of the Nile Perch, many IFPs are currently operating at below 50%. Some of them stated that they have been kept afloat by the sale of by products, which for one factory that was interviewed was at least able to cover operating costs.

b) Lack of appropriate processing technology for artisanal processors. This is particularly so for the Dagaa species which is normally sun-dried making it a big constraint during the wet seasons.

c) Lack of clean and treated water: This is particularly a problem for ice makers and artisanal processors. For the IFP, water treatment is done at the factory at their own cost.

13.6 Financial Services and Issues

a) Lack financial banking services at the beaches: There are no banks or formal financial institutions in almost all fish landing beaches, despite the large cash transactions that take place around the lake shores. In one case a single IFP agent indicated that he has to carry up to Kshs 3.0 million for purchase of fish in just one trip.



b) Lack of a savings culture: There is widespread lack saving culture for among the fishermen and many of them are known to spend all their daily earnings, which is sometimes as high as Kshs 1,200 per fisherman, on beer drinking and prostitution, which is partly responsible for the high prevalence of HIV/Aids. This cultural problem is partly responsible for the reluctance of financial institutions to extend their services to the fish landing sites. Fishermen are largely migratory and this partly explains the reason for the low willingness of the few financial institutions in the lake region to lend money to them.

c) Lack of exposure to alternative investment opportunities around the lake. d) Lack of training on financial accounting and business management, among most individual

fishermen, leaders of fishermen association and Beach Management Units (BMUs).

13.7 Institutional, Policy and Regulatory Constraints

a) Weak capacity of institutions to manage and regulate the fishing industry in a sustainable manner, particularly in enforcing the application of the right fishing gears to avoid over-exploitation as stipulated in the Fisheries Act. The DoF, which is the central government organ charged with these responsibilities lacks adequate and morally motivated personnel, boats and funds to facilitate effective patrols on fishing malpractices and collection of fees. The fees collectors/fishermen ratio estimated at about 1:180 in Lake Victoria compared to 1:30 along the Indian Ocean coast line. Most fish scouts have to travel on public means and many of them tend to fall prey to corruptive practices with a scout being responsible to as many as six beaches most of which are far apart. Consequently, fees collection is about one-third of the potentially possible collections estimated at Kshs 7.6 million per annum19.

b) Lack of effective Systems for Trade Information Assessment and Monitoring. There has been rampant under declaration of import and export values with no credible verification such as that from INFOFISH, because most records are not yet computerized.

c) Imposition of multiple levies on fish and fishery products. Traders pay levies at source markets (i.e. the landing beaches) as well as at the destination wholesale markets.

d) Multiple licenses procedures e.g. fish traders being licensed by the department of fisheries as well as by local authority.

e) Disharmony of regulations. Regulations are not harmonized in the three countries. For example mesh-size regulations are not harmonized for all lakes and all fish species

f) Lack of effective co-ordination between different institutions dealing with fisheries. For example, there is weak co-ordination between research and management institutions.

g) Lack of participatory stakeholders approach in management of the lake resources and poor integration of the Fisheries Act with traditional fisheries management systems.

h) Lack of qualified personnel to undertake HACCP systems audits. There is lack of a service provider on training on the HACCP systems, leaving most actors vulnerable to export market forces.

i) Lack of an appropriate and well equipped national fish quality control laboratory.

19 Estimates in the report on “A Study Leading to the Establishment of the Fish Levy Trust” (A workshop discussion paper July 2002). Report prepared by SMEC International for the Ministry of Environment and Natural Resources.



14. RECOMMENDED INTERVENTIONS AND CLUSTER AREAS Based on the stakeholders workshop held at the Sunset Hotel in Kisumu on 30th October 2003, the following interventions were ranked high and were recommended for support under the Kenya BDS programme.

o --- o ---- o --- o ---

The initial clusters recommended largely on the basis of critical mass of MSEs in the lake’s fish subsector are as follows: District Clusters Beach Clusters Main Target Actors Suba District • Kiumba, Roo, Korunga, Mbita

and Litare Fishermen, traders, Associations, Agents, BMUs, Artisanal processors, Transporters, and Ice Makers.

Bondo District • Wichlum, Usenge, Obenge, and Luanda Kotieno

Fishermen, traders, Associations, Agents, BMUs, Artisanal processors, Transporters, fishmeal processors, and Ice Makers.

Busia District • Port Victoria. Fishermen, traders, Associations, Agents, BMUs, Artisanal processors, Transporters, and Ice Makers.

Migori District • Muhuru Bay and Karungu Fishermen, traders, Associations, Agents, BMUs, Artisanal processors, Transporters, and Ice Makers.

Rachuonyo District • Mainuga, Awana, and Achuodho Fishermen, traders, Associations, Agents, BMUs, Artisanal processors, Transporters, and Ice Makers.

Kisumu District • Asat, Kaloka, Nyamware, and Paga

IFPs, Artisanal processors, traders, wholesalers, input suppliers, ice makers, fishermen, boat owners, and BMU.



15. Annexes

Annex1: Itinerary Date Activity 13th October 2003 • Literature review. 14th October 2003 • Design of research methodology, development of tools and questionnaires for subsector

assessment; • Refinement of blue-print subsector map; • Review of secondary research data and information; • Identification of key actors/stakeholders to target during the field interviews.

15th October 2003 • Review of secondary research data and information; 16th October 2003 • Travel to Kisumu.

Interviews in Kisumu (Peche IFP, Fish Processors-FP, Obunga-Mbuta Artisanal Processors, OSIENALA)

17th October 2003 Interviews in Kisumu (DoF, HEMNet, KAR/LVEMP, Input suppliers, Wholesaler Traders) 18th October 2003 • Interviews in Kisumu (Afro-Meat IFP and Ice Processors) 19th October 2003 • Data analysis 20th October 2003 • Travel to Suba District 21st and 22nd October 2003

• Interviews Dagaa fishermen and traders, Nile Perch Agents, Litare and Korunga BMUs, District Fisheries office, boat owners, ICIPE ice processor, (in Mbita town and Rusinga Islands).

23nd October 2003 • Travel to Bondo and Interviews of fishmeal processor (Bondo fishmeal industries. Interviews DFO (Bondo), Tilapia and Dagaa fishermen and traders at Wichlum and Usenge beach

24th October 2003 • Travel to Port Victoria Beach and interview fishermen, traders, processors and wholesalers of Tilapia, Nile Perch and Dagaa.

25th October 2003 • Interview traders at Bondo and Travel to Kisumu and Interview SAGAA. 26th October 2003 • Travel to Nairobi 27th October 2003 • Interview DOF (Kilimo House NBI), AFIPEK and W-Itili Nile Perch Fish Processor 28th October 2003 • Synthesizing data and information, and preparing workshop materials 29th October 2003 • Travel to Kisumu 30th October 2003 • Hold vetting stakeholders workshop (Sunset Hotel-Kisumu) 31st October 2003 • Synthesizing field/workshop data and information and drafting report 1st November 2003 • Synthesizing field/workshop data and information and drafting report 2nd November 2003 • 3rd November 2003 • Synthesizing field/workshop data and information and drafting report 4th November 2003 • Synthesizing field/workshop data and information and drafting report 5th November 2003 • Synthesizing field/workshop data and information and drafting report 6th November 2003 • Synthesizing field/workshop data and information and drafting report 7th November 2003 • Present draft report to Kenya BDS



