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Seychelles
Brief Overview
The Republic of Seychelles lies northeast of Madagascar, an archipelago of 115 islands with almost 95,000 citizens (2016), three-quarters of whom live on the main island of Mahé. Seychelles has the highest gross domestic product (GDP) per capita in Africa ($15,410 in 2016), but inequality is significant, placing the prospect of continued shared prosperity in tighter focus. Climate change also poses long-term sustainability risks.
Political Context
Independent since 1976, the Seychelles is a relatively young democracy: the first multiparty presidential election was held in 1993 after the adoption of a new constitution. A presidential election in December 2015 was closely-fought, and President James Michel narrowly elected for a third and last term by just 193 votes out of the 62,831 valid votes cast. Michel resigned in October 2016, and was replaced by his deputy, Danny Faure. President Faure did not stand for the leadership of the governing Parti Lepep in June 2017, saying he wished to separate partisan politics from his role as head of state. In his place, Vincent Meriton, Vice-President of the Republic, was elected the party’s president. The next presidential election is due in 2020.
In September 2016’s legislative elections the opposition coalition won the parliamentary elections for the first time. The Linyon Demokratik Seselwa (LDS) is a coalition of four parties, including the Seychelles National Party (SNP), which boycotted parliamentary polls in 2011. The LDS holds 19 seats in the Sixth National Assembly, while Parti Lepep retains 14 seats.
This is the first time since 1993 that Parti Lepep has not had a parliamentary majority. Before the elections, it held all 25 directly elected seats in the assembly and an additional 7 proportional seats, leaving just one seat for the opposition. In a surprise move, the Speaker of the National Assembly, Patrick Pillay, resigned in January 2018. His former deputy, Nicholas Prea, has been elected the new speaker.
The Republic of Seychelles
Capital: Victoria
Population 94,000
Area: 455 sq km (176 sq miles)
Major languages: English, French, Creole
Major religions: Christianity
Life expectancy: 68 years (men), 78 years (women)
Currency Seychelles: rupee
UN, World Bank
Economic Developments and Outlook
Seychelles’ recent economic performance has been strong, benefiting from the continued growth of the tourism sector. Gross domestic product (GDP) growth in 2018 was 3.6%. Visitor numbers in 2018 were 361,844 (more than 3.5 times the resident population), a 3% increase over 2017. European markets remain key to the Seychelles tourism industry, but the sector is also benefiting from increases in tourists from other regions, facilitated in part by more airline connections. The formal unemployment rate was 3.5% in the third quarter of 2018, indicating a tight labor market consistent with robust recent economic conditions. Unemployment rates were higher for men (4.2%) than for women (2.9%). Youth unemployment was 14.5%.
The country’s external position has been stable in recent years, but structural vulnerabilities remain due to Seychelles’ heavy reliance on imported goods and on foreign funding for investment. Seychelles runs large, structural current account deficits, financed substantially by foreign direct investment (FDI). The external debt stock is estimated at 98.2% of GDP for public and private sectors combined at the end of 2017. The latest external debt sustainability framework shows the external debt burden declining under baseline assumptions (to 88.3% of GDP in 2022).
The baseline growth outlook remains favorable in view of the ongoing robustness of tourism, although the current pace of real GDP growth is expected to moderate to 3.4% in 2019 as construction activities linked to new tourism capacity development slows (a moratorium on new large hotel permits was extended recently to 2020) and regional tuna fishing quotas were reduced in 2017. Given the limitations on land, labor and the fragile environment, economic growth will have to increasingly rely on increases in productivity in the medium term.
Development challenges
Among Seychelles development challenges is the importance to focus on greater productivity, participation and performance of its economy as means to increasing shared prosperity. Some of the main institutional challenges in this regard are notably barriers to open and operate businesses, inefficiencies in public sector management, such as limited statistical capacity, scope for a more strategic and sustainable approach to social protection, as well as the need to broaden access to quality education and skills development. Regarding growth, achieving more productivity-based growth is Seychelles’ key challenge. Economic growth performance has been strong, but it has been driven by factor accumulation, hence the need to raise productivity growth as Seychelles’ key growth challenge. Seychelles has recently joined the ranks of high-income economies, a stage where both economic theory and the international empirical evidence show that sustained economic growth is fueled by rising productivity. Regarding inclusion, increasing Seychellois’ direct participation in an increasingly skills-intensive, sophisticated economy is the paramount challenge for the social sectors. Absolute poverty levels in Seychelles are low, but inequality remains significant. Seychelles’ economy is mainly vulnerable to external shocks. A weakening of tourism entries—for instance because of increased competition from newer markets in the Middle East and Asia, or a series of price hikes in international food and oil prices—could negatively affect the country’s economic outlook.
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(1) Freedom of the Press
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(3) Impunity
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