Since the early 2000s, CFFA has argued that the EU should stop paying a proportion of the fees for EU vessels gaining access to developing countries. It is an unfair subsidy and the industry should pay these costs. Still, the EU, through DG MARE, spends millions of Euros a year to contribute to the costs of these commercial arrangements - 71 million was spent in 2015 as a contribution to its Sustainable Fisheries Partnership Agreements (SFPA). CFFA believes that EU public funds spent on fisheries in developing countries should be used entirely for achieving local fisheries development, and the role of the EU in such agreements should be restricted to negotiating the technicalities of the commercial fishing agreements, and providing a regulatory oversight role.
While there is a sound argument for decoupling EU funds from access payments, a related issue lies with insuring EU funds for fisheries development are used well. Already DG MARE is engaged in efforts to support fisheries management in partner countries. About 31 millions Euros (in 2015) of the total payments for SFPA were used for developing the capacity of coastal states to manage their fisheries, although this money is not technically ‘aid’. The CFFA proposal would see a clear decoupling of EU funds from the access payment, with decisions on how best to support foreign countries based on a needs assessment. We would therefore expect that the amount of EU funds available to DG MARE to support fisheries development would increase.
However, the European Court of Auditor undertook a review of how these funds are managed in its report: “Are the Fisheries Partnership Agreements Well Managed by the Commission?” It highlighted a number of problems. It raised concerns about the fund’s impact, it showed there were problems in terms of transparency and accountability, and it argued there was a lack of co-ordination with other sources of development assistance. The recommendation for decoupling aid from access payments must therefore be joined with efforts to improve oversight and monitoring of funds available to DG MARE to be used for local fisheries development.
What is EU Sectoral Support?
Sectoral support provided through EU fisheries agreements with developing countries can be traced back to the 1994 Senegal-EU fisheries agreement. Until then, funds would simply go into the central state budget. However, growing criticism about the impact of the EU’s fisheries access agreements, meant that in the 1994 agreement both the government of Senegal and the EU agreed that part of the funds paid for fishing access would be set aside for ‘targeted actions’. These were directly linked to strengthening fisheries management, and providing some support to artisanal fishing organisations. This was significant as both parties recognised artisanal fishers as a stakeholder in the fishing agreement. The 1994 EU-Senegal agreement was also the first time a representative from small-scale fisheries was allowed to attend the negotiation of the agreement.
Targeted actions were subsequently introduced in most of the agreements between the EU and African countries. Typically, the funds have been managed separately from the state’s central budget (i.e. treated as ‘off budget income’). With the reform of the Common Fisheries Policy (CFP) of the EU in 2002, these agreements were transformed into fisheries partnership agreements, and target support was referred to as ‘sectoral support’. The basic regulation for the new CFP, which entered into force on January the 1st 2014, provides further legal guidelines for sectoral support (see articles 31 and 32).
Sectoral support is therefore part of the financial contribution paid by the EU as part of an SFPA, although it is not a form of Official Development Assistance (although at times the EU has reported this as part of its ODA, which was a mistake). The amount identified for this sectoral support is a proportion, decided by the coastal state, of the overall access payment. A country may decide that all of its revenue from the EU is set aside for sectoral support, as is the case in the Cook Island. However, as reported by the Court of Auditors, the EU Commission has a policy goal to cap sectoral support at 50% of access payments, which is roughly what is agreed to in most countries now. The lowest proportion of funds set aside for sectoral support is found in Mauritania, where it has declined over the years, largely due to Mauritania encountering problems for absorbing these funds. In the most recent agreement, annual payments for fisheries access are just under 60 million Euros, and 4 million is set aside for sectoral support (about 15%). Still, sectoral support provided to Mauritania through the fisheries agreement protocols between 2008 and 2012 amounted to 65 million Euros.
The size of these transfers is of course larger for those countries that can provide more valuable fisheries access agreements, including those that have ‘mixed agreements’. These tend to be worth more than the tuna only agreements. Along with Mauritania, the largest mixed agreement exists with Morocco, worth 30 million a year with 14 million allocated for sectoral support. Guinea-Bissau and Senegal also have mixed agreements. For Guinea-Bissau this is worth 9.2 million a year, with 3 million going to sectoral support, and in Senegal the EU’s agreement is worth about 1.8 million, and 750,000 is allocated for fisheries development. In comparison, the smallest sectoral support is found in the Ivory Coast-EU SFPA, with only 275,000 Euros a year, due to its tuna agreement being worth 680,000 Euros a year.
