IMPACT OF STRUCTURAL ADJUSTMENT POLICIES ON THE FiSHERiES SECTOR iN DEVELOPING COUNTRIES SENEGAL, CHILE, AND THE PHILIPPINES - A PRELIMINARY ASSESSMENT November 1992 Impact of structural adjustment policies on the fisheries sector in developing countries Senegal, Chile, and the Philippines A preliminary assessment HKL & Associates Ltd Report prepared for the International Development Research Centre and the Canadian International Development Agency, Ottawa INTERNATIONAL DEVELOPMENT RESEARCH CENTRE Ottawa ' Cairo Dakar JohannesburgMontevideoNairobiNew Delhi . Singapore Material contained in this report is produced as submitted and has not been subjected to peer review or editing by IDRC Communications Program staff. Unless otherwise stated, copyright for material in this report is held by the authors. Mention of a proprietary name does not constitute endorsement of the product and is given only for information. ISBN 088936-660-8 TABLE OF CONTENTS ACKNOWLEDGEMENTS iv I INTRODUCTION AND TERMS OF REFERENCE 1 II SUMMARY OF FINDINGS 3 III AN OVERVIEW OF THE WORLD FISHERIES ECONOMY 10 IV STRUCTURAL ADJUSTMENT AND THE FISHERIES SECTOR 21 V CASE STUDY: SENEGAL 27 VI CASE STUDY: CHILE 57 VII CASE STUDY: PHILIPPINES 89 VIII CONCLUSIONS 117 APPENDICES 120 Terms of Reference 121 List of Persons Consulted 123 Bibliography 128 'U ACKNOWLEDGEMENTS Max Aguero was our main contact in Chile. He and his assistants, Marcela Cisternas and Exequiel Gonzalez, set up our associate's itinerary and accompanied her to meetings in Santiago, often providing translation services. Dr. Aguero also accompanied her on the field trip to Valparaiso, Vina del Mar and San Antonio. In addition, Dr. Aguero provided much valuable input into this report, both during the visit to Chile and in his comments on an earlier draft. Marcela Cistemas collected and provided English translations for much of the data cited in this report, and in addition, proved to be an invaluable guide during the field trip to Concepcion and Talcahuano. Additional data, insights into the fishing industry, and translation at meetings during this trip were provided by Dr. Arcadio Cerda of the University of Concepcion. In Puerto Montt, Aurora Guerrero, a faculty member at the Universidad Austral de Chile, and Carlos Jimenez I, a graduate student at the same institution, arranged and escorted our associate to meetings with a number of fishermen's organizations that they have been working with. Translation services were expertly provided by Eduardo Yeager during this field trip. Moustapha Kebe was the main contact in Senegal. Real Lavergne of IDRC, Dakar, provided assistance in a variety of ways as did Pierre Beauchesne of Servi-Pêche. Rogelio Juliano was the main contact person in Manila. Randy Spence of IDRC, Singapore, provided invaluable assistance in the early phase of the study. The assistance of Brian Davy, Theo Brainerd and Marc Van Ameringen of IDRC, Ottawa is greatfully acknowledged, as is that of Howard Powles of CIDA, Ottawa. None of the above is responsible for any errors or shortcomings in what follows. This report was prepared by Laura Anderson, Moray Clayton, John Loxley, Alain Molgat and Brenda Smale. The study was directed by John Loxley. HKL & Associates Ltd 100 - 511 Ellice Avenue Winnipeg, Manitoba< Telephone (204) 775-1196 Telefax (204) 775-6723 iv 1 I INTRODUCTION AND TERMS OF REFERENCE 1 Background to the study Economic crises have plagued countries in Africa, Latin America and Asia since the early 1980s. International donors and financial institutions, led by the Jnternational Monetary Fund (JMF) and the World Bank, responded by requiring certain policy changes as a condition of further lending. These conditions are now formalised in the various Structural Adjustment Programs (SAPs) currently being followed by many Third World Countries. While there are many studies of the impacts of SAPs, the majority consider macro-economic impacts only; few have evaluated impacts at the sectoral or micro levels.It is at this level that CIDA, ICOD and IDRC decided that this study should be focused. The fishery sector was chosen because, in most Third World countries, fish are an important source of animal protein for large numbers of people, and fish products contribute significantly to foreign exchange earnings. 