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Microcredit for small-scale fishermen

For years, the local fishermen have been enduring the effects of the financial crisis. The region’s banking system is limited to a few operators with strict constraints for attributing loans. Fishermen cannot necessarily provide a typical guarantee, making it difficult for them to obtain loans. Because fishermen do not always fit the standard profile of a borrower, they can be categorised as ‘non-bankable’. Recent discussions with these local fishermen made clear the need to provide them with a more accessible credit system to help fund their initiatives.

This CLLD example is also available in: 

This is why the FLAG with one of its partners has decided to establish a microcredit fund to respond to fishermen’s financial needs and support initiatives related to the fisheries sector. Such small investments are easily monitored thanks to the “proximity” of the recipients and the fund’s managing institution. With this system, the FLAG’s local strategy can be implemented, leading to the creation of new businesses, and improving the efficiency and production of existing ones.

A private credit company is a member of the East Sardinia FLAG, allowing the fund to be established. This company registered as a microcredit provider to be able to allocate microcredit in accordance with national regulations. 

The first step will be to carry out a small pilot project in the coastal region of Eastern Sardinia. The results of the pilot project will then be evaluated to potentially be replicated on a larger regional scale with more active involvement of third parties and the FLAG partnership. The FLAG will contribute an added value to the project by providing direct support to the borrowers and facilitating contact between the credit company and the fishermen.

Once the fund’s regulations are drafted and the cooperation agreement is signed between the microcredit company and the FLAG, candidates will be able to apply for funding. The project will offer financing for initiatives (including mentoring) and promote them. Monitoring and evaluating the activities will be done to assess the success of the microcredit fund.

  • Expected results: The FLAG expects to help develop between five and eight microcredit applications from cooperatives for an average of € 10 000 each in 2018. The project is currently limited to cooperatives, start-ups, and companies with a maximum of five years of experience.

  • Transferability: The project is interesting for other fisheries and coastal areas because it could be replicated in areas where credit access problems exist, adapting to the local situation. It is crucial to find a financial intermediary who is willing to work with minimal third-party guarantees (provided by a third person) and who has the financial means available. This is more likely to be a public authority or an institution with the mission to support small enterprises.

  • Lessons: For Italy, such microcredit funding could not be financed from the EMFF as the financial instruments envisaged in the OP have not been approved yet, so an alternative solution needed to be found. It is recommended to first understand whether this is also the case in other countries. A major condition for the success of such a project is identifying the financial intermediary capable and willing to allocate accessible micro-credits.

  • Contribution to CLLD objective:
    - adding value, creating jobs, attracting young people and promoting innovation at all stages of the supply chain of fishery and aquaculture products
    - strengthening the role of fisheries communities in local development and the governance of local fisheries resources and maritime activities.


Total project cost
  • FLAG costs: equivalent of € 3000 (estimate of the time a consultant would spend to develop such a project proposal, in this case covered by the FLAG running costs)
  • Other contributions: €100 000 (available as credit line for the following 3 years; 100% of this amount comes from the private credit company)


Project information

Official project title in Member State language: Microcredito "Credito a Piccoli Pesci"
Official project title in translated into EN: Microcredit - "Credit to Small Fishes"
            
Implementation duration: From January 2017 to December 2019
        
Case study date: November 2016    

FLAG details        
Eastern Sardinian FLAG
direttore (at) flagsardegnaorientale.it
www.facebook.com/gacsardegnaorientale
FLAG factsheet (2007-2013)


Key words: Fisheries, microcredit, credit access, financing initiatives, small investments, new businesses, start-up