Annex 2: List of People Interviewed Date

Name Place Position/Organisation

16th Oct. 2003 Mayanna Shiupura Kisumu MD-Peche Foods Ltd (IFP) 16th Oct. 2003 Peter Ojiambo Kisumu Member- Obunga-Mbuta Artisanal Group 16th Oct. 2003 Anderson Otieno Kisumu Ass. Secretary- Obunga-Mbuta Artisanal Group 16th Oct. 2003 Tom Ondudo Kisumu Coordinator-- Obunga-Mbuta Artisanal Group 16th Oct. 2003 Churchill Otieno Kisumu Member- Obunga-Mbuta Artisanal Group 16th Oct. 2003 Daniel Okong’o Kisumu Operations manager-IFP 2000 Ltd 17th Oct. 2003 Okumu Makogola Kisumu Assistant Director of Fisheries/DoF 17th Oct. 2003 Susan Imende Kisumu Senior Fisheries Officer/DoF 17th Oct. 2003 Jacob Odhiambo Kisumu Assistant Fisheries Officer/DoF 17th Oct. 2003 Alfred Obayo Kisumu Fisheries Quality Assurance Officer/DoF 17th Oct. 2003 Joseph Ngome Kisumu Coordinator-Health & Environment Media Network (HEMNet) 17th Oct. 2003 Kyalo Mailu Kisumu KARI/LVEMP Secretariat 17th Oct. 2003 Wanannchi Kisumu Wananchi Fishnet/Input Supplier 17th Oct. 2003 Nashid Kassam Kisumu Director/Kavirondo Fishnets Ltd 17th Oct. 2003 Hassan Kassam Kisumu Director/ Kavirondo Fishnets Ltd 17th Oct. 2003 Christine Amollo Kisumu Chair/Lady-Fresh Fish Joint Women Group (Mun. Mkt) 17th Oct. 2003 Mary Anyango Kisumu Treasurer- Fresh Fish Joint Women Group (Mun. Mkt) 17th Oct. 2003 Elizabeth Olwal Kisumu Secretary- Fresh Fish Joint Women Group (Mun.Mkt) 17th Oct. 2003 Perez Onyango Kisumu Member-Fresh Fish Joint Women Group (Municipal Mkt) 17th Oct. 2003 Jane Owilli Kisumu Member-Fresh Fish Joint Women Group (Municipal Mkt) 17th Oct. 2003 Jane Lukale Kisumu Member-Fresh Fish Joint Women Group (Municipal Mkt) 17th Oct. 2003 Christine Awino Kisumu Member-Fresh Fish Joint Women Group (Municipal Mkt) 18th Oct. 2003 Tejendra Mandalia Kisumu MD-Webuye Fish net Wholesaler 18th Oct. 2003 Thomas Nyamao Kisumu MD-Victoria Ice Mart 21st Oct. 2003 Benedict Kyalo Suba District Fisheries Officer-Suba 22nd Oct 2003 Tom Okombo Rusinga Chairman-Litare Beach BMU 22nd Oct 2003 Peter Odoyo Rusinga Secretary-Litare Beach BMU 22nd Oct 2003 Benedict Achieng Rusinga Assistant Beach Leader-Litare Beach BMU 22nd Oct 2003 Isaiah Angweno Rusinga Member- Litare Beach BMU 22nd Oct 2003 Doris Atieno Rusinga Boat owner 22nd Oct 2003 Wikista Arwa Rusinga Boat Owner 22nd Oct 2003 John Ouma Rusinga Fisherman/Boat owner 22nd Oct 2003 Lazarus Ongengo Suba/Mbita Korunga Beach-Council Representative 22nd Oct 2003 John Onyango Suba/Mbita Korunga Beach BMU-Member 22nd Oct 2003 Elizabeth Akoth Suba/Mbita Dagaa Business lady/ Boat owner- Korunga Beach 23rd Oct. 2003 Washington Odour Suba/Mbita Fisherman/Boat owner- Korunga Beach 23rd Oct. 2003 Naomi Atieno Suba/Mbita Dagaa Trader-Korunga Beach 23rd Oct. 2003 Abdul Okoth Suba/Mbita IFP Agents- Korunga Beach 23rd Oct. 2003 Steve Ndanga Suba/Mbita IFP Agents- Korunga Beach 23rd Oct. 2003 Alfred Oluoch Suba/Mbita IFP Agents- Korunga Beach 23rd Oct. 2003 Andika Semo Bondo DFO 23rd Oct. 2003 Kenneth Luga Bondo Deputy DFO 23rd Oct. 2003 Jared Agano Bondo Fisheries Officer 24th Oct. 2003 Godfrey Barasa Bondo Manager-Bondo Fishmeal Industries 24th Oct. 2003 Edward Ochae Bondo Beach Leader –BMU (Wichlum Beach) 24th Oct. 2003 John Maeri Bondo Assistant Beach Leader- BMU (Wichlum Beach) 24th Oct. 2003 Elisha Ogutu Bondo Treasurer- BMU (Wichlum Beach) 24th Oct. 2003 Austine Okello Bondo Secretary- BMU (Wichlum Beach)



24th Oct. 2003 Moses Odongo Bondo Assistant Secretary- BMU (Wichlum Beach) 24th Oct. 2003 Michael Opondo Bondo Member- BMU (Wichlum Beach) 24th Oct. 2003 Dismas Kola Bondo Member -BMU (Wichlum Beach) 24th Oct. 2003 Mrs Sabina Orwa Bondo Member- BMU (Wichlum Beach) 24th Oct. 2003 Mrs Joan Ajulu Bondo Member- BMU (Wichlum Beach) 24th Oct. 2003 Mrs Anne Abuyu Bondo Member- BMU (Wichlum Beach) 24th Oct. 2003 Keffa Usenge Bondo Fisheries Representative (Wichlum Beach) 24th Oct. 2003 Mark Orwa Bondo Fishing Patrol Secretary 24th Oct. 2003 Peter Odhiambo Bondo Fisheries Officer-Mbita 24th Oct. 2003 Nancy K. Gitonga Nairobi Director Fisheries Department (by David Knopp) 25th Oct. 2003 Bernard Were Port Victoria Bunyala Fishmeal Cooperative Society 25th Oct. 2003 Fredrick Oduri Port Victoria Bunyala Fishmeal Cooperative Society 25th Oct. 2003 ----- Kisumu SAGAA (MFI) 27th Oct 2003 Dr Stephen Mbithi Nairobi CEO-AFIPEK 27th Oct 2003 Mrs B.A, Wagude Nairobi Deputy CEO-AFIPEK 27th Oct 2003 Mr. Thomas Oduor Nairobi Finance Director- W.E. Tilley (IFP) 27th Oct 2003 Dr. Kimunya Nairobi Production Manager-W.E. Tilley (IFP)



Bibliography 1. Diagnostic Report-Kenya Fish Subsector –December 2002 by Department of Fisheries (Ministry

of Agriculture and Rural Development, Kenya Fish Processors and Exporters Association –AFIPEK; and Export Promotion Council); Funded under Joint Integrated Technical Assistance Programme to Selected Least Developed and other African Countries-JITAP, ITC, UNCTAD, and WTO).

2. Kenya Exports of Nile Perch-Impact of Food Safety Standards on an Export Oriented Supply Chain: By Spencer Henson and Winnie Mitullah (April 2003).

3. A Study Leading to the Establishment of the Fish Levy Trust” (A workshop discussion paper July 2002). Report prepared by SMEC International for the Ministry of Environment and Natural Resources.

4. Fishing and Fish Processing Cluster at Lake Victoria-by Winnie Mitullah (January 1998); 5. A Study Leading to the Establishment of Fish Levy Trust-Workshop Discussion Paper July

2003 (SMEC International Pty Ltd); 6. Food Safety Requirements and Food Exports from Developing Countries: The case of Fish

Exports from Kenya to the European Union-by Spencer Henson, Ann Marie Brouder and Winnie Mitullah (2000);

7. Lake Victoria’s Nile Perch Fish Cluster, Institutions, Politics and Joint Action-IDS Working Paper 87-by Winnie Mitullah (undated).

