Namgomar Activity Report

Report – in - Namgomar

Date: 6 April 2016

Executive Summary

Angola and Namibia have an established cooperation framework since 1990. The two countries seek to complement food security, promotion of domestic consumption of fish & in their respective markets. In 2013 the establishment of Angolan-Namibian fish brand via interaction of commercial entities of the two countries, led to the creation of NAMGOMAR.

Namgomar S.A. is an Angolan based joint venture of Angolan and Namibian Nationals in the sector. The entity was created to exploit marine resources in the Exclusive Economic Zones (EEZ’s) of Angola- Namibia. Namgomar’s activities seek to enhance food security via the supply of frozen fish & fish products to both the Angolan and Namibia markets, thereby augmenting both countries’ efforts of alleviating food shortage.

Namgomar Pesca S.A. seeks to ensure that Angolans and Namibians are in a position to contribute to food security within the two countries and would like to market harvested products into Angola and Namibia to achieve this objective. The Angolan State-owned entity, EDIPESCA (Fish Product Distribution Company) serves as a conduit through which Namgomar Pesca S.A. will realize the objective. In Namibia, the Fish Consumption Trust has a well-established network that can be replicated by EDIPESCA.

The first fishing season came with some challenges for Namgomar. Key among which were some logistical and legislative challenges in the Angolan market, and then the oil price slump created a drop in the global price for horse mackarel. Despite these seemingy serious challenges, Namgomar remains resolute to pursue its mandate and continue to seek out ways of mitigating the challenges that we have faced in the past year.

Page 1 of 7 Namgomar Activity Report

The Fishing Activities

Namgomar commenced activities in Namibia at the end of 2014 with a quota allocation of 7000 mt and continued in Angola (fishing a 10000 mt quota) until the beginning of March 2015 when the Heinaste returned to Namibia.

The project is ongoing in Namibia but has been suspended temporarily in Angola due to some logistical and legislative challenges we faced there, however these are being addressed and we are confident of being back in Angolan waters soon.

PICTURE 1: FISHING VESSEL HEINASTE

PICTURE 2: NAMGOMAR STAND AT THE FISH EXPO IN 2014 & 2015 PICTURE 3: HON MINISTER OF FISHERIES OF ANGOLA LAUNCHING NAMGOMAR

The preparation for the project in Angola began towards the end of 2013 and work continued until the vessel commenced fishing in December of 2014. Despite several challenges the preparation went well and all the relevant parties put in effort in order to ensure the success of the project.

Page 2 of 7 Namgomar Activity Report

As part of the preparations we received and acutely studied the regulations and the TAC for the years 2014 and 2015. In comparison to the 2014 regulations the 2015 were very similar and we could not identify any challenges in the regulations besides that using mid-water trawl for Horse Mackerel was prohibited. It was our belief that we had resolved that issue before entering into Angola as we received a pre-fishing license on July 2 2014. The pre-fishing license did not contain any disclaimer that would have given arise for concern. The pre-fishing license was for mid-water trawl for Horse Mackerel and a vessel over 100 m.

It should also be noted that the fishing regulations themselves did not contain any restrictions like those we faced regarding the export of Horse Mackerel. During the preparation period our emphasis was on the importance of exportation of Horse Mackerel and we were reassured that it would not be a problem. With that reassurance and having reviewed the fishing regulations we were comfortable in our belief that no further obstacles were in the way of the project. The remainder of the preparation period was without any major problems or obstacles. The real challenges did not start until Heinaste began fishing in Angola.

I - Facts about the fishing operations in Angola.

 Conditions: o Permission was granted to use mid-water trawl. o Permission was granted to catch outside of the 20 miles.  There are 2 kinds of types of Horse Mackerel in Angola. o Trachurus Capensis (migrating specie, also in Namibia). o Trachurus Tracae.  Trachurus Tracae contains more fat and is more valuable (fish which is found in Angola, not in Namibia).  Total time of the project around 70 days.  The fishing days were around 30 days. o Partly in January and partly in February.  Stoppage time was around 34 days.  Around 6 days for sailing.  The total catch 1.959 tons during the 30 days. o Catch: 65 tons per day.  Break down of the catch indicated below:

Period/fishing 19. Jan to 17. February Species Quantity (kg) Horse Mackerel 1.445.250 Mackerel 492.200 By Catch 21.460 Total (kg) 1.958.910

Page 3 of 7 Namgomar Activity Report

II - Main challenges.

