#1SEYCHELLES NATIONAL DEVELOPMENT STRATEGY 2019-2023 ols de Rose HYPERMARKET#2FINIS CORONAT OPVS SEYCHELLES NATIONAL DEVELOPMENT STRATEGY 2019-2023#32 TABLE OF CONTENTS ENTS#4TABLE OF CONTENTS FOREWORD Message from the President PREFACE Message from the Minister of Finance, Trade, Investment, and Economic Planning ACKNOWLEDGEMENTS CHAPTER 1: INTRODUCTION 1.1 The Seychelles context and historical development 1.2 National development of Seychelles: characterisation, dynamics and main challenges 1.3 Trends CHAPTER 2: BROAD STRATEGY FOR DEVELOPMENT 2.1 The six thematic pillars Pillar 1: Good governance 6 10 15 18 21 20 23 30 36 Pillar 2: People at the centre of development 48 Pillar 3: Social cohesion 56 Pillar 4: Innovative Economy 61 Pillar 5: Economic transformation Pillar 6: Environmental sustainability and resilience 71 NORGE W 37 40 65 CHAPTER 3: IMPLEMENTATION 3.1 Introduction 3.2 Ownership of the NDS by all 3.3 Institutional arrangements 3.4 The provision and mobilisation of adequate financing 3.5 Performance monitoring and evaluation 3.6 Strengthening and innovating public service management 3.7 Enhanced use of ICT 3.8 Behavioural change and capacity strengthening 3.9 Information, communication, consultation and participation 3.10 Public sector reforms 3.11 Conclusion CHAPTER 4: MACROECONOMIC AND FISCAL CONSISTENCY OF THE NDS 4.1 Introduction 4.2 Current economic conditions and macroeconomic projections 4.3 Fiscal position 4.4 Debt management strategy 80 81 81 82 84 84 87 10 10 60 60 to ∞o 85 85 86 86 87 90 91 91 92 92 3#5copyright: STB#6CHAPTER 5: FINANCING 5.1 Introduction 5.2 Medium term fiscal framework (MTFF) 5.3 Public sector investment programme (PSIP) 5.4 Resource envelope 5.5 Expenditure 5.6 Fiscal risks CHAPTER 6: RISK MANAGEMENT 6.1 Introduction 6.2 What are the risks? 6.3 Risk assessment 6.4 Risk management strategy and mitigations 6.5 Monitoring 6.6 Conclusion ANNEXES TABLE OF CONTENTS 98 99 99 100 101 102 102 106 107 107 109 110 110 111 112 Annex 1: Logical framework for the implementation of the pillars' goals and strategies 114 Annex 2: What future - alternative scenarios The Garden of Eden Time bomb Status Quo Exodus Implications and Interpretation of the scenarios Annex 3: Risk management strategy Annex 4: 132 133 137 141 145 146 148 Overview of previous strategies Aspiration 2013 Strategy 2017 154 155 156 Annex 5: Alignment of NDS pillars to Sustainable Development Goals and Agenda 2063 goals 158 ABBREVIATIONS & ACCRONYMS 165 IMPRESSUM: 168 5#76 MESSAGE FROM THE PRESIDENT#8MESSAGE FROM THE PRESIDENT 7#9MESSAGE FROM THE PRESIDENT This document presents a strategy for the next 5 years that will help us realise the views, aspirations, dreams and hopes of our citizens. It articulates how those dreams and aspirations will be achieved. This particular document, NDS 2019-2023, is the first of three which will guide us through to 2033. We have spent more than two years on the visioning exercise, giving ourselves the space and time to reflect on and imagine the kind of Seychelles we want for ourselves and our children in 2033. We held numerous consultations with a diverse cross-section of society. We met with students, the private sector, civil society, the elderly, and civil servants. We met with residents of Mahé, Praslin, and La Digue. The NDS reflects the feedback received from extensive consultations. Perhaps the most recurring sentiment was the critical need to improve service delivery, in both public and private spheres, so that it is more efficient, better targeted, and more relevant to the increasing needs of our people. The pace of change of technology, the disruption of innovation, and the changing natural environment make it imper- ative that our education system better prepares our youth for the future; that our health system gets each one of us more actively engaged in safeguarding our wellbeing; that our social protection systems better empowers us towards independence; that our regulatory procedures seek to reduce the compliance burden and facilitate growth; and so on. And all of this needs to be done with improved service delivery at its core. In preparing the plans and collating the views of all the participants, we have given due consideration to challenges and opportunities that are arising from the effects of climate change on our island nation. Similarly, we have had to incorporate national commitments such as the United Nations Agenda 2030 and its Sustainable Development Goals, the Paris Declaration, the African Union's Agenda 2063, and others. As we continue our steady progress and become ever more developed, the greater will be the need for our actions as a society to be well-planned and well-coordinated. A society behaving in a well-planned and well-coordinated manner allows for catalytic progress, allowing us to achieve more for our population in less time. Consequently, some of the plans laid out for this NDS cycle are not goals in themselves. Instead, they lay the foundations upon which the next NDS will build so that the appropriate 2033 goals can be achieved. During the consultations, there was a close to unanimous wish for more discipline and responsibility in our society. A more disciplined and responsible student population, more disciplined and responsible parents, as well as a more disciplined and responsible Seychellois workforce. Maintaining the focus on the six identified socio-economic pillars, the National Development Strategy presents indi- cators to help us track our progress during and after implementation. We appreciate that the road ahead is not 100 per cent predictable. Our world is a dynamic one. Nevertheless, through extensive consultations, we have managed to set a course with a consensual set of desired outcomes. 8#10MESSAGE FROM THE PRESIDENT In addition to getting us towards our dreams and aspirations, the Strategy also guides us on measures to deal with the most critical, challenges facing our country today: Maintaining an atmosphere of peace and security, the cornerstone for an enabling environment for dialogue, consensus-building, sustainability of growth, development and prosperity. Continuous upgrading and provision of the necessary infrastructure for sustainable socio-economic development and progress. Transforming our education system to prepare a knowledgeable, skilled, responsible and capable Seychellois workforce in light of technological advances, innovations and the resultant demands of the labor market and our economy. Embracing science, technology and innovation as a cross-sectoral means to achieve multiple objectives and out comes including better delivery of services for our citizens. Intensifying our fight against the scourge of substance abuse and related social-ills plaguing our peaceful existence. Mitigating and adapting to the threats caused by climate change. Realizing our potential as a large oceanic state as well as finding solutions of the global threats to oceans. Ensuring that Seychelles remains a champion in the regional and global arena when considering its commendable reputation for sustainable environmental management and conservation efforts. • Increasing our economic resilience and maintaining macroeconomic stability. We are a diverse but harmonious family of less than 100,000. We are custodians of one of the most beautiful countries on Earth. Our unity in our diversity is our greatest strength, and is what distinguishes us as a shining example across an increasingly divided global arena. May we continue to be positive, open-minded and be guided by the positive forces of our universe. May our love for our beautiful country continue to fill our patriotic hearts. And may harmony and peace reign supreme as fundamental foundations of a more resilient, principled and prosperous Seychelles. Danny Faure, President of the Republic of Seychelles Prezidan Larepiblik Sesel иле 9#1110 MESSAGE FROM THE MINISTER OF FINANCE, TRADE, INVESTMENT AND ECONOMIC PLANNING#12MESSAGE FROM THE MINISTER OF FINANCE, TRADE, INVESTMENT AND ECONOMIC PLANNING 11#13MESSAGE FROM THE MINISTER OF FINANCE, TRADE, INVESTMENT AND ECONOMIC PLANNING The Ministry of Finance, Trade, Investment and Economic Planning is mandated, among other deliverables, to co- ordinate the formulation, implementation and monitoring of the national economic development planning process. Following the successful economic reforms that averted a financial and socioeconomic catastrophe in 2008-2009, the Republic of Seychelles found itself at a crossroads. The important task to coordinate the consultations as well as seek the views and aspirations of the people was en- trusted to the Department of Economic Planning. After taking stock of the political, social and economic situation of the Republic of Seychelles in 2017-2018 and receiving counsel from credible partners, the option for a 15-year Vision exercise buttressed by a sequence of three consecutive five-year National Development Strategies was adopted and approved as a way forward by the Cabinet of Ministers. The Visioning exercise took somewhat longer than initially planned. This is because the consultations and dialogue were intense and characterised by a desire to be as inclusive as possible. While a National Working Group, made up of experienced and eminent Seychellois, guided the process and the drafting of feedback from the consultations, a team of young economists in the Department also provided