8. Institutional Response to Global Perch Market: The case for Lake Victoria Fish Cluster-By Dorothy McCormick and Winnie Mitullah (October 2002);

9. Osienala-Friends of Lake Victoria ( A metamorphosis of a community based organization)

Scope of Work Activity 2 and 3 – Fish Subsector Kenya Business Development Services Program (KENYA BDS) Assignment: Sub-Sector Analysis of the Fish Subsector to Identify Constraints to Growth and

Service Gaps Background and Objective: KENYA BDS is a Microenterprise development program that combines the subsector approach with business development services market development. Over the five-year period, the program will work in product markets of high growth potential, and identify market inefficiencies along the supply chain. As critical constraints are identified, the program will facilitate the delivery of appropriate business development services on a commercial basis. This approach will be replicated in 2-3 sub-



sectors over the life of project. Kenya BDS has already identified “tree fruits” as the first sub-sector for assistance, and rolled out activities accordingly. This past September 2003, the sub-sector selection team arrived at fish as the second area for support, with a focus on fish in the Lake Victoria region. In accordance with the Kenya BDS work plan, an in-depth analysis is now required of the fish sub-sector to understand the market dynamics and critical relationships between actors within the supply chain, as well as the relevant constraints to growth for rural microenterprise. Beginning 13 October, the Kenya BDS Team will initiate Activities 2 and 3 for the fish subsector. It is recognized that significant market research and analysis has already taken place. To maintain efficiency and minimize duplication of previous efforts, Kenya BDS will implement a “scaled-down” subsector analysis activity, which will serve primarily to validate previous work conducted, while ensuring that information collected is in line with the Kenya BDS objectives – increasing access to commercial business services for rural MSEs. Specifically, this activity will serve to: 1) validate secondary data through primary research and stakeholder vetting; 2) identify supply-chain constraints and map commercial relationships; and 3) understand key actors participating in the supply chain from a business services perspective. The activity will reflect a largely (rural based) participatory approach, in which information will be extracted from key informants and sub-sector representatives through focus group discussions, market questionnaires, direct field interviews, and vetting workshops. A small team is proposed for this activity, consisting of the following:

Individual Role on Team Background

Stanley Karuga

Team Leader. Will lead the subsector analysis activity, and be responsible for overall synthesis of findings and production of final report.

Subsector analysis Agribusiness MSE development BDS

Richard Abila Team Member. Will participate full time as part of the subsector analysis team.

Fish expert MSE development

Muli Musinga

Team Member. A full time staff member of Kenya BDS, Mr. Musinga will assist in the subsector analysis data gathering and field vetting activities.

MSE development BDS

Richard Asiaho

Team Member. Will participate specifically as lead facilitator in stakeholder workshop vetting activities.

Meeting facilitation MSE development BDS

Tasks: Mr. Karuga will lead a small team to assist in the sub-sector analysis and constraints identification activity. The specific tasks will be to:



1. Identify and review secondary research and identify information gaps. Consultant will lead the review effort of data and research pertaining to the fish subsector. Consultant will coordinate with the relevant sources to obtain additional data as necessary.

2. Prepare field work activities. Consultant will liaise with team to develop field research activity plan. Primary actors to target will include fisher folk, agents, processors/exporters, government, and NGO’s operating in the subsector.

3. Conduct sub-sector analysis. Consultant will lead sub-sector analysis team, and conduct field validation and research using a combination of qualitative and quantitative tools (data review, questionnaires, field interviews, FGD’s).

4. Conduct Vetting workshop. Consultant will coordinate with workshop facilitator to design and co-deliver a stakeholder vetting workshop to be held in Kisumu.

5. Synthesize results. Consultant will work with team to synthesize findings from field research and validation activities, with the specific objective of identifying the supply-chain constraints, as well as the corresponding business services to overcome the constraints. Consultant will take the lead in drafting the subsector analysis report, drawing from team member input as required.

Outputs and Deliverables: Payment will be based upon the satisfactory completion of deliverables as defined below. It is expected that Mr. Karuga in coordination with local short-term consultants be responsible for the following:

1. Trip Notes, which capture the information and insight gathered from all meetings, focus group

discussions, and workshops attended in relation to this Scope of Work. 2. Sub-sector Analysis/Constraints Identification Report, which will detail at a minimum: 1) in-

depth sub-sector analysis; 2) identification of constraints and opportunities; and 3) synopsis of the vetting workshops, and identification of business development services to address the market inefficiencies. The analysis will include a discussion of key competitiveness factors facing the sub-sector. The report will also detail a short-list of priority constraints and corresponding business services, and will conclude with the identification of at least 8 business services to target for the subsector. The report will be comprehensive, and include an overview of the sub-sector methodology, market research tools, as well as contact information and profile of all market actors/stakeholders interviewed for purposes of the assessment.

3. Oral presentation to USAID on findings. Timing: 13 October Consultant initiates literature review. 14 October Subsector analysis team meets in Nairobi to design research methodology, and

develop tools and questionnaires for subsector assessment. Team refines blue-print subsector map, reviews secondary research, and identifies critical actors/stakeholders to target in advance of field research.

15 – 25 October Team conducts field research in support of subsector analysis and constraints identification. Data gathering and fieldwork complete by 27th.



27 – 29 October Team meets in Nairobi to synthesize data. 30 October Vetting workshop held with local stakeholders in Kisumu to discuss findings

and validate constraints and business services. 31 Oct. – Nov. 6 Consultants prepare Sub-sector Analysis/Constraints Identification Report.

Joint presentation is given to USAID on or around November 7th. 7 November Report due

Proposed Level of Effort: The duration for the assignment will be from 14 October – 7 November. The proposed Level of Effort for this consultancy will not exceed 19 days, broken down as follows:

2 days Subsector design and literature review; 10 days Data gathering in the field; 3 days Synthesis of data with team and preparation for vetting workshop 1 day Participation in vetting workshop 3 days Synthesis of vetting workshop activities and drafting of sub-sector analysis/constraints

identification report



REFERENCES:

Institutional Response to Global Perch Markets-The Case of Lake Victoria Cluster by Dorothy McCormick and Winnie Mitullah (October 2002) 1. DECLINE: The supply of NP has been declining since 1991 (Bokea and Ikiara-2000).

Between 1991 and 1996 the landed volume declined by 22% despite increased fishing effort. Further, the size of captured fish has steadily reduced. Factors attributed to this are:

• Over-fishing due to ineffective enforcement of rules and regulations eg observing the

“closed seasons” which should occur during the breeding season. It also occurs because of the increase of number of competing fishermen. In 1993, there were 82,300 fishermen from Kenya. Due to the reduced catch rate and the disruptions brought about by the EU bans and compliance requirements, the number had dropped to just 30,000 in the year 2000. An estimated 83% of the fishermen operate as crew on behalf of IFP or large traders. They neither own the vessel nor the fishing gears.

• Increased use of illegal gears: Competition for fish in a situation of diminishing supplies has led to the use of wrong fishing gears. These include the use of trawlers mainly by the large scale IFP with the devastating effects on fish nursery grounds. These are prohibited in the Lake Victoria Kenya waters. Sometimes use of chemicals. The use of small-mesh nets by the artisan fishermen who cannot afford the motorized boats necessary for deeper offshore fishing thereby catching ”baby Perch” who are not retuned into the water but are sold to small-scale processors. While the large IFP do not buy the baby perch, the sizes of Nile Perch fish processed has continued to decline due to the declining sizes in the fish population. Department of fisheries estimates that about 80% of the fish being processed are between 30-45 cm as opposed to the regulations that limit the sizes to between 50 and 85 cm and about 1.5 Kgs. Infestation of the hyacinth weeds, which interfered with the water and the ecosystem of the lake. This is however still controversial as the fisher folk .tend to argue that the weed has brought back the native species. Other observers argue that its negative effects are on its interference with the activity of fishing and the landing sites.

