Pioneering impact investing in small-scale fisheries

MASSIF investment: USD 5 mln
Contracted: 2018
Instrument: Equity

The Meloy Fund I LP is the world’s first impact investment fund directly supporting small-scale, sustainable coastal fisheries in Indonesia and the Philippines. Set up by Rare, an international, non-profit conservation organisation with deep technical expertise and networks, the Meloy Fund links inclusive development with the conservation of critical marine habitats. It does this by investing debt and equity capital in fishing and seafood-related businesses. These investments will lead to better management and protection of community-based coastal fisheries, as well as opportunities to boost the livelihoods of local, small-scale fisheries through co-operation with Rare’s Fish Forever programme.

Potential impact of Meloy Fund

Through more sustainable fishing practices, the small-scale fisheries reached could experience an increase in their income and food security. This is an important impact as 60% of people in Indonesia and the Philippines, including ca. 4.3 mln small-scale fishers, live within 60 km of the coast and are therefore dependent on the sea for income and food. Moreover, the marine habitats protected by Fish Forever, which contain mangrove forests and sea grass meadows, for example, capture CO2 from the atmosphere and thus contribute to climate change mitigation. Lastly, the protected habitats play a critical role in the maritime ecosystem as they have extremely high biodiversity.

The small-scale fishers targeted currently earn an average of USD 3.1 per day (PPP adjusted), which is below the lowest daily minimum wage in both countries. Moreover, fish contributes 40% or more to the protein intake of people in coastal communities. These people are therefore highly vulnerable to the negative effects of climate change and overfishing of coastal ecosystems. In fact, only about 3% and 1.6% of the marine area of Indonesia and the Philippines is protected, while 60% and 70% of coral reefs are at medium or high risk of overfishing respectively. Clearly, there is not enough protection.

The Meloy Fund aims to reach 100,000 members of fishery households and for 1.2 mln ha. of coastal waters to be protected by 2028, which translates to significant tons of GHG emissions avoided through reduced deforestation of mangrove forest and seagrass meadows. Moreover, the Meloy Fund strives to reduce the carbon footprint of small-scale fisheries by 37% by shifting an even higher portion of their protein intake to fish. By increasing the demand for sustainable seafood products, the Meloy Fund aims to add USD 20 mln of economic value annually to the fishers it reaches. This translates into an increased average daily income of USD 5 (PPP adjusted). While this is a great improvement of 60%, it does not yet lift these people out of poverty.

Investing alongside several family foundations and international non-profit organisations, MASSIF is contributing ca. 23% of all committed capital and is thus closing an important funding gap for the Meloy Fund, without which it could not have reached its current scale. Moreover, MASSIF adds value to the Meloy Fund by funding several technical assistance projects, such as an ESG best practice training for Meloy’s investees.

The main source of impact risk to all intended impacts is that the sustainable fishing zones and conservation areas are not maintained due to a lack of local support. This risk is mitigated by Rare’s strong track record in engaging local communities in leading its conservation efforts. Rare has, for example, already run 34 similar conservation campaigns in the region.