2 Terms of Reference and Approach to the Study The detailed terms of reference are to be found in Appendix I. The overall objective of the study is to evaluate the impact of structural adjustment programs on the fishery sector of Third World countries, with specific reference to Senegal, The Philippines and Chile. The study begins by outlining the importance of the fishery sector in the world economy and by reviewing the development of the sector in recent years.Specific attention is paid to problems facing the fisheries sector in Third World countries. This is followed by a review of what structural adjustment policies are designed to achieve, the policy instruments involved and the debates concerning their desirability and efficacy. The possible implications of structural adjustment programs for the fisheries sector are then analyzed in schematic terms and this analysis provides the framework for the three case studies. Each case study begins with a review of macro economic developments in recent years, a description of the contents of structural adjustment programs, and an assessment of their accomplishments. There follows an overview of the structure and importance of the fisheries sector, and a preliminary assessment of how structural adjustment programs might have influenced developments in that sector. Finally, suggestions are made for further research in this area. The report concludes by drawing together the main findings of each case study on how structural adjustment policies might have affected the fisheries sector. Given the tight deadlines in which this study had to be completed and the limited resources available, it was intended that it would draw only upon secondary sources of information, complemented by short visits to each country both for data collection and interviews with knowledgeable persons. Each Canadian researcher had a local contact in the field to assist in collecting information and in making contacts. 2 The intention is that this preliminary evaluation will be followed up by more focused research in the field, drawing more extensively on local expertise, on the areas identified for further study. 3 IL SUMMARY OF FINDINGS - THE IMPACT OF STRUCTURAL ADJUSTMENT IN FISHERIES Structural Adustment Programs (SAPs) are usually introduced as a way of handling the pressures of an increasingly adverse balance on the external account; bankers and other lenders seek the imprimateur of the IMF/World Bank before easing repayment terms/advancing new funds. The major foci of SAPs are the external balance, and the linked internal balances between both savings and investment and between government revenues and government expenditures, as a prelude to growth in real income. As the role of the market is paramount in SAPs, a corollary - which critics would argue is the main objective - is to integrate l'hird World more closely into the world market economy. The major policy areas and instruments used in SAPs are: restraining demand: by increasing interest rates; tightening credit; restraining wages; reducing government spending by cutting services; employment and subsidies; increasing tax collections; and, where imports exceed exports, devaluation; getting prices right: ending price controls and subsidies, removing import controls and lowering tariffs (so that "world prices rule"); ending state monopolies; and devaluing "overvalued" currencies; institutional/sector reforms: removing institutional restrictions on the freedom of capital to invest in any sector; privatization; reducing and simplifying the role of the public sector in day to day business decisions of the country and so on. In the last few years the Bank has recognized the social impact of adjustment and has attempted to work in measures for job creation for those most affected, and provisions for redundancy payments, retraining etc. to mitigate these adverse impacts In section IV of this report we analyze in detail how the fishery sector of an economy could react to SAP measures; here we note some of the major effects seen in the countries we visited. SENEGAL Fish production has increased strongly since 1982, which coincides with the introduction of reform programs. Most of the increase was accounted for by artisanal fishers, whose numbers also increased steadily after 1984. By 1989 they accounted for 71 percent of total production. Since 1983 there has been a steady increase in the dollar value of fish exports, accounted for mainly by the industrial fishery. Fish now earns about 28 percent of total export revenue. 4 The expansion of artisanal production may be related to structural adjustment through easing of foreign exchange constraints and restored economic growth but other factors played a role e.g. easing of competition with industrial fishers in the early 1980s and provision of credit for motors. Export promotion was essentially through subsidies and tax exemptions. Since the artisanal sector was producing essentially for local consumption they were not, until recently, affected much by these incentives. Recently, however, the increased production of fish seems to be reaching natural limits. Some species are already recognized as being overfished, but given the poor data and the known problem