• Feeding habits of the NP-It has been argued that the introduction of the NP into the Lake has caused the destruction of about 65% of the haplochromis species locally referred to as fulu (Goldscmidt 1992). Predation on the native species by the NP (Okeyo 1999). The cannibalistic tendencies of adult NP, which has been eating the juvenile perch (Ongari 1988).

• Poor Management Lake Victoria Fisheries 2. NP constitutes over half of landed fish. The rest are Tilapia-Ngege and the small, sardine-

like omena (Rastrineobala Argentea), which are largely retained for domestic market.



3. By the end of 1990s, the central problem of the lake Victoria cluster was the conflict between providing current livelihoods to the fisher folk and ensuring sustainability of the fisheries.

4. The study concluded that although the cluster was considered a complex industrial cluster because of the interaction of firms of different sizes, it showed little evidence of collective efficiency. The study made four major conclusions:

• External economies were weak because--- • Joint action among the fishermen was ineffective • Joint action of the IFP worked for a limited time. • There were no common associations

5. Fisheries are a prime example of a common pool of resources. Except for the enclosed

fish farm, fisheries in the open are available to many users. The resource is fugitive in that a fish not caught by one fisherman today will be caught by someone else tomorrow, which encourages fisher folk to catch as many fish as possible thereby depleting rather than conserving the resource. This will always happen unless there are effective and enforceable user norms.

6. Value chain is that set of activities required to bring a product from its conceptualization to the final consumer. A typical chain consists opf four stages, design, Supply Production and Distribution.

7. NP Chain: a. Some sold locally around the lake region b. Some transported to regional consumption points-NBI, MSA etc c. Majority exported to Europe, North America and Middle East

8. Nile Perch Market is buyer driven in terms of demand, quality etc. The EU is the main

market 9. 10. Institutional and Regulatory Issue

Community-based Regulation: Before 1947, fisheries as a common resource were managed and under the communal property norms under village elders who made and enforced rules and regulations. As a conservation measure:

• The communities allowed only limited number of fishermen. • They, closed fishing during the long rains season, which was considered as the

fish-breeding season. If any fishing was to be done it was to be in the far offshore because fish breeding occurs near the shore.

• The communities insisted on the use of large meshed net during the rain season to avoid the capture of fingerlings.

• Ownership of canoes and fishing gears were also restricted and only two fishermen were allowed to own a beach seine nets. The men were supposed to be of high social integrity and willing to give fish to members of the community

• Fishing was restricted to those who were over 20 years old and married being more likely to behalf responsibly.



• Fishing was restricted to areas near the shoreline within the wetlands and river mouths (Geheb 1996). Fishing in the deeper waters was free for all but the available technology constrained much fishing here.

Commercialization of Fisheries involved at least six separate transformations in the subsector: Transformation Key Impact on Management Focus of the NP • Loss of bio-diversity Presence of outsiders • Clan Management systems no longer

appropriate or effective Urbanization of beaches • Significant non-fishing activities.

• Women involvement especially on processing • Increased lake water pollution

Emergence of large IFP and Traders • Change in power and economic balance • Reduced supply for local market

Heightened Competition • Over-fishing • Development of the baby perch market • Cooperatives monopsonistic position lost • Reduced joint actions

Emergence of the EU markets • Rise in quality standards needed for competition in the export market.

• Need for competent authority to negotiate with the EU

IFPs

• IFP- 1999 were 22 with 15 located around the lake 4 in NBI and 3 in MSA (Mitullah 1999). Before the NP boom, most were located in NBI and MSA. Sizes 35-200 workers.

• The power balance favors IFP-who determine prices. Reluctance of commercial banks to extend credit to ordinary fishermen reduces their ability to compete. IFPs play the intermediary role in credit

• . •

DEAPRTMENT OF FISHERIES (DoF)

OTHER RELEVANT INSTITUTIONS AND ACTS

Cooperative Act, Land Use Management Act and provisions of the Department of Social Services and Ministry of Home Affairs.. LAKE VICTORIA MANAGEMENT PROGRAMME (LVMP).



LVMP has been assisting the fisher folk communities around the lake through fencing of beaches; improving roads networks, provision of patrol boats to the DoF to control especially the use of wrong fishing gears, construction of sanitary facilities and dispensaries. EAST AFRICA FOR MANAGEMENT OF LAKE VICTORIA RESOURCES (ECOVIC) ECOVIC, which was registered in 2000, is a membership based organization with members drawn from the fisher folk registered CBOs and NGOs. It has its Headquarter in Arusha (Tanzania) and has representatives from each district or all countries bordering the lake. Its main goals are focused on addressing socio-economic and political issues facing the lake’s fisher folk with lobbying and advocacy being the core their function.

KENYA ASSOCIATION OF FISH PROCESSORS AND EXPORTERS (AFIPEK) AFIPEK was registered in the year 2000, with a view to addressing the problems relating to EU

fish export requirements. The association works closely with the Government in ensuring that

quality and standards required in the fish industry are met. The Association has participated in a

umber of initiatives aimed at sustainable lake management and fish quality control. The initiatives

include the drafting of the Code of Practice (COP) for the fish industry, testing, compliance and

certification of the quality control conditions which in part led to thr lifting of the EU ban on fish

from the Lake Victoria and the rehabilitation of the fish landing beaches along the shores of the

lake (Samaki News 2002).

COMMUNITY-BASED ORAGNISATIONS (CBOs)

Fisher folk cooperative societies are common but most of them are weak in terms of management and financially to the extent that they cannot offer credit to their members. Before the NP era most fishing gears, boats, and fishing operations were mainly owned and managed by the fishermen themselves. With the inability to acquire the relevant equipment through own or cooperative sourced resources, most fisher folks are forced to enter into patron-client relationships with large IFPs and traders which include credit provision, supply of fishing gears and contract supply of fish.



• Beach Management Unit (BMU) • Beach Improvement Committee (BIC) charged with issues related to the ten selected fish

landing sites for export markets, identification of what requires to be improved to meet the EU requirements, determining the level of levies. The problem is that BIC is composed only of officials from the DoF and Large IFPs even though all players acknowledge the need to have representatives of fisher folks in such organizations..

KANAM FISHER FOLK COMMUNITY DEVELOPMENT NETWOK (KFCDN) KFCDN is composed on communities drawn from a number of beaches. Its aim is to develop the Kanam area with support from the Homa Hills Centre.

FUNCTIONS Fishing: DRIVING FORCES

EU Hygiene Directive covers the entire supply chain: • Fish and fishery products • Fishing vessels • Health checks and certification • Quality pf cleaning water and laboratories; • Method of analysis and limits; There requirements are far more stringent compared to those demanded by other export markets such as Israel, Japan Singapore and the UAE CONSTRAINTS

• Low hygiene standards on boats and landing sites many of which lack jetties, portable clean running water, cooling facilities and fencing.

• While the CA (i.e. the DoF) is required to use an accredited laboratory for testing the quality of water and fish the country has no one-stop microbiological and pesticide residues testing laboratory. The CA with support from the Lake Victoria Environmental



Programme (LVEP) funded by the World Bank and other donors are constructing a fish quality testing laboratory in Kisumu, which is now 80% complete (Samaki News 2002);

• Conflicts of interest and corruption in the industry especially with regard to compliance on rules and regulations of fishing and processing;

• High cost of upgrading landing sites to meet the EU requirements especially in terms of providing portable water, cooling facilities, which are estimated at US1.2 million for an average landing site around the Lake.

• High cost of upgrading laboratory facilities for chemical and micro-biological analysis which is estimated at US$ 1.1 million per single unit (LVMP, 1988).

