State of World Fisheries and Aquaculture 2004 - Library
State of World Fisheries and Aquaculture 2004 - Library
State of World Fisheries and Aquaculture 2004 - Library
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<strong>World</strong> review <strong>of</strong> fisheries <strong>and</strong> aquaculture<br />
65<br />
Box 6<br />
Micr<strong>of</strong>inance in fisheries <strong>and</strong> aquaculture<br />
Micr<strong>of</strong>inance can be defined as the provision <strong>of</strong> a broad range <strong>of</strong><br />
financial services, including loans, savings <strong>and</strong> insurance, to segments<br />
<strong>of</strong> the population who may lack access to traditional financial services.<br />
Most micr<strong>of</strong>inance programmes aim to promote <strong>and</strong> protect income<br />
<strong>and</strong> empower these population segments. More specifically, the<br />
development objectives <strong>of</strong> micr<strong>of</strong>inance for poor fishing communities<br />
are to enable fishing households to increase their income, smooth<br />
consumption, develop microenterprises, manage risks better <strong>and</strong><br />
enhance their earning capacities, thus reducing their economic <strong>and</strong><br />
social vulnerability. Because women constitute a significant proportion<br />
<strong>of</strong> poor fishing households, micr<strong>of</strong>inance can also serve as an effective<br />
tool to assist <strong>and</strong> empower women in fishing communities.<br />
The dem<strong>and</strong> for financial services in the fisheries sector is diverse<br />
<strong>and</strong> requires differential products <strong>and</strong> services. Micr<strong>of</strong>inance is just<br />
one means in the continuum <strong>of</strong> financial services provision to cater to<br />
that dem<strong>and</strong>. Characterized by small loans, micr<strong>of</strong>inance has inherent<br />
limitations in terms <strong>of</strong> financing the capital investment needs <strong>of</strong> the<br />
fishing industry. It should therefore supplement, not replace, traditional<br />
lending products from mainstream financial institutions, as the latter<br />
are still required to finance medium- <strong>and</strong> large-scale investment needs<br />
<strong>and</strong> priorities necessary for the growth <strong>and</strong> development <strong>of</strong> fisheries.<br />
Micr<strong>of</strong>inance programmes can be a powerful tool also in poverty<br />
alleviation. In the case <strong>of</strong> fishing <strong>and</strong> fish-farming communities,<br />
the alleviation <strong>of</strong> poverty is an important precondition for their<br />
participation in efforts to rehabilitate <strong>and</strong> conserve the aquatic<br />
environment <strong>and</strong> fisheries resources.<br />
levels:<br />
The mechanics <strong>of</strong> micr<strong>of</strong>inance operations basically involve three<br />
1. the borrowers who take out loans that they invest in<br />
microbusinesses;<br />
2. the loan delivery <strong>and</strong> recovery system;<br />
3. the institution or organization that manages the delivery system.<br />
The successful operation <strong>of</strong> these levels is premised on the twin<br />
principles <strong>of</strong> client discipline (where borrowers take responsibility for<br />
their decisions <strong>and</strong> agreements made with the lending institution) <strong>and</strong><br />
institutional discipline (where the lending institution <strong>of</strong>fers <strong>and</strong> provides<br />
products <strong>and</strong> services that are characterized by quality, efficiency <strong>and</strong><br />
commitment).<br />
A core principle that has been proved by successful micr<strong>of</strong>inance<br />
programmes is that the poor have the capacity to repay loans, pay the<br />
real cost <strong>of</strong> loans <strong>and</strong> generate savings.<br />
Source: FAO. 2003. Micr<strong>of</strong>inance in fisheries <strong>and</strong> aquaculture: guidelines <strong>and</strong> case<br />
studies, by U. Tietze <strong>and</strong> L.V. Villareal. FAO <strong>Fisheries</strong> Technical Paper No. 440. Rome.