technical assistance and experts from organisations such as the United Nations Development Programme (UNDP) and the World Bank's Advisory Services and Analytics assisted with capacity building. Together, their joint efforts filtered the dreams and aspirations of Vision 2033 into a prioritised and implementable National Development Strategy focused on affordability, results-delivery and robust monitoring of Key Performance Indicators (KPIs). Further, following successful pilot phases, the rollout and application of Programme Performance Based Budgeting (PPBB) across all ministries is particularly timely. It sets the stage and provides the basis and incen- tives for future public sector institutions that are focused on efficient service delivery, and judicious management and use of allocated budgets. This National Development Strategy (NDS) 2019-2023 comes at a crucial juncture in our determined efforts to realise sustainable, accountable and transparent economic development objectives within a framework of good governance practices. It seeks to consolidate the gains of the past decades, take stock and mitigate the adverse effects of emerg- ing challenges while fortifying resilience and inclusion. It is also cognisant of, and encourages stakeholders to seize, emerging opportunities, for example, through entrepreneurship opportunities in connection with the blue economy and the many other lucrative sectors that are viable for our economy. The strategy supports a shift in focus towards strategically building our human capital in general and improving op- portunities for the poorest 40 percent of the population to enable them to participate in new and expanding economic sectors. It also seeks to further increase efficiency in public finance allocation and management as well as improve existing regulatory capacities to improve the ease of doing business, fortify our border security and create the enabling en- vironment for the proliferation of the private sector. In this light, no effort will be spared in the establishment of solid foundations and frameworks for greater transparency, accountability and good governance. The judicious implementation of the National Development Strategy 2019-2023 will also further leverage Seychelles' strong record of economic reform and leadership among small island nations. Of late, many of these nations, including the Seychelles, have come to realise the importance of judicious and sustainable custodianship of the vast ocean ter- ritories within our respective Exclusive Economic Zones (EEZ). In the case of Seychelles, our EEZ is 1.4 million square kilometres, which is almost three times the land mass of France. 12#14MESSAGE FROM THE MINISTER OF FINANCE, TRADE, INVESTMENT AND ECONOMIC PLANNING It is therefore not surprising that Seychelles and Mauritius are the first two 'Large Ocean Island Nation States' to have successfully presented their proposal for the joint management of a demarcated area in the Indian Ocean (the Mas- carene Plateau), to the United Nations. Furthermore, the Republic of Seychelles is the very first country to initiate the innovative "Blue Bond", which opens a new avenue for island nations to realise sustainable blue economy objectives. To anchor its stewardship and current pole position at the forefront of the region's environmental conservation efforts and promote its sustainable blue economy concept, Maritime Spatial Planning (MSP) for the Seychelles is currently at an advanced stage and it is hoped that 30 per cent of our EEZ will be designated as marine protected areas. This sovereign act will provide a boost to Seychelles and give even more recognition to its blue economy strategy with its great potential for the country's sustainable economic development in the future. The ambitions of the 'Large Ocean Island Nation States' to realise the aforementioned opportunities do not in any way take precedence over Seychelles' existing commitments to address our current critical socioeconomic challenges. They include the need: - to maintain and improve upon the socio-political environment for dialogue and constructive engagement between different stakeholders to build consensus, - to contain inflation and reduce the cost of living, - to substantially improve our education and health standards, - to substantially abate the increasing trend of substance abuse (drugs and alcohol), - to address the imbalanced demand and supply for decent, affordable housing, - to the provide and improve critical infrastructure for economic development, - - to bridge the widening income inequality gap and lift the 40 percent of the population living below the poverty line to or above the identified income threshold through programmes that develop skillsets for remunerable employment, - to facilitate the private sector's role as the 'engine of growth' for the economy, to ensure that the country's socioeconomic achievements are sustained and delivered with greater efficiency and accuracy through the refinements of quality data collection, processing and analysis for the monitoring and evaluation of progress towards the Sustainable Development Goals (SDGs), - to maintain macroeconomic credibility and stability for greater shared prosperity These are but a few of the pertinent national issues that remain the central focus and an integral part of the NDS 2019- 2023. Allow me, at this juncture, to thank all stakeholders who have in one way or another contributed to the formulation of both the Vision 2033 and the NDS 2019-2023 documents. Your invaluable inputs and observations cannot be over- stated. The most appreciable and critical aspect of the level and quality of the conversations was the spirit and will to move towards consensus that prevailed in all fora. The fruit of all the hard work invested is now in our hands. It is with immense pleasure that, on behalf of the Department of Economic Planning, I have the great honour and privilege to deliver this important economic strategy for us all to familiarise ourselves with and partake in the national growth and sustainable development of our beloved country. Maurice Jean Leonard Loustau-Lalanne Maurice Loustan lelanne Manica 13#15Maison de Mahe ♡ Mon Kontan ATM copyright: Warren Andre#16ACKNOWLEDGEMENTS The Ministry of Finance, Trade, Investment and Economic Planning is grateful to the officers of Government Ministries, Departments and Agencies for their very valuable assistance in the preparation process by providing helpful guidance and pertinent information; the private sector and the non governmental organizations. We would also like to thank the President of the Republic, Mr. Danny Faure, for his overall guidance and active engage- ment in this exercise. The Plan benefitted immensely from the advice and guidance of the Technical Working Group. We thank too, Mr. Peter Wilson, Mr. Jacob Adesida and Mr. Peter Sinon, consultants to the Planning team, for their invaluable input. To anyone else who contributed in any way, we thank you sincerely for your input. The various development partners namely UNDP and the World Bank for their partnership in the process and for peer reviewing the document. Finally, the Ministry expresses appreciation to the staff of the Department of Economic Planning for their tireless dedica- tion to the drafting of the National Strategic Plan. Thank you for staying the course and persevering to the end.#17CHAPTER 1 / INTRODUCTION 16#18copyright: James Agricole (details)#1918 CHAPTER 1 / INTRODUCTION CHAPTER 1: INTRODUCTION#20CHAPTER 1 / INTRODUCTION Any vision should be a picture of the future which creates passion. Following nation-wide consultation, a consensual, long-term national vision emerged as "A resilient, responsible and prosperous nation of healthy, educated and em- powered Seychellois living together in harmony with nature and engaged with the wider world." The national vision spans over a fifteen-year period, echoing the prolonged desire to see continuous progress and sustainable develop- ment. Vision 2033 provides the high-level direction for the future of the Seychellois people. The theme adopted for Vision 2033 is 'Towards a sustainable and inclusive future' and this will be rolled out through the implementation of a series of three five-year National Development Strategies (NDS), beginning with the first NDS for 2019-2023. The Vision will act as the compass that sets the clear and decisive direction for our desired destination and the three NDS's will be the vehicles on which the nation will embark to undertake the journey to the year 2033. NDS 2019-2023 presents a unique opportunity to kick-start the transformation of Seychelles. Based on the six pillars of the NDS, we can plan and prioritise key areas of focus within each of the pillars. This will allow us to ensure resourc- es for these focus areas are allocated appropriately in the national budget process, as well as providing a guiding light for the mobilisation of resources in collaboration with our development partners, both domestic and foreign. The pillars touch all walks of Seychellois society. The everyday citizen, the businesswoman, the young professional and the retired individual are all targeted by its goals and strategies, thus ensuring a multifaceted approach to the development of our nation. Each of the goals requires a set of specific strategies for successful attainment. Good governance, transparency, and