• Ineffective implementation and enforcement of the Fisheries Act by the DoF and Ministry of Cooperatives Development (Owino 1999). Reasons attributed to this are poor remuneration of staff especially the fish scouts; low fish scout-fishermen and Scout-beach ratios (1:6)

• Lack of fishfolk integration in the management of fisheries, a responsibility that was inherent in in fisher folk communities in the past. The DoF is addressing the issue through Co-Management systems, which include training of fisheries officers and a pilot project covering 16 beaches, establishment of Beach Management Committee and Beach Improvement Units. Ten Million Kshs have been allocated for building the capacity of fisher folk in the 16 beaches.So far, 20 beach inspectors have been trained on management and handling of fish to ensure good sanitary conditions in 10 beaches where fish for export are sourced. These beaches will be paved, have soak pits, septic tanks, and drainage systems to accommodate sipping trucks. COMESA and FAO have been supporting training of senior fisheries officers on quality management systems.

• Lack of training institutions focusing on fish management and quality control; •

Annex Table: Fishermen, Beaches and Active Vessels by District around Lake Victoria (2000) District Fishermen Beaches Active Vessels Suba 10,239 97 2,833 Bondo 8,395 67 2611 Kisumu 2,540 32 1189 Rachuonyo 4,438 38 1133 Migori 3,597 27 1083 Busia 2,748 23 770 Nyando 512 6 185 Homa Bay 568 7 181 Total 33,037 297 9,985

Annex table:---- Industrial Fish Processors in Kenya (Dec. 2002). Name Location Current Status Kendag Ltd Operational Prinsal Ltd Operational Samaki (2000) Ltd Operational Fish Processing (2000) Ltd Operational W.E. Tilley Ltd Operational East Africa Seafoods Ltd Operational



Capital Fish Ltd Operational Afro Meat Co. Ltd Operational Peche Ltd Operational Kenya Cold Storage Ltd Not Operational Skyview Investments Ltd Not Operational Lake Victoria Fish Ltd Not Operational Modern Fishing Industries Ltd Not Operational Starfish Ltd Not Operational Tropical Food Products Ltd Not Operational Plantex Ltd Not Operational



Export of Fresh and Chilled Fillets by Destination in Kgs (1994-2000) 1994 1995 1996 1997 1998 1999 2000 2001

Belgium 8,900

130,704

56,684

21,860

2,004

4,290

980

France - 3,902

37,510 -

1,607 - -

Germany 1,500

1,500

341,891

573,985

79,947

54,008 -

Italy 900

17,942

16,480

600 - - -

Luxembourg - 4,428 -

5,716 -

4,402 -

Netherlands 12,170

47,528

512,404

236,123

56,808

64,770 -

Spain - - 63,020 - - - -

Switzerland 1,500 - -

88,488 -

3,493 -

UK - - 16,340

11,100 - - -

Australia - - - - - 1,388

Malaysia - - - - - - 18,169

USA - - 1,200

1,070

4,280 -

29,418

Middle East - - - - - - 824

Africa 325

63

4,050

6,377

6,000 -

170

Other Asia - - - 630

200

580

1,250

Others 4,210

267 70

430

170

100

660

TOTAL 29,505

206,334

1,049,649

946,379

151,016

133,031

51,471

1994 1995 1996 1997 1998 1999 2000

EU 24,970

206,004

1,044,329

937,872

140,366

130,963

980

Other 4,535

330

5,320

8,507

10,650

2,068

50,491

Total 29,505

206,334

1,049,649

946,379

151,016

133,031

51,471

Source: Diagnostic Report-Kenya Fish Subsector –December 2002 by Department of Fisheries (Ministry of Agriculture and Rural Development, Kenya Fish Processors and Exporters Association –AFIPEK; and Export Promotion Council); Funded under Joint Integrated Technical Assistance Programme to Selected Least Developed and other African Countries-JITAP, ITC, UNCTAD, and WTO).



Table 2: Fish Production (MT) from Lake Victoria –Kenya Waters-By District-2002 District Nile Perch Dagaa Tilapia Others TOTAL (MT) (MT) (MT) (MT) (MT) Suba 22,052 13,082 6,448 561 42,143 Bondo 15,721 6,078 3,448 66 25,313 Busia 9,356 5,688 1,248 13 16,305 Kisumu 4,448 3,359 3,359 909 12,075 Rachuonyo 3,598 5,047 1,996 1,407 12,048 Migori 2,699 1,746 326 123 4,894 Nyando 451 364 495 318 1,628 Homa Bay 107 91 147 61 406 Totals 58,432 35,455 17,467 3,458 114,812

Source: Department of Fisheries (Kisumu

Fish Production (MT) from Lake Victoria -Kenya Waters-By District-2002

District

Nile Perch Dagaa Tilapia Others TOTAL % of 3 Main

Suba 22,052 13,082 6,448 561 42,143 99%

Bondo 15,721 6,078 3,448 66 25,313 100%

Busia 9,356 5,688 1,248 13 16,305 100%

Kisumu 4,448 3,359 3,359 909 12,075 92%

Rachuonyo 3,598 5,047 1,996 1,407 12,048 88%

Migori 2,699 1,746 326 123 4,894 97%

Nyando 451 364 495 318 1,628 70%

Homa Bay 107 91 147 61 406 85%

Totals 58,432 35,455 17,467 3,458 114,812 97%

Landed Fish Value (000' Kshs) From Lake Victoria-Kenya Waters-By Species and District (2002).

District Nile Perch Dagaa Tilapia Others TOTAL

Suba 2,165,947 253,171 153,948 12,459 2,585,525 100%

Bondo 1,464,190 119,128 143,398 3,225 1,729,941 100%

Busia 902,604 95,802 72,739 648 1,071,793 100%

Kisumu 305,378 68,192 222,578 37,345 633,493 94%



Rachuonyo 237,199 86,912 111,500 56,779 492,390 88%

Migori 251,870 28,389 24,342 3,335 307,936 99%

Nyando 30,668 7,280 32,670 12045 82,663 85%

Homa Bay 9,232 1,721 11,973 3,354 26,280 87%

Totals 5,367,088 660,595 773,148 129,190 6,930,021 98%

Annex Fig…..: Structure of the Competent Authority

Ministry of Agriculture (PS)

Standing Committee

Director of Fisheries

Head: Fish Quality Control & inspection Unit

Heads: Regional Fish Quality Control & Inspection Unit

Laboratory Services

District Fisheries Inspectors

Fisheries Assistants

Fish Scouts



TABLE 1: SWOT ANALYSIS OF KENYA’S FISHERIES SUPPLY SIDE Fish production __________ Fish supply networks __________ Fish pricing

• Strengths • Abundant natural supply of fish • Predictable • Annual fish output • Well skilled and reliable fishermen • ___________ • Well developed local supply

network • Sufficient numbers of refrigerated

fish transport trucks • Support services e.g. supply of ice

to fish trucks • Increased regional integration of the

industry achievers cross-border fish supplies

• ___________ • Liberalized fish pricing system at

landing beaches • Many landing beaches means

increased price competition between fishermen

• Many fish buying companies means increased price competition between factories

• High retail price paid for Kenya’s export fisheries products

• Weaknesses • _Over-reliance on one major species,

Nile perch, for export • Over 90% of fish from one source,

Lake Victoria • Seasonality of fish supply • Fishermen lack efficient gears e.g.

