Economy of Seychelles

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Economy of Seychelles

Central Bank of Seychelles

Currency Seychellois rupee (SCR, SR)

Fiscal year calendar year

Trade organisations AU, AfCFTA (signed), WTO, COMESA, SADC

Country group Developing/Emerging[1]

High-income economy[2]

Statistics

GDP  $1.583 billion (nominal, 2018 est.)[3]

 $2.901 billion (PPP, 2018 est.)[3]

GDP rank 194th (nominal, 2018)

190th (PPP, 2018)

GDP growth 4.3% (2017) 4.1% (2018)

3.5% (2019e) -10.8% (2020f)[4]
GDP per capita  $16,575 (nominal, 2018 est.)[3]

 $30,383 (PPP, 2018 est.)[3]

GDP per capita 54th (nominal, 2018)
rank
59th (PPP, 2018)
GDP by sector agriculture: 2.5%

industry: 13.8%

services: 83.7%

(2017)[5]
Inflation (CPI) 3.699% (2018)[3]
Population 39.3% (2013 est.)[5]
below poverty line
Gini coefficient 46.8 high (2013)[6]
Human  0.785 high (2021)[7] (72nd)
Development Index
 0.661 medium IHDI (2021)[8]
Labour force 47,210 (2017 est.)[5]
Labour force by agriculture: 3%
occupation
industry: 23%

services: 74%

(2006)[5]

Unemployment  3.7% (2017)[9]

Main industries fishing, tourism, beverages
Ease-of-doing-  100th (medium, 2020)[10]
business rank

External

Exports  $564.8 million (2017 est.)[5]

Export goods canned tuna, frozen fish, petroleum products (reexports)
Main export  United Arab Emirates 28.5%
partners
 France 24%

 United Kingdom 13.8%

 Italy 8.9%

 Germany 4.6%

(2017)[5]

Imports  $1.155 billion (2017 est.)

Import goods machinery and equipment, foodstuffs, petroleum products,

chemicals, other manufactured goods

Main import  United Arab Emirates 13.4%
partners
 France 9.4%

 Spain 5.7%

 South Africa 5%

(2017)[5]
 Current account  −$307 million (2017 est.)[5]
Gross external debt  $2.559 billion (31 December 2017 est.)[5]

Public finances
Public debt  63.6% of GDP (2017 est.)[5]
Budget balance −0.5% (of GDP) (2017 est.)[5]

Revenues 593.4 million (2017 est.)[5]

Expenses 600.7 million (2017 est.)[5]

Foreign reserves  $545.2 million (31 December 2017 est.)[5]

Main data source: CIA World Fact Book

All values, unless otherwise stated, are in US dollars.

The economy of Seychelles is based on fishing, tourism, processing

of coconuts and vanilla, coir (coconut fiber) rope, boat building, printing, furniture and
beverages.[11][12] Agricultural products include cinnamon, sweet
potatoes, cassava (tapioca), bananas, poultry and tuna.[11][12]
The public sector, comprising the government and state-owned enterprises, dominates
the economy in terms of employment and gross revenue, employing two-thirds of the
labor force. Government consumption absorbs over one-third of Seychelles's GDP.

Contents

 1Economic history
o 1.1Advent of the tourist industry (1971)
 2Current economy
o 2.1Tourism and fishing
o 2.2Manufacturing
o 2.3Public sector
o 2.4Vulnerability to external shocks
o 2.5Economic growth
o 2.6Financial Services
o 2.7Offshore oil and gas
 3Economic statistics
 4See also
 5References
 6External links

Economic history[edit]
The French originally settled the Seychelles in 1770, setting up plantations which relied
heavily on slave labour to produce cotton, sugar, rice, and maize. The British took
control of the Seychelles during the Napoleonic Wars without removing the French
upper class.
After the British prohibited slavery in 1835, the influx of African workers did not end
because British warships captured Arab slavers and forced the liberated slaves to work
on plantations as apprentices without pay.
In the 1960s, about 33% of the working population worked at plantations, and 20%
worked in the public or government sector. [13]
Advent of the tourist industry (1971)[edit]

Aircraft at Seychelles International Airport.

Plantations were the main industry of the Seychelles until 1971, when the international
airport opened. Overnight, tourism became a serious industry, basically dividing the
economy into plantations and tourism. The tourism sector paid better, and the plantation
economy could only expand so far.
The plantation sector of the economy declined in prominence,
and tourism and fishing became the primary industries of Seychelles. In the 1960s,
about 33% of the working population worked at plantations, but by 2006 it was less than
3%.
While the tourism and industrial fishing industries were on a roll in the late 1990s, the
traditional plantation economy atrophied. Cinnamon barks and copra—traditional export
crops—dwindled to negligible amounts by 1991. There were no exports of copra in
1996; 318 tons of cinnamon bark was exported in 1996, reflecting a decrease of 35% in
cinnamon bark exports from 1995.
The US military Indian Ocean Tracking Station on Mahé operated from 1963 until 1996.