The use of sectoral support should be defined by the partner State, based on its priorities, and is validated by the Joint Committee that provides overall management of the fisheries partnership agreement, comprising representatives from both the EU and the coastal country. The range of projects tends to include those aimed at improving scientific research on fish stocks, supporting monitoring, control and surveillance of fishing vessels, improving health and sanitary conditions for exports of fish, or for projects that support small-scale fisheries. There are also cases, such as Mozambique, where the majority of funds for sectoral support have been spent on infrastructure developments, including building offices of the fisheries authority.
Sectoral support payments are dependent on results. If funds for sectoral support have not been spent, or there is a lack of evidence that funds have been used according to the matrix of results jointly agreed, subsequent annual payments by the EU for sectoral support can be withheld. This has happened before, such as with Madagascar in 2011.
Is Sectoral Support working?
The decision to allocate up to 50% of access fee payments to fisheries development is open to different interpretations. A general point is that commercial fisheries revenue received by highly underdeveloped states may be better used for other developmental priorities, and not for fisheries management costs. Indeed, for countries such as Mauritania, total EU funds for fisheries sectoral support have amounted to over 10% of the country’s entire national budget. Channeling these funds to fisheries may deprive other sectors (health, education, etc.). The flip side is that earmarking funds may help the country achieve better fisheries management and help achieve sustainable fisheries, which ought to contribute to the country’s development and food security. What is more, in some African countries there has been a concern that EU funds paid to the central budget may also be lost to corruption or spent on harmful activities, so in theory targeting funds on specific fisheries activities could improve accountability. Sectoral support also may improve public opinion on fisheries agreements, as it demonstrates contributions for fishing agreements are being used productively.
However, there has been a range of criticisms about the way EU sectoral funds have been managed. Drawing on the report of the European Auditors there are several issues.
Part of the problem facing the EU’s Sectoral support funds lies with the weak capacities of States in defining priorities. Many coastal states still do not have a national fisheries strategy in place, which means the identification of projects to be funded by sectoral support can be uncoordinated and lacking a coherent long term strategy. There is also a lack of public information and public consultation in how sectoral support from EU fisheries partnership agreements is allocated and used. Country reports regarding the use of the sectoral support are still confidential. This was discovered by a group of European Members of Parliament, when they visited Guinea-Bissau this year to learn more about the country’s challenges and its relationship with the EU. The meetings held by the MEPs highlighted that:
“…stakeholders' widespread lack of information on EU aid or the implementation of the current FPA, on what projects could be financed under the 'sectoral support' or on how and where to apply; while stakeholders were incited to intervene more actively with national authorities so that their projects become eligible for EU funding, complaints were also voiced on the lack of transparency in the allocation of government/aid funds.”
An outcome of this situation is that the allocation of funds may not reflect the country’s priorities. As the Court of Auditors report indicated, the trend suggests most sectoral funds are spent on combatting illegal, unregulated and unreported fishing through strengthening monitoring and control of industrial fishing vessels. For example, nearly 60% of the sectoral support provided to Madagascar in 2013 went to paying for the monitoring and control of fishing vessels, and the remainder was invested in supporting fish exporting businesses, many of which are owned by European and Asian companies. These are clearly sectors that may have a more direct benefit for coastal state governments (through taxation), but not necessarily for wider development and food security, which are the objectives of the EU development policy for fisheries. Indeed, there is a risk that decisions by partner governments and the EU on how best to use sectoral funds focus predominantly on efforts to improve fisheries management for the industrial sector, without taking into consideration the needs and importance of local artisanal fisheries.