motorized boats • ____________ • Exploitation of fishermen by

middlemen • Poor roads to fish landing beaches • Ice insufficient to serve fishing and fish

transport boats • Too many sparsely distributed landing

beaches • ____________ • Fishermen not organized into strong

bargaining units • Price information not disseminated to

fishermen • Huge price fluctuations within the year

e.g. low in rainy seasons • Fishermen lack cold facilities to store

fish against low prices • Middlemen have too much power over

fish price decisions • Multiple levying of fish increases costs

and prices

• Opportunities • Increased exploitation of inland lakes’

fisheries • Greater production from aquaculture • Diversification to non-traditional

fisheries • Increased output of marine fisheries,

especially located off-shore • Increased fish imports from the

neighbouring countries • Improved waste management • Control of weeds _____________ • Concentrating fish landing beaches to

reduce travel time and costs for fish buyers

• A leaner marketing channel avoiding agents

• Ice production units close to fish landing beaches

• Formalization of fish import channels

• Concentration of fish landings to improve market transparency

• Developing organization structures for fishermen e.g. co-operatives and fishing groups

• Increased access to fish price information by all players

• Increased direct negotiation between fishermen and factory owners

• Establishment of cold-storage facilities on the main fish landing beaches

• Reduced margin between the f.o.b price and export retail price of Kenya’s fisheries exports

Threats • Poor management of fisheries

sources • Over-fishing using destructive

gears and methods • Unsustainable catch levels • Official attitude and policies of

neighbouring countries against fish exports to Kenya

• Siltation of rivers and dams • Pollution of fish supply

sources • Uncontrolled aquatic weeds

e.g. water hyacinth • Increased cross-border

conflicts in the use of fishery products

• ___________ • Concentrating beaches have

social and financial implications to fishermen e.g. increased average transport costs

• _______________ • Mismanagement of co-

operatives • Effect of international forex

rates on local prices e.g. weakening Ksh against US$

• Fishermen edged out of fish price bargaining

Source: Diagnostic Report-Kenya Fish Subsector –December 2002 by Department of Fisheries (Ministry of Agriculture and Rural Development, Kenya Fish Processors and Exporters Association –AFIPEK; and Export Promotion Council); Funded under Joint Integrated Technical Assistance Programme to Selected Least Developed and other African Countries-JITAP, ITC, UNCTAD, and WTO).



General Guiding Questions

A: Introduce yourself first and state purpose of study: B: Information about Interviewee (Use appropriate Protocol)

1. NAME OF INTERVIWEE ----------------------------------------------------------------------------------------------------- 2. ORGANIZATION---------------------------------------------------------------------------------------------------------------- 3. POSITION------------------------------------------------------------------------------------------------------------------------ 4. TEL CONTACT------------------------------------------------------------------------------------------------------------------

C: Key Questions 5. What part do you play in the fish subsector (input supply, fishing, assembling/collection, brokerage/commission agent, wholesaler, processing,

exports, retailer etc); 6. What inputs do you use (physical, labour, finance, services, etc) and where do you source them from? 7. How are your costs (per unit costs for purposes of determining the Gross margins); 8. What are your outputs and who are your competitors? 9. Whom do you sell your outputs/services to at what price (per unit); 10. What key constraints are facing the subsector/or are inhibiting better performance of your business?

• Production/Fishing level (technology, inputs availability and prices • Assembling at the landing sites (facilities etc) • Transport & communication (roads, water, telecommunication) • Processing (technology/product development, input prices, etc) • Marketing (access/Linkage, demand, information, market prices, organizational issues); • Technical inputs (professional services etc); • Business management skills; • Financial issues (including credit sources, banking facilities, investment areas etc); • Policy, Regulatory an coordination issues; • Tariffs paid?

11. What business development services would help improve your business performance? 12. How many women are employed your business? 13. Any records of business profits/gross margins (be careful here…) 14. Number of people employed in the subsector (where deemed appropriate))



FIELD NOTES Date 16th Oct. 2003 Organization Peche Foods Ltd Type of Actor Industrial Fish Processor (IFP) Respondent (s) Mr. Mayanna Shiupura (Manager) Location Kisumu Background: Peche Foods Ltd was established in 1992 and is one of the 4 IFPs currently operating in Kisumu. The firm is processing only the Nile Perch producing fillet for export mainly to USA and Japan. The firm stated that the reason for processing NP only was that it was the only commercially viable species. The installed capacity is 20 tons per day, but due to scarcity of Nile Perch, prohibition on fish sizes by Government and the EU markets, and lack of adequate supplies from Uganda (as used to be), the factory is only doing approximately 10 tons per day. Purchasing: Firm uses own purchasers and agents who normally use IFP trucks stacked with own made ice from the factory. Currently, the firm has 7 own purchasers. The firm contends that use of own purchasers is cheaper by Kshs 2-3 per Kg but the company would have to put up more money for purchases. Costs related to fuel, vehicle, driver and ice are all borne by the IFP. They manufacture ice for their use only, and are forced to do this because there are no ice plants to provide the input. Fish is purchased mainly from Uhanya, Osieka, Mbita and Port Victoria beaches. The IFP has 10 trucks of 3 tons each, which are sent out in such a way that the factory receives fish in a regular basis. For the accredited agents (currently 3), Peche agrees on the price at which fish will be delivered into factory before they send the team out to purchase. The current price to fishermen is Kshs 75 per kg. The Agent gets Kshs 10 per kg as mark-up and from which he (she) has to pay the following costs: Charges Kshs/Kg CESS 1.00 County Council 1.00 Selection & Loading 1.00 Cooperative soc. 1.00 Total 4.00 Net to Agent 6.00 The agreed mark up to the agent is paid cash on delivery but any bad fish (rejects) which are normally around 1.5-2% are the responsibility of the agent, who often sells to artisanal processors at a lower price. To minimize losses, the agent uses fish selectors at the point of purchase to ensure that only good quality, right sizes of fish (50cm-85cm range) and weight (1.5-9 Kgs) are loaded on to the trucks. Sizes below this range are prohibited by DoF and are also too small for making fillet. The bigger fish (more than the aforementioned size is the breeder fish) is also prohibited. Due to scarcity of the Nile Perch, the agent takes 2-3days to fill up a truck of 3-4 tons unlike 10 years ago when it used to be one day on average. Products: The firm is currently producing Nile Perch frozen fillet in the following proportions; boneless-skinless, 70% for USA markets; and boneless-skin-on (30% for Japan markets). They do not process chilled fillet. The raw material-fillet out turn is about 40%, with the balance 60% being accounted for by skin, frame and guts which are sold locally to artisanal and traders who supply to Bondo fishmeal processing factory for animal feed processing. About 80% of the by-products (guts, frame, skins and offal or off-cuts are sold to artisanal processors). About 30-40 artisanal processors are company’s regular buyers of the by-products. The prices are



Kshs 1.0 per Kg for skins, Kshs 1.50 per Kg for frames and Kshs 15 for guts which yield the fat for artisanal’s deep frying of frames and off-cuts (fish chips). The After deep frying, the frames and the fish chips are sold to low income household consumers. The chest is sold to small traders who are mainly selling it to consumers in Mombasa. Markets and Market Prices: After processing, the fillet is transported to Mombasa on hired refrigerated trucks of about 20-26 tons at a cost of Kshs 160,000. The main export markets for Peche are in USA (50%), Japan (40%) and UAE (10%). Prices for the USA markets are US$ 3.0-3.40 per kg while those in Japan (for skin-on) average US$ 3.0 per kg. EU market is mainly for the chilled fillet (selling for US$ 3.75 per kg) which the firm does not process. Employment: The factory employs 60 women and 40 men. Women are mainly fish cleaners while men undertake filleting. Constraints:

o Declining availability of the Nile Perch as a result of past over-exploitation through the use of indiscriminate fishing gears, yet up to date, enforcement against this practice by DoF/Competent Authority not fully effective on this.

o Poor roads resulting is high rate of vehicle depreciation, and losses of fish (especially during the wet season); o Lack cooling facilties at the landing beaches, resulting in quality deterioration and hence the need for factories to invest heavily on ice making; o Poor sanitary conditions at the landing sites which do not comply with EU regulations/codes of practice; o High cost of electricity currently estimated at Kshs 15.0 per Kg of processed fillet and amounting to 20% of overall processing cost. o Lack of mechanized boats o High cost of fishing nets.