It is our opinion that the main challenges stem from lack of concrete information from the ministry as further explained below. Other challenges are a consequence of the information as mentioned in chapters IV, V and VII.

Heinaste spent a total of 34 days fishing from of total 70 days in Angola, waiting for licenses and other permissions. We had received a pre-fishing license 6 months before fishing in Angola began which gave us comfort that the issuance of a fishing license would not be problematic. The latter license along with other permissions, such as customs documents, discharging permissions, exit permission, export permission, and any other permission which was needed are granted once the vessel has entered Angola and commenced fishing. These licenses and permits could therefore not been obtained at an earlier stage.

Secondly, we were not permitted to export and sell Horse Mackerel from Angola. As mentioned, this was our emphasis during the preparation and we bore this in mind especially when reviewing the fishing regulations. The fishing regulations did not contain any information which might have suggested restrictions or ban to export Horse Mackerel. To our knowledge there were no public information regarding this restriction. Our agent did not notify us of any such public information and gave us oral confirmation as well that we could export and sell Horse Mackerel from Angola. We could not export the Horse Mackerel as planned and promised to our client. Against many odds a solution was found. The Horse Mackerel was sold for an acceptable price and despite challenging payment conditions we received the payment.

III - Markets – branding of Namgomar products (from Namibia and Angola).

The marketing and branding campaigns of Namgomar products have emerged fairly well. As a result we saw Namgomar products being sold in Namibia, Angola, Zambia, Mozambique, DRC and Zimbabwe.

Majority of the product was sourced from the Namibian operation. The products from the Angolan operation were sold within Angola, excluding the Mackerel that was caught as a by-catch.

The Namgomar brand has generally been very well received in these markets and is well established brand with a good reputation for the good quality.

As mentioned the main purpose of the project is food security in Namibia and Angola. For that purpose the project was successful. The Namgomar product reached its consumers in those countries via established distribution channels.

PICTURE 4: DISCHARGING IN PORT IN WALVIS BAY PICTURE 5: FISHING VESSEL ALINA (WAS FISHING IN NAMIBIA)

Page 4 of 7 Namgomar Activity Report

PICTURE 6: NAMGOMAR PRODUCT PICTURE 7: NAMGOMAR PRODUCT

IV – Angolan Operations.

 There were about 14 vessels fishing Horse Mackerel in Angola 1 to 1 ½ years ago (Freezer trawlers). o In our opinion there is an oversupply of fishing licenses in Angola. o As a consequence some vessels have left due to poor fishing and challenging conditions. o In April 2016 there are around 4 to 5 freezer trawlers and have been very few for the last 1 year to 1 ½ year.  2 year ago there were only few vessels fishing Horse Mackerel in Angola. o It only opened for the first fishing vessel fishing Horse Mackerel around 3 years ago (unconfirmed).  The fishing experience for the last 1-2 years of the vessels fishing in Angola has been unstable and poor outside the 20 miles.  In our opinion the Angolan water / Horse Mackerel biomass is very unlikely to tolerate so many vessels fishing in Angola.  All the vessels fishing in Angola have put a lot of pressure on the fish stock of Horse Mackerel in Angola and can be damaging both on the short and long term.  Some vessels fishing in Angola go over the boarder to Namibia illegally to catch in Namibian water. o The illegal fishing in Namibia will most likely have a negative effect on the biomass of Horse Mackerel in Namibia. o In addition, too many vessels fishing in Angola will most likely also have a negative effect on the biomass of Horse Mackerel in Namibia as Horse Mackerel is a migrating specie (part of the biomass goes between Angola and Namibia as Horse Mackerel is a migrating specie).