accountability will set the scene for a society in which all stakeholders feel included and protected from harm. Moreover, it will give added credibility to government and therefore create confi- dence in the business and investment climate. People at the centre of development captures two key elements, namely participation and inclusivity. It also recog- nises that development outcomes need to focus on people's experiences: a long and healthy life; quality education; decent work and an acceptable standard of living. Social cohesion ensures peace harmony and unity. Seychellois must endeavour to become united as one people. Diverging opinions must be understood, tolerated and accepted as part of daily life. The emphasis must be on finding common ground, building strong community ties and working towards spiritual wellbeing. Having an Innovative Economy, underpinned by advances in science, technology and innovation for development is a compulsory catalyst for national development. It will serve as a platform for linking the relevant implementing bodies. Implications for e-commerce and e-government are major considerations going forward. We live in the digital age and we can expect this to further develop in terms of sophistication. A successful Seychelles must, by its very nature, be a connected, digitalised Seychelles, embracing the fourth industrial revolution. Economic transformation will bring about a rise in our standard of living. We look to our large ocean economy as one of the main drivers of growth and development. Tourism, fisheries, mariculture, energy generation and resource ex- traction are just some of the key areas of interest and focus going forward. Environment sustainability and resilience ensure that in all aspects of development, the integrity of the natural environ- ment is considered carefully. Our unique biodiversity and ecosystems serve as the basis for the tourism industry and sustainable development as a whole. In the short, medium and long term, the right balance needs to be struck when considering development pathways. They must be sustainable, climate-smart and reasonably "green". 19#21CHAPTER 1 / INTRODUCTION NDS 2019-2023 identifies Seychelles' most critical development priorities and highlights what needs to be done to overcome these. These can be addressed through "the 3 Ps": Productivity, Participation, and Performance. Productiv- ity focuses on how Seychelles could benefit from placing more emphasis on boosting the efficiency with which it uses its existing resources - that is, by achieving more productivity-led growth. Participation refers to how the Seychelles' education system needs to equip graduates with the tools they need to reap the benefits of the growing opportunities offered by the country's increasingly sophisticated economy. It also addresses the fact that social spending needs to be better targeted to shore up its sustainability, boost its impact for protecting the vulnerable, and empower Sey- chellois to get high quality jobs. Finally, Performance requires a public sector that is efficient enough to deliver high quality public services, agile enough to respond to and anticipate emerging priorities, and small enough not to divert scarce financial and human resources away from the private sector, which is responsible for generating the bulk of employment and income. The NDS adopts a scenario-planning approach to promote systemic thinking about the past, present and the future in order to set the goals, develop the strategies and put in place the systems for ongoing review. Adopting scenarios is particularly important, as the NDS is mandated to make choices about the future, which by its nature is largely unknowable. Scenarios allow one to envision multiple futures-bad and good-to be better prepared to create the desired future. Four scenarios were developed for the NDS (Annex 2). The full scenarios are presented in the annex. They were con- structed in a series of workshops and in a process that involved identification, exploration and SWOT analyses, main trends of the future, future bearing events, key predetermined elements, the main actors and their roles, as well as the critical uncertainties that are expected to drive the future of Seychelles in one direction or the other. The four scenarios were developed and elaborated using two qualitative parameters; i.e. the resilience to climate change and other external factors and ii. socio-economic transformation. The two scenarios which represent non-re- silience are labelled as 'Time-Bomb' and 'Exodus', while the 'Garden of Eden' and 'Status Quo' scenarios demonstrate resilience. From a socio-economic transformation perspective, the 'Time Bomb' and 'Garden of Eden' scenarios are transformational, while the 'Exodus' and 'Status Quo' scenarios reflect an economic contraction and a non-transfor- mational future respectively. The worse-case scenario is the 'Exodus' scenario that should be avoided at all costs. Its end-result is a basket case economy and failed state that has lost most of its invaluable human capital due to emigration for better economic opportunities. Alternatively, the collective aspirations and determination of a people who have dared to dream and translate their dreams to reality for the betterment of their lives and for generations to come is to be found in the most desirable outcome, which is the 'Garden of Eden' scenario. For successful implementation of the NDS, we must ensure we build the right institutional framework and coordination mechanisms. Working in silos will not allow for smooth development. A unified, whole-of-government approach guar- antees effective coordination for successful realisation of the desired vision. 20 20#221.1 SEYCHELLES CONTEXT AND HISTORICAL DEVELOPMENT CHAPTER 1 / INTRODUCTION Seychelles, a small island nation of about 115 tropical islands (both granitic and coralline) with a population of approx- imately 95,000 people of mixed heritage, is located in the Indian Ocean northeast of Madagascar and about 1,600 km east of Kenya. The country is widely known to being a large ocean state with an Exclusive Economic Zone (EEZ) of approximately 1.4 million km² and a total landmass of approximately 459km². The Seychellois nation is a colourful and harmonious blend of different races, stemming from African, European and Asian roots, all of whom have brought something of their own customs and way of life to the islands, resulting in a unique Seychellois culture enriched from the melting pot of many countries. The first recorded settlement was in 1770. On 29th June 1976, Seychelles gained its independence after many years of colonialism under British administration, and prior to that was governed by the French. From 1977, Seychelles was governed through a one-party system for fifteen years. This regime gave way to a pluralist democratic system that was adopted through the adoption of the Constitution of the Third Republic in 1993. In September 2016, for the first time since the return of multiparty politics, the ruling party failed to secure a majority in the legislative elections, despite being victorious in the presidential election in early 2016. A coalition of the four main opposition parties named the "Linyon Demokratik Seselwa" (Seychellois Democratic Union) won a majority in the National Assembly, propelling the country for the first time into what was termed a "cohabitation" of political powers. Thus, the Republic of Seychelles has passed through a series of political configurations namely, a coalition govern- ment, a one-party state, reintroduction of multiparty politics and, most recently, a cohabitation of political parties. It can be said that the majority of Seychellois are in general agreement on the wisdom of having an inclusive develop- ment model that promotes the wellbeing of all and gives the country the best chance for progress in a world full of challenges and uncertainties. Economic growth performance has been strong both over the long term and in recent years, and employment rates are high. However, structural diversity in Seychelles' economy has been limited. Reliance on the plantation-based activities of the colonial period (copra, cinnamon and other spices) has long (since the inauguration of the first interna- tional airport in 1971) faded into relative unimportance, and now only generates about two percent of Gross Domestic Product (GDP). Since the 1970s, Seychelles' economy evolved increasingly to benefit from its rich environmental endowment in a different way, by growing its tourism sector, which accounts directly for about a quarter of both GDP and employment. Seychelles has developed a strong tourism brand that places the country at the high end of the global tourism market. The tourism sector has continued to buoy up the Seychelles' economy; the number of visitors rose by three percent in 2018 to reach a record high of 361,844. In the early 1990s, Seychelles experienced major expansions in its key economic sectors, namely tourism and fisher- ies, while attempts were also made to develop the financial services sector as the third pillar of the economy. However, this sector proved difficult to develop in a period where Offshore Financial Centres (OFCs) were being scrutinised heavily and negatively labelled as "tax havens". 