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Investing in the Canadian Fisheries Sector

- A Golden Opportunity?

Nadia Bouffard

Director General, Fisheries & Aboriginal Policy,

Fisheries and Oceans Canada

National Aboriginal Fisheries Forum II

October 2nd – 4th, 2012 Nanaimo, British Columbia

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Missed Opportunity??

• World Bank says the world loses an estimated potential net economic benefit of over $50 Billion annually from the Fishery*

• Losses can be largely attributed to two factors leading to unsustainable fisheries world-wide:

1. Depleted fish stocks

2. Massive fleet overcapacity

• These problems are largely attributable to the following key causes:

• Lack of governance and structure in fishing sector • Lack of governance and strong fisheries management regimes

*Information from “The Sunken Billions”, Food and Aquaculture Organization and The World Bank, 2009

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Fisheries Management Costs

• Canada has a strong management regime for Fisheries and Aquaculture

– Legislation & Regulations

– Limited entry & Licensing Regime

– TACs and Quotas & Effort Limitations

– Mitigation of Ecosystems Impacts

– Etc.

• Strong fisheries management regimes cost: both the public purse and the fishing sector

• For fishers, this has meant, over time, increased costs with no increase in useable collateral to support the investment

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Sources of Capital

• Capital may be obtained from various

sources, including: – Financial Institutions

– Private Funders

• Regular Investors

• « Impact Investors »*

– Governments

– Philanthropic Organisations

* J.P Morgan Impact Investments – An emerging economic class” Global Research, Nov. 29, 2010

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General Conditions for Investment

• Banks commonly follow the 5 C’s when evaluating a potential borrower

1. Character

2. Capacity

3. Collateral

4. Credit history

5. Collection

(“Report on Access to Capital in the Canadian Tidal Waters Commercial

Fishing Industry”, May, 2010)

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General Conditions for Investment

1. Character

• Character of the organisation or individual(s) involved

• Governance & Structure or organisation or individual

• Strong image of industry sector as a prudent investment

option

2. Capacity

• The ability to repay

• Importance of a strong business case (Plan)

• Predictability in future economic returns

- Stability in access: long term fishing licenses

- Stability in allocation: defined shares at the borrower level

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General Conditions for Investment

3. Collateral • Forms of property in support of loan default

• Transferable License and quota as collateral - Saulnier

- Notice and Acknowledgement

4. Credit history • Has there been a problem?

5. Collection • Will it be difficult to collect in the even of default?

• Importance of Strong governance

• Process facilitating recovery e.g. Saulnier & Notice and Acknowledgement

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What does this all mean for Aboriginal Fisheries?

Strengths:

• National and Regional Aboriginal Structures – Economies of scale and Strength in numbers

• Single distinct identifiable image (brand)

• Sustainable Fisheries

Challenges:

• Internal Aboriginal Community Governance

• Managing fisheries as a business

• Improvements to Fisheries Management Regime

• Partnerships

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Discussion

What can you do

to tap into the opportunity?