Not all countries follow the same path. Some examples show that EU sectoral support is used for local fisheries development. The Seychelles uses at least 50% of its EU sectoral funds for local fisheries development, including the establishment of a loan facility for small-scale and semi-industrial fishing fleets. Still, a criticism in some countries is that a significant proportion of the EU access payment derived from the presence of EU industrial fleets is being used to cover the costs of managing these fleets. This may detract from the goal of developing local fisheries capacities, simply working as another subsidy for industrial fisheries. Indeed, where coastal states do not have the resources available to cover the basic costs of managing industrial fishing, it may be because access fees are set too low. Whether foreign fishing companies are paying enough in access fees so that coastal states can cover the resulting management costs without having to rely on additional support from donors, is an important consideration. It would be extremely useful if coastal states were able to identify what the full costs are of managing foreign fishing, as well as the value added to their economies, so that this could be reflected in negotiations for a fairer access fee payment.
Donor coordination and coherence
The European Court of Auditors identified ‘absorption difficulties’ in many countries. It is a widespread problem for governments in Africa, where donor’s expectations and support can exceed the host authorities ability to deliver. This was a major problem with the sectoral support provided to Mauritania in the 2008-2012 protocol, where 25 million Euros from sectoral funds allocated were not spent. Previous protocols with the Seychelles and Mozambique had similar issues, as both countries reported unspent funds amounting to 63% of their sectoral support budget (although the situation seems to be improving).
This problem is exacerbated by the existence of other official development assistance for fisheries, which has increased over the past decade throughout Africa. Many fishing authorities have been encouraged towards aid dependency, where development aid forms a sizeable portion of state expenditure and there are no indications that reliance on this aid is declining. There is now growing international recognition that aid dependency has negative implications for developing countries, although it has yet to be seriously considered in Africa’s fisheries sector.
The EU Court of Auditors also noted how EU Sectoral funds are being used in an uncoordinated way with other development aid. This risks causing duplication of efforts, as well as lack of coherence. As such, the EU’s sectoral support is not always based on a wider appreciation of what other donors are doing, including the support provided by the EU’s Development Fund, as well as EU members states and other multilateral and bi-lateral partners. As the EU Auditors (page 32) found:
“…in the Indian Ocean countries visited, coordination among the development partners active in the fisheries sector was weak. Sectoral support is not discussed at the regular coordination meetings between the representatives responsible for EDF support in the EU Delegation and the other financial partners, and the fisheries attaché does not take part in these meetings…In addition, in none of the countries visited was FPA sectoral support included in a global matrix together with the other partners' funds intended for use in the fisheries sector. For example in Mozambique, where different partners are funding similar actions, there is a risk of double financing, particularly with regard to participation in meetings and inspection activities. Although Mozambique does have a global matrix in place, it includes neither all the relevant partners nor sectoral support. This was also the case in Madagascar.”
It is worth noting that DG MARE responded to this observation by describing that there have been efforts to improve coordination not only with DG DEVCO, but also other development partners in coastal states. But as there is so little published about the use and effectiveness of EU sectoral support, it is difficult for others to know whether this collaboration is working well.
Accountability and oversight
The auditor’s report also argued that DG MARE have failed to provide consistent and rigorous control and monitoring of sectoral support funding. Part of the problem is that sectoral funds are often not traceable in the coastal state’s budget, and reports on outputs by host states submitted to the joint committee are often difficult to verify for the commission. At times, EU Sectoral funds have not been spent on agreed activities and have not been fully accounted for. Because it is not classified as Official Development Aid, EU Sectoral support is not subject to the same levels of oversight and accountability as other similar aid payments from the EU.
There have certainly been improvements in transparency and accountability in some cases. The recent management of sectoral funds in both Mauritania and Morocco has probably achieved the highest levels of accountability to date. However, in many countries transparency and accountability of the use of sectoral support through EU fisheries agreements is still considered poor by the Court of Auditors. There is little in the public domain on how these payments have been used and whether their impact has been positive or not.
The European Court of Auditor’s report cast considerable doubt on the ability of DG MARE to monitor spending by coastal states, largely because they do not have the necessary capacity or even the mandate to do this. Moreover, although the EU does undertake its own external evaluations of fisheries partnership agreements, these are inconsistent in terms of reporting on the use of sectoral funds. These evaluations focus more on the extent to which the fisheries agreements have provided value for money for the EU and are operating on a sustainable basis. They often provide superficial analysis of how sectoral support has performed, if at all.