21#23CHAPTER 1 / INTRODUCTION In view of such difficulties, financial regulators in the Seychelles such as the Central Bank of Seychelles (CBS) and the Financial Services Authority (FSA) have in recent years made significant progress towards keeping the jurisdiction credible and compliant with international financial reporting standards. This has necessitated a shift in the traditional offshore business model and products of the financial services sector, paving the way to more innovative diversifica- tion avenues. With an underlying economic model characterised by extensive state intervention and a generous social welfare sys- tem, Seychelles accumulated debt over the post-independence years that eventually became unsustainable and left the country extremely vulnerable to external shocks. The global economic crisis of 2008 exacerbated the impact of the domestic economic downturn. Eventually, with its foreign exchange reserves all but depleted, the country defaulted on its Eurobond obligations. The government responded to the 2008 crisis by embarking on a comprehensive programme of economic policy and institutional reforms with the support of our development partners. The reform measures re-established macroeco- nomic stability and allowed economic performance to recover, beginning in 2009. The reforms necessitated a move towards a more open market economic policy and some adjustments to the social welfare system. The extensive communication by the authorities that informed the public on the aims and expected results of the eco- nomic reforms and sacrifices that were necessary to achieve them, was an approach that assured their effectiveness and efficiency as well as the peaceful implementation of the programme. The reforms were highly successful at getting the country back on track towards shared prosperity. Macroeconomic conditions stabilised rapidly and economic growth resumed, despite the challenging, post-crisis, global economic backdrop. Beyond the expectations of all stakeholders, the partnership with the IMF and other multilateral financial institutions, on the macroeconomic reforms saw Seychelles recover from the economic crisis in a record time of three years - a much acclaimed success story. 22 222#241.2 NATIONAL DEVELOPMENT OF SEYCHELLES: CHAPTER 1 / INTRODUCTION CHARACTERISATION, DYNAMICS AND MAIN CHALLENGES Since 2015, Seychelles has been classified as a high-income economy with a per capita Gross National Income (GNI) of US$14,760. Seychelles has done well in terms of increasing GDP, achieving the MDGs, promoting unity, upholding its unique Creole culture and ensuring a democratic society with peaceful change of power, while being environmen- tally conscious. To bolster environmental sustainability, the government has embraced the blue economy concept as an organising principle to drive growth further, while not only preserving but also building the country's natural endowments. For all things to fall in place, good governance is key to ensuring transparency and accountability while improving the efficiency of the public sector. Regulatory, policy and institutional frameworks must be reviewed and updated to reflect what we collectively hope to achieve in 15 years. The need to strengthen institutions, build and improve skills of the workforce, reduce dependency on welfare, improve the quality of education in all aspects of life, deliver better health services, strengthen efforts for greater social cohesion, and reduce income inequality is fundamentally what we hope to accomplish in Vision 2033. Moreover, public sector efficiency is critical both to the productivity agenda and to the state performance agenda. Therefore, an articulated and realistic National Development Strategy will help set priorities that guide the allocation of budgetary resources, policy decisions and institutional improvements. This should include a sharp prioritisation of public investment. The country needs a robust monitoring and evaluation system to track progress on programme implementation and the impact of the efforts. The supporting statistical system needs an overhaul and can benefit from the use of more modern techniques to produce sound, timely information. State agencies can be expected to provide a large share of the needed information, and efforts need to be consolidated to integrate and modernise the information base for the state and the country at large. Seychelles has been fortunate in that it has not been exposed to the sharp environmental shocks that have beset many other small island states. The economy of Seychelles is primarily services-oriented, led in recent years by information and communications technology (ICT), tourism, fisheries and real estate activities. With limited scope for diversifi- cation, there is a need to transform the economy by significantly increasing the value-added contributions of each sector. For example, currently, the value chains in the artisanal fisheries sector are mostly underdeveloped and involve minimal handling, processing and marketing. Production in the industrial fisheries sector is dominated by canned tuna (approximately 90 percent by volume), a low-value product processed in a free-trade zone. Despite the intrinsic challenges that come with being a small, relatively isolated island nation, Seychelles has already achieved a remarkable level of economic development. In considering the prospects for Seychelles, therefore, the salient comparators are nearby island states with relevant similarities (for example, Mauritius which is an upper mid- dle-income economy with a population of 1.3 million and historical links to Seychelles and Maldives, with its high-end tourism) and other states around the world that have managed to achieve even higher GDP per capita income levels despite their size: such as Bermuda (US$ 66,670) and Iceland (US$ 46,500)¹. Rapid economic growth since the 2008-2009 crisis and subsequent recovery has propelled Seychelles to high-in- come status, but this has been accompanied by continuing vulnerabilities, and some new, growing concerns. The need to secure the sustainability of the fiscal and the macroeconomic accounts remains paramount in view of contin- uing pressures on, and risks to, public expenditure. A growing source of macro prudential risk is Seychelles' offshore corporate sector, potentially affecting the banking system where further progress on anti-money laundering (AML) regulation and enforcement is needed. Figures for rankings are GNI per capita converted at PPP rates to international dollars (World Development Indicators, 2015). 23#25CHAPTER 1 / INTRODUCTION A resilient macroeconomic framework provides the foundation for productivity, participation, and performance. Past cycles and fluctuations in economic activity have resulted in part from the lack of a consistent institutional framework for macroeconomic management. Since 2009, Seychelles has made significant progress in building such an institu- tional framework. A system of continuous monitoring and evaluation, including involving the population as active participants, is need- ed to guide analysis and policy. This is particularly necessary as Seychelles continues to base its prosperity on its environmental endowments, especially when it comes to marine resources, which are under extreme stress globally. In addition, more information is needed regarding Seychelles' additional factors of production. An integrated view of labour allocation, migration, and skills development can help meet the challenges of sustaining rapid productivity growth and avoiding bottlenecks due to skills shortages, while ensuring that Seychellois participate directly in emerg- ing opportunities. Education, employment and healthcare Productivity, participation and performance are the major challenges for Seychelles. The challenges of providing a solid education for all, strengthening skills, reforming the social protection system, addressing current constraints to accessing high-quality jobs and securing the sustainability of health services remain pressing. In Seychelles, there is universal access to education: pre-primary, primary and secondary, with boys and girls enrolling at the appropriate age. Seychelles has also seen success in the provision of tertiary education for selected priority areas. However, the opening and widening of opportunities in a higher-productivity economy could leave the local population behind if they do not have the appropriate education and skills required to participate. For education to contribute the most to the productivity and participation agendas, it is important to broaden the presence of high- ly-educated and skilled members of future generations. The quarterly unemployment rate for 2018 was as as follows: 4.2 percent in Quarter 1; 5 percent in Quarter 2; 35 per- cent in Quarter 3 and 2.1% in Quarter 4. The unemployment rate is higher among the youth group (15-24 years) with a recorded rate of 6.5 percent in 2018 Q4. Rising demand for labour renewed applications for Gainful Occupational Permits (GOPs), which rose to approximately 22,997 in mid-February 2019. Expatriates now account for almost half of the Seychelles' total workforce in formal employment, and are employed mostly in construction and tourism². 2 State of the Nation Address 2019. 