1

Socio-economics of the Nile Perch Fishery on Lake Victoria

FROM LOCAL TO GLOBAL MARKETS

The Fish Exporting and Fishmeal Industries of Lake Victoria —Structure, Strategies and Socio-economic Impacts in Kenya

Richard 0. Abila1 and Eirik G. Jansen2

Lake Victoria is the second biggest lake in the world. With its 69,000 km2, the lake has me same size asIreland. The lake is shared between three countries; Tanzania (which possesses 49%, Uganda (45%) andKenya (6%) of the lake.

The findings, interpretations and conclusions in this publication are those of the authors and do notnecessarily reflect those of IUCN or the partner organisations in this project.

Design & Layout: IUCN EARO Communications Unit

1 Research Officer 1Kenya Marine & Fisheries Research InstituteKisumu Research CentreP.O. Box 1881 KISUMU, Kenya

2 Technical AdvisorlUCN-The World Conservation UnionSocio-economics of the Nile Perch Fishery on Lake VictoriaP.O. Box 68200NAIROBI, Kenya

2

Table of Contents

SUMMARY............................................................................................................................................ 4

INTRODUCTION.................................................................................................................................. 5

THE PRE-NILE PERCH FISHERIES REGIME (1960-1979)........................................................................... 5CHARACTERISTICS OF THE NILE PERCH REGIME (1980-1997) ................................................................. 6METHODS FOR COLLECTION OF INFORMATION - ..................................................................................... 8

THE STRUCTURE OF KENYA'S FISH PRROCESSING INDUSTRY ............................................. 9

OWNERSHIP AND INTEGRATION ............................................................................................................. 9FISH SUPPLY ARRANGEMENTS ............................................................................................................. 10PROCESSING LEVELS ........................................................................................................................... 12NILE PERCH PRODUCTS AND MARKETS ................................................................................................ 13

TABLE 4: NILE PERCH PRODUCTS EXPORTED BY FACTORIES IN KENYA (1996 - 97) ...... 15

GOVERNMENT POLICY OBJECTIVES FOR THE FISHERIES................................................... 16

SOCIO-ECONOMIC IMPACTS OF INDUSTRIAL FISH PROCESSING ...................................... 17

NILE PERCH EXPORTS AND IMPACT ON FOOD AVAILABILITY ................................................................ 17COMPETITION FOR NILE PERCH FRAMES AND THE EFFECT ON FOOD SECURITY...................................... 19DAGAA FOR FISH MEAL AND ITS IMPLICATIONS FOR PER CAPITA FISH CONSUMPTION ............................ 21GENERAL FISH PRICE TRENDS AND ITS EFFECT ON ACCESS TO FOOD .................................................... 23THE EXPORT AND FISHMEAL INDUSTRIES AND CONSEQUENCE TO JOB SECURITY................................... 24

THE IMPACT OF THE FISH EXPORT AND FISHMEAL INDUSTRIES ON THECONSERVATION OF FISH RESOURCES ....................................................................................... 26

REFERENCES..................................................................................................................................... 37

3

List of Tables

Table 1: Distribution of Nile Perch Processing Factories in Kenya

Table 2: Fish Processing Company Groupings

Table 3: Fish Procurement Facilities by Factories

Table 4: Nile Perch Products Exported by Factories in Kenya (1996 - 97)

Table 5: Markets and Prices for Nile Perch Products (1996 - 97)

Table 6: Destination of Nile Perch Frarnes Produced by Factories in Kenya (1996)

Table 7: Quantity of Dagua used by Milling Companies (1996)

Table 8: Types of Fishmeal used in Kenya (1996)

List of Figures

Figure 1: Distribution of Fish Processing Companies by Methods of Acquiring Fish

Figure 2: Fish Landings on Lake Victoria, Kenya

Figure 3: Distribution by Capacity of Nile Perch Processing Plants in Kenya (1996)

Figure 4: Distribution of Factories by Quantities of Nile Perch Processed (1996)

Figure 5: Capacity vs Actual Volumes of Fish Processed by Firms in Kenya (1996)

Figure 6: Unutilized Capacity by Fish Processing Factories in Kenya (1996)

Figure 7: Lake Victoria Fish Prices

Figure 8: Per Capita Consumption Trends of Fish

4

SUMMARY

The fisheries of Lake Victoria has undergone a dramatic transformation during the last 15 years. Frombeing a locally based fishery with little intervention and capital investment from outside, the presentfishery is dominated by national and international capital penetrating the industry. It is the explosion inthe growth of Nile perch, and the strong demand which has developed for this fish in the global markets,which have transformed the fisheries of Lake Victoria.

This paper presents the results of a survey carried out between December 1996 and June 1997 about thefish export and fishmeal industries in the Kenyan part of Lake Victoria. The ownership pattern of theexport industry is described as well as the strategies the fish processing factories pursue to obtain asmuch fish as possible. A major part of the paper discusses some of the socio-economic impacts of thepresent industry. It particularly focuses on the effect the export of fish and the development of a fishmealindustry in Kenya has on food security and employment for the local population.

There are 12 Nile perch processing factories operating in the Kenyan part of Lake Victoria. Most of themare owned by non-indigenous Kenyans. The industry is well integrated horizontally and vertically, whichextends to other factories in Tanzania and Uganda. Much of the investments in the industry has beenfinanced by funds from both international and local financial institutions. The factories have establishedrelationships with fishermen, either directly or via agents, by supplying gear or credit. This makesfishermen dependent on factories or their agents, effectively reducing their choices in the market.

The factories in Kenya process about 200 tons of Nile perch per day, which is only 50% of the existingcapacity. The excess capacity is mainly due to the difficulty factories face in getting adequate fishsupplies, although some of them also have constraints related to marketing, fish quality and under-financing. Besides fillet, the plants also produce frames (skeletons), fish maws (bladder), fish oil andskins for various markets. Fillet and maws are exported to several countries overseas. There is though aready potential market locally for much of the exported Nile perch.

Most of the fish frames produced by factories, about 60%, now goes for fishmeal. Similarly about two-thirds of the catch of a small sardine-like fish, dagaa, goes for fishmeal. The demand for both products inthe local market for human consumption is high and unsatisfied. Therefore Nile perch frames and dagaagoing for fishmeal is directly in conflict with food security requirements for local people. The per capitafish consumption in Kenya is about 3Kg per year. If none of the fish in the country was exported or usedfor fishmeal, this figure could be 6Kg, which is still very low by all international standards. Because ofthe strong demand for fishmeal, the price of fish frames and dagaa has risen beyond what mostconsumers can afford.

The industries also draw away fish and fish products from the traditional processing sectors, thus causingunemployment, which outweigh the new employment opportunities created in the modern sectors. Atleast a net of 10,000 jobs, mainly involving women, have been lost in the traditional fish processing andmarketing sectors as a result of the fish exporting and fishmeal industries. Finally, industrialization of theLake Victoria fisheries has negative impacts on the conservation of fisheries resources.

The current trends in the fish industry therefore do not promote the important objectives set up forKenya's fisheries policy, especially on food security and employment. These are being undermined bythe present way in which the fish resources are being utilized and exploited.

5

INTRODUCTION

During the last 15 years the fishery of LakeVictoria has been completely transformed.From being a locally based fishery with littleintervention and capital investment fromoutside, the present fishery is dominated bynational and international capital penetrating theindustry. This change is very much a result ofthe strong demand which has developed in theglobal markets for the Nile perch (Latesniloticus) of Lake Victoria.

This paper will discuss the transformationwhich has taken place, particularly focusing onthe fish processing and exporting industry in theKenyan part of Lake Victoria. The paperpresents some information on this industry'sstructure, strategies and its socio-economicimpacts. Some preliminary investigations havealso been carried out in the Ugandan part ofLake Victoria which reveal many similarities toKenya's situation with regard to the structure ofthe industry and the socio-economic impacts.

It is the explosion in the growth of Nile perchfishery which has caused the transformation ofthe fisheries of Lake Victoria. In order tounderstand the recent developments of the LakeVictoria fisheries, it is therefore useful todistinguish between the "old" pre-Nile perchfisheries regime which lasted up to about 1979and the "new" fisheries regime which developedduring the 1980s (Greboval, 1989). In the nextsection we will present information about theLake Victoria fisheries as it existed during the1960s and 1970s before the Nile perch boom.This is followed by a discussion of the changeswhich occurred during the 1980s when anexport market developed for the Nile perch.

We then present a detailed description of thestructure and strategies of Kenya's fishprocessing and exporting industry, based on asurvey that we carried out between December1996 and June 1997. This is followed by a brieflook at the Government of Kenya's major policyobjectives for development of the fisheries. Wethen evaluate to what extent the present trendssupport this policy. We discuss, in particular,the effects the export of fish have for the foodsecurity and employment situations for localpeople. Most of the local people are poor and

they have depended on the fisheries forgenerations, as a source of food, employmentand income. We also explore the possiblenegative effects the exports of fish have onsustainable exploitation of fisheries resources.Finally we indicate some measures throughwhich the major Government objectives for thefisheries can be better achieved.

The Pre-Nile Perch Fisheries Regime (1960-1979)The total catch from Lake Victoria during the1960s and 1970s was quite stable. About100,000 tons of fish was caught annually in thethree countries. Until the mid-1970s thefisheries of Lake Victoria was exploited solelyby small-scale fishermen. It was then estimatedthat some50,000 fishermen operated from about12,000 fishing vessels (Butcher and Colaris,1973). The fishermen had a varying degree ofinvolvement in the fisheries. Some fished onlyon a part-time or seasonal basis while otherswere full-time fishermen. Nearly 80% of thefishermen derived their primary income fromfishing. With the decline in opportunities forurban employment, many of the populationfrom around the Lake region, who previouslymigrated to large cities in the country, turned tofishing, with the result that earnings perfishermen declined (Francis and Hodinott,1993).

In the pre-Nile perch regime there were clearbarriers to investment in equipment in theproduction sector. Very few owners of canoespossessed more than one canoe or owned moregill-nets than they were able to controlthemselves. The ownership pattern was thusvery decentralized and the income from the lakeevenly distributed among the fishermen (Jansen,1973 and 1977). There was very littleinvestment in fishing technologicalimprovement. The canoes were sailed andmanually operated in the same way as they hadbeen for decades. Although outboard engineshad been available for the previous 30 years,only a few canoes were fitted with them, andalmost all these were used for transportpurposes only.

6

During this period, the processing and tradingsectors of the traditional fisheries was almosttotally dominated by small scale operators, mostof them women, who were based in the localcommunities around the lake. The part of thefish which was not sold fresh, was processed bybeing smoked or sun-dried on the beach andcarried to local inland markets by the traders.There were few wholesalers in the fish trade,and the traders never acquired control over thefishermen as they have managed to do in somany other traditional fisheries through theestablishment of credit relationships. Mostfishermen sold their fish to a limited number ofwomen fishmongers with whom they haddeveloped long-standing relationships. Most ofthe animal protein which the local populationate came from fish of the lake (Jansen, 1973and 1977).