Possible Interventions: o Reduce import taxes on fishing nets. o Provide cooling facilties at the landing beaches;

Date 16th Oct. 2003 Organization/Location Obunga-Mbuta Artisanal Group/Kisumu Type of Actor Artisanal Fish Processor AFP Respondent (s) Committee Members (P. Ojiambo, A. Otieno, O. Otieno, T. Ondudo, C. Otieno); Background: The Obunga-Mbuta Artisanal group which is located in Kisumu is registered with the Ministry of Culture and Social Services and has 100 members. Business: Members individually buy Nile Perch by-products (frames, skins, off-cuts, and guts) from IFP around Kisumu. From these by products, they extract fats which they use to deep-fry the frames and the off-cuts (to make what is called fish chips) and sell the same to low income consumers in Kisumu. They used to buy the chest but these days the IFP are selling to traders who are transporting them to Mombasa for sale for human consumption. After the remaining fats are extracted, the skins are used as source of fuel for deep frying. They sell the fried frames at Kshs 2-3.50 per kg depending on the size, Kshs 25 per the two kg tin for the fish chips, and Kshs 30 per Kg of fat. Constraints

o Inadequate supply of Nile Perch by-products; o High competition from animal feed fishmeal processors; o High price fluctuations; o High competition from industrial fishmeal processors (especially Bondo fish meal processors); o Lack of operating capital; o Lack of business skills;



Date 16th Oct. 2003 Organization/Location Fish Processors 2000 (FP-2000)/Kisumu Type of Actor IFP Respondent (s) Daniel Okong’o Background: F.P. 2000 Ltd was started in 2001 and is the biggest IFP in Kisumu followed by Afro-meat20 and Peche Foods. It is owned by the same proprietors who own Samaki Industries in Nairobi and Kendag Ltd. The firm employs 150 people of which 47 are women. Business: The factory deals with Nile Perch processing only producing frozen fillet which are mainly exported to Japan Israel and Australia. Despite the high market prices to the EU for the chilled fillet, the firm does not deal in the product because of the high stringency in quality and the difficult logistical issues which requires the product to be in the destination market within 24 hours of processing. In addition, fish for fresh chilled making requires more elaborate cooling facilties at the landing beaches as well as in the fishing boats, all of which are lacking and would demand higher investments. The firm operates with 23 accredited agents for fish procurement and delivery. Accreditation is based on integrity, proof of having been an honest businessman, has a boat and fish movement permit and is financially able. They agree on quantity to be delivered and the prices before going out to buy fish. The current agreed buying price is Kshs 100 per Kg, but sometimes goes as low as Kshs 60 per kg. Once agreed, a vehicle and driver, fish movement permit (from DoF at a cost of Kshs 1,000 per 3 ton truck per trip) and ice are provided. The firm has 60 three ton trucks all of which are insulated. Current fish rejection rate is normally 5-6% though it sometimes go as high as 35-37% because of lack of cooling facilties at the landing beaches and faster warmer deterioration during the warmer seasons raising water temperatures. The agents sell the rejects to wholesalers around Kisumu for onward sale to retailers for household consumption. Before departure to landing beaches, agents are given 50% of the money needed to buy the agreed quantity of fish and the balance in the form of a cheque. Agent commission is paid on delivery. The agent has his own people at the beaches that include the crew that goes into the waters to purchase fish from fishermen and fish selectors. The boats used to scout for fish in the waters are normally motorized and are owned by agents through credit provided by the IFP and payable over time. Prices at the beaches vary over time but the firm is currently buying at Kshs 95 per Kg. It takes 3-4 days to fill up a 3-4 tons truck. Constraints:

o Insecurity of carrying cash on the part of agents (as fish is trading is transacted on cash basis). o Poor sanitary conditions at the landing sites (many are simple structures with no paved floors and toilets); o Inadequate supply of Nile Perch (resulting in underutilization of capacity). The factory has installed capacity of 30 MT per day but achieves a maximum of

26 MT. During low supply seasons the factory does only 15 MT per day. The fishermen and the IFP agent’s fish scouts have therefore to go deeper into the lake leading to high fish collection costs.

o High fluctuations of buying prices; o Weak organization of fisher folks; o Fishermen lack funds to enable them invest in appropriate cooling facilities in the boats and at the landing sites. o Lack of ice as there are no plants producing ice for use by fishermen, yet completion of the Mbita ice plant has been delayed by five years. o Poor roads which are impassable during the wet season.

Possible Interventions: Provision of fish preservation or cooling facilities in fishing boats and at the landing sites; (ii) Strengthening fisher folk associations;

Date 16th Oct. 2003 Organization/Location OSIENALA/Kisumu

20 Not processing at the moment.



Type of Actor NGO Respondent (s) Obiero Ongang’a Background: OSIENALA was established in 1992 as a national NGO and is currently managed by 8 professionals. It was formed as a membership organization by the local communities who live and derive livelihood from the lake resources and its environs. It is a forum for addressing various issues of environment facing g the lake. Its mission is to create awareness locally and internationally about problems of the lake while creating structures that would encourage the communities to organize themselves into responsible custodians of their environment including the lake and its resources. It has 5 development partners in Uganda, 5 in Tanzania and 20 in Kenya including CBOs. The following are the key activities which have so far been undertaken around Migori and Busia districts (now planning to extended to Suba and Rachuonyo districts). Objectives:

o To create environmental awareness for enhanced conservation and protection of the lake and its catchment from further degradation; o To serve a forum for exchange and expression of views of the local communities regarding environmental matters affecting the lake and its resources; o To provide necessary training to community members involved in activities whose impact has a bearing on the lake; o To carry out research in relevant areas of environment and to find practical and sustainable solutions ; o To establish and maintain a resource center on matters and issues related to the lake for purposes of improving the knowledge base of the community living

around it. Mission: To carry out research, development consultancy and capacity building for CBOs, NGOs and other socio-economic groupings with a view to lobbying for

progressive policies that would enable stakeholders to determine their destiny through sound and responsible resource management and ownership. Achievements:

o Organized a number of workshops with local communities to identify problems and formulate solutions; o Organized training workshops on industrial and domestic waste management; o Facilitated implementation of Otiwa Bay fisheries and wetland management; o Capacity building for fisher folks and promotion of ecological sanitation; o Conducted a rapid environmental impact assessment and monitoring; o Lobbied and advocated for progressive environmental policies and effective enforcement and regulatory framework; o Collaborated with other organizations on various initiatives and funding (including Maseno and Moi Universities, LVEMP, KMFRI, SIDA, IUCN, RELMA,

DANIDA, GEF-UNDP, IDRCX and Swedish Embassy). Current activities:

o Promotion of water quality and sanitary conditions around the lake region; o Training communities around the lake on issues of pollution and ways of minimizing it; o Capacity building of CBOs around the lake, especially for fisher folks (over the last two years); o Training of fishermen cooperative societies and associations on how best to invest their funds, recording keeping and business accounts; o Mobilizing communities for enhanced group formation;

Planned Activities:



o Provision of micro-credit under the FOSA system to fishermen as operations capital and procurement of nets. The organization has already approached SAGA (micro-credit institution) and KREP for collaboration;

o Buy shares for fishermen in the up-coming Mbita Ice Plant in Suba; o Start a radio broadcasting programme to provide fish market and price information, early warning systems, HIV/AIDS issues, provide health services in the

lake among the fisher folks, environmental issues and measures for sustaining the lake’s resources. o Promote savings culture among the fisher folk which is currently missing; o Education to the youth; o Conservation of fisheries; o Information dissemination; o CBO capacity building; o Lobbying and advocacy for appropriate policies and regulations; o Public health sanitation activities; o Promotion of renewable energy technology.