24#26Percentage 0 25 CHAPTER 1 / INTRODUCTION Chart 1: Unemployment Rate by Age Group and Sex, Q2 2017, Q1 and Q2 2018 Male Female Both Sexes Male Female Both Sexes Male Female Total Male Female Both Sexes Male Female Both Sexes Male Female Both Sexes 15 < 25 25 <55 55+ Total Seychelles' life expectancy of 74.3 years is relatively high compared to other countries in the region but still lags be- hind its income-level peers, mostly because of the wide life expectancy gap between women and men. Seychelles has an ageing population, mainly due to increased life expectancy and a low and declining birth rate. Nevertheless, the projected population is expected to increase slightly over the next 25 years. It is expected that there will be a higher burden on government expenditure in terms of pensions and social welfare expenditure, higher migration levels and greater automation processes to support the ageing population and compensate for the reduced labour force partic- ipation rate. The projected population composition for the age group of 15 and below is expected to decline while the age group of 65 and above is expected to double by 2040. The state provides free primary and universal access to healthcare with a focus on improving service delivery and quality of care. Over the years, Seychelles has developed a robust primary care system. However, various challenges remain. The disease burden is now dominated by cardiovascular, respiratory and other Non-Communicable Diseases (NCDs) due to unhealthy lifestyles (smoking, poor diet, physical inactivity, substance abuse and increasing alcohol consumption) as well as ageing. These require better preventative management of NCD risk factors and provision of chronic and long-term care. There has also been a rise in HIV and hepatitis C cases as a result of intravenous drug use. 25#27CHAPTER 1 / INTRODUCTION Figure 1 Projected population ('000) 2025 2030 2035 2040 Male 50.8 52.9 53.3 53.4 Female 49.2 51.9 53 54.1 Total 100.0 104.8 106.3 107.5 Projected Population Age composition (%) Under 15 years 21.3 19.4 18.0 17.8 (15-44) years 41.4 42.7 42.8 41.7 (45-64) years 27.1 28.7 28.8 28.5 65 years and over 10.2 14.0 16.7 19.4 Source: National Bureau of Statistics Based on 2010 Census results, Population Projections report 2014-2080 Source: World Bank Seychelles achieved 7 out of the 8 Millennium Development Goals (MDGs). For example, in access to education and health services, Seychelles has already achieved near 100 percent enrolment of both girls and boys in primary schools. There is almost universal access to safe drinking water, sanitation and housing; the country also has a high literacy rate of 97 percent, significantly low infant mortality and high life expectancy at birth. Environmental protection was already a continuing flagship for Seychelles as the island nation's oceanic resources are considered vital for the development of its fisheries and tourism industries, as well as in facilitating trade. 26 26#28CHAPTER 1 / INTRODUCTION Tackling poverty Absolute poverty levels in Seychelles are low, but inequality between rich and poor is significant. A segment of the population is therefore at risk of falling behind. The current social protection system, although it reduces poverty, is not positioned to counter growing pressures on equity and social cohesion. Spending on social transfers is already at comparatively high levels, and is heavily concentrated on older persons through the universal old age pension. The Seychelles also has a generous, broad-based transfer programme which has helped eliminate some of the worst external manifestations of poverty. By international norms, Seychelles has eradicated absolute poverty (individuals living on an income of under $1.90 per day). However, the last household budget survey conducted in 2013 highlighted a poverty rate of 39.3%, based on the national poverty line. Following this, the government is also committed to erad- icating poverty in all its dimensions, and not focusing solely on income as a poverty measure. In 2013, the distribution of wealth was highly unequal and the Gini Coefficient of inequality was estimated to be a high 0.47 compared with Mauritius at 0.39. Poverty is low by international standards but inequality is substantial 70 Inequality: latest Gini coefficient estimate 65 60 SYC 55 50 45 40 35 MUS 30 25 20 0 20 40 60 80 100 Poverty: latest estimated rate at international PPP$3.10/day Source: Seychelles Systematic Country Diagnostic, World Bank Group 27#29CHAPTER 1 / INTRODUCTION The need to orient policy and implementation to bolster inclusion is pressing with the persistent inequality of income pointing to constraints in accessing economic opportunities. These constraints could well intensify as the economy develops further and demands higher and more specialised skills. If not addressed, the constraints could cause in- creasing pressure on state spending and become a source of social tension. It is paramount to meet the participation challenge by taking a more strategic and sustainable approach to social pro- tection. This would firstly require some resources currently focused on older persons to be realigned towards mothers and children to prevent inter-generational poverty. It is also important that the current criteria for eligibility for social assistance is revised so that those in need are covered while they are provided pathways and opportunities to lead themselves and their families away from dependence on social assistance. Moreover, administrative support for the management of social assistance can be made more efficient by introducing modern information management tools and integrating datasets to related activities. Lastly, programmes for older persons should focus on promoting active and healthy ageing, favour independent living and community integration and, where specific interventions are need- ed, these should be streamlined and targeted to be more effective. Growing the private sector In terms of in ICT rankings, Seychelles is generally performing well. ICT is a small but established sector, and there is considerable scope to develop it further. Seychelles' relative isolation could perhaps be turned into an advantage by offshore data centres and ICT service providers. Work on a second submarine cable is underway; such a cable would supply the necessary redundancy in international connectivity for this sector to grow. More generally, further ICT development - which has been substantial but not yet truly "transformative" for Sey- chelles - could play a major role in reducing business costs, supporting government efficiency- particularly by greatly increasing the level of output from the public sector from the existing public servants. Public sector modernisation through the provision of e-government services to citizens and businesses, already underway, could be strengthened by addressing gaps and investing in continued reforms. There is also a need to incentivise private sector business to expand and grow sustainably in an enabling environment facilitated by the government. In transforming the economy, the blue economy can be a tool of great importance for development. The blue economy is seen as the nation's development potential through a knowledge-led approach with innovation at its heart, all the while being mindful of the importance of environmental conservation for present and future generations. As a small island state committed to the blue economy concept and the delivery of the UN's 2030 Agenda for Sustainable Development, the government of Seychelles recognises the importance of the principles of "inclusive development with opportunities for all" and "leaving no one behind". 88 28#30CHAPTER 1 / INTRODUCTION Management of natural resources A further source of opportunities for Seychelles arises from its strategic location in the western Indian Ocean. This is well aligned with the emerging global focus on sustainable use and management of ocean resources. The country already has a successful oil bunkering industry, which benefits from the country's location on major shipping routes, and Seychelles could play more of a role in providing services for international transport. In the port, a quay extension and airport expansion will be essential components of an improved national infrastructure to ensure the future growth and stability of the economy. Seychelles has considerable opportunities to continue climbing the income ladder, especially given its rich natural biodiversity, which is of global significance. Seychelles has built a powerful brand linked to the abundance and beauty of its natural environment and resources, including its tropical islands, beaches and the ocean. With its EEZ ranking 71st out of 221 countries on the Ocean Health Index, the country supports some of the world's most pristine, diverse and productive marine ecosystems, through their full extent and condition are yet to be fully explored. Coral reefs encircle and protect most of Seychelles' 115 islands. Large seagrass beds on the surrounding plateaus are an important nursery for reef fish, invertebrates, sea turtles, and manatees. Fishing grounds are abundant and home to a wide variety of species. The opportunity is ripe for Seychelles to consolidate its regional, and even global, leadership status in the management and sustainable use of these resources. Government is aware of this opportunity and is moving ahead with its ambitious blue economy agenda. A national Blue Economy Roadmap has been developed and is line with the UN Sustainable Development Goal 14: Conserve and sustainability use the oceans, seas