Market Gaps on Access to Finance - Bank of Valletta

Table 10: Mapping of financial instruments with local enterprises in the fisheries and aquaculture
Economic sectors Current financing needs Current financing options Scope for financial instruments
Fisheries and
aquaculture
The fisheries sector is highly fragmented, with
operators comprising both full-time and part-time
fishers. Likewise, the Maltese fishing fleet register
includes more part-time registered vessels than
full-time, with the average size of the Maltese
fishing vessels being under 10m in length. The
current financing needs relate to the upgrading of
the vessel fleet and gear to conform with health &
safety requirements and to allow for greater
diversification in the catch.
EU membership has increased the number of
obligations which Malta has to meet, and which,
though ultimately beneficial, are costly to
implement. These financing requirements are
needed to enable the sector to catch up with its
foreign counterparts, but higher quality
investment is needed to spur growth and improve
competitiveness. For example, a number of
operators have started investing in on-board
fridges / freezers to improve the quality and
freshness of their product. The sector also needs
to find other income sources and diversify (e.g.
tourist fishing trips).
The need for aquaculture to be environmentally
sustainable has an impact on site selection,
carrying capacity, good practice and sustainable
development. This sector is constrained by lack of
sites (permit issues, not eligible for ME premises),
lack of vertical integration (limited value chain)
and poor economies of scale. The current
financing needs relate to expansion plans (product
differentiation), obtaining specialist HR skills,
development of new species, sites for processing
and packing plants, facilities for R&D and related
R&D expenditure.
External threats represented by depleted
natural resources, greater regulation
Need to invest in upgrading fleet and gear
Reactive rather than proactive investment
Ageing population of fishermen
Planning permit issues in aquaculture
Growth in aquaculture
Government policy to sustain the industry,
especially aquaculture
Potential for R&D opportunities in aquaculture
The fisheries sector is also highly dependent on
grant assistance through national and EU funded
schemes. Examples include Measure 1.3:
Investments on board fishing vessels and
selectivity and Measure 1.4: Socio-economic
compensation for the management of the
Community fishing fleet. The co-financing rates of
some of these schemes were often limited through
state aid restrictions (e.g. 15%).
Due to the lack of collateral, bank financing is
often not a viable option in the fisheries sector. As
evidenced by a recent scheme aimed at assisting
operators to acquire new vessels through partgrant,
part-loan, many operators found it difficult
to acquire the necessary bank financing and as a
result take-up for this scheme was low.
The aquaculture sector requires larger capital
outlays and as a result requires various funding
options. National and EU funded schemes have
provided aid to this sector, as evidenced by
schemes such as Measure 2.1: Productive
investments in aquaculture. Collateral, however,
still remains a stumbling block for these operators
and thus inhibits bank financing.
Lack of own capital
Limited access to bank financing
Various national/ EU earmarked schemes,
generally based on grants
Significant grant dependence and reluctance to
consider loans
Certain schemes undersubscribed
Page | 71
In order to ensure the sustainability of the
fisheries sector, initiatives have been put in place
to attract young fishermen. Further grant funding
is required in this regard to ensure an adequate
take-up of such schemes.
In the aquaculture sector, where growth
opportunities are more pronounced, the JEREMIE
guarantee scheme could be extended to include
the “aquaculture” and “processing” sectors. In
addition, hybrid instruments combining loan
guarantees with grant assistance could be
considered. This could be especially relevant for
processing firms, for those firms attempting to tap
inland aquaculture (e.g. in industrial premises) and
those investing in R&D to diversify production/
hatch new species.
The private sector, due to limited resources,
shows little interest in investing its funds in
projects and research which in most cases is
hindered by a severe limitation in the size and
number of projects. As a result, the public sector
will remain an important player in this sector.
According to the Aquaculture Strategy for Malta,
discussions were underway on the proposed
establishment of a large scale spawning and
hatchery facility to be run as a Public Private
Partnership which would also include research
facilities. There is therefore scope for such
initiatives where government acts as catalyst for
further private sector involvement.
Reliance on grant assistance to remain –
limited scope for innovative financial
instruments, especially for micro
enterprises/ self-employed fishermen
Extension of JEREMIE guarantee scheme to
include “aquaculture” and “processing”
sectors
R&D initiatives in aquaculture would require
a collaborative financing effort between
government and the private sector, such as
a PPP