SUSTAINING SOCIAL DEVELOPMENT IN A SMALL ISLAND DEVELOPING STATE: THE CASE OF SEYCHELLES

1. SUSTAINING SOCIAL DEVELOPMENT IN A SMALL ISLAND DEVELOPING STATE: THE CASE OF SEYCHELLES Liam Campling and Michel Rosalie

2. OVERVIEW • Seychelles in context: population and economic ‘vulnerabilities’ • Seychelles in transition: the changing composition of the economy • Government policy: people-centred development • Social development: indicators, programmes and implementation • Sustaining socio-economic development: past, present and future

3. 1971 1977 1987 1994 1997 2002 Population Average annual growth rate (%) Total fertility rate Expectation of life at birth Males Females Age Distribution (%) 0-14 15-63 63 and above 54695 2.2 6.0 64.9  61.8 67.9 43.6 50.1 6.3 61786 2.6 4.0  67.9 64.6 71.1 39.7 53.8 6.4 68499 1.1 3.1  70.1 66.2 73.5 35.7 57.4 6.9 74331 2.2 2.6  71.6 67.2 72.9 31.0 61.7 7.3 78064 1.2 2.2   71.6 66.0 77.2 28.6 63.6 7.9 81777 -0.5 2.0 71.0 66.6 75.8 26.0 66.1 8.0 SEYCHELLES IN CONTEXT: POPULATION

4. SEYCHELLES IN CONTEXT: SEYCHELLES AS A SMALL ISLAND DEVELOPING STATE

5. SEYCHELLES IN CONTEXT: SEYCHELLES AS A SMALL ISLAND DEVELOPING STATE • Small domestic market: Seychelles population of 80,000 creates market inefficiencies due to small economies of scale that discourage competition • Limited and undiversified resource base: a micro population limits labour-intensive production and the diversity of human capital; a land mass of 455 sq km reduces scope for agricultural production; smallness and economic difficulties reduce sources of domestic finance capital (Both factors severely limit economic diversification)

6. SEYCHELLES IN CONTEXT: SEYCHELLES AS A SMALL ISLAND DEVELOPING STATE

7. SEYCHELLES IN CONTEXT: SEYCHELLES AS A SMALL ISLAND DEVELOPING STATE • Structural openness to international trade: Seychelles imports around 90% of what it consumes; in 1992-2001 it suffered an average annual balance of trade deficit of SR976 million • High vulnerability to external shocks: Seychelles is a ‘price-taker’ and lacks capacity to influence international markets in its trade of goods and services, thus world fluctuations are simply absorbed

8. SEYCHELLES IN CONTEXT: SEYCHELLES AS A SMALL ISLAND DEVELOPING STATE

9. SEYCHELLES IN CONTEXT: SEYCHELLES AS A SMALL ISLAND DEVELOPING STATE • Locational determinants: the economy is physically isolated from its main West European trading partners and 1,500 km from the nearest market or supply in East Africa. Remoteness leads to permanently high transport costs. • Political sovereignty: Seychelles per capita spending on physical infrastructure, environmental protection and international relations is very high. Independence is expensive!

10. SEYCHELLES IN CONTEXT: SEYCHELLES AS A SMALL ISLAND DEVELOPING STATE

11. SEYCHELLES IN TRANSITION: THE CHANGING COMPOSITION OF THE ECONOMY • In 1974 ‘traditional’ agricultural commodities dominated engagement with the world economy, i.e. copra and cinnamon were 90% of visible exports • Deepened integration with world economy in 1971 with opening of the international airport, i.e. by 1976 tourism constituted 18% of GDP • In the ten-year period 1992-2001 tourism contributed a stable 16.1% to GDP

12. SEYCHELLES IN TRANSITION: THE CHANGING COMPOSITION OF THE ECONOMY • Exclusive Economic Zone (EEZ) of 1.3 million sq miles = comparative advantage in fisheries • Tuna industrially exploited from early 1980s+ • In 1995 Heinz formed Indian Ocean Tuna (IOT) Ltd attracted by EEZ, industrial tuna fleet, SITZ, and preferential access to EU market • IOT processed tuna exports contributed US$202 million in gross foreign exchange earnings in 2001 (35% of the national total)

13. SEYCHELLES IN TRANSITION: THE CHANGING COMPOSITION OF THE ECONOMY • In 1995 the offshore sector became legally operative and SIBA was formed • SIBA broke the 15,000 mark of registered international business companies by mid-2004 • In 2003 the direct financial benefits of the offshore sector were US$5-6 million • SIBA achieved financial autonomy by end-2003 • Lack of offshore banking is a key limiter