Before 1980 the fisheries to a large extentexisted independent of outside interference. TheGovernments of the riparian states thoughcollected statistics on the fishery and formulateddifferent regulations. These regulations wererarely enforced. Although in principle there hasbeen an open access to fish in the lake, the localfishing communities around the lake have allthrough this century, developed rules whichregulate the fisheries. These rules stipulate whomay fish, in what season, in what area, whattypes of fishing gear are acceptable and whattype or size of fish which can be caught.Institutions have been developed in the localcommunities to enforce these regulations. Therules and nature of enforcement "institutions"vary from one area to another and they havealso changed over time. In some places theserules are detailed, explicitly expressed and well-known in the community. In other areas therules may be more vague, cover less issuesrelated to the fishing effort and may not begenerally recognized in the community. Thissystem of local management has been threatenedwith the introduction of commercial fishing(Ogutu, 1994; Geheb, 1996; Jansen, 1996)).

Characteristics of the Nile Perch Regime(1980-1997)The rapid proliferation of Nile perch started inthe Kenyan part of the lake about 15-20yearsafter the fish was introduced in the lake. In1978 about 1,000 tons of Nile perch were

caught, in 1981 nearly 23,000 tons and in 1985the production had increased to 50,000 tons.Figure 2 shows that Nile perch landings rose toa peak of 123,000 in 1991, and has since beenon a generally declining trend.

An even faster increase took place in Ugandaand Tanzania. In each of these countries lessthan 1,000 tons of Nile perch were landed in1981. In 1986 approximately 41,000 tons ofNile perch was caught in Uganda and abouttwice that amount in Tanzania. The totalproduction of this fish in the three countries in1993 was close to 363,000 tons, with 29%landed in Kenya, 27% in Uganda and the rest inTanzania (Greboval and Mannini; Goulding,1997).

The total catch of all fish species of LakeVictoria increased from about 100,000 tons in1979 to about 500,000 tons in 1989. Since 1989the annual production has remained at a levelfour to five times higher than what wasachieved during the late 1960s and 1970s. In thelast 6-7 years, the production of fish from LakeVictoria has represented about 25% of theannual total catch from Africa's inland fisheries(FAO, 1995).

Along with the rapid increase in the stock ofNile perch, the composition of the fish biomassin the lake changed dramatically. Nile perch,being a predator, feeds on most of the speciesof fish in the lake. From being a multi-speciesfisheries, the fisheries of Lake Victoria is todaybasically a "three species fisheries". Nile perchis the dominant species, but about a third of thelake's catch consists of dagaa (Rastrineobolaargentea) while various species of tilapia,mainly Oreochromis niloticus, constitute about10%. These three species alone have during thelast years made up about 98% of the total catchin the lake. In the Kenyan part of the Lake, itrnay today even be more correct to talk about a"two-species" fisheries. In 1995 about 91.5% ofthe catch consisted of the combination of Nileperch composing 47.2% and dagaa constituting44.3% (Othina and Osewe-Odera, 1996).

In response to the increased landings of NilePerch during this time, more fishermen wererecruited into the fishery. The number increasedfrom about 11,000 fishermen in 1971 to 22,000

7

in 1989 and 24,000 in 1992 on the Kenyan partof Lake Victoria. In 1995 there were 30,000fishermen. The number of canoes alsosignificantly increased in the same period.There were about 8,000 canoes of differenttypes in this area in 1995. Besides, there wassubstantial investments in fishing nets, andespecially the gill nets with larger mesh-sizesaimed at catching the bigger Nile Perch(Reynolds et al, 1992; Hoekstra et al, 1990;Ogutu, 1994; Kenya Government I, 1995).

Initially the local market could not absorb allthe Nile perch landed. In particular, it wasdifficult to sell the perch in the local markets inKenya in the early 1980s. Many of theconsumers living in the fishing communitiesnear the lake resented the "oily and fatty" fish.However, it only took a few years before theperch became a- popular table fish also inKenya as new forms of fish processingdeveloped (Yongo, 1994; Abila, 1995).Preliminary results of a consumption survey wecarried out in 1997 and our previousinvestigations in 1996 show that Nile perch hasbecome even more popular and spread to newmarkets all over East Africa.

Unlike in Kenya, the Nile perch was betterknown in the other countries sharing the lake,as Lakes Kyoga and Albert in Uganda and LakeTanganyika in Tanzania had supportedflourishing perch fisheries in the past. Duringthe mid-1980s, in a period of only 3-4 years ofthe Nile perch boom, the market in East Africawas able to absorb a supply of almost threetimes higher than any time previously, withoutmuch effect on prices. This shows thepopularity of the Nile perch and the existence ofa huge demand for a medium priced table fishin the three countries. There is no doubt thatmany new fish consumers gained tremendouslyfrom the changes which affected the rich LakeVictoria fisheries during the 1980s, with hugeamounts of fish having been made available atmore affordable prices in many parts of thethree countries (Greboval and Mannini, 1992).

People in the harvesting, processing anddistribution sub-sectors of the fisheries alsobenefited greatly from the new fisheries regime.It has been estimated that during the 1980s, anadditional 180,000 jobs were created in the

primary and secondary fields of the fisheries.Many people who had been unemployed orunder-employed were able to obtain incomes atlevels they had never experienced before. Nowonder that many fisher-folk nick named theNile perch "the saviour" (Reynolds andGreboval, 1988).

In the early and mid-1980s the fisheriescontinued to be almost exclusively operated bysmall scale rural fisher-folk with littlefundamental changes in technologies, techniquesand practices compared to the former fisheriesregime. The period saw more women engagedin the processing and marketing of fish both onthe Lake Victoria beaches and in markets inseveral towns in Kenya, as in the othercountries (Yongo, 1994; Abila, 1994).

Linked to the rapid growth of the Nile perch,another "revolutionary" change took place inthe Lake Victoria fisheries. This change isrelated to the huge demand for Nile perchwhich soon expanded beyond the three countriessharing the lake. A market for the perchdeveloped quickly in the industrializedcountries. In order to satisfy this market,processing factories were established along theshoreline of Lake Victoria. The first plants inKenya were set up in the early and mid-1980sto process Nile perch and export its fillets tomarkets overseas. They proved to be soprofitable that more factories soon were set upin all the three countries.

Today there are about 35 factories spreadaround the lake. Many of the factories havebeen financed by international developmentbanks and received support from governmentdevelopment aid agencies of the industrializedcountries. Most of the factories have thetechnical capacity to process Nile perch whichfar exceeds the amount of fish they are able toobtain (Asowa-Okwa, 1996; Jansen, 1996;Goulding, 1997).

The filleting factories around Lake Victoria aretherefore competing to secure sufficient rawfish. Many factories have already been closedpermanently or temporarily due to lack of Nileperch. In addition, in the early part of 1997,most of the factories closed down as a result ofa ban on fish exports to the European Union

8

(EU) for quality related reasons. Someunderstanding has since been reached and manyof the factories are now able to export fish,although with stringent quality requirements.However, arrangements are being made toestablish a long-term quality monitoring andassurance system for East African fish going tothe EU.

Previously the factories only processed Nileperch of minimum weight 2-3Kg. Due toincreased competition for wet fish, the plantsnow accept lower weights, at times even under1Kg. Almost all Nile perch of good qualityabove 2Kg goes to factories for processing. Theonly Nile perch available in the local marketsare the juveniles or that rejected by factoriesdue to poor quality. Even the frames (skeletons)of Nile perch, which previously were sold,processed and consumed in the local marketsare now largely being processed into fishmeal inNairobi.

In the past few years, some processing factorieshave also started to fillet tilapia, in addition toNile perch, and to market this fish in theindustrialized countries. There is sufficientdemand for tilapia in the international market.The only constraint is that very little amount oftilapia is landed at the moment. The export oftilapia could easily pick up if more of it islanded.

Also the small sardine fish, dagaa, has beensubject to regional and internationalcommercialization. Special factories have beenestablished to convert the sardine into fishmealfor use in the animal feeds industry. Thus allthe three important fish species of LakeVictoria, which together make up 98% of thecatch, have become integrated into the globalmarket (Jansen, 1996).

Methods for Collection of Information -The information presented below was gatheredin a survey we conducted from December 1996to June 1997 This involved 12 Nile perchprocessing factories operating in Kenya,namely: Afro Meat, Capital, East African SeaFoods, Kendag (Midas), Lake Victoria Fish,Modern Fishing Industries and Peche Foods.Also included were Prinsal Enterprises, SamakiIndustries (in Kisumu and Nairobi), StarFisheries and Tropical International Foods. Wevisited these factories and, in each case,formally interviewed one or more of theManagers using a questionnaire. However, forpurposes of anonymity, the factories are labeledwith letters A - M in the paper.

We also conducted interviews at four factoriesproducing fishmeal or animal feeds. They areKenya Fishmeal, Milling Corporation of Kenya,Unga Feeds and United Feeds. These arelabeled N - R in the text. Similarly a number ofprocessors and traders on the by-products ofNile perch were interviewed in Kisumu, Homa-bay and Migori. The survey was also carriedout in selected Lake Victoria beaches whereconsumers, processors and traders of differentfish species were interviewed informally. Inseveral instances, we held discussions withofficers of the Kenya Fisheries Department, andtheir views have been considered when makingour conclusions.

In order to have a point of comparison, we alsoconducted limited interviews in Uganda withrepresentatives of fish processors and exporters,fishermen and senior fisheries researchers andadministrators. We have also referred torelevant studies in other parts of Lake Victoria.Finally some preliminary conclusions have beendrawn from a fish consumption survey wecarried out in June-July, 1997 in rural andurban areas in the Lake Victoria basin ofKenya.

9

THE STRUCTURE OF KENYA'S FISH PRROCESSING INDUSTRY

According to the information received, there are15 registered Nile perch processing factories inKenya distributed in four Kenyan towns, shownin Table 1. At the beginning of our survey nineof these factories were operational. Three newones started operating during the study.Towards the end of the survey, one of the majorfactories faced financial crisis and was expectedto wind up operations later in 1997, whilewaiting for a new buyer. Its statistics havethough been included in this report. All thefactories primarily process Nile perch but threeof them have diversified and fillet a smallamount of tilapia in addition to Nile perch.

Ownership and IntegrationKenya's fish processing factories aredominantly owned by members of the Asiancommunity, some of whom are Kenyan citizens.Of the 12 operating factories, eight are ownedby people of Asian origin as sole owners or inpartnership with people of other nationalities,especially Israelis. Three of the firms are fullyowned by Kenyan Africans while one is fullyowned by Israeli nationals.

