Commercial aquaculture, which, for this paper is defined as the rearing of aquatic organisms that is profit oriented and primarily by the private sector, contributes to food security, directly by producing food fish, and indirectly by generating employment, and thus, income for the purchase of food. In addition, commercial aquaculture can be sustainable because it depends on private, rather than public funds that are usually lacking or scarce. Commercial aquaculture produce can also contribute to a country's balance of trade as an export, or as an import substitute. In many countries, aquaculture is a source of tax revenues and a stimulus to technological advances. It has also bolstered the development of isolated regions and halted migration to cities. However, commercial aquaculture can cause environmental costs and social conflicts. Shrimp farming, in particular, has created social tensions and caused mangrove losses in several countries.
Commercial aquaculture will flourish only if macroeconomic conditions, and cultural and political attitudes favour entrepreneurship. Low and volatile economic growth, overvalued exchange rates, policy and political instability and poor governance, such as corruption and lack of transparency, adversely influence investors. Property rights also influence investment especially in operations that are land or water intensive, such as commercial aquaculture. Other critical factors that determine the success of commercial aquaculture include the species selected, the location of farms and the choice of cultivation techniques. The species should be easily reproducible and have a ready market. As for any other type of aquaculture, location of farms must not only take into account physical attributes such as soil and water, but also access to infrastructure, particularly transport for input procurement and output distribution. For production technology, elasticity of technical substitution implies that intensive methods may not always be appropriate, however technically efficient.
This study led to the following main conclusions:
1. The low wage to capital cost ratio in most countries of sub-Saharan Africa suggests semi-intensive techniques may be more economically efficient than intensive techniques.
2. Governments receptive to the private sector should at least provide an enabling environment. A framework should cover access to land and water, the importation of exotic species and environmental regulations. Because of the cost of monitoring and enforcement, regulations should not be too complicated and can be complemented by other measures, such as economic incentives and self-policing. Administration should be facilitated, with easy access to regulations, transparent approval procedures and rapid processing of permits. Authority for aquaculture should preferably be vested in a single agency. That agency would oversee the development of the industry, and would be responsible for sector planning that should involve all stakeholders
3. For countries with scarce public investment capital, the appropriate strategy to promote commercial aquaculture might be to attract large operations, domestic or foreign. Large farms have access to their own equity financing, obviating the need for bank credit. They have the resources to exploit appropriate technology and to develop marketing networks. By their size, they can have backward linkages stimulating the establishment of feed and fingerling industries. By their success, they can encourage small-scale entrepreneurs to enter commercial aquaculture.
4. Foreign direct investment in commercial aquaculture may be desirable, even necessary. Foreign firms often introduce new technologies, which provides knowledge to the domestic labour force. They will tend to be export-oriented and develop marketing channels. In return, foreign firms will expect, inter-alia, capital and profit repatriation as well as full currency conversion. Debt/equity swaps and joint ventures have also proven effective in attracting foreign investment.
5. One of the main constraints to commercial aquaculture in sub-Saharan Africa is the reluctance of financial institutions to provide loans, and the high interest on bank loans. To ease the problem of access to, and affordability of, credit, a number of policy options exist. Loan guarantees eliminate risks for banks, and incur no cost to government (unless there is default). Providing information about the sector, evaluating business plans by departmental technical staff, and diffusing financial data about successful commercial farms are other possibilities. To lower the cost of credit, subsidies on interest of bank loans have been offered to commercial producers in a number of countries. Credit subsidies have the advantage of spreading risk between governments and producers. However, in general, subsidies for inputs should be avoided. They contribute to dependence and misallocation of resources. Tax burden is also ranked among the principal concerns of domestic investors in sub-Saharan Africa. Tax holidays provide time for the cash flow to become positive while tax exemptions on inputs reduce operating costs. These economic incentives have acted as a stimulus to commercial aquaculture in Latin America. They could be equally useful in sub-Saharan Africa because they do not require additional government expenditures, although they have an opportunity cost.
6. The lack of data is frequently cited as a handicap for public support to aquaculture in sub-Saharan Africa. Requiring aquaculture permit lessees to submit production information could redress the problem. Costs of data collection would be passed to producers.
7. Marketing has been used as a policy in several countries. It has involved direct intervention through a marketing agent, generally a marketing association, or the construction of a central selling point. For the long run development of the industry, marketing associations have been used as an interface between the government and private sector. They have an incentive to maintain quality, to diffuse technological knowledge, to search for new markets and to maintain environmental sustainability. Associations can assist with bottom-up planning, demand-driven research, and environmental self-policing. Reliance on associations and model farmers can improve the effectiveness and efficiency of training and extension.
8. Planning of the aquaculture sector is not common in sub-Saharan Africa. Yet, it can be a device for focussing attention on constraints and for assessing comparative advantage. A plan should be multi-disciplinary and participatory. Because commercial aquaculture is market driven, a holistic planning ensures that all the constraints and opportunities are assessed. A participatory process empowers producers, and reduces the risk that particular disciplinary interests will dominate policy and research
9. Introducing alien species poses a risk to the ecosystem, but that should not inevitably be a binding constraint. If there are countries where a constraining factor is the lack of a marketable species, and the alternative to importing an alien species is abandoning commercial aquaculture, the appropriate strategy is to compare potential costs and benefits. An inter-disciplinary body should make such a decision, taking into account the precautionary approach and FAO guidelines.
10. Most countries in sub-Saharan cannot afford to increase funding on research and training. Thus, the focus must be on higher efficiency in existing research and training activities. Research must be demand-driven. It therefore should be allocated by the lead agency for aquaculture or by a supervisory committee. Members on the committee could include producers. Research conclusions should be diffused to producers perhaps by their association. Where possible, results from research in other countries should be obtained in order to avoid duplication. As the industry develops research and training should be funded where possible by the private sector.
11. At the macro level, governments in sub-Saharan Africa have little discretionary funding for the sector. This suggests that policies in the region should focus almost exclusively on those that incur few budget expenditures. At the micro level, although in some countries start-up funding has been effective in stimulating investment in commercial aquaculture, governments in sub-Saharan Africa lack the resources to implement the policy. Also, while producers frequently request subsidies on feed, seed and interest rates, the cost is usually prohibitive. Moreover subsidies distort market signals, and are difficult to eliminate. Subsidies are unrealistic in the context of fiscal retrenchment of sub-Saharan Africa.
12. In spite of the caveat on government fiscal limitations, however, there are policy options that are feasible. Among the most promising are tax holidays and exemptions. Relieving companies of the burden of corporate income taxes enables them to become financially secure in their infancy. If selectively targeted at commercial aquaculture, an incentive is provided to diversify into that sector. The government loses access to tax revenues in the short run, but gains potential long- term benefits. A similar choice exists by exempting farmers from sales taxes or custom duties. The impact on output will take longer because the reduction in variable costs occurs over a number of years.