14. SEYCHELLES IN TRANSITION: THE CHANGING COMPOSITION OF THE ECONOMY

15. GOVERNMENT POLICY: PEOPLE-CENTRED DEVELOPMENT • Pre-independence: substantive class divisions • Post-1977 emphasis on principles of social justice and national modernisation • Social development implemented through free and universal access to health care, education and social welfare • Modernisation implemented through national development plans: focus on top-end tourism and import-substitution industrialisation

16. SOCIAL DEVELOPMENT • Education – 10 years free & compulsory • Health care – available free at point of use in all clinics & hospitals • Income security – employment generation schemes available • Other means of social provisioning

17. SOCIAL DEVELOPMENT: EDUCATION & HEALTH

18. SOCIAL DEVELOPMENT: EDUCATION & HEALTH

19. SOCIAL DEVELOPMENT: EDUCATION & HEALTH • Human resource development – limited availability of the right mix of human resources to meet targets in the two sectors • Cardio-vascular disease and cancers are today’s main killers. ‘Diseases of development’? • Adolescent reproductive health a main area of health concern, especially related to teenage pregnancy and HIV/AIDS

20. SOCIAL DEVELOPMENT: UNEMPLOYMENT

21. SOCIAL DEVELOPMENT: SOCIAL WELFARE • Employment generation projects: • Full Employment Scheme (1980) • Work Experience Programme (1984) • Unemployment Relief Scheme (1995) • Lack of effective implementation, systemic abuse, demotivation amongst users

22. SOCIAL DEVELOPMENT: SOCIAL WELFARE • Social Security System: • Sickness, disability and chronically ill • Old age, i.e. home care programme • Maternity, i.e. 12-week leave • Children, i.e. needs-based dependents allowance • Systemic abuse, formation of a ‘culture of dependency’

23. SOCIAL DEVELOPMENT: PUBLIC UTILITIES

24. SOCIAL DEVELOPMENT: POVERTY • Single women-headed households – predominantly women who had children as teenagers and/or several out of wedlock • The ‘hidden poor’ – mainly the younger and older generations who are unaware of social welfare programmes • The seasonally employed – mainly fishermen, stevedores and small farmers • Those who mismanage household income • Children and the disabled (Questions of analysis and integration in national policy)

25. SUSTAINING SOCIO-ECONOMIC GAINS: PAST • Social development partly enabled through export-orientated sectors of the modern economy, i.e. tourism and fisheries • Rent-seeking behaviour during the Cold War sustained social spending • Domestic and international debt subsidised government policy (and poor economic management – centrality of the petty bourgeois)

26. SUSTAINING SOCIO-ECONOMIC GAINS: PRESENT • Seychelles as a victim of its success in people- centred development? (Non-LDC status)

27. SUSTAINING SOCIO-ECONOMIC GAINS: PRESENT • Decline in rent-seeking capacity, i.e. end of Cold War, high GDP per capita, reputation as loan defaulter and global decline in ODA • Debt at crisis-point (defaults on ‘donor’ loans and rise in commercial borrowing): external debt at 200% of GDP • Environmental protection is now the primary source of donor assistance (decline in external social support) • Vulnerability to external shocks, i.e. Gulf War (1991), coral bleaching (1998), Iraq (2003+) • Monetary and financial crisis constraining import of some social and economic inputs • Macroeconomic reform (austerity programme) increases cost of living for low-income brackets

28. SUSTAINING SOCIO-ECONOMIC GAINS: PRESENT

29. SUSTAINING SOCIO-ECONOMIC GAINS: FUTURE (POLITICAL-ECONOMIC) • EU market for Seychelles canned tuna will be under threat in 2008 • Stagnation in tourism sector likely to continue (poor price-quality perceptions) • Eastern and Southern Africa Economic Partnership Agreement = limited benefits to Seychelles • Accession to the WTO negative implications for national sovereignty in policy orientation and social, economic and environmental controls • Environmental decline may have a negative effect on tourism and thus socio-economic prosperity • Present moves to economic diversification (i.e. offshore sector), improving environmental consciousness (i.e. eco-tourism) and recent domestic macroeconomic reforms may allow sustainability of social development gains

30. SUSTAINING SOCIO-ECONOMIC GAINS: FUTURE (SOCIAL) • Cultural globalisation has led to a rapid rise in individual expectations and consumer demand, but a decline in community networks • Global decline of sympathy for the ‘welfare state’ model • Culture of dependency on social services threatens the equitable transfer of resources • Family: threat of disintegration • Land conflicts and sustaining social development

31. CONCLUSION Seychelles demonstrates the centrality of the ‘social’ in terms of: • analysing islands (i.e. social forces); • understanding SIDS ‘vulnerabilities’ (i.e. the nexus of social development-environment-economy), and; • island peoples offering creative solutions to developmental challenges (e.g. building ‘resilience’) beyond the narrow interests of political-business elites.