Table 1: Distribution of Nile Perch ProcessingFactories in Kenya

Town No. ofregisteredfactories

No. offactoriesactuallyoperating

Kisumu 9 9Nairobi 4 1Migori 1 1Homa-bay 1 1

TOTAL 15 12Source: Survey results

The top management posts are in most casesoccupied by members of the same communityas the principal owners. Many of the Asian-owned factories are run as family business, withmembers of the family employed in some of themanagement posts. One of the factories ownedby Asians, however, had an unusualcombination of an Asian, Israeli and Russianoccupying important posts in the firm. AnotherAsian-owned plant employed a Swiss national asplant manager while a third one had an Israeliin the top management post. The employedmanagers generally have good experience or

skills in fish processing and marketing.Therefore they provide the factory with thetechnical expertise required in fish processingand also enable the firm to gain easy access tomarkets in the manager's country of origin.Other factories normally receive experts sent byfish importing companies abroad to ensurequality standards are met in the factory. Theseexperts may be attached to the factory for ashorter period of time, as a condition for sellingfish to specific buyers overseas. Factory Cthough has established a marketing departmentmanned by members of the family, who mostlyreside in London.

Through buying or constructing new factories,mergers or simple business arrangements, someestablished firms have been able to gain greaterpower in the industry and enhance vertical andhorizontal integration. Originally most fishprocessing plants were located in Nairobi andMombasa. In order to cut on transport costs, thecompanies have opened up plants in Kisumu,Homa-bay and Migori, all close to LakeVictoria, which now do the bulk of fishprocessing. This arrangement reduces the costof transporting whole fish. The other advantageof this is that wet fish reaches the factory ingood quality due to the reduced transport time.Further, with the opening of Eldoret Airport inWestern Kenya, the companies will easily shipout the fish by air. Horizontal integration mayalso achieve greater economies of scale if thesame marketing arrangement serves allcompanies in the same group.

Other factories have built or acquired partnerfirms in Musoma and Mwanza in Tanzania andJinja and Entebbe in Uganda. There are severaladvantages of this. Factory D imports fish fromsister companies in Entebbe or Musoma if itcannot get enough fish in Kenya or if the priceis too high. Factory B does pre-processing forits Nairobi partner which has better facilities forfurther processing, storage and packaging.Factory H will supply J with skin-on fillet, eventhough the former has sufficient facilities toproduce high quality final fillet itself. This isbecause J has good contacts in export market,which H has not developed.

10

Table 2 shows the extent to which fishprocessing factories have grouped togethereither under joint ownership or through workingpartnership. Most of the plants in the industryare together with at least one other firm undersuch grouping. Factories B and L are owned bythe same entrepreneur(s), who also has anotherfactory in Uganda. Companies H and J havebusiness arrangement, where the formersupplies the latter with semi-processed fish.However the two factories are owned bydifferent people. Factories D and M have thesame owner. Their group also owns one factoryeach in Tanzania and Uganda. Factory E is amember of the largest fish processing group inthe region, together with two factories inTanzania, and one in Uganda.

Some of the companies have diversified theirbusiness to include commercial activities outsidethe fishery. The owner of one of the factoriesalso owns a meat processing plant in Mombasa.The same fish processor owns, jointly withJapanese nationals, a company manufacturingfishing nets in Kisumu. The owner(s) of anotherfactory has also invested in a bakery and hotelbusiness in Kisumu. A third factory owner alsohas a butchery chain in Nairobi.

The fish processing factories have beenconstructed, or acquired, and equipped usingfunds obtained from different sources. Themanagers of eight factories stated that theirfactories were financed by resources obtainedlocally, either from local financial institutionsor that generated from their previouscommercial activities. Some of the processingfactories have also obtained loans frominternational financial institutions such as theAfrican Development Bank (ADB), theInternational Finance Corporation (IFC) and theAga Khan Foundation.

Table 2: Fish Processing Company GroupingsFactory No. of partner factories in

Uganda and TanzaniaA,F 0 eachH and J group 0C, G, K 1 eachB and L group 1D and M group 2E 3Source: Survey results

Others have got loans from donor agencies suchas NORAD. One of the large fish processinggroups with four factories in East Africa hasinvested a total of US$ 47 million inconstructing and equipping the plants. This hasbeen realized using loans obtained from ADB,IFC, NORAD, local financial institutions andthe owners' other business.

Fish Supply ArrangementsIn order to procure adequate fish supplies, someprocessing factories have invested in motorizedboat transport and specialized insulated vehiclesfor transporting the landed fish to the factories.Others provide fishermen with nets and credit.Five of the factories provide fishermen oragents with boats, nets and outboard engines forharvesting or transporting fish.

Another two factories only give boats and netsbut not engines. Six factories also have somekind of credit relations with fishermen directlyor through their cooperative societies.

Except for factory A, all others have specializedinsulated vehicles and participate in transportingwet fish from the beaches to their factories.Company A has left fishing and transportactivities to local groups so that they alsobenefit from the export trade. Its fish isdelivered to the factory by 120 bicycles, 6ordinary vehicles and 2 boats, all owned bylocal people. However this factory, like all theothers, has specialized trucks which transportchilled (fresh) fillets to Nairobi and frozenfillets to Mombasa for export. Table 3 showsthe facilities provided by various factories sothat they get enough fish.

There are several ways through which factoriesget their fish supplies. These may be classifiedinto three broad strategies. First, some factoriesbuy fish directly from fishermen or theircooperatives on the landing beaches. Thesecond method is where factories get fishsupplies from contracted (company) orindependent agents. The third case includesfirms which participate in fish harvesting, byemploying and equipping fishermen, and thosethat depend on fish supplies from partnerfactories in Tanzania or Uganda. In Figure 1,the factories are classified according to the threemajor modes of procuring fish supplies. The

11

Figure shows that five factories use acombination of all three strategies to ensure fishsupplies. Another five plants employ two of themethods, while only two factories depend on asingle means of getting fish.

The most common method in which fish supplyis secured, is through agents. All 12 factoriesuse agents, either singly or in combination withother strategies, to procure fish supplies. Thereare two types of agents:

Company agents: These are contracted by thecompany to supply it with wet fish.Such agents may not provide any otherfirm with fish.

Independent agents: These sell fish to thefactory without any binding agreement.They may also sell fish to any otherfactory.

Agents have an important role to play in the fishmarketing channel. They collect fish fromseveral dispersed landing beaches and bring it tocentral points from where factory trucks take it.Some agents develop credit relations withfishermen by supplying nets and other fishinggear on loan. One independent agent operatingat Uhanya beach in Kenya has built a modernfish banda supplied with running water, wherefish is landed, cleaned and loaded into waitingtrucks. The agent has at least 30 boats forharvesting and collecting fish in remote parts ofthe lake and on the neighbouring islands. Thisagent, alone, handles, on average, 15-20 tons ofNile perch per day, which he supplies to fivefactories.

Table 3: Fish Procurement Facilities by FactoriesFacility Factory provingOutboard engines B,C,E*,G,LBoats B,C,D*,E*,G,L,MNets B,C,D*,E*,G,L,MCredit B,C,E,F,G,L

* - Facility provided only in Tanzania and UgandaSource: Survey results

Agents normally earn about KSh 5 per Kg offish delivered, which is approximately 10% ofthe landing price, as commission. This paysmainly for the costs of transport, ice, labor andthe agent's own remuneration. Since agentshandle large quantities of fish, on average 3-5

tons each per day, they can become very richand powerful. In addition they easily get loanadvances from the companies to which theysupply fish. Company E often lends money toits agents, who have been very prompt inrepaying such loans. Some agents though arenot trustworthy. Factory L lost a large sum ofmoney to an agent who disappeared after beingadvanced a loan.

Factories F, J and L have no company agentsand so get fish from independent agents. Allother factories use both kinds of agents. Thenumber of agents per company varies widely.Company F buys fish only from twoindependent agents while factory K has 13agents in Kenya. Most of the factories prefer tomaintain the same suppliers in order to ensurecontinued supply of high quality fish. Factory Khas retained the same agents in the last twoyears for this reason.

Before an agent is contracted, a factorymanager would carefully scrutinise his characterand past business record. To be successful, anagent should be a resident in his area ofoperation. He should be influential and developgood contacts within the local community andalso build trust with fishermen. Company Mengages very influential people, usually localleaders or people who are highly respected bythe community, as its agents.

A common complaint encountered wheninterviewing fishermen was that they areexploited by the agents. Through variousmechanisms, such as credit and supply of gear,the fishermen become dependent on agents.Although there are continual and elaborateattempts to escape from this relationship ofdependence, many fishermen are paid wellbelow the going market rate for their fish. Oftenthe agents will cooperate and postpone theirpurchase of fish until the fishermen getdesperate and agree to sell at lower prices. Mostof the time agents also hide vital marketinformation, such as the prevailing price paidby factories and the quantities of fish requiredby factories at a given instance, fromfishermen.

12

Usually the factories place formal purchasingorders with agents which define the quantities offish to supply at a given time. There is,however, no formal contract between fishermenand agents. The agents are therefore protectedfrom breach of contract while fishermen haveno chance of legal address in case of disputes.

The second most common mode for thefactories of obtaining fish is from localfishermen, directly, or through theircooperatives. As earlier mentioned, most of thecompanies provide fishermen with nets, boats,engines or with credit to purchase the fishinggear. In 1996, factories G and B supplied atleast 200 and 300 fishermen respectively withsuch facilities. The fishermen receiving thefacilities are contracted by the companyconcerned to supply it with fish. Their earningsfrom delivered fish is deducted to recover theloan. Such fishermen are not supposed to sellfish to any other company. However, companyE has been cheated by fishermen through thisarrangement and had to suspend buying fishfrom two beaches where it lost money.Company G also lends to fishermen but, unlikeE, has not had problems with repayment. Thefishermen repay at the rate of KSh 1 per Kg offish delivered.

A third method of obtaining fish is through thefirms directly getting involved in fishharvesting. Some of the companies own boats,nets and engines on which they hire fishermento operate. We gathered that it is practiced morein Uganda and Tanzania than in Kenyan waters.Kenyan firms therefore depend on their sistercompanies in those countries to organize thefishing and supply them with wet fish. This isenhanced by the relatively close distancebetween Kisumu and some of the other lakesidetowns where factories are located such as Jinja,Entebbe and Musoma. Factory M has 22 fibre-glass boats with built-in insulated compartmentsand equipped with outboard engines. Theseboats are operated by fishermen and agents inTanzanian waters who take the fish to a partnerfactory of M in Musoma. This factory latersends half of the fish to M as skin-on fillet.

Commercial trawling, though banned in allparts of Lake Victoria, is still practiced illegallyin all three countries. One factory owns five 12-

metre fishing trawlers in Kenya, capable ofcatching 4-5 tons each daily, but which,according to the manager, are not used now dueto the ban. Our investigations revealed thatthere are at least 5 trawlers fishing in Kenya,which can land 10-15 tons of fish daily. Detailsconcerning ownership of the trawlers was notdetermined. But there is possibility that they areowned by people who are not directly involvedin the ownership or management of theprocessing factories.

Processing LevelsThe fish factories vary widely in sizes, withprocessing capacity ranging between 10 to 75tons of whole Nile perch per day. This capacity,distributed as in Figure 3, is based mainly onthe space available for freezing fish in eachfactory. The fish factories in Kenya can processup to 380 tons of whole fish per day. But onaverage the factories process about 200 tons perday, indicating that only close to 50% of thiscapacity is actually utilized. From Figure 4 itmay be deduced that the total quantity of Nileperch processed is not evenly shared betweenthe factories. The top three factories processand export over half of the total amount.Factories C and K process the highest quantitiesat 40 tonnes each per day, while the factoryprocessing the least, H, handles only three tonsdaily. Figure 5 displays the daily averagequantities of fish processed by each of thefactories compared to the existing capacity foreach plant. The total unused capacity, displayedin Figure 6, is about 180 tons per day.