Constraints: o Lack of savings culture and investment in alternative businesses in light of the declining fish availability in the lake; o Lack of awareness on environmental conservation measure; o Lack of common responsibilities on the lake and its resources; o Poor roads network; o Poor and indiscriminate fishing practices; o Lack of cooling facilities/ice for fisher folks and traders at the bandas;

Date 17th Oct. 2003 Organization/Location DOF- (Kisumu) Type of Actor Government Institution Respondent (s) Assistant Director of Fisheries and staff Background: The DoF informed the study team the following. That total income from fisheries country wide was approximately Kshs 7.4 billion. The number of fishermen was estimated at 33,000 operating some 11,000 boats. That the supply chain are structured around the type of fish targeted (that is the Nile Perch, Tilapia, or Dagaa specifically and those who combine the fishing of Tilapia and Dagaa). The normal size of fishing crew comprise 3 men who go out to the lake in a paddle propelled boats averaging 25ft carrying different fishing gears depending on the targeted species. Only 5% of the boats are engine powered. For the Nile Perch and Tilapia, fishing gears include sails, paddles (oars), nets, floaters, weights, hooks, and baits. For the Dagaa which are caught only in dark nights, the equipment nets, sails, paddles (oars), weights, and pressure lamps. Despite the need for it, fishermen do not carry ice due to a combination of factors including lack of it around the beaches, lack of space in the boats, inappropriate storability of ice in the boats. The boats require to be modified to carry ice. Alternative is to have special boats to distribute ice to fishermen while in the lake.



Fishing: Only a small number of boat owners (5%) actually go fishing. Majority use paid crew. Normally, the Dagaa fishermen set out at about 6 PM and return at 6 AM, while Nile Perch and Tilapia fishermen set out at 6 AM and return at about 3 PM. The departure and return schedules are however determined by the direction of the wind and the type of fish targeted. The Dagaa fishermen operate in accordance with the moon cycle, as fishing has to be done during dark nights when it is possible to attract the lake fly to the lamps which in turn attracts the Dagaa fish. Landing Beaches: The lake has 297 beaches (current unofficial estimate is 306). At the beaches, fish is off-loaded mainly by women, selected (quality and size), weighed and loaded into insulated trucks; and payment made to fisher folks directly or through Cooperatives/Associations where they exist. The county council cess is also paid at this point. Market: The Nile Perch is exclusively for processing by IFP for export, with only rejects being consumed locally after undergoing artisanal processing. High quality Nile Perch is loaded into trucks and transported to IFP plants -Kisumu (4), Migori (1), Homa Bay (1) and Nairobi (2). Tilapia is exclusively consumed locally. At the beach, the fish is off-loaded, selected and weighed the same way as the Nile Perch. Payments to fisher folks, loaders, selectors, and the county councils are done at this point as well. Tilapia sold to regional markets is hauled by insulated trucks in the case of wholesale traders, or by night commuter buses in the case of small to medium traders. The price of Tilapia is currently Kshs 60 per Kg at the beach, though it is commonly sold on per piece basis. The main regional markets for Tilapia are Nairobi, Mombasa, Kisumu, Nakuru and Eldoret. In Nairobi, the main wholesale markets for Tilapia are Gikomba and City Market. For the Dagaa, all beach processes are the same as for the Tilapia and the Nile Perch. However, the species which is specifically for the local market (human and animal feeds) is first sun-dried before delivery to the various local and regional markets. Women are the main traders in Dagaa unlike the Nile Perch and to some extent the Tilapia species. Buyers of Dagaa for animal feeds mainly come from Nairobi, Nakuru, and Thika. Cooling Facilities: Ice for cooling has been a big problem and the majority of fishermen and small traders have difficulties in accessing it. Wholesalers buy ice blocks mainly from Coca Cola bottlers and carry it to the beaches, where they break it into ice flakes, stack it in papyrus baskets and arrange fish in alternating layers. Artisanal Processing: Consists of sun-drying before selling to households or animal feeds processors and grinding to sell to animal (for the Dagaa), and deep frying for the Nile Perch by-products for sale to households consumption after cooking. Role of Women: Women are prohibited by culture from actual fishing and this remains the role of men. However, artisanal processing for the three species (Nile Perch, Dagaa and Tilapia) is dominated by women. Other activities dominated by women are off-loading and retailing of fish (especially Dagaa and Tilapia). Wome are also the main suppliers of life baits for Nile Perch and Tilapia fishing. Only about 15% of women own boats. Constraints:

o Lack of business management skills and prudent investments knowledge; o Lack of saving culture among fisher folk and fish mongers; o Lack of financial services (savings and lending facilities including banks, MFI or even CBO based institutions ) o Lack of cooling facilities (ice in particular); o Lack of strong community based marketing organization; o Lack of market information (especially on IFP into-factory prices), resulting in exploitation of fisher men and fish mongers by IFP agents; o Lack of electricity for cooling and/or ice production in many beaches; o Lack of portable clean water in many of the beaches; o Declining catch of fish especially the Nile Perch as a result of past over-exploitation, coupled with little effort to diversify into other sector such as



horticulture crops production; o Insecurity un the lake due to theft and fishing equipment, especially nets; o High prices of fishing gears, especially nets;

Date 17th Oct. 2003 Organization/Location HEMNet/Kisumu Type of Actor NGO Respondent (s) Mr. Joseph Ngome-Coordinator Background: The Health & Environment Media Network (HEMNet) was launched in Entebbe in 2001. The main focus provision of accurate reporting on relevant information including public awareness, sensitization, and advocacy on matters regarding sound environmental management of the lake and its resources. Dissemination of information is done through workshops, seminars, and broadcasting through radio, TV and print media. The main objectives of the Network are:

o Sensitize stakeholders about the issues affecting the lake’s ecosystem; o Stimulate action by stakeholders for the wise use of the environment of the lake; o Collect, collate and collaborate lake data and information and facilitate information exchange locally, nationally and internationally; o Improve linkages between the NGOs and other civil society bodies, governme3nt agencies, scientists and then media; o Enhance capacity of the network members for responsible, investigative, accurate interpretation of the facts and reporting; o Strengthen regional collaboration in communicating issues of the lake’s ecosystem; and, o Promote and raise the status of environmental journalism in media houses.

HEMNet is a membership-based organization drawn but not limited to practicing journalist, media managers, scientists and researchers, associate members and institutions involved in environmental activities including NGOs and private sector. Currently, the Network has 40 members of which a few have so far benefited from short courses in relevant areas. The Network operates in close collaboration with similar journalist organizations in Uganda and Tanzania which acts as focal points for regional coordination. These include EJAU in Uganda and JET in Tanzania. Together these organization undertake the following:

o Organizing media events and fora; o Sharing information and contacts; o Involving scientists/encouraging researchers to become members; o Training in environmental journalism; o Circulation of information on available courses and materials; o Regional meetings and seminars; o Involving editors and media managers in the network.

Constraints:

o Lack of business management skills among fishermen and fish mongers; o Lack of saving culture among the fisher folks and artisanal processors. Indeed, there was a mobile banking facility in Mbita which was later withdrawn

because of lack of adequate business in way of savings and borrowing;



o Lack of credit for operations and purchase of equipment especially nets; o Lack of market information (especially demand, quality requirements and prices); o Lack of cooling facilities for storage at the landing sites; o Low promotion of alternative fish farming (e.g. cage aquaculture in the lake as in Bangladesh, Thailand, China, and Norway); o Lack of financial services (banking facilities)

LAKE VICTORIA FISH SUB-SECTOR STUDY - richard o. abila

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