and marine resources for sustainable development. The use of renewable energy can bring about a positive impact in the development of the country and economic diver- sification by being efficient, environmentally friendly and creating employment opportunities as well as improving our energy security. Much needs to be done to ensure that the country robustly mitigates the impact of climate change but also finds innovative ways to adapt to the changes when they inevitably arise. Our rich and unique biodiversity is what makes Seychelles a paradise for living, doing business in, as well as visiting. Predetermined elements Seychelles enters the national planning process with sound knowledge that we face some predetermined elements which, by definition, are out of our control and are for the most part, fixed. Predetermined elements are relatively stable or predictable. It is given that they will play out in the future, though how they interact with and impact other variables remains uncertain. Population size is perhaps the main predetermined element. With a population estimated at 95,000 (including for- eign workers), Seychelles must keep in mind that a limited population can be both a strength and a weakness going forward. With the right policies and strategies, Seychelles can circumvent some of the drawbacks related to having a relatively small population. By the year 2030, Seychelles expects to have a population of approximately 104,000, in- creasing to just over 106,000 by the year 2035. Population size can, of course, be influenced by migration, both inward and outward, which will also influence the mix of people who are resident on the islands. • The size of the country's land mass poses the issue of limited land space for development. The nation is an archipel- ago of 115 tropical islands, some composed of granite and the rest of coral. The majority of the islands are small and uninhabited. The total landmass is only 459 km2, but the islands are spread over an Exclusive Economic Zone (EEZ) of 1,374,000 km2. About 90 percent of the total population of 95,000 live on Mahé, and nine percent on Praslin and La Digue. The island of Mahé makes up around a third of the total land area, and another third of the landmass is the protected and largely uninhabited atoll of Aldabra. Seychelles should therefore focus its efforts for economic growth on sectors which do not require large expanses of land for inception and development, and on the riches of the vast ocean in our EEZ. Moreover, there have been successful land reclamation efforts, but going forward there remains the need to balance these with environmental factors 29#31CHAPTER 1 / INTRODUCTION . • Seychelles has engaged in international commitments with its development partners, both bilateral and unilateral. These agreements call on Seychelles, as a signatory country, to implement certain actions and policy directives in specific fields of interest, to be in line with international standards and best practices. (i) One of the most notable commitments was to the 2030 Agenda for Sustainable Development. This is founded on 17 Sustainable Development Goals (SDGs). The SDGs (or Global Goals for Sustainable Development) are a col- lection of 17 global goals set by the United Nations in 2015. The goals are broad and interdependent, yet each has a separate list of targets to achieve. Achieving all 169 targets would signal the accomplishment of all 17 goals. The SDGs cover social and economic development issues including poverty, hunger, health, education, global warming, gender equality, water, sanitation, energy, urbanisation, environment and social justice. (ii) Agenda 2063 is a strategic framework for the socioeconomic transformation of the African continent over the next 50 years. It builds on, and seeks to accelerate the implementation of past and existing continental initiatives for growth and sustainable development. Agenda 2063 has a total of seven aspirations, follows a bottom-up approach and is result-oriented. Goals, targets and strategies have been set in each aspirational area for the national, regional and continental stakeholders and levels. The targets will form the basis for holding stakeholders accountable for performance. 1.3 TRENDS Demography and migration The current global population of 7.3 billion is expected to reach 8.5 billion by 2030; 9.7 billion in 2050 and 11.2 billion in 2100, according to the UN. Most of the projected increase in the world's population can be attributed to a short list of high-fertility countries, mainly in Africa, or countries with already large populations. During 2015-2050, half of the world's population growth is expected to be concentrated in Africa and Asia. With the highest rate of population growth, Africa is expected to account for more than half of the world's population growth between 2015 and 2050. As a small island developing state (SIDS), Seychelles is expected to face an increasingly ageing population over the coming years. Official estimates project the population of Seychelles will be 104,289 by the year 20303. Migration is perhaps the most difficult variable to make assumptions on regarding its future course. This is because migration flows often result from short term changes in economic, social or political factors that are hard to predict or quantify. Nonetheless, its impact on population structure and trends is also a major issue, as it affects population growth, age and sex structures and related dependency ratio. Globally, the refugee crisis in Europe saw increasing numbers of people fleeing hardship such as war, famine and ethnic persecution. In the case of Seychelles, internation- al net migration has fluctuated considerably. Recent growth in net migration has been attributed to the large amount of imported labour, mostly brought in to support the tourism and construction industries. This has also supported Seychelles' strong economic performance over the past decade. Furthermore, given the number of expatriate workers represent almost half the total employed workforce, this suggests that current (and future economic growth) will be dependent on migrant labour. 3 National Bureau of Statistics: Seychelles population projection 2014-2080. 30 50#32CHAPTER 1 / INTRODUCTION Political Trends emerging on the global stage include major political shifts in different parts of the world. Ideological battles over political values such as democracy, rule of law, freedom of the press, and freedom of speech are giving way to fights grounded more directly in naked self-interest. A decade ago, so-called "Western" democratic and libertarian political values played a central role in international diplomacy. The recent emergence of increasingly nationalistic right-wing governments and political movements in developed countries is challenging established global order and creating significant tensions. The implications of this change on bilateral, multilateral and political relations are major considerations going forward. Seychelles must therefore astutely evaluate and respond, to the best of its ability, to the potential impacts of the changes in the global political landscape on its development agenda. Internally, we must evaluate the political landscape to mitigate upsets to the development process. Politics must not be detrimental to the country's development agenda. It is thus important to consider our local political climate as a determinant in national development priorities, consumer and investor confidence. Emerging economies The number of economies searching for ways to be more active in the global economy is growing rapidly. The digital transformation of communications and other industries is allowing access and global reach for more businesses in many countries. Increasing numbers of emerging economies have successfully developed their tourism industries, and many can offer the sun, sea and sand experience similar to Seychelles, and thus competition in this tourism mar- ket is growing. However, as emerging markets become wealthier, the number of tourists from developing countries seeking to explore new destinations also increases. As Seychelles seeks to become further economically developed and globally competitive, innovation, strategic commerce and investment techniques will have to be employed. Science, technology and innovation A plethora of applications demonstrating new capabilities from robotics, materials science, 3D printing, sensors, arti- ficial intelligence, biotechnology, and a variety of sources are enabling new business processes that are transforming business and economic opportunities and the way we live. In the same way that technology has transformed our lives and the sort of businesses that thrive over the past 15 years, so we should anticipate that the world of 2033 will be very different to the world of today, with technology being a major driver of change. About 70 percent of the world's surface is covered by oceans, but ocean science and innovation are relatively underdeveloped. With fish stocks dwindling, growing ocean pollution and concerns over the marine environment, the strong influence of oceans on climate at a time of global warming, and advances in biotechnology which could sustainably release economic potential from the sea, it is certain that over the next 15 years the blue economy will increase in importance - and Seychelles can be at the