There are several reasons for under-utilizationof capacity. For most companies, the mainconstraint limiting maximum production is dueto the difficulty in obtaining enough fish toprocess. Irrespective of all strategies put inplace by various factories to procure fishsupplies, many of them still cannot getsufficient quantities most time of the year.

The second limitation is related to fish qualityfor the export market. This is especiallyimportant for the fresh (chilled) fillets, whichrequire greater attention in handling andpackaging. Due to constraints in availability ofskilled labour and processing facilities, factoriescan only handle well a limited volume of fish ata given time. A factory taking in much higher

13

quantities than it is used to, risks contaminationor drop in quality standards. Some managersindicated that this may have been one of thereasons for the drop in fish quality (andcontamination with salmonella species) in early1997, which led to the ban on Nile perchexports from East Africa to the EU.

Some factories also find difficulty in gettingaccess to particular markets overseas. Thisproblem is common especially to new factorieswhich have not established contacts withreliable fish wholesalers or retailers abroad. Asearlier mentioned, factories attempt to solve thisproblem by employing nationals of the countriesthey want to sell fish to, who may have contactsin those countries already. Others allow theimporting company to send an expert to workwith the Kenyan firm for a short period of timeto establish acceptable quality standards and linkthe factory with the market.

The fourth cause of excess capacity is that somefactories, especially in the initial stages, cannotraise enough funds to buy all the fish they areable to process. Fishermen insist on being paidcash on delivery of fish. Therefore wheneverfish prices are too high, such factories may notbe able to buy all the fish they want.

The figures mentioned above are averageestimates made by the managers of theparticular factories during the interviews. Themanagers noted that the capacity utilizationwould fluctuate widely during the year,depending on seasonal catches of fish. Inperiods with little fish, some of the factoriesclosed down completely for weeks or evenmonths.

Nile Perch Products and MarketsThe main product of Nile perch is its fillet.Ideally fillet should comprise of 30-35% of thebody weight of a medium size Nile perch. Someof the factories produce fillet within this rangeand are able to sell it in the more competitivemarkets, especially in Europe, U.S.A. andAustralia. Most factories though have adoptedmore efficient techniques of filleting, whichremoves 35-50% of the perch flesh as fillet.Such fillet is sold mainly in Israel, Japan andother parts of Europe. Broadly, fillets areexported either in chilled (fresh) or frozen state.

Depending on the target market, the fillet maybe presented in different forms, for example, asskin-less, skin-on or as blocks, and in varioussize grades (Werimo, 1994; Goulding, 1997).

The by-products of fish processing are the swimbladders (maws), frames (skeletons), fats andoil, skins and trimmings. All these productshave actual and potential uses in differentindustries. Nile perch maws are sun-dried andeasily exported to the Far East, in particularChina and Japan, where it is prepared into arich soup, considered to have medicinal values.It may also be used in the beer making industryas is in glass for filtering beer. The frame haspreviously been used for human consumption,although more of it now goes into makingfishmeal. The Nile perch belly flaps and fatscan be rendered to produce high quality fish oilfor domestic uses. The skin may be tanned intogood quality leather, or used to manufactureglue. It also has potential use as a storableedible fish product. However, industrialutilization of the skins is still the least developedamong the various products of Nile perch. Afterall flesh is trimmed out, a large quantity ofskins is still discarded or used as fuel materialby artisanal fish processors (Abila, 1994;Odhiambo, 1994; Ogunja, 1994).

Table 4 shows that Kenya's Nile perch fillet isexported to many countries in differentcontinents. Many of the exporting firms haveestablished marketing departments whichdirectly deal with wholesalers or retailers inexport markets. Company A, however, hasfound it difficult to gain direct access into theexport market and still sells fillets throughmiddlemen or brokers. This arrangement hasproblems since the brokers, who are non-Kenyans based in Nairobi or overseas, often dounethical trade practices such as buyingunlabeled fish from different companies andselling it in bulk, making it difficult to identifya factory in case it sells low quality fillet.

In 1996, different companies bought wet Nileperch on various Lake Victoria beaches inKenya at prices ranging from KSh 50-60 perKg. Company F, which bought fish at KSh 57per Kg in November 1996, estimated that all thecosts from the time fish is landed to the time itreaches the factory gate, amount to about KSh 5

14

per Kg. This includes various levies charged onthe beach, handling and transport costs to thefactory. The cost of shipping out frozen fishfrom Kenya to the EU market is approximatelyUS$ 0.2-0.5 per Kg. Factory E estimated thatthe total costs of exporting 1kg of frozen perchfillet is US$ 1.8-2.2. This includes the cost ofpurchasing, transport, handling, processing andmarketing. Considering the volumes of fishexported by different companies, the free onboard (f.o.b) prices for Nile perch leavingKenya, shown in Table 5, indicate that theexport trade is very lucrative. Furthermore, theretail price for chilled Nile perch fillets in someof the EU markets exceeded US$ 9 per Kg in1996 (Goulding, 1997).

However, despite supporting this flourishinginternational trade, the Lake Victoria regionseems to have gained insignificantly. Very littleof the massive foreign exchange and taxrevenues earned from the exports is ploughedback for infrastructural and human developmentin the fishing communities. Most fishing areasstill lack basic physical infrastructure and socialamenities (O'Riordan, 1996).

Even though Nile perch fishermen now earnmore per kilogram of fish landed than ten yearsago, there is little evidence of re-distribution ofthis income in the wider community to achievereduction in poverty, better protein consumptionand improved living standards. A recentGovernment of Kenya official report shows thatKisumu, which is the largest town on LakeVictoria, and where 80% of the Nile perch

factories in Kenya are located, has the highestpercentage of the population suffering fooddeficiency and absolute poverty, among allurban areas in the country (Kenya Government,1997).

Other rural districts bordering Kenya's LakeVictoria also have high prevalence of foodpoverty, with close to 50% of their populationunable to get the minimum calorific intakerequirement of 22.50 calories per adultequivalent per day, as recommended by theWorld Health Organization. The total monthlyexpenditures for such households on food andnon-food items is in the range of US$ 13-18.The findings of this report supports earliersurveys by UNICEF and other organizationswhich have shown high incidence of proteindeficiencies, especially in children, in the lakecommunities (Chalken, 1988; KenyaGovernment, 1997).

The Government report ranks two provincessharing Lake Victoria - Nyanza and Western -among the last four in terms of both informaland formal employment situation in Kenya. Italso demonstrates that there is more potential increating employment in the informal than theformal sector. Increased modernization of thefishing industry has the effect of concentrating afew visible jobs in the factories, whileopportunities of creating employment in theartisanal fish processing and distribution arelost.

15

Table 4: Nile Perch Products Exported by Factories in Kenya (1996 - 97)

Factory Fish processed Product for export(in order of importance)

Export market for fillet

A Nile perchTilapia

Frozen N. perch filletsChilled N. perch filletsFrozen Tilapia filletsFish maws

Germany

B Nile perchTilapia

Frozen N. perch filletsChilled N. perch filletsFrozen Tilapia filletsFish maws

Israel, EU countries

C Nile perch Frozen N. perch filletsChilled N. perch filletsFish maws

Greece, Holland, other EUcountries, Israel, Japan, U.S.A.

D Nile perchTilapia

Frozen N. perch filletsFish maws

EU countries, Israel, Japan,U.S.A.

E Nile Perch Frozen N. perch filletsFish maws

Spain, Italy, other EU countries,Australia, Hong Kong and Israel

F Nile perch Frozen N. perch filletsFish maws

Italy, other EU countries, Japan

G Nile perch Frozen N. perch filletsFish maws

EU countries, Israel, U.S.A.

H Nile perch Frozen N. perch filletsFish maws

Exported through Factory J

J Nile perch Frozen N. perch filletsFish maws

Germany, other EU countries

K Nile perch Frozen N. perch filletsChilled N. perch filletsFish maws

Israel, other EU countries

L Nile perch Chilled N. perch filletsFrozen N. perch filletsFish maws

Australia, Greece, Netherlands,Israel

M Nile perch Chilled N. perch filletsFrozen N. perch filletsFish maws

EU countries, Israel, Australia

Source: Survey Results

Table 5: Markets and Prices for Nile Perch Products (1996 - 97)Product Destination Prices

Frozen N. perch fillet

Chilled N. perch fillet

Germany, Netherlands, Spain,Greece, Italy, other EUcountries, Japan, U.S.A.,Australia

Frozen fillet: 2.5 - 4.0 f.o.b.Mombasa

Chilled fillet: 3.5 - 5.0 f.o.b. Nairobi(in US$ per Kg)

Frozen Tilapia fillets Germany, Netherlands Ex-factory price: 120 - 200(in KSh per Kg)

Fish maws China, Japan, Hong Kong Ex-factory price:Wet weight: 180 - 250Dried weight: 700 - 1,000

(in KSh per Kg)Nile perch frames To local market for human

consumption

For fishmeal

Ex-factory price: 5

Ex-factory price: 3 - 4(in KSh per Kg)

Fats and oil Ex-factory price: 20 - 30(in KSh per Kg)

Source: Survey Results

16

GOVERNMENT POLICY OBJECTIVES FOR THE FISHERIES

The Government of Kenya has developed a policy with very clear objectives for its fishery (KenyaGovernment, 1995). These are:

• Increase per capita fish consumption through production of low cost high protein food (fish)• Generate employment opportunities in the country through fishing, fish processing and trade• Enhance the living conditions of the fishermen and their families by maximizing economic

benefits to them. This is achieved through provision of cold storage, fish handling andprocessing facilities.

• Maximize export and foreign exchange capacity.

This paper will limit itself to discuss to what extent the present fish export and fishmeal industriescontribute to achieve the two first objectives of the Government's policy.

17

SOCIO-ECONOMIC IMPACTS OF INDUSTRIAL FISH PROCESSING

Nile Perch Exports and Impact on FoodAvailabilityThe catch statistics recorded by the KenyaMarine and Fisheries Research Institute(KMFRI), Figure 2, indicate that about 82,000tons of Nile perch was landed in Kenya in 1995.Of this, approximately 47,000 tons was used byfish processing industries to produce nearly15,000 tons of fillet for export and 21,000 tonsof frames (Abila, 1996). This means at least35,000 tons of whole fish, as well as anyproducts of Nile perch such as frame, is leftbehind in the local market. However,preliminary observations on landing beachesindicate that a much lower quantity of Nileperch, composed mainly of immature fish andthat rejected by factories for being in poor stateof quality, remains behind for localconsumption. A rough assessment on some ofthe beaches in Kenya indicated that, dependingon the season and location of the beach, 10-35%of the Nile perch landed could be juvenile fish.According to our own survey results, theaverage processing levels by Nile perchfactories in Kenya was, as previouslymentioned, 200 tons per day in 1996. Assumingthat factories operate for 310 days annually,then the quantity of Nile perch processed wasabout 62,000 tons, to produce over 21,000 tonsof fillets and 28,000 tons of frames. The Nileperch catch statistics for 1996 were not yetavailable. But if we take the projected figures ofabout 80,000 tons, then less than 20,000 tons ofNile perch, most of it juveniles and spoilt fish,remains behind. However some fish is alsoimported from Uganda and Tanzania boththrough legal and illegal channels.