V – Result in Angola.

 The size of Horse Mackerel is fairly good.  Good size of Mackerel.  The fishing is unstable outside of the 20 miles and limited fish to catch outside the 20 miles. o Catching 2.000 tons in 30 days is below average.  Regulations need to be clearer, foreseeable and in place.  Necessary to increase the control and surveillance on the fishing grounds.

Page 5 of 7 Namgomar Activity Report

 Too many vessels fishing in Angola which is putting pressure on the biomass and pressure on the fishing ground also potentially having negative effect on Namibian fishing.

VI – Financial results of fishing in Angola.

The project made a significant loss during the 70 days and the stoppage of 34 days (for licensing and permissions) was one of the bigger factors for the loss.

Other factors include limited catch, permission to fish only outside the 20 miles, and the non export of Horse Mackerel.

VII – Conclusion

In our opinion in order for fishing Horse Mackerel in Angola to be a feasible and viable option it is necessary that:

 we continue to seek resourceful, efficient and knowledgeable staff to obtain all licenses and permissions in an efficient manner. We are in the process of reviewing our processes in Angola together with our partners.  we are able to fish closer than 20 miles (possibly 15 miles, even 10-12 miles). In this respect we have approached the ministry for consideration  should the above be permitted, we would be able to catch approx. 2.600 to 3.200 tons per month  we have permission to export Horse Mackerel as it is one of the most critical factor for the project and the way forward. Currently this matter is under discussion, especially given the lack of foreign exchange in Angola at this time. o The lack of currency in Angola is a serious challenge. The cost factors of the operation are almost exclusively in US dollars at the same time as it is very difficult to generate dollar revenues from the sale of the product.  Angolan authorities ensure sustainable fishing of Horse Mackerel by enforcing a good fishery management plan, i.e. by limiting the number of fishing vessels operating in Angolan waters (possibly down to 2 to 4 vessels, whereas now there are up to 14 vessels) and also by limiting the fishing season to a few months each year instead of the whole year as it is now. It is important to identify where and when it is best to fish in Angola to secure sustainable fishing there. This is necessary to secure the biomass and to prevent overexploitation. In Namibia there are around 10 vessels for larger biomass of Horse Mackerel and larger fishing ground. This can be done in an active cooperation and/or consultation with Angolan authorities.  We are cooperating with the UNUFT in Iceland (www.unuftp.is) which will facilitate transfer of skills and international know-how into the fishery management in Angola. Some of the skills are for example; stock assessment, fishery regulations and practical management of a sustainable quota- system to benefit the future needs of the country. o The director of UNUFTP in Iceland is looking for suitable candidate from Angola to participate in their 6 months training program which will begin in September 2016.

Page 6 of 7 Namgomar Activity Report

Aside from the challenges, which can be resolved with the assistance of an efficient agent and a dialogue/cooperation with Angolan government, the Horse Mackerel fishing project in Angola continues to provide promising potential.

VIII – Operation in Namibia.

The Horse Mackerel in Namibia is well established and well regulated. It has been professionally developed for a long period of time with the aim that the industry’s regulatory is both efficient and practical.

Our main concern is the effect fishing in Angola may have on the fishing grounds in Namibia. It is known that Horse Mackerel vessels with fishing license in Angola have sailed over the boarder to Namibia to catch Horse Mackerel illegally. As described above we are also concerned that the fishing grounds in Angola might be overexploited. As the Mackerel is migrating specie this may affect the fishing grounds in Namibia. It is therefore our recommendation that control and surveillance at the boarder of Namibia is increased and that Namibian and Angolan governments cooperate in securing the sustainability of the Horse Mackerel.

IX – Conclusion in Namibia.

The fishing operation in Namibia was and is viable and with positive results.

We have not faced any big challenges, only minor administrative challenges with the Ministry of Fisheries.

It is our opinion that Angolan Ministry of Fisheries can learn a lot from the Namibian Ministry of Fisheries when it comes to the fishery regulations and administrations in general.

Page 7 of 7