The Small Business Development (SBD) provides fisher skills training and extension in small business development; personal financial management training; fisher banking and bank account set-up; and support for application to lending institutions and NFA managed funds in support of their marine aquarium fishing activities.
The training emphasizes on personal and household management of income and spending. SBD realizes that it is unarguable that without personal and household initiatives to derive income and control over spending at village level it is absurd to manage business in any form.
The training aspect of SBD is comprised of practical exercise conducted for fishers in respective Fishery Management Areas (FMA). The objective of this training is to make fishers aware of the importance and need to spend their income from aquarium fishing,and other fishing activities, in a more sustainable, and manageable approach, in hopes they realize the enormous potential their income can do to better their livelihoods.
The training is sectioned into two parts: theory and practical.
The theory part of the training is a classroom session whereby trainers teach fishers various functions of personal financial management such as identifying sources of income, how much income earned in a day/week from fishing activities, list of spending habits, how much spending in a day/week, savings, and the benefit of savings.
The practical aspect of training is where fishers are asked to fill out respective forms that are distributed during training.
SBD noted that almost none of the fishers ever had the opportunity or were exposed in the practical aspect of the training where they get the chance to really itemize their income sources and spending areas. This was evident by fishers expressing disbelief in how much they are generating from their fishing activities including aquarium fishing in a week, month, quarterly, and even in a year. Interestingly, fishers also regret to realize how much they have spent, and the missed opportunity to save if they had forgone some of their bad habits. It was also discovered that fishers are not accustomed to regular savings. Fishers only save for customary obligations if and when the need arises.
Cash management is a very tough challenge facing an ordinary villager let alone a fisher when he or she has cash on hand. SBD has discovered that almost none of the fishers have control over how they spend their fishing income because they have either committed them to some financial decisions or just the spending on normal daily expenses. Fishers do not know how to plan their use of income, thus they do not see the importance to do that.
SBD is emphasizing the need for each fisher to develop a money plan for their weekly and bi-weekly commitments. Each fisher must learn how to do a budget for himself or herself and his or her household at large. SBD discovered that income generated from fishing activities directly benefit a household.
A simple weekly budget sample that an ordinary fisher can follow would appear as follow:
SBD encourages fishers to save the surplus portion of their budget, thus they can be able to meet monthly, quarterly, and even yearly commitments such as school fees.
SBD understands that getting fishers straight into running a business can be cumbersome to an ordinary village fisher. On that understanding SBD identified a simple cashbook format they can use as a start by detailing every income and spending of their household.
Below, example of managing a simple cash book for Fisher A:
- Received payment from aquarium fishing on 01/01/10 for an amount of K300.
- Paid for food at Stop and Shop on 02/01/10 for an amount of K200.
- Paid for easy pay power at PNG Power on 02/01/10 for an amount of K30.
- Received income from selling Tuna fishing at fish market on 03/01/10 for an amount of K300.
- Paid for zoom/fuel at Mobil Service Station on 04/01/10 for an amount of K100. Receipt/Invoice No. 125
|Amount Received||Spending Amount||Food||Zoom||Power||Balance|
|02/01/10||Stop & Shop||123||200||200||100|
The need for each fisher to have a personal bank account becomes natural due to the flow of income derived from regular fishing, especially in aquarium fishing. Reasons for opening fishers’ bank account are as follows:
- Security – In handling of cash these days on a regular basis is a concern to the Program and fishers. Direct transfer of fishers pay avoid any chances of stealing from outside or mismanagement from within.
- Convenience – It is convenient to save time and resources going to the bank to organize cash and send payment in envelopes.
- Safe Keeping – To provide safe and conducive environment as far a keeping of cash is concerned.
- Traceability of fishers’ pay – Bank account acts as a medium for fishers to have a check and balance of what they have on their invoices as compared to what is deposited into their accounts.
- Build trust and confidence in the banking – It is a forecasted reason for fishers who wish to request for any loan assistance from banks. Without proper bank account and any banking experience it would be difficult to convince banks or lending institutions for any loan facility. Thus, SBD is aware of this view and entails this as one of the key reason why each fisher should have a bank account.
During FFD training fishers are also distributed bank account application forms. Fishers are taken through those forms with a SBD representative to fill out the application and making sure everything that needed to be filled is complied with. A SBD officer takes those completed forms to the bank to begin the process of opening the bank accounts. The process itself is not that simple since it involves strict guidelines like valid ID cards. Due to the village setting of FMAs, all fishers do not have any form of ID cards, thus it was difficult to open their accounts. However, good relationship by the SBD with the bank has made it convenient for such service.
Each fisher has a debit account with ANZ Bank in the type “Access Account” whereby they are issued an Account card. The process takes 2-3 weeks after opening the bank accounts before they are issued with cards.
After opening bank accounts and issuing of bank account cards, all payments from fishers’ collection go directly to their bank account. Each time fishing is done based on the order issued by ETF and collection is recorded, ETF sends a list of fishers for payment to SBD. SBD computes list of fishers and sends to the bank with their bank account number, plus payment amount for the bank to credit the respective accounts by debiting the program’s bank account.
After the list of payment is sent to the bank for processing, SBD in collaboration with Finance and Administration, issues invoices received from ETF to respective fishers so they can confirm or reconcile with their bank balances for receipt of payment of their catch.
Facilitating opening fishers’ bank account plus issuing of bank account cards is not the end of SBD’s part in fishers banking. Any problem and difficulties encountered by fishers in relation to their banking are reported immediately to SBD, and SBD takes it up with the bank.
SBD stands as a mediator between National Fisheries Authority (NFA) and fishers, especially seeking or applying for available funding. SBD officers handle and take the fishers through the process of applying for available grants with NFA. Because of the nature of the application process, SBD officers work closely with FMA’s in making sure all the necessary requirements are fully compiled with.
Bank Loan Assistance is something that SBD will again act as middleman in pursuing such process. SBD has already commenced discussion with ANZ Bank representative from “Small and Medium Enterprises Division” to secure assistance from the bank for a loan facility in meeting the fishers need for boat, motor, fishing gear, and storage shed. The bank’s idea about that prospect is clear and SBD is conscious of. One of the obvious concerns shared by the Bank is the need for fishers to regularly fish so that their bank accounts involves reasonable transactions, especially payments of their catch to their bank accounts to be on a consistent basis.
If there is a bank loan assistance provided to an FMA, SBD maintains that it would make sure that repayment from fishers is paid on time and is consistent. SBD will do that in two ways.
- Direct deduction from fishers pay at time of fishing and keep in a suspense account till the repayment schedule date to pay.
- Pay in advance from Programs account and deduct from fishers payments later.
SBD acknowledges that it is a challenge to establish and maintain working relationships between fishers and funding agencies plus banking/financial institution. SBD always emphasizes that all sectors in this industry must collectively make every effort to see that relationships in whatever form is established and maintained, thus there is no question of its credibility, reliability, and, dependability.