With so much unutilized production capacity,the factories make great efforts to obtain allNile perch weighing more than 1.5-2Kgs. Onefactory manager admitted that their factory nowtakes in even fish below 1Kg, and that this isdone by other factories as well. Evidence fromfish landings clearly show that the factories aresuccessful in this regard and hardly any Nileperch in good quality weighing above 2Kgs isleft for the local market.

A notable exception was found at Dunga fishlanding beach, 6Km from Kisumu. Here some

fishmongers fillet about 20-30Kg of mature Nileperch daily, which they sell to local hotels andwell-to-do consumers able to pay about KSh150 per Kg for fillet, or KSh 50-55 per Kg forwhole fish, the same price as paid by factories.Except for Dunga, and maybe a few otherbeaches close to urban centres, very littlemature Nile perch of acceptable quality is leftbehind. "The Nile perch just passes us by" wasa standard remark encountered wheninterviewing fishmongers and consumers alongthe fish landing sites. Most consumersinterviewed stated they would prefer to eat Nileperch of size 2-5Kg. When the consumerscannot get mature Nile perch, they opt for thejuvenile perch. On some fish landing sites,juvenile Nile perch weighing below 1.5Kgfetches as much as KSh 35 per Kg.

The local situation is made even worse in thatthere are no proper facilities in place topreserve and distribute the little Nile perchrejected by the processing firms. Much of itundergoes some form of artisanal processingsuch as smoking or frying in oil. However, theadditional effort in processing is not wellcompensated for in terms of increased consumerdemand and price. Hence the Nile perchavailable in many local markets may not be in astate which is acceptable to many fishconsumers. Despite this, the taste andpreference for Nile perch has positivelychanged with time. Where as many Kenyansderided Nile perch in the early 1980s, very fewcontinue to reject it. The demand for the fish,especially if in good quality, is high. It is quiteclear that Nile perch has become an acceptableform of food for many consumers who were notfish eaters in the past.

Preliminary results of a consumption survey weconducted in June and July 1997 of 250households in three districts bordering LakeVictoria, namely; Kisumu, Migori and Suba,reveal that 30% of these households consumeNile perch. The sample had respondentsrepresenting all income classes, and werepicked from both rural and urban communitiesin this region. About 25% of the sample,composed mainly of those households withhigher incomes or those directly involved infishing activities, indicated that they eat more

18

Nile perch than five years ago. Another 30%ate the same quantities, or had very slightreduction in their consumption of the fish.However, the larger group, constituting 45%,stated that they now consume much lessquantities of Nile perch than five years ago. Therespondents gave several reasons for eating lessNile perch, including the increase in fish prices,relative reduction in real household incomes andthe unavailability of Nile perch locally. There isalso evidence that the reduction in consumptionof Nile perch has been greater among poor ruralhouseholds than the urban based consumersduring the specified period.

Thus, there is potential demand for Nile perchlocally, which is still unsatisfied. Recently, theprice of Nile perch on Lake Victoria beaches ofKenya dropped sharply from over KSh 50 perKg in November 1996 to about KSh 25 per Kgin February 1997, probably due to the effects ofthe EU ban on imports. However the traderseasily found new outlets for Nile perch locallyand prices gradually rose up to KSh 35 per Kgby May 1997. Our investigations revealed thatsimilar trends were observed in Uganda duringthe same period, where prices drasticallydropped from USh 1,500 (US$ 1.5) to USh 350per Kg. The traders began to sell Nile perch inseveral inland markets and the price quicklyrose to USh 900 within two weeks. Thisindicates that the local market can absorb muchmore Nile perch, although at lower prices,should the export market collapse.

The growing demand for Nile perch has alsobeen noted in several urban centres far from theLake region, where the fish was initiallyunpopular. In particular, a significant quantityof Nile perch fillet is now sold in hotels andsupermarkets in Nairobi. Some perch also goesto similar institutions in Nakuru, Mombasa andeven to towns in Central Province, wherepreviously, fish was not consumed. Four casesdescribed below give an indication of theexisting network for distributing fillets locally.

The owners of factory H, previously based inNairobi, have been involved in distributing filletin Kenya for the last 5-6 years. The companybought fillet from other fish processingfactories, re-packed it and sold as wholesalersin the local market. In the latter years, the firm

has encountered problems securing filletsupplies from processing plants in Kenya,which view it as a potential rival in the trade.The company then started importing fillet fromtwo Mwanza based processing firms andcontinued distributing in the country. In 1996 itbought fillet at US$ 1.5 f.o.b. Mwanza.Compared to the f.o.b. prices for Kenyan filletdiscussed on Table 5, the price of the Mwanzafillets suggest that they may be grades notmeeting the export quality requirement. Afterpaying transport costs, customs duties and othercosts, the ex-store wholesale price in Nairobiwas KSh 120 per Kg. The same fillet retailed atKSh 150-160 per Kg in hotels or supermarketswhich they supply in different towns in Kenya.The company has managed to sell 15 tons offillet in the domestic market every week.

A few fish retailing companies have also startedselling Nile perch fillets in shops servingespecially the high income consumers inNairobi. In one of these shops located inWestlands region of Nairobi, a fillet of Nileperch sells at KSh 300 while, in comparison,that of tilapia goes for KSh 270 per Kg.

One processing factory also has a retail shop inNairobi where it sells Nile perch fillets and alittle unprocessed tilapia. The demand for theproducts is high and the factory is able to sell800Kg of fillet daily, approximately 2-3% of itsoutput. In the City Market, located in thecentral part of Nairobi and which serves middleto high class consumers, whole (unprocessed)Nile perch sells at KSh 75-90 per Kg. Theabove examples show that Nile perch sold inthese urban markets is highly priced and servesmainly the upper income market. The low andmedium income earners in towns, like theircounterparts around the Lake region, cannotafford Nile perch.

Thus, the drive to sell fish overseas has resultedin very little of it being available locally. Thelittle that remains is mainly rejects because ofsmall size or poor quality state. And becausethe export trade exerts strong influence onlanding prices, the resulting retail prices of Nileperch and its fillets are too high for mostconsumers.

19

The main interest of the fish processing industryis to sell to the lucrative export market. Mostfirms give no consideration to the socio-economic effects of their profit motivatedactivities. In particular, the domestic foodsecurity seems to be of no concern to thefactories. We believe that the continuedexpansion of the industrial processing capacitywill, among other effects, further reduceavailability of fish by exporting what could havebeen consumed locally.

Competition for Nile Perch Frames and theEffect on Food SecurityIn the earlier years of Nile perch processing,the remains of Nile perch after removing fillet,commonly known as frame (or Mgongo Wazi),was considered a waste, and factories incurredexpenses to dispose of it. In less than a decadethis product has become an important part of thediet of many people especially in WesternKenya.

Initially considered a "poor man's food" whichmany people would not consider eating, theframe has increased in price so much thatconsumers often cannot afford to purchase it(Jansen, 1996).

By the late 1980s, almost all Nile perch framesproduced by factories was consumed by localpeople or discarded. The animal feedsmanufacturing industry then depended either onimported fishmeal, fishmeal made from dagaaor crushed animal bones from the Kenya MeatCommission (KMC) slaughterhouses. Howeverthe fishmeal industry soon started to use Nileperch frames in processing fishmeal. Theirdemand for frames has increased so much thatthey now compete directly with the local marketprocessing it for human food.

Currently there are two factories, both based inNairobi, which convert Nile perch frames intofishmeal. The larger factory, N, was establishedin 1990 and makes fishmeal entirely using Nileperch frames. Factory N uses an average 40tons of frames per day to produce about 10 tonsof fishmeal. The second factory processes 15tons of fish frame to produce 4 tons of fishmealdaily. Annually the two factories thereforeprocess approximately 17,000 tons of frameswhich yield 4,000 tons of fishmeal, representing

about 17% of fishmeal used in Kenya. Thequantity of frames going for fishmeal isequivalent to 21% of the weight of Nile perchlanded in 1995.

The Nile perch processing factories have todecide which market they will sell frames to.Two sets of factories, each with six members,have emerged in regard to the destination offrames. The first group has factories which sell51-100% of the Nile perch frames they produceto fishmeal factories. In this group, E and B sellall of their frames to fishmeal factories, whilethe rest supply this same market with 51-80%of their frames. Members of this group tend tobe factories producing large quantities offrames.

The second group has factories which sell 51-100% of their frame output to the local marketfor human consumption. In this group factoriesA, F and H sell all their frames to the localmarket. The remaining three factories in thegroup sell 51-70% of their frames to the localmarket. Most factories in this group producerelatively little quantities of frames each.

If we take that each of these groups will sell, onaverage, 75% of frames produced to the firstchoice market and 25% to the alternativemarket then, as in Table 6, we estimate that 55tons per day, or 60%, of frames produced inKenya goes for fishmeal. The remaining 39 tonsis left to be processed in the local market forhuman consumption.

There is evidence of price discrimination in theselling of frames to the two markets. Table 5shows that the local processors, who have tocollect frames from the factory, pay KSh 5 perKg on average; Various factories though sell theproduct at KSh 3-4 per Kg to fish meal firms,and the factories, in most cases, incur the costof transporting the frame to the fishmeal plantsin Nairobi. Such discrimination in pricingagainst local processors can only persist if thedemand for frame is very high in the localmarket. It is an indication that the local demandis not satisfied.

20

Table 6: Destination of Nile Perch Frames Produced by Factories in Kenya (1996)Companies Approximately Daily

Frames Output (tons)Proportion to Fishmeal

Industry (tons)Proportion to LocalMarket for HumanConsumption (tons)

Group 1: B,D,E

G,K,M

63 47 16

Group 2: A,C,F

H,J,L

31 8 23

Total 94 55 39

Source: Survey Results

One surprising aspect is that Nile perchfactories continue to sell frames to fishmealfactories, even when they can easily sell it tothe immediate local market at higher prices.Several reasons may explain this. First, it isapparent that the fishmeal factories must putmuch effort to ensure that they are suppliedwith adequate quantities of frames on acontinuous basis. One way to achieve this is byestablishing long-term contracts with processingfactories for the supply of frames.

Some Nile perch factory managers weinterviewed also stated that the supply of framesfluctuate substantially during the year. In therainy seasons the supply of wet fish, andconsequently, the production of frames, is high.Because of distribution constraints, the localmarket cannot absorb all the frames produced atsuch times, hence factories resort to thefishmeal market. Nile perch processingfactories, especially those producing largequantities of frames, therefore prefer tomaintain good relations with fishmeal factoriesall the time, by selling them a portion of theirframes throughout the year. One managerexplained that local traders can only buy smallamounts of frames each, leaving the rest toaccumulate in the factory and cause a foulsmell. Another manager stated that it is anuisance in selling the frames to many smallscale fishmongers who always want to bargain.

