Investment Opportunity in Cameroon (Fish Project)

U&I is acting as consultant to the National Industrial Fishing Farming LTD. The project is to bread 5,000 tons-10,000 tons of bar fish annually in the Limbe sea South West region Cameroon. The company is a newly establish and it is seeking for partners with whom they can take the venture. Below is the executive summary of the project for your review.

Introduction

The demand of high quality fish and shellfish products has increased over the last century, both as a result of shifts in consumer preference as well as a growing world population. Inherently in this is also an increased awareness of healthy food i.e. consumers focusing on a low calorie diet and polyunsaturated fatty acids. Global fish production from fisheries peaked with 90 million tones in the early 1990s (FAO1999). About two-third of this is used for human consumption with the remaining catch employed as fish meal or fish oils in various industrial application, inclusive of feed for the agriculture and aquaculture. Attempt have been made to predict the future capacity of the global food production system due to increasing pressure on natural resources and possible declines in stock due to increasing environmental stress (Doos and Shaw 1999).
The predicted increased regional and global demand for fish and fishery products will fall shorts of wild fishery, such demand may be met by aquaculture products but most aquaculture fisheries are fed by wild fish.

Many of the world’s poorest people depend on fish to help meet their basic needs. Fish are a key dietary staple for over 1 billion people, providing up to 70% of animal protein in some countries. Similarly millions of families rely on catching, processing and trading fish to provide their main source of cash income. These benefits need to be protected if hunger and poverty are to be reduced and the MDG targets met. As the world’s population grows and purchasing power increases so does the demand for fish. Consumption has doubled since 1973, with rising demand in developing countries accounting for the bulk of that growth. Meeting that demand is both a challenge and an opportunity. It is a challenge because most wild-fish stocks are already reaching the limits of their productive capacity, while many have leveled off or declined as a result of over fishing and other causes. In response we need not only to develop the capacities required to maintain wild fisheries in the face of these constraints and pressures, but also develop aquaculture which provides the only option for substantial increases in fish production. It is an opportunity because the strong demand for fish creates national and international markets that provide an increasing number of farmers, fishers, processors, traders, and service providers, with attractive investment options. This has already driven the rapid expansion of aquaculture in Asia, and the recent increases in aquaculture production and associated livelihoods in Egypt and sub-Saharan Africa have been similarly fed by growth in local markets. As demand continues to increase, these national markets will grow together with international opportunities. With 40% of fish catch being sold internationally fish has already become the most heavily traded commodity in international markets, with a net value of $18 billion a year, nearly 75% of which goes to developing countries in Asia. With adequate support, more small-scale fish producers in developing countries could benefit immensely from the globalization of trade in fish

Why Focus on Fisheries and Aquaculture?

The Millennium Development Goals (MDGs) set ambitious targets for improving human well- being by 2015. As the international community strengthens investment to meet these targets it is important that special attention is given to areas where there is greatest leverage for improving people’s lives. The World Fish Center and Cameroonian Government believes that fisheries and aquaculture can make such a contribution in many of the poorest countries and the present document summarizes where the Center’s research is helping to achieve this. A study in Malawi and Cameroon shows that average farm profits per unit area can be more than doubled by integrating aquaculture into traditional livestock and horticultural farming systems and these ‘fish farming’ families can earn 28% higher incomes. Fish consumption rises, strengthening the family’s food security and child malnutrition decreases. During times of drought, these farms are 18% more productive. This has huge implications, particularly in southern Africa where even mild droughts can lead to food shortages, and demonstrates how fish ponds underpin the resilience of the entire farming enterprise
Objectives

Main objective

To build sustainable increase in domestic fish production in 1 pilot countries in sub-Saharan Africa (Cameroon)

Specific objectives:

- To increase production of fish thereby improving food security of Cameroonians and subsistence farmers
- To increase household income of subsistence farmers
- To improve nutrition conditions for subsistence farmers household and Cameroonians at large.
- To reduce fish importation by improved local production capacity
- To improve farmers access to fingerlings.

Expected results

To mitigate the possible fish shortages and reduce the need for fish importation and the associate drain on foreign currency reserves in the sub-Sub-Saharan region. The initiative will enhance fish production in each target country by 10-20%.

National production and consumption trends

Fish is a preferred protein source for most Cameroonians because it is cheap compared with such other meats as bush meat, pork, chicken and beef. Prices for fish vary from 700-3000 FCFA per kilogram (kg) according to the quality and the place of purchase. Additionally fish is available in conveniently small units that can easily purchased by the poor with heaps of smoked fish selling for 100 FCFA or 0.2 dollars.

According to the 2007 Cameroon Economic and Financial Report national fish production was estimated at 140,000 tons, 100,000 tones come from marine fisheries and 40,000 tones from inland fisheries and demand stood at 260,000 tones. As a result 120,000 tones were imported which leads to about 120 billion spent by the government in the importation of fish. Sixty percent of national fish production is sold in smoked form mainly because of poor communication and access to fisher’s settlements as well as insufficient infrastructure for other form of processing (e.g. freezing, canning, salt-drying or fermenting). In addition, consumers prefer fish species such as madeuran sardinella (sardinella sp), Bonga Shad (Ethmalose sp) Bar fish etc.

Average fish consumption nationally is estimated at 17.9 kg per person per year. This figure varies according to location, rising to 30-35 kg in the large cities of Yaoundé and Douala and falling to 10 kg in villages far from fish production sites. As national fish production has not been able to meet fish demand, the government of Cameroon has in the past decades imported over 100,000 tones of fish per year. In 2004 135,000 tons of frozen fish were imported (Ngok et al 2005 Groupment Professionnel des Acconiers 2007). An estimate of 2.8 % growth rate in the fish consuming population and rapid urbanization (38% in 1987 rising to 55% in 2006) ensure that the potential for production and profitable aquaculture is high, especially as increased production from captures cannot be expected. So far, however, the large potential for aquaculture has not yet to be realized

Promoter of the project

The promoter of the project is Nation Industrial Fishing Farming LTD with the aims of providing quality fish to Cameroonians and to promote the cage culture of fishing and enhance the production of fingerlings for farmers.

Operation size

The project intends to produce 5,000 – 10,000 tones of bar fish during it first three years of operation. The fish will be graded in sizes accordingly during breeding to match – up consumer’s pattern, 0-3 months fish will weight 500g, 4-8 months 6-8kg and the suitable market size 500g two whole fish in a kg is good for Cameroon market.

Investment Objectives

The investment objective is to promote cage culture and producing large quantity of finger lings for the farmers and thus lead to wealth creation for the farmers and also to maximize the investment of partners. The fund asset allocation will concentrate in the feasibility study, purchase of equipment, setting up of plant, construction of processing units, office premise, health centre, vehicle and working capital.
The total cost of the project is 3 billion Franc with an internal rate of return of 100% during the first three years of operation with a start up cost of 100million and a projected revenue of 3.5 billion.