Future of Fish is excited to announce the launch of the Artisanal Fisher Development Fund (the Fund), a pilot loan guarantee fund to facilitate access to credit to support formalization, sustainable practices and financial inclusion amongst Peru´s artisanal fishing sector .

The informal economy in Peru is estimated to make up more than 40% of the country’s GDP and its presence is widespread amongst artisanal fisheries. As in many communities dependent on wild capture fisheries, this lack of formality prevents most fishers, vessel owners, and coops/associations from accessing the formal market and necessary financing to improve their businesses. Many of these fishers instead are reliant on informal money lenders who lock them into “debt-trap” conditions which, in turn, perpetuates the need to fish more to pay off their debts – thus exacerbating overfishing and illegal, unreported, and unregulated fishing (IUU). This dependency means that breaking off existing relationships with informal lenders to pursue new, formal financing sources can present significant risks to fishers. Compounding this risk, even when choosing a path to formalization, a newly formalized business will not be able to access formal credit due to their lack of commercial track record, credit history and adequate collateral. Given these challenges, transitioning from the informal to formal economy presents significant risks that many are unable or fearful to take given the risks to the activities that support their livelihoods.

Moreover, within Peru´s savings and lending sector, only a fraction of their credit portfolios are devoted to financing artisanal fisheries. A study implemented in Peru in 2021 by UNDP’s Biodiversity Finance Initiative (BIOFIN) analyzed the credit portfolio of the seven most important savings and lending financial institutions, concluding that 95% of their portfolios were comprised by loans in the agriculture and livestock sectors while only 5% were devoted to the artisanal fisheries and aquaculture sectors largely due to the particular and additional risks inherent to seafood production versus terrestrial based activities. This striking difference reinforces the importance of this initiative to bridge the financial gap in Peru´s artisanal fishery sector.

Read the full article about the Peru Artisanal Fisher Development Fund at Global Washington.