forefront of this trend. Information technology and communications have shrunk the world, and with constantly increasing bandwidth avail- able, many new opportunities will be developed for sharing knowledge and expertise over great distances, e.g. new models for health or education delivery, or for security, or banking or to support dispersed business applications. But also increasingly the dark side of IT is emerging with cyber security and cybercrime issues, "fake news", opinion manipulation and cyber espionage. Energy Sources of energy are proliferating as storage methods are becoming more effective. In 2017, energy storage pilot projects, demonstrations, and trial projects emerged around the world in a most unanticipated manner. Consumers are actively searching for ways to achieve energy independence, and distributed energy solutions, where consumers or communities generate their own energy, are growing across the globe. The age of dependence on fossil fuels may be ending as the world increasingly moves to power generated by harnessing the respective powers of wind, sun, biomass, nuclear and water. Eco-friendly energy generation is graduating towards energy supply based on both public and private participation and ownership. Seychelles is making considerable progress towards generating electricity 31#33CHAPTER 1 / INTRODUCTION from natural gas. Preliminary discussions have started for a project to build a liquefied natural gas power plant to gen- erate electricity locally. The project was approved by the Cabinet of Ministers in June 2018 and is aiming to replace the use of heavy fuel oil with liquefied natural gas (LNG), as it is more scalable and less damaging to the environment, taking into account the growing electricity consumption in the country. Electricity consumption in Seychelles is expected to keep on growing in line with expansion of human settlement and economic activity. This growth is likely to be driven by increased use of air conditioning, refrigeration, computers and other related appliances. To manage this rise in energy consumption, more sustainable building codes can be adopt- ed which include requirements for savings in cooling and electricity consumption and the installation of solar water heaters. Substantial, long-term savings in cooling needs and electricity consumption for hot water can be achieved with minor additional costs if buildings are constructed according to an appropriate building code developed for Sey- chelles' tropical climate. Waste-to-energy conversion could potentially be considered in the Seychelles context, allowing for effective and strategic use of waste generated domestically. This could potentially represent a sustainable pathway for combined reductions in greenhouse gas emissions as well a clean-up of waste from the environment. In cities around the world, governments are attempting to turn waste into energy as a means to curb the expansion of landfills. Wind is seasonal in the country and occurs mainly during the five months of the southeast monsoon period. For the rest of the year, wind speeds are low. There is presently a keen drive to grow the solar energy sector, - particularly using the roof space of existing buildings -, allowing for "green" and cost-effective power generation. This represents a step in the right direction to increasingly reduce our dependency on the import of costly fossil fuels. Climate change Over the past decades, global climate change has already led to a rise in temperature and higher sea levels around the Seychelles islands. This trend of global warming will continue, which may lead to adverse climatic phenomena such as flooding, coastal erosion, severe storms and heat waves. In addition, the ecosystems that provide natural protection from such extreme events, most notably the sensitive coral reefs, are likely to suffer further damage due to rising ocean temperatures. However, climate change also offers opportunities. Investing strategically in clean energy, ecosystem restoration and resilience can create new jobs and sustain growth, especially as innovative, 'climate-smart' investments raise the overall quality of Seychelles' capital stock and realize the vision of sustainable, shared prosperity centred around the blue economy. 22 32#34CHAPTER 1 / INTRODUCTION Social awareness Social media, communications, and shared experiences are increasing our social awareness about both local and global issues. The challenges for the future include operating businesses in an environment where customers de- mand both transparency and accountability in the way business is carried out, from source to delivery. As Seychelles develops further, becoming increasingly interconnected nationally as well as with the wider world, we anticipate even greater use of social media networks and electronic means of communication for personal, business and e-govern- ment purposes. One world On any given day, we are aware of events around the globe as they occur, giving us an everyday impression of the global village. Recognition that our actions impact the rest of the globe and that events have effects beyond the local dimension challenges us to rethink our capabilities and responsibilities. 33#35CHAPTER 2 / BROAD STRATEGY FOR DEVELOPMENT 34 34#36copyright: STB#37CHAPTER 2 / BROAD STRATEGY FOR DEVELOPMENT 36 CHAPTER 2: BROAD STRATEGY FOR DEVELOPMENT#38CHAPTER 2 / BROAD STRATEGY FOR DEVELOPMENT For the successful implementation of the national development agenda, Seychelles will need to become a high-value economy that embraces diversification as presented by opportunities in science, technology and innovation, the blue economy and human capital development, among others. In addition to a socioeconomic transformation, fundamental changes in the traditional approach to development will be the cornerstone of the way forward. One key priority, given our current socioeconomic challenges, is the need to change mind sets to promote a more productive and responsible nation with higher moral and spiritual values. It calls for the involvement of all stakeholders that is at once, public, private and from civil society, as well as en- gagement and collaboration with regional and international partners in our development process. In doing so, we will safeguard our Creole culture and sustain our leadership role in the preservation and conservation of the environment which is key to the sustainability of our tourism and fisheries industry. 2.1 The six thematic pillars The National Development Strategy 2019-2023 is supported by six key pillars. The pillars which represent the areas of focus for the NDS are: i.) Good governance ii.) iii.) People at the centre of development Social cohesion iv.) Innovative economy v.) Economic transformation vi.) Environmental sustainability and resilience These pillars are in line with the 17 goals of the 2030 Agenda for Sustainable Development and Agenda 2063. NATIONAL DEVELOPMENT STRATEGY / (2019-2023) FA 8888 686 good governance peolple at the centre of development social cohesion innovative economy economic transformation environmental sustainbility & resilience Strong moral & spiritual values Upholding of the Creole and island culture Centrality of environmental sustainability & resilience Government plays a strong enabling & facilitating role Excellent delivery of Public Sector Services Empowered, adaptive, responsible & sustainable communities Embrace new relevant and appropriate technology underpins solutions (technological solutions) Conducive environment for global partnerships in relevant science & technology Democratic, accountable & transparent governance Inclusivity & social cohesion People-centred development Private sector led economic growth 37#39CHAPTER 2 / BROAD STRATEGY FOR DEVELOPMENT Good governance Good governance is participatory, consensus-oriented, accountable, transparent, responsive, effective and efficient, equitable and inclusive, and follows the rule of law. This is essential for ensuring a sound foundation for peace and prosperity, which in turn paves the way for sustainable development. Furthermore, good governance is responsive to the present and future needs of a nation, exercises prudence in policy setting and decision-making, and ensures that the best interests of all stakeholders are taken into account. 8888 People at the centre of development. The need to build our human capital is pressing and is a top priority on the development agenda. As Seychelles en- gages with the wider world, the country requires a pool of highly-skilled, creative workers who can increase labour productivity and economic growth. The Seychellois people must invest time and attention in acquiring skills and knowledge which will allow us to take part in national development and provide us with the income and resources to sustain ourselves and our families. These skills and knowledge will, among others, provide us with an ability to maximize our potential despite the existence of constraints and challenges rather than perceiving our potential to be unattainable until all constraints and challenges have been eliminated. 用 Social cohesion Social cohesion can be thought of as the bond or "glue" that maintains stability in society. This pillar aims to promote a renewed sense of national unity and togetherness. To realise a shared vision, our sense of belonging and inclusivity will be key in allowing our people to reconcile and foster trust, so as to move forward as one nation. 