Current economy[edit]

One of the supermarkets by the Seychelles Marketing Board, built in 1984.

Since Seychelles' independence in 1976, per capita output has expanded to roughly
seven times the old near-subsistence level. Growth has been led by the tourist sector,
which employs about 30% of the labor force and provides more than 70% of hard
currency earnings, followed by tuna fishing. In recent years the government has
encouraged foreign investment in order to upgrade hotels and other services.
At the same time, the government has moved to reduce the dependence on tourism by
promoting the development of farming, fishing, small-scale manufacturing and most
recently the offshore sector. The vulnerability of the tourist sector was illustrated by the
sharp drop in 1991-92 due largely to the Gulf War. Although the industry has
rebounded, the government recognizes the continuing need for upgrading the sector in
the face of stiff international competition. Other issues facing the government are the
curbing of the budget deficit and further privatization of public enterprises.
Despite attempts to improve its agricultural base and emphasize locally manufactured
products and indigenous materials, Seychelles imports 90% of the food it consumes.
The exceptions are some fruits and vegetables,
fish, poultry, pork, beer, cigarettes, paint, and a few locally made plastic items. Imports
of all kind are controlled by the Seychelles Marketing Board (SMB), a government
parastatal which operates all the major supermarkets and is the distributor and licensor
of most other imports.
In an effort to increase agricultural self-sufficiency, Seychelles has undertaken steps to
make the sector more productive and to provide incentives to farmers. Much of the state
holdings in the agricultural sector have been privatized, while the role of the government
has been reduced to conducting research and providing infrastructure.
In 2020, the Corruption Perception Index from Transparency International assessed
Seychelles as the least corrupt country in Africa. [14]
Tourism and fishing[edit]
Further information: Tourism in Seychelles

Wikivoyage has a travel guide for Seychelles.