Other Nile perch factories prefer to sell framesto fishmeal plants since they buy largequantities at once, thus keeping the processingplant clean and hygienic. This is one of therequirements of the EU regulations for the fishprocessing industry. The EU Directive onHygiene (91/493/EEC) deals with handling andprocessing of fish from the point of capture to

its eventual arrival on the market. It is quitespecific about how processing waste should behandled and disposed of (O'Riordan, 1997).With the visit of the EU inspectors in May andJune 1997 to the processing factories in all ofthe three countries around the lake, there is nodoubt that many of the factories in the futurewill sell all their frames to the fishmeal plants.

As we mentioned previously, most fishprocessing factories have adopted new filletingtechniques which remove up to 50% of flesh offthe skeleton. According to the artisanal framesprocessors, these frames are "too naked".Consumers of such frames hardly get any edibleflesh on the skeletons. It should be pointed outthat even for a fairly filleted Nile perch, theedible flesh left on the skeleton is only 10-20%of the frame's weight. The rest is mainly boneswhich are discarded by the eater. Increasedfilleting efficiency at the factory further reducesthis little edible flesh on the skeletons.

Despite these practices, the demand for framesby local consumer, who are among the poorestin the community, has continued to rise. Newartisanal "factories", at which frames are friedin deep oil, have emerged in Kisumu, Migoriand Homa-bay, the same areas whereprocessing factories are located. The friedframes have got ready market in several parts ofKenya, especially in Western Kenya. Framestraders we interviewed mentioned Kakamega,Busia, Kitale, Bungoma, Oyugis, Kisii,Awendo, Rongo, Kisumu, Migori and Homa-bay as some of the prominent markets for theproduct. Other traders obtaining frames fromKisumu have been able to sell it in fartherinland markets such as Nakuru, Nairobi,Kiambu and even Taita-Taveta, which is morethan 500 Km away.

21

Table 7: Quantity of Dagaa used by Milling Companies (1996)Milling Company Quantity of Dagaa

Utilised (tons per yearwet weight)

Animal Feeds Output(tons per year)

%

Q 30,000 150,000 56P 10,000 50,000 19

Others 13,000 65,000 25Total 53,000 265,000

Source: Survey ResultsThe recent changes in the processing andmarketing of Nile perch frames therefore havetwo important negative implications to the localfood security situation. First, increased use offrames in the fishmeal industry means that mostof it is now not available for direct humanconsumption. Secondly, even the availableframes from most of the factories now has muchless flesh on it. Its value as food is thus greatlyreduced. If the fishmeal industry did not utilizefish frames, then an additional 17,000 tons ofNile perch, in form of frames, which currentlygoes for fishmeal, could be made available forhuman consumption.

Dagaa for Fish Meal and its Implications forper capita Fish ConsumptionAccording to KMFRI's catch records, dagaaconstituted about 77,000 tons, or 44% of thefish landed on the Kenyan part of Lake Victoriain 1995. In each of the past eight years it hascomposed between 37-45% of the catch (Othinaand Osewe-Odera, 1996). Previously dagaa hasmainly been used for human consumption. Ithas been considered a "poor man's food" andhas been a source of protein, especially to manylow and medium income fish consumers in thecountry. However a significant proportion ofthis fish now goes into making fishmeal.

The animal feeds industry in Kenya startedusing dagaa as the main source of crude proteinin feeds in the early 1990s. Currently there aresix major animal feeds manufacturingcompanies in Kenya which mostly depend ondagaa. Table 7 shows that the two largestcompanies, Q and P, control nearly 75% of thetotal animal feeds production.

The dagaa is supplied to the feeds factorieseither in whole (uncrushed) form or in milled(powder) state. The distribution channelsupplying dagaa to this industry has severalmiddlemen who buy the fish from variouslanding beaches. They in turn transport dagaa tosmall milling factories located in Nakuru,

Nairobi, Kisumu, Ahero and Migori. Aftermilling, the dagaa fishmeal is supplied to theanimal feeds companies by the millers.Company P however receives only whole dagaadirectly from middlemen, which it then driesand grinds into fishmeal at the factory premises.

Dagaa contains 55-60% crude protein and henceis a suitable source of protein in the feeds. Incomparison, Table 8 shows that importedfishmeal can yield 70-80% crude protein, and isthus a richer source of protein. However theprice of imported fishmeal is double that ofdagaa. Manufacturers of animal feeds thereforefind more economic advantages in using dagaathan imported fishmeal.

The demand for animal feeds in Kenya is stillmuch higher than the supply. Hence feedsmanufactured in Kenya is all used within thecountry. Many times during the year, whendagaa supply is low, some of the feedsmanufacturers only use fishmeal in formulatingchicken feeds, since chicken lack some essentialamino acids which they get from supplementaryprotein sources. At such times, feeds for pigs,cattle and pets are made without fishmeal. Thisindicates that there is a large and unsatisfieddemand for fishmeal in the country. Thisdemand is even increasing as the nationalagricultural policy now puts greater emphasison intensive production systems which requiresmore usage of supplementary feeds.

On some beaches there are two kinds of dagaafor the two markets. The market for humanconsumption takes the cleaner and higherquality fish, which sells at approximately twicethe price of that going for fishmeal. Thedividing line differentiating the product formsfor the two markets is, however, not clear.Much of the dagaa considered unfit for humanconsumption could easily go for that purpose ifadditional effort was put in washing andcleaning it of incidental physical impurities. Thefishmeal industry, by readily buying dagaa in a

22

dirty state, discourage traders from undertakingsuch cleaning operations, which would makefish acceptable for human consumption.

The interest shown by the fishmeal industry fordagaa has important implications for the foodsecurity situation in the country. With most ofthe Nile perch going for export, dagaa hasremained the "staple fish" to many householdsaround Lake Victoria. For a long time, its price

was low and many local people could afford tobuy it. However Figure 7 shows that the priceof dried dagaa going for human consumptionrose considerably from less than KSh 20 in1490 to about KSh 60 per Kg in 1995. This hasbeen attributed to increased pressure due tofishmeal factories buying this fish. The pricehas since fluctuated at KSh 40-60 per Kg,depending on the season.

Table 8: Types of Fishmeal Used in Kenya (1996)Type Quantity (tons per year

dried weight)% Crude protein Cost of Feeds

Company (KSh perKg

Lake Victoria Dagaa 16,000 55 - 60 25 - 35

Lake Victoria Nileperch (Frames)

4,000 50 - 55 25 - 35

Fishmeal from Peru,Chile, Europe

3,000 70 - 80 65 - 75

Total 23,000

Source: Survey Results

The continued use of dagaa for fishmeal willmake it more scarce and cause further priceincreases. Since most of its consumers are localpeople with low incomes, they are likely to bevulnerable to any competition, however slight,with fishmeal factories. An important aspectconcerning the fishmeal industry's interest fordagaa is related to the huge differences inseasonal availability and price. The fishmealplants usually buy much of the dagaa in the wetseason when the price is low. During our visitto one of the factories manufacturing animalfeeds, the manager showed to us a stock ofabout 640 tons of dagaa, which would beadequate supply for the factory's needs in thenext 2-3 months. In spite of this, the managerstated that he would accept more of the fish ifdelivered, since it would be harder and moreexpensive to buy it in the drier season.

Besides the domestic fishmeal industry, therehave been attempts to export dagaa. In the early1990s dried dagaa from Kenya was brieflyexported to Hong Kong and Korea (Ogunja,1991). Two years ago there was furtherpressure to export this fish to South Africa'sfishmeal industry. However the initialconsignment was rejected by the importer fornot meeting the required quality conditions.

Despite the use of dagaa in fishmeal industryleading to increases in its price, it has continuedto have a strong demand in many communitiesaround Lake Victoria. Our fish consumptionsurvey in the three Lake Victoria Basin districtsmentioned earlier, revealed that dagaa isconsumed by 89% of the 250 randomly selectedhouseholds. The proportion of consumers isthough much higher among rural households.Over 95% of 85 respondents in Suba District,which is largely rural, indicated that theyconsume dagaa. However 79% of thesehouseholds are already finding it more difficultnow to get or afford dagaa than five years ago.As more dagaa goes for fishmeal, it has becomescarce in many areas, and its price hasprogressively risen, preventing many consumersfrom getting sufficient access to it.From the consumers' point of view, dagaa has adistinct advantage. Being a sardine-like fish,people can easily buy small quantities of itwithout any difficulty. Many relatively poorconsumers only buy dagaa for Ksh 10-20 at atime and still the fish contributes an importantsource of animal protein in their diet. Where asthe use of fish frames for fishmeal may, tosome extent, be explained in that it is a by-product of fish processing which is consumedonly as a last resort, the use of dagaa for animal

23

feeds cannot be sufficiently excused. Its highprotein content and flesh composition is anadvantage to the consumers, especially tochildren threatened with malnutrition.

The fishmeal industry in Kenya uses about53,000 tons of wet dagaa annually. This isequivalent to about 70% of all dagaa landed inthe country in 1995. In that year therefore, only24,000 tons of the landed dagaa could havebeen left for the local people to consume.However a significant but unknown quantity ofdagaa milled in Kenya actually comes fromTanzania and Uganda. This helps to relax thepressure on the dagaa available in the country.

Based on the statistics discussed in varioussections above, we estimate that the per capitafish consumption in Kenya was 3.76 and 3.13 in1995 and 1996 respectively. In calculating thisparameter, all fish caught from various sourcesin Kenya are taken into account. This includesthe catches of Lake Victoria, which hasrepresented over 90% of the total catch duringthe last ten years, as well as that landed fromother inland lakes, marine sources andaquaculture. The per capita consumption level isaffected by the fish landings, exports andimports, quantity of fish used for fishmeal andKenya's population levels. It should though beexplained that per capita consumption is simplyan average measure showing what is availableto the whole nation. It does not tell the levels ordistribution of consumption to various groups orindividuals.

The amount of dagaa going for fishmeal is thusone important factor determining the level ofper capita fish consumption in the country.Since huge demand exists in both markets ofdagaa for fishmeal and human consumption, itis difficult to predict what quantities of this fishwill be allocated to either market in future, andthe impact it will have on per capita fishconsumption. One way of looking at it is byassessing the per capita fish consumption trendsif we assume different percentages of dagaalanded had gone for fishmeal in the last decade,all other factors held constant.

Figure 8 displays various trends of per capitafish consumption assuming that 50%,70% or100% of dagaa landed went for fishmeal.

