Financing opportunities in a modern Marine and Fishing Sector
12.JUNE.09
by Cerlian Russell
National Commercial Bank SVG Ltd
The thrust by our Government to create a modern competitive economy by 2020 has created a new burst of energy to explore, develop and exploit the vast potential in arguably one of our traditional sectors, the maritime and fishing sector.{{more}}
While the fishing sector is one of our traditional sectors contributing just around two per cent to GDP on an annual basis, the sector is vastly untapped and can play a vital role in propelling our future economic and social development.
Currently, the average investment by a fisher is under $50,000, but a larger fishing vessel to accommodate a fishing crew at sea for several days will cost hundreds of thousands. In the case of the brand new fishing vessels from Mexico, with state of the art fishing technologies, the investment could cost just under EC$1 million. Without being a rocket scientist, one could already see the need for a new approach towards larger investment in the sector to include new skill sets such as more money management skills, business management skills, expertise to use the new technology etc.
There are also the new business opportunities that will be created for fish processing, storage capacity and boat building to name a few. To manage our marine resource, our children will have other areas of studies to consider rather than the traditional areas such as law. There will be student loan opportunities to develop our human resource in areas such as marine biology, boat building and surveying, marine law, and fish technology, to name a few.
Our Government, having recognized the vast potential of our marine resource has mandated National Investment Promotions Inc (NIPI) to lead efforts towards sensitising all stakeholders of this new thrust to develop this resource. NIPI will host a fisheries investment forum on July 9th, 2009. EC $6 million dollars has been made available by the Government through the NIS for on lending by several financial institutions such NDF, NCB SVG Ltd and First St. Vincent Bank, to facilitate the first part of this thrust, the âFishing Fleet Expansion programmeâ. Under this programme a maximum loan of 95 per cent of the boat value will be considered with the fisher folk coming up with a minimum of 5 per cent input plus fees. Because of the inherent risk related to collateral coverage in this area of investment, the Government is willing to guarantee up to 50 per cent of the fishing boat cost to ensure that the collateral risk in the proposal is minimized. The loan facility is available to all Vincentians at a preferential rate of 8 per cent per annum with a repayment period to be determined by the financial institution but not to exceed 10 years. Under this programme applicants must first be approved by the Min of Agriculture, Forestry and Fisheries. The Ministry will determine the technical requirements of the fishing project then make their recommendations to the financial institution. This is necessary since this expertise does not reside within the financial institution. A business plan must accompany all applications detailing cash flow projections, a marketing plan and fisher folkâs capacity or plan to manage the operation. This information is critical for the financial institution to do the necessary due diligence and access all risks relating to the sector, collateral, investorâs character and repayment. As we move forward with this new thrust and energy to develop our marine resource, it will require a whole new approach towards management, investment and business opportunities within the sector. As a people, we have the capacity to modernize the sector by 2020. However, it requires a holistic approach with all hands on deck.
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