The use of conditionalities
DG MARE has a rigid policy of withholding payments if there are problems in spending. For the time being it has no way of reducing a proportion of the funds or withholding money for certain projects; it has to be paid in full or not at all. Because of this, the Court of Auditors argued that the Commission has regularly supplied funds when problems have been evident. The Court of Auditors argues that the inflexible arrangement for withholding payments on an annual basis makes managing them extremely difficult. The move to decoupling sectoral payments from access payments should help alleviate this problem.
The auditor’s report also suggests that in the past the Commission has not worked proactively to help coastal states overcome problems in the spending of sectoral funds. In the case of Mauritania, the realization that funds were underspent led to the decision by DG MARE to simply reduce the proportion of funds going to sectoral support in the next 5-year agreement protocol. This put more of the money into the central state’s budget which, as the European Court of Auditors argued, has even worse levels of transparency and public oversight. The decision, the auditors thought, was not compatible with the objective of helping improve the country’s fisheries governance overtime, and was at odds with the concept of achieving a sustainable partnership for fisheries development.
Improving Sectoral Support
Coastal states are in agreement with the EU’s policy of sectoral support and they maintain some power to reject it if they wanted to. The inclusion of sectoral support suggests the “sustainable partnership” model of trade is trying to be addressed. However, a number of key reforms are needed.
- First, there needs to be concerted effort by both parties to identify the priorities of coastal states so that sectoral funds can be used well. This needs to happen through a more consultative process, including representatives of small-scale fisheries. The EU has a strong role to support such efforts and should encourage partner countries in the development of long-term national strategies for fisheries management. This will clearly identify where support is needed to improve sustainability and the contribution of fisheries to food security and poverty reduction. Although promoting food security is a key objective of the EU Development Cooperation policy when it comes to fisheries, it is not taken as a serious objective when it comes to identifying actions to be supported by SFPA sectoral support.
- Second, through a process of developing such strategies, it should be carefully considered whether it is appropriate for access payments to contribute to the management costs of large-scale fisheries, and how the sector itself needs to do more to provide for such costs. Coastal states need to have more information on the costs and value added by foreign fishing firms so that they can have a stronger position in negotiating access agreements and deciding on how support for local fisheries development should be prioritized.
- Third, discussions on how sectoral support is used must be linked to wider efforts to co-ordinate fisheries development aid and other investments. This is not to suggest that all donors and foreign partners have to pursue the same goals and priorities, but at a minimum there should be openness and discussions about what these goals and priorities are. Over the past few years there have been better co-ordination between DG-MARE and the DG DEVCO on fisheries assistance in some countries. However, on the basis of the auditor’s report it would seem much more needs to be done, including with EU Member States and other development partners.
- Fourth, improving the transparency and reporting mechanisms of EU sectoral funds is also evident. In the case of the fisheries agreement with Mauritania, a fact sheet was published on the sectoral support of the 2008-2012 agreement, which was a useful effort to raise public awareness. However, minutes of the meetings of the joint committee that provides oversight of the use of sectoral funds and third countries reports regarding the use of the sectoral support are not published. They should be.
- Finally, the EU and coastal states should undertake more rigorous external evaluation of sectoral support, which could be given more prominence in existing evaluations of SFPAs. This will also assist with improving transparency and multi-stakeholder inclusion in the decision-making process.
These are practical recommendations on the reform of the management of sectoral support. They need to be put in context of the need for decoupling access payments from aid. At the moment this has been treated as an administrative issue, which will allow DG-MARE more flexibility in disbursing sectoral funds as opposed to the rest of the access payment. However, this still leaves the control and oversight of fisheries development funds with those engaged in the negotiation and management of the commercial fisheries agreement, and it means the EU continues to use public funds to cover the costs of commercial trade agreements. A stronger approach to decoupling access payments from aid would be through the separation of access fees from sectoral support altogether. The amount of money provided to support coastal states in improving fisheries management should be informed entirely by a needs assessment, and have no bearing on the size of fisheries access payments. As is the case for some other fishing fleets, payments for access should gradually be made solely by the industry, whereas public money paid to the coastal developing state should be used for development.