Additionally we take it, as we estimated earlier,that 21% of the equivalent weight of Nile perchlanded went for fishmeal, in form of frames.Per capita consumption lines derived from thethree assumed percentages of dagaa going forfishmeal display the same patterns. In each casethere is a general increase from 1985-87 andthen a fluctuating pattern in the next four years.This is followed by a small rise from 1992-95.From the graph, it is noticed that even at lowerlevels of dagaa going for fishmeal, it wasdifficult to reach 9.3Kg per capita consumption,which has been suggested as a suitable targetfor Kenya (Okemwa and Getabu, 1996).Increased use of dagaa for fishmeal will furtherreduce per capita fish consumption, which isstill too far below the targeted level.

If the animal feeds industry did not use fishproducts, then 70,000 tons of fish, consisting of53,000 tons of dagaa and 17,000 tons of fishframes, which currently goes for fishmeal,could be channelled to human consumption.This would raise the per capita fishconsumption in 1996 by about 2.5Kg, or 80%.

In addition, if the exported Nile perch was allretained for local consumption, the per capitaconsumption in that year would have increasedby another 0.75Kg. Thus if all the fish landed inKenya went for local human consumption, theper capita consumption could have exceeded6Kg in 1996. By eliminating fish going forexport and fishmeal, the per capita consumptioncould be doubled. A per capita consumption of6Kg would still be very low by all internationalstandards.

General Fish Price Trends and its Effect onAccess to FoodThe beach price of dried dagaa and wet Nileperch remained constant at less than 5 Ksh perKg before 1983 for the former and 1987 for thelatter. Figure 7 shows that the prices rose gentlybetween 1983 and 1990 for dagaa and from1987 to 1991 for Nile perch. These trendsgenerally conformed to the pattern of changes inthe consumer price index (inflationary changes)in Kenya. There was a sharp rise in the rate ofinflation from 1991 to 1993 followed by a hugedrop to 1995. In response to the rise ininflationary rate, there was a sharp increase inprices of both Nile perch and dagaa from 1991.

24

However these prices have not dropped, eventhough inflation has declined. This suggests thatother factors beside the inflationary changes,contributed to the price increases. In particularit indicates that there has been increaseddemand for fish in the early 1990s. The mostprobable reason for this is the demand for thetwo fish species for industrial uses for exportand fishmeal.

As fish prices rise without compensatoryincrease in consumer purchasing power, manylocal people are denied access to fish.

The Export and Fishmeal Industries andConsequence to Job SecurityWe have noted that in recent years there hasbeen increase in numbers of fish processingfactories while existing ones continue to expandtheir processing capacity. This has causedintense competition for wet fish as companiestry to increase their volumes to the seeminglyunlimited export market. The firms have put inplace several mechanisms in order to be able toacquire sufficient quantities of wet fishregularly. As already noted, some companieshave purchased boats, including trawlers, netsand engines and have hired fishermen tooperate, them. In addition, almost all companieshave invested in transporting fish from thevarious landing beaches to the processing plant.

The consequence of these strategies is that localpeople, who in the past depended on thefisheries, have lost employment as processingcompanies become more involved in varioussectors of the fishery. New fish harvesting andtransport facilities, especially motorized boatsand trawlers, use much less labour per Kg offish handled.

The Nile perch going for export is broughtdirectly into the insulated trucks on the beachwithout local transporters and traditionalfishmongers intervening as they would havedone if the fish was sold through the localmarket. Observations and interviews at the fishlanding beaches confirmed that many localsmall scale fishmongers, most of them women,have given up their traditional jobs asfishmongers, simply because there is decliningamounts of fish to trade on.

Given that there would be a ready marketlocally for most of the fish taken to thefactories, for each ton of whole fish taken fromthe local to global market, not only theavailability of fish and food security isthreatened for the local population, but also jobsecurity. The lost jobs in the traditional sector isnot compensated for by the employment createdin the export industry.

The fish processing factories each employbetween 100 and 200 people directly, mostly toperform filleting and packaging activities. The12 fish factories in Kenya have thereforedirectly created at most 2,400 jobs. About 75%of these employees are on casual or temporaryemployment terms, with no job security and nolong-term benefits. Often the workers are laidoff for several days without pay whenever thefactory cannot get sufficient supply of fish.

These conditions of employment are quitesimilar to that in the informal sectors of thefisheries. Since all fish factories are in urbancentres, they create mostly urban-based jobs,away from the fishing community. Many of thepeople employed have not been engaged in anyfishery activity in the past.

As noted earlier, the average daily processingof Nile perch in Kenya is about 200 tons.Therefore, each factory employee at leasthandles about 80-90 Kg of fish. In contrast anordinary fishmonger, according to ourestimates, handles 10-20 Kg of fish per day. Itwould seem therefore that for each job createdin the industrial fish processing sector, therecould have been 4-9 jobs in the traditionalsector. Based on the above figures therefore, weestimate that about 15,000 jobs in the traditionalfish processing and marketing sector have beenlost as a result of the modem industry.

Even if we consider the 2,400 jobs directlycreated by factories, and giving a wide marginof error, there would still be a net loss of atleast 10,000 jobs in the local communities of thelake. Although some assumptions have beenmade, there is no doubt that for each ton of Nileperch transferred to the export market andfishmeal industry, many jobs are being lost inthe fishing communities around Lake Victoria.

25

The artisanal sector processing Nile perchframes is another area where local people arethreatened with unemployment. As earliermentioned, several informal processing"factories" were established in the early 1990sin Kisumu, Nairobi, Homa-bay and Migori,where Nile perch frames from nearby factorieswas fried and distributed to markets for humanconsumption. In 1994 Kisumu town alone hadabout 600 people, 75% of them women,engaged in processing and distributing theframes of Nile perch to many parts of thecountry (Abila, 1994).

In Homa-bay there were 500 such artisanalprocessors in 1993. These fried 20-40 tons offish frames daily, which was obtained from thetwo processing plants in the town at the time.About 400 people processed and sold frames inNairobi and a similar number was employed forthe same purpose in Migori.

The artisanal Nile perch frames processing anddistribution sector therefore directly employedclose to 2,000 people in Kenya in early 1990s.Besides, these processors and traders formedsmaller groups through which additionaleconomic and social benefits accrued andtrickled down to other sections of thecommunity. These included internal financialand capital generation and group welfareactivities.

However the fishmeal industry has now movedin to take away the frames, the same rawmaterials which local processors depend on. Asearlier estimated, about 60% of frames now gofor fishmeal. The remaining quantity is too littlefor the requirement of local processors. Assuch, several processors and traders who werepreviously employed in this sector have already

been displaced, and even more are beingthreatened.

We gathered that as many as 50-60% of thepeople employed in frames processing and trade4-5 years ago in the four towns have now lostemployment because they have no frames to fryor sell. Even the processors still lucky to obtainsome frames, are under-employed most of thetime.

Our own observations in Kisumu, Migori andHoma-bay showed that about half of the stallsformerly used for processing frames arecurrently idle. We also noticed that processorsoften spent many hours outside the factory gatesin order to secure some supply of frames, andthey protested when the frames were loaded intolorries to be taken to the Nairobi fishmealfactories.

In Homa-bay, there is only one processingfactory now and it sells the greater portion of itsframes to a fishmeal factory in Nairobi. Theremaining frames, which the tradersapproximated as or 2-4 tons per day, isinadequate for the artisanal processors. Hencethe processors have formed two groups whichreceive frames from the factory on alternatedays, each group working only three days aweek.

Even though artisanal frames processors willingand able to pay for frames at significantlyhigher prices than fishmeal factories, the latterthrough various mechanisms, still takes more ofthe frames. With the demand for fishmeal stilllargely unmet, the remaining artisanal framesprocessors are at real risk of losingemployment.

26

THE IMPACT OF THE FISH EXPORT AND FISHMEAL INDUSTRIES ONTHE CONSERVATION OF FISH RESOURCES

This last section briefly discusses the impact theexport and fishmeal industries have onsustainable exploitation of the fisheriesresources of Lake Victoria. The demand forNile perch in the export market has posed thegreatest challenge to the conservation of thefisheries of the lake in the last decade. Thefishmeal industry, particularly targeting dagaa,now raises the possibility for even a greaterthreat to a sustainable exploitation and to theconservation of biodiversity. A part from beingan important fishery itself, dagaa forms part ofthe food chain for Nile perch.

The great demand of fish for export andfishmeal, as well as that for humanconsumption, have caused new fishermen tojoin the fishery. With them have come moretechnically efficient fishing techniques andtechnologies capable of catching largerquantities of fish at reduced fishing efforts.These include non-selective small-meshed netswhich have the effect of catching a large by-catch of juveniles or non-targeted species. Inorder to satisfy the export demand, trawling forNile perch has continued, albeit illegally.Besides the by-catch and juvenile fish caught ina trawling expedition, trawlers destroy the fishbreeding habitats. They also interfere with thestability of the water column and the generalaquatic environment. Similar effects are causedby beach seining, which has gone onuninterrupted in several areas of Lake Victoria.Beach seine fishermen aim especially atcatching small and medium sized tilapia andNile perch for the local market. This is justifiedin that the processing factories and fishmealindustry now take most of the fish caught inother parts of the lake.

The development of the Nile perch fishery, andthe emerging fishmeal industry, have thereforegreatly increased fishing pressure, leading tooverfishing in two ways. First, the use of smallmesh sizes raises the chance of catchingimmature fish before they can grow, developinto adults and spawn. It is estimated that theaverage age of the Nile perch currently caughtis 2-3 years, which barely gives them time toreproduce before being caught. Secondly, the

use of certain destructive and non-selectivefishing methods, such as trawling and beachseining, removes large quantities of fishspecies, or their food, indiscriminately thusinterfering with food chain linkages. Thisdisrupts the aquatic environment, making it lesscapable of supporting fish life (O'Riordan,1996).

The greatest evidence of overfishing in LakeVictoria is the declining trends in catch levels.Figure 2 shows that Nile perch catches havebeen on general downward trend since 1991. Asecond indication of overfishing is the commonuse of smaller mesh size nets. It is reported thatthe average mesh size used in the lake hasreduced from 12 inches in 1981 to 6 inches in1996. Along with the reduced mesh size, theaverage size of fish caught has come down from50-100Kg in 1981 to 5-10Kg in 1996. Factorieswhich previously processed Nile perch ofminimum weight 2-3Kg now fillet even thosebelow 1-2Kg. In addition, boat catch rates havereduced from a daily average of 400-500Kg in1981 to about 100-150Kg in 1996 (O'Riordan,1996; Othina and Osewe-Odera, 1996).

As most mature Nile perch goes for export anddagaa for fishmeal, there is increased efforts tocatch juvenile fish for the local market. Asnoted previously, the juvenile catch in somebeaches constitute close to 10-35% of theoverall landing. The allocation of more Nileperch frames to fishmeal rather than the localprocessing sector for human consumption hasalso encouraged the artisanal processors to fryand sell juvenile fish. We observed in Homa-bay that artisanal processors who previouslyfried Nile perch frames have now turned tofrying Nile perch juveniles since frames havebecome scarce.

The lack of mature Nile perch remaining behindfor local consumption has therefore contributedto much of the fishing with illegal gear. Thusthe monopoly the filleting factories haveestablished for buying mature Nile perch has ledto increased efforts to catch juvenile Nile perch.Indirectly the factories in this way contribute toan unsustainable exploitation of the fishresource.