Fisherman landing his catch, in the early 1970s

Tourism is one of the most important sectors of the economy, accounting for
approximately 16.6% (2000) of GDP. Employment, foreign earnings, construction,
banking, and commerce are all dominated by tourism-related industries. Tourism
earned $631 million in 1999–2000. About 130,046 tourists visited Seychelles in 2000,
80.1% of them from Europe (United Kingdom, Italy, France, Germany, and Switzerland).
In 2000, industrial fishing surpassed tourism as the most important foreign exchange
earner. Manufacturing, construction, and industrial fishing, notably tuna fishing, account
for about 28.8% of the GDP. Earnings are growing annually from licensing fees paid by
foreign trawlers fishing in Seychelles' territorial waters.
In 1995, Seychelles saw the privatization of the Seychelles Tuna Canning Factory, 60%
of which was purchased by the American food company Heinz. Similarly, some port
operations have been privatized, a trend that has been accompanied by a fall in
transshipment fees and an increase in efficiency. Overall, this has sparked a recovery in
port services following a drastic fall in 2009.
Manufacturing[edit]
Many of the other industrial activities are limited to small scale manufacturing,
particularly agro-processing and import substitution. Agriculture (including artisanal and
forestry), once the backbone of the economy, now accounts for around 3% of the GDP.
Public sector[edit]
The public sector, comprising the government and state-owned enterprises, dominates
the economy in terms of employment and gross revenue, employing two-thirds of the
labor force. Public consumption absorbs over one-third of the GDP.
Vulnerability to external shocks[edit]
The Seychelles economy is extremely vulnerable to external shocks. Not only does it
depend on tourism, but it imports over 90% of its total primary and secondary
production inputs. Any decline in tourism quickly translates into a fall in GDP, a decline
in foreign exchange receipts, and budgetary difficulties.
Economic growth[edit]
Growth slowed in 1998–2001, due to sluggish tourist and tuna sectors. Also, tight
controls on exchange rates and the scarcity of foreign exchange have impaired short-
term economic prospects. The black market value of the Seychellois rupee is anywhere
from two thirds to one half the official exchange rate. [citation needed] The next few years were
also slow due to the worldwide economic downturn and the fear of flying brought on by
the terrorism on September 11, 2001.
More recently though, tourism has roared back at a record pace setting successive
records in 2006 and again in 2007 for number of visitors. The increased availability of
flights to and from the archipelago due in part to new
entrants Emirates and Qatar airlines is also beginning to show. New five star properties
and the devaluation of the currency by nearly 33% by the Seychelles Government is
having a positive influence on the tourism sector as well. [citation needed] Both at official
exchange rates and at purchasing power parity (PPP), Seychelles remains the richest
territory in Africa in terms of GDP per capita (US$9,440.095 at real exchange rates and
US$17,560.062 at PPP 2008 estimate), [15]
Because of economic contraction (the economy declined by about 2% in 2004 and 2005
and lost another 1.4% in 2006 according to the International Monetary Fund) the
country was moving downwards in terms of per capita income. However, the economy
bounced back in 2007, growing by 5.3% due in part to record tourism numbers and the
booming building and offshore industries. The IMF forecast further growth in 2008 with
continuing increase in the GDP per capita.[16]
In October 2008, as tourism and fishing revenue began slowing, the Seychelles
defaulted on a $230 million debt. The International Monetary Fund stepped with a two-
year, $26 million rescue package. The rescue package came with a few stipulations;
The country laid off 1,800 government workers, floated its currency, lifted foreign
exchange controls and sold off state assets.[17] At the time, the country's $800 million
external foreign debt was equivalent to almost 175 percent of its gross domestic
product.[18]
The decision to let the currency trade freely as part of the IMF rescue package means
that Seychelles is the smallest country in the world that has a completely independent
currency - one that is neither pegged, nor an adopted foreign currency, nor a common
currency used within a larger monetary union. When the Seychellois rupee became
freely floated on November 3, 2008, its value quickly fell drastically, decreasing from
eight per U.S. dollar to 16, effectively doubled the prices of imports. [19]
The global recession and piracy in the Indian Ocean hit Seychelles hard in 2009, with
the GDP projected to contract by 7.5 percent. However the government exceeded its
fiscal targets, with a primary surplus of 13.4% of GDP in the first nine months of 2009
according to the IMF. They report expenditure has been tightly controlled and revenue
has held up well despite the difficult economic environment. [20]
In May 2010 an International Monetary Fund mission visited Seychelles and concluded
the country is making progress. The head of the mission, Mr. Jean Le Dem, said at the
conclusion of the visit:[21]
The economy is recovering from a recession that put real gross domestic product (GDP)
to almost a stand in 2009. Real GDP is projected to grow at 4 percent in 2010, reflecting
primarily a rebound in tourism earnings. Twelve-month inflation, which was negative
during the past few months, is expected to return to about 1 percent by year-end
In 2017 the Seychelles joined the World Trade Organisation, facilitated by Omani
economist Hilda al-Hinai, who chaired the Working Group.[22]
Financial Services[edit]
In addition to the now booming tourism and building/real estate markets, Seychelles has
renewed its commitment to developing its financial services sector. Government officials
and industry participants believe this could overtake the tourism industry as the chief
pillar of the economy by 2017. The recent passage of a revised Mutual Fund Act 2007,
Securities Act 2007 and Insurance Act 2007 are meant to be the catalysts to move
Seychelles from just another offshore jurisdiction to a full-fledged Offshore Financial
Center (OFC).
The Ministry of Finance is responsible for economic decisions and budgetary policy. A
separate Monetary Authority supervises the banking system and manages the money
supply. Although foreign banks operate branches in Seychelles, the government owns
the two local banks—the Development Bank of Seychelles, which mobilizes resources
to fund development programs, and the Seychelles Saving Bank, a bank for savings
and current accounts.
The Seychelles International Business Authority (SIBA) is charged with overseeing the
quickly growing offshore industry.
Offshore oil and gas[edit]
New detailed studies and exploration shows that the Seychelles potentially have large
off-shore petroleum reservoirs which are yet to be discovered. Drills have proven the
presence of:

1. Oil-prone source rocks containing Type II kerogen in coaly deltaic shales of the

Middle Jurassic and in marine shales of the Upper Jurassic;
2. Mixed source rocks bearing Type II/III kerogen in deltaic marine shales of the
Lower Cretaceous that are II correlative of oil-generating shales in Somalia;
3. Gas-prone sources containing Type I kerogen in Upper Triassic fluvial shales
and Paleocene marine shales, the latter being correlative of oil and gas
generating source rocks of the Deep Continental Shelf trend of the Bombay High
Oil Province offshore west India;
4. Evidence of hydrocarbon generation and migration with well shows, such as 0.7
ml benzene in DST-1 of Reith Bank-1, 10,010 ppm of 99.8% n-C4 headspace
gas coincident with as small fault in the same well and 20% petrol vapours at an
immature level of volcanics in Owen Bank A-1;
5. Clastic reservoirs with measured porosities up to 22% in the Early-Middle
Jurassic;
6. Sealing lithologies occur both locally in syn-rift, and regionally in post-rift
sequences;[23]
7. An extensive seismic dataset, plus a variety of remote sensing data have been
collected which bolster the well data by confirming the presence of:
8. A variety of trapping styles, dominated by tilted fault blocks, stratigraphic
pinchouts and reefs;
9. Multiple heating events, with the principal event post-dating trap formation; and
10. Hydrocarbon generation and migration with the presence of: a) numerous DHIs
on seismic, including gas chimneys, flat spots, bright spots, phase changes and
chemosynthetic reefs; b) gas sniffer anomalies, involving ethane/iso-butane in
the southeast and propane/normal butane/total hydrocarbon in the north and
northeast; c) UV fluorescence anomalies, especially over the wells and in the
southeast; and d) 4 types of beach-stranded tar that correlate to the local source
rock stratigraphy.
However, to date all exploratory and stratigraphic test wells (a total of 9 since the
1970s) in the Seychelles have failed to find commercial hydrocarbons. The most recent
wildcat by Enterprise Oil in 1995 detected gas but failed to find hydrocarbons.
Several oil and gas exploration companies are active in the Seychelles offshore. These
include East African Exploration (EAX) (a subsidiary of Afren), Avana Petroleum (a
subsidiary of Vanoil Energy) and WHL Energy.
Beginning at the turn of the millennium the Seychelles Petroleum Company (SEPEC)
started to develop the first fleet of modern petroleum double-hull tankers, with five
vessels, which was completed by late 2007/early 2008 with the possibility to build more
in the near future. The Seychelles President claims that this has opened the door to a
new industry for his country and encouraged economic growth by further removing over-
reliance on traditional trades like fisheries and tourism, which is now falling rapidly as
the country's main income but nevertheless, has experienced significant growth in
recent years.[24]
The country has also increased its capacity for wind power, with windfarms
on Romainville Island.

Economic statistics[edit]
[11][12]

This section needs to be updated. Please help update this article to reflect recent
events or newly available information. (September 2018)

GDP:
official exchange rate - $1.498 billion (2017)
purchasing power parity - $2.75 billion (2017)
GDP - real growth rate:
+5.3% (2017 est.)
0.8% (2016)
GDP - per capita:
purchasing power parity - $29,300 (2017)
GDP - composition by sector:
agriculture: 2.5% (2017 est.)
industry: 13.8% (2017 est.)
services: 83.7% (2017 est.)
Inflation rate (consumer prices):
2.9% (2017 est.)
-1% (2016 est.)
Labor force:
47,210 (2017 est.)
Labor force - by occupation:
services: 74%, industry: 23%, agriculture: 3% (2006)
Unemployment rate:
3% (2017 est.)
Budget:
revenues: $593.4 million (2017 est.)
expenditures: $600.7 million (2017 est.)
Industries:
fishing, tourism, processing of coconuts and vanilla, coir (coconut fiber) rope, boat
building, printing, furniture; beverages
Industrial production growth rate:
2.3% (2017 est.)
Agriculture - products:
coconuts, cinnamon, vanilla, sweet potatoes, cassava (tapioca), bananas; poultry; tuna
Exports:
$564.8 million (2017 est.)
Exports - commodities:
canned tuna, frozen fish, petroleum products (re-exports)
As of 2013, the main export products are processed fish (60%) and non-fillet frozen fish
(22%).[25]
Exports - partners:
UAE 28.5%, France 24%, UK 13.5%, Italy 8.9%, Germany 4.6% (2017)
UK 27.6%, France 15.8%, Spain 12.7%, Japan 8.6%, Italy 7.5%, Germany 5.6% (2004)
Imports:
$1.155 billion (2017 est.)
$991 million (2016 est.)
Imports - commodities:
machinery and equipment, foodstuffs, petroleum products, chemicals, other
manufactured goods
Imports - partners:
UAE 13.4%, France 9.4%, Spain 5.7%, South Africa 5% (2017)
Debt - external:
$2.559 billion (31 December 2017 est.)
$2.651 billion (31 December 2016 est,)
Currency:
1 Seychelles rupee (SCR or SRe) = 100 cents
Exchange rates:
Seychelles rupees (SCR) per US$1 − 13.64 (2017), 13.319 (2015), 12.747 (2013),
11.85 (May 2010), 16.7 (February 2009), 8.0 (2008), 5.8 (2007), 5.5 (2006), 5.3 (1999),
4.7 (1995)
Seychelles rupees (SCR) per Pound Sterling £1 − 17.50 (May 2010), 24.11 (February
2009)
Seychelles rupees (SCR) per Euro €1 − 15.04 (May 2010), 21.55 (February 2009)
Fiscal year:
calendar year

See also[edit]
 Seychelles
 Seychelles Port Authority
 United Nations Economic Commission for Africa