Copyright 2016 by Encourage Capital. All rights reserved.
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Case Study

January 10, 2016

The Nexus Blue Strategy : An Investment Blueprint for National-Scale Fisheries in The Philippines

Publisher: Encourage Capital

Funders: Rockefeller Foundation, Bloomberg Philanthropies

Authors: Kelly Wachowicz, Trip O’Shea, Alex Markham

Encourage Capital has worked with support from Bloomberg Philanthropies and The Rockefeller Foundation to develop the first sustainable fisheries public-private partnership (or “PPP”) impact investment strategy. The Nexus Blue Strategy (Nexus Blue) is a hypothetical $34.0 million PPP impact investment to improve IUU (illegal, unreported, and unregulated) enforcement and facilitate transparency and information sharing across the supply chains of these high-value products. This investment will pay for the deployment of hard and soft infrastructure to combat IUU fishing and to facilitate transparency and information sharing across the supply chains of high-value fish species. Private capital proceeds will be used to refurbish and operate the General Santos Fish Port Complex (GenSan), the largest tuna port in the Philippines, and invest in data collection and monitoring of the relevant fisheries. Proceeds will pay for hard infrastructure as well as the deployment of IT infrastructure to virtually link the downstream buyers, upstream (on-the-water) harvesters, port market actors, dockside catch accountants, national and regional fisheries authorities, and independent researchers. This “soft” infrastructure will leverage constrained fisheries management and enforcement resources far more effectively by integrating digital capabilities and applying “big data” analytics. By using the analytics and traceability tools common across nearly every other product supply chain, regulators can also harness the power of the market by arming buyers with the knowledge to punish violators while rewarding sustainable practices. Integrated PPP investments of this nature promise to eliminate the long standing information and cost barriers to strong, coordinated, multi-stakeholder fisheries management facing the “highly-migratory pelagic” fisheries of the Western and Central Pacific Ocean (WCPO). Nexus Blue intends to achieve these objectives by upgrading strategic port infrastructure and post-harvest facilities, installing 2.4 MW in solar PV capacity, and deploying the IT hardware and software to fight IUU fishing while informing better resource management across the 429 vessel fleet actively using the port. Investors would be compensated through the ongoing collection of port fees and rental revenues under a 30-year PPP concession with the Philippine government. These measures will also ensure compliance with EU and U.S. demands for monitoring, control and surveillance (MCS) and chain-of-custody to address the scourge of IUU fishing in the region. The poor, highly-vulnerable nearshore fishers who are directly harmed by the illegal fishing operations that poach fish from their local waters stand to benefit from a share of the $620 million that IUU fishing costs the Philippines alone each year. The Nexus Blue Strategy targets a 15.0% blended IRR and 22.3% equity IRR2 for investors over a 33-year term (including a 3-year construction & implementation period in addition to the 30-year concession.)