27

The issue of over-exploitation of fisheriesresources is already causing some concern tothe fish processing industries. With such heavycapital and financial investments, theindustrialists would not like the resources todeplete soon. Managers of various factoriessuggested four broad ways of improvingconservation efforts for Lake Victoria fisheries:First there is need to develop a better regulationand enforcement framework for the lake. Theregulations should address and control sizes offish targeted, mesh size, breeding areas, beachseining, trawling, pollution and aquatic weeds.The second means should be for the governmentto enact administrative controls on theexpansion of the processing industry, as well asthat of fishmeal. In particular the governmentshould prevent the licensing and establishmentof new factories since the industry is alreadyover-established. A related issue is for thegovernment to consider and, if possible,allocate export quotas to each factory. The

quantity of dagaa going for fishmeal should alsobe closely monitored and controlled.

Thirdly there should be greater self-policing bythe factories themselves. In particular, factoriesmust avoid processing immature Nile perch ofbelow 2kg. Lastly some managers suggested theformation of an association of fish processorsand exporters to spearhead conservation effortsand internal regulation of the industry. InUganda such an association already exists and itcontributes to conservation efforts, among otherissues. One common complaint is that the fishprocessors and exporters in Kenya have beenonly interested in exporting the maximumpossible quantity of fish, while paying littleregard to the status of the resources. With itsimmense power, the industry could significantlycontribute to the management and conservationof the fisheries resources.

28

CONCLUSIONS:

1. There is a ready local market for muchof the Nile perch currently going forexport. Increased exports of the fishtherefore poses eat to local foodsecurity.

2. The local human demand for fishframes is high and still unsatisfied.Hence there is clearly a conflictbetween the use of fish frames forfishmeal instead of direct humanconsumption.

3. The demand for dagaa among localpeople is high and largely unmet.There is much potential in selling it inmany new markets. Its use in fishmealindustry therefore threatens local foodsecurity.

4. The export industry and the fishmealfactories, particularly using fishframes, continue to draw away fish andfish products from artisanal processingsectors, thus causing unemployment,which is not adequately compensatedfor by jobs created in the formalsector.

5. The current levels or expansion ofindustrial utilization of fisheries hasnegative impacts on conservation of theresources.

6. The current trends in the fish industrydo not promote the importantobjectives set up for the developmentof the fisheries, in particular foodsecurity and employment.

RECOMMENDATIONS:

1. The fisheries policy should be re-focussed to put greater emphasis onfood security. It should avoidconflicting objectives such as goals tomaximize foreign exchange and ensurefood security as well, since there islimited supplies of fish in the country.

2. The use of fish frames and dagaa infishmeal should be controlled boththrough deliberate policy andadministrative action. The humanmarket must take priority over fishmealwhenever there is direct conflict. Inaddition the frames going to the marketfor human consumption passes throughthe traditional processing systems, thusgenerating new opportunities forartisanal employment.

3. There is clearly a need for controllingthe expansion of the fish processingand exporting industry. This isimportant for food security as well assustainable exploitation of the fisheries.Such controls may involve stopping thelicensing or establishment of newfactories. The Government may alsoinstitute policy of allocating exportquotas to existing factories.

29

30

31

32

33

34

35

36

37

REFERENCES

Abila, R.O. (1994) "The Socio-economics of Nile Perch Frames Marketing in Kisumu", Proceedings ofthe K.M.F.R.I. Seminar on the Utilization of Nile Perch By-products, Kisumu, June 7-10,1994,Kenya Marine and Fisheries Research Institute, Kisumu.

Abila, R. O. (1995), "Structure, Conduct and Performance of Kisumu Fish Marketing System", MSc.Thesis, University of Nairobi, Nairobi.

Abila, R. O. (1996), "Economic Analysis of the Domestic and Export Marketing of Kenya's Nile Perchand its Products", Proceedings of the 6th FAO Expert Consultation on Fish Technology inAfrica, August 27-30,1996, Kisumu.

Asowa-Okwe, C. (1996)."Modern Fisheries and its Impact on Access to Common PropertyManagement. A Case Study of Lake Victoria Fisheries, Uganda", Paper Presented at theSymposium on Common Property Management, 26-28 March 1996, Kampala. MakerereUniversity, Kampala.

Butcher, D.A.P. and J.C.G. Colaris (1975), "A Sociological Survey of the Fishermen PopulationAround Lake Victoria", Report Prepared for the Lake Victoria Regional Fisheries ResearchProject, FAO, FI:DP RAP/71/242/4., Rome.

Chalken, M. S. (1988). "Anthropology, Nutrition and the Design of a Health Intervention Program inWestern Kenya": In Brokensha, D. and P.D. Little (Eds.) "Anthropology of Development andChange in East Africa, I.D.A. Monographs in Development Anthropology, Westview Press,Boulder, U.S.A.

FAO (1995)," Management of African Inland Fisheries for Sustainable Production", Paper Presented atthe First Pan African Fisheries Congress and Exhibition, UNEP, Nairobi

Francis, E. and J. Hoddinott (1993),"Migration and Differentiation in Western Kenya: A Tale of TwoSub-locations", The Journal of Development Studies, 30(1).

Geheb, K. (1996), "The Regulators and the Regulated: Fisheries Management, Options and Dynamics inKenya's Lake Victoria Fisheries", Ph. D Thesis, University of Sussex. UK:

Goulding, I. (1997), "Perch on a Precipice", Sea Food International, April 1997.

Greboval D. (1989)," Management of the New Fisheries of Lake Victoria: Major SocioeconomicIssues", RAF/87/099-TD/04/89. FAO. Rome.

Greboval, D. and P. Mannini (1992), "The Fisheries of Lake Victoria: Review of Basic Data",UNDP/FAO Regional Project, Inland Fisheries Planning RAF/87/099/-WP/16/97 FAO, Rome.

Hoekstra T. M., A. Asila, C. Rabuor, O. Rambiri (1990), "Report on the Census of Fishing Boats andGear in Lake Victoria, Kenya". UNDP/FAO Regional Project, IFIP, Nairobi.

Jansen, E.G. (1973), " The Fishing Population in the Kenyan Part of Lake Victoria", Report to the EastAfrican Freshwater Fisheries Research Organization, Department of Social Anthropology,University of Bergen, Norway.

Jansen, E.G. (1977)," The Development of the Lake Victoria Fisheries and the Possibilities ofNorwegian Participation", East African Journal of Rural Development Vol.10, Nos 1 & 2

Jansen, E.G. (1996), " Rich Fisheries - Poor Fisherfolk: The Effects of Trade and Aid in the LakeVictoria Fisheries", Centre for Development and the Environment (SUM), University of Oslo.Norway.

Kenya Government I (1995), "Fisheries Annual Statistical Bulletin, Kenya Fisheries Department,Nairobi.

Kenya Government II (1995), " Statistical Abstracts, 1995", Central Bureau of Statistics, Nairobi.

38

Kenya Government I (1996), " Economic Survey, 1996", Central Bureau of Statistics, Nairobi.

Kenya Government II (1996), "Kenya Population Census, 1989: Analytical Report Vol VII - PopulationProjections" Central Bureau of Statistics, Nairobi.

Kenya Government (1997), "Economic Survey, 1997", Office of the Vice-President and Ministry ofPlanning and National Development, Central Bureau of Statistics, Nairobi, Kenya.

Kongere, P.C. (1979)," Production and Socio-economic Aspects of the Fisheries in the Lake VictoriaBasin (Kenya)": In Okidi, C.O.(ed), "Natural Resources and the Development of the LakeVictoria Basin of Kenya" Institute of Development Studies Occasional Papers No.34; IDS,University of Nairobi, Nairobi.

Odhiambo, M. I. (1994), Heat Penetration Processing of Nile Perch Skin and its Utilization as EdibleFish Food Product", Proceedings of the KMFRI Seminar on the Utilization of Nile Perch By-Products, Kisumu, 7-10 June 1994, Kenya Marine and Fisheries Research Institute.

Ogari, J. (1996), " The Common Policy to Regulate Minimum Fish Sizes Especially for IndustrialProcessing", A Report Prepared for the Lake Victoria Environment Management Programme,Kenya Marine and Fisheries Research Institute, Kisumu.

Ogunja, J.C. (1991), " Recent Developments in the Nile Perch and "Omena" Processing in Kenya",Proceedings of the FAO Expert Consultation on Fish Technology in Africa, Accra, Ghana, 22 -25 October 1991. FAO Fisheries Report No. 467. FAO. Rome.

Ogunja, J.C. (1994) "Alternative Utilization of Nile Perch of Lake Victoria", Proceedings of the KMFRISeminar on the Utilization of Nile Perch By-Products, Kisumu, 7-10 June 1994, Kenya Marineand Fisheries Research Institute.

Ogutu, G. E. M. (1994). "Empowering Small Enterprise Groups for Effective Participation in theFisheries of Lake Victoria, Kenya", Paper Presented at the Small Scale Fish Systems Kenya)Workshop, Kisumu, Kenya. Sept 8-10, 1994.

Okemwa, E. and A. Getabu (1996), " Fish Farming in Kenya with Particular Reference to the LakeVictoria Fisheries", Paper Presented at the Seminar on the Management of IntegratedFreshwater Piscicultural Ecosystems in Tropical Areas, May 16-19. Brussels.

O'Riordan B. (1996), "An Assessment of the Current Status of Kenya's Lake Victoria Fisheries", AReport for the Intermediate Technology Development Group, IT Kenya, Nairobi.

O'Riordan B. (1977), "Fisheries, Farming and Food Security in Nyanza - Caught Between the Devil andthe Deep Blue Sea? A Report to the Intermediate Technology Development Group, IT Kenya

Othina, A.N and S. Osewe-Odera (1996), "Catch and Effort Assessment Survey for Artisanal Fisheriesof Lake Victoria (Kenya Waters)", Kenya Marine and Fisheries Research Institute, Kisumu.

Reynolds, J. E. and D.F. Creboval (1988)," Socio-economic Effects of the Evolution of Nile PerchFisheries in Lake Victoria: A Review", CIFA Technical Paper No.17, Committee for the InlandFisheries of Africa, FAO, Rome.

Reynolds, J.E, D.F. Greboval and P. Mannini (1992), "Thirty Years On: Observations on theDevelopment of the Nile Perch Fishery in Lake Victoria", Paper Presented at the Symposium onImpact of Species Changes in African Lakes, 27-31 March 1992, Imperial College, London.

Werimo, K. O. (1994), "Handling and processing of Nile Perch Skeletons at Artisanal level",Proceedings of the KMFRI Seminar on the Utilization of Nile Perch By-Products, Kisumu, 7-10June 1994, Kenya Marine and Fisheries Research Institute, Kisumu.

Yongo, E.O. (1994); Socio-economic Aspects of Artisanal Nile Perch Processors", Proceedings of theKMFRI Seminar on the Utilization of Nile Perch By-Products, Kisumu,7-l0 June 1994, KenyaMarine and Fisheries Research Institute, Kisumu.