38#40CHAPTER 2 / BROAD STRATEGY FOR DEVELOPMENT Economic transformation Economic transformation is paramount in securing jobs, financial inclusion, poverty reduction and in boosting shared prosperity in accordance with our sustainable development goals. The nation will enhance the creation of gainful em- ployment opportunities, in order to increase productivity and empower our labour force. Innovative economy Science, technology and innovation (STI) are important drivers of economic development. The ability to create, dis- tribute and exploit knowledge has become a major source of competitive advantage, wealth creation and improve- ments in the quality of life. Some of the main features of this transformation are the growing impact of information and communications technologies (ICT) along with the rapid application of recent scientific advances in new products and processes. It is clear that science, technology and innovation are key to improving economic performance and social well-being. Seychelles is no exception to this global reality. STI will have to be further harnessed and adopted to meet national development needs, as Seychelles endeavours to become more engaged with the wider world. Environmental sustainability & resilience The Environmental sustainability & resilience pillar seeks to protect our natural environment, human and ecological health, while driving innovation and enhancing our quality of life. In this regard, Seychelles has long been a champi- on. However, it must be ensured that we stay the course, ensuring conservation, preservation and protection of our natural environment, while also seeking to further our development agenda. Increasing our energy and food security is also paramount to maintaining our resilience as we are currently almost entirely reliant on imported fossil fuels for electricity and imported food to feed our nation. The results framework for the six pillars will be presented in the annex. 39#41CHAPTER 2 / BROAD STRATEGY FOR DEVELOPMENT PILLAR 1: GOOD GOVERNANCE Good governance is defined as the traditions and institutions by which authority in a country is exercised. This in- cludes the processes by which governments are selected, monitored and replaced; the capacity of the government to effectively formulate and implement sound policies; and the respect accorded by citizens and the state for the institutions that govern economic and social interactions - which include respect for the rule of law, transparency and accountability of government actions, the quality of service delivery, and the government's capacity to promote private sector development. Good governance was identified as a key pillar to facilitate the achievement of Vision 2033 because of its central role in the proper functioning of all institutions across all pillars. Good governance will ensure that there will be capacity to pursue the goals for each pillar and ensure the plan is implemented properly. This will ultimately result in the timely and cost-effective delivery of the NDS and Vision 2033. Furthermore, good governance is important for the implementation of the Sustainable Governance Framework. According to the World Bank's World Governance Indicators (WGI) for 1996 to 2017, Seychelles governance was marked by early stagnation, which in some areas improved post-2008. The WGI is divided into six dimensions, namely: Voice and accountability, Political stability and absence of violence/terrorism, Government effectiveness, Regulatory quality, Rule of law, and Control of corruption. The index ranges from -2.5 (worst outcome) to 2.5 (best outcome). For the dimension Voice and accountability, except for a short period of significant positive change in 2005, the trend shows general decline, until 2015. Seychelles' most recent score (2017) was 0.19. This was higher than the world average, as well as the regional average for sub-Saharan Africa. However, Seychelles' score remains below average compared to income peers. 40 40#42Voice and accountability 0.30 0.20 0.10 SENCHILLES World madian 1996 1990 2000 2002 2004 2006 2008 2010 2012 2014 2016 Year CHAPTER 2 / BROAD STRATEGY FOR DEVELOPMENT Political stability and absence of violence/terrorism has been on a declining trend for Seychelles since the beginning of the recorded period, with a noticeable dip in 2014. This is particularly concerning and will need to be closely monitored to minimise its impact on the country. Seychelles' most recent score (2017) was 0.68. This was higher than the world average, as well as the regional average for sub-Saharan Africa. However, Seychelles' score remained below average compared to income peers. Political stability and absence of violence/terrorism 0.50 SEWELLER Would man 1996 199 2000 2007 2004 2000 2004 2010 2012 2014 2016 Government effectiveness has steadily increased in the second half of the timeline, coinciding with the post-2008 reform period. Seychelles' most recent score (2017) was 0.42. This was higher than the world average, as well as the regional average for sub-Saharan Africa. However, Seychelles' score was significantly below average compared to income peers. 41#43CHAPTER 2 / BROAD STRATEGY FOR DEVELOPMENT Government Effectiveness 0.60 0.40 0.20 SCHELLES -0.20 1990 1550 2000 2002 2004 2006 2008 2012 2014 Year Regulatory quality has shown steady improvement since 2008 (pre-2008, the indicator fluctuated ambiguously). Sey- chelles' most recent score (2017) was -0.18. This was similar to the world average, and higher than the regional average for sub-Saharan Africa. However, Seychelles' score was significantly below average compared to income peers. Regulatory quality -0.50 THE 2000 2002 2004 2018 2012 14 游局 Rule of law has stagnated during the recorded period. Seychelles' most recent score (2017) was 0.10. This was higher than the world average, as well as the regional average for sub-Saharan Africa. However, Seychelles' score was sig- nificantly below average compared to income peers. 42 42#44Rule of law 0.40 0.20 ° -0.20 2000 Year 2018 2012 EVERELLE Would 2056 CHAPTER 2 / BROAD STRATEGY FOR DEVELOPMENT Control of corruption stagnated over the first half of the period, however the situation has improved post-2008 crisis. Seychelles' latest score (2017) was 0.68. This was higher than the world average, as well as the regional average for sub-Saharan Africa. However, Seychelles score remained below average compared to income peers. Control of corruption 0.50 1994 2000 2002 200 2006 2012 2014 2010 These six indicators show that the governance situation has stagnated (and at times deteriorated) from the early days of multiparty politics - with improvements happening post-2008 crisis, in some areas. However, despite these recent positive changes, Seychelles still lags behind its income peers and some best practice countries in the sub-Saharan region such as Botswana. 43#45CHAPTER 2 / BROAD STRATEGY FOR DEVELOPMENT The below table compares Seychelles with peer and aspirational peer economies for 2017. Seychelles Mauritius Botswana Cape Maldives Barbados Iceland Samoa Verde Voice & 0.19 0.79 0.38 0.98 -0.74 1.11 1.38 0.78 accountability Political Stability & 0.68 0.99 1.03 0.90 0.26 0.98 1.37 1.2 Absence of Violence/Terrorism Government 0.42 0.90 0.43 0.16 -0.45 0.84 1.45 0.62 Effectiveness Regulatory Quality -0.18 1.0 0.46 -0.20 -0.42 0.49 1.43 -0.08 Rule of Law 0.10 0.68 0.51 0.41 -0.66 0.66 1.61 0.87 Control of Corruption 0.68 0.20 0.80 0.84 -0.79 1.42 1.84 0.66 Source: World Bank 44.#46CHAPTER 2 / BROAD STRATEGY FOR DEVELOPMENT Out of all the countries in this comparison, Seychelles outperforms only the Maldives by scoring higher in all dimen- sions. All other economies perform better with the largest average difference being in Voice and accountability and Rule of law. The smallest difference is in Control of corruption. Seychelles' closest neighbour, Mauritius, scores better in all dimensions. The consultations conducted to formulate Vision 2033 and the first NDS addressed many of the issues highlighted by the indicators, namely: early stagnation and recent improvements, and Seychelles' poor performance compared to other similar economies. Specific issues cited by stakeholders include: government inefficiency and disorganisation; the narrow-based economy which leaves the country exposed to exogenous shocks; growing income inequality; a large and growing government; inefficiencies in the implementation of laws and regulations; lack of human resource capacity; the blurry mandates of state-owned enterprises (SOEs); and perceived high levels of corruption and political interference in the public service. Seychelles also suffers from some of the governance problems most associated with SIDS, such as accountability issues due to the population size and its resultant close community and extended family ties. Furthermore, weak alignment between sector allocations and national objectives, and a lack of strategic planning and participatory monitoring and evaluation (PM&E) culture have also been cited as serious contributory issues. Despite these issues, Seychelles displays some key strengths that will allow it to greatly improve governance within the next 15 years. This includes a relatively stable economy post-2008; strong commitment for public sector reforms; good infrastructure (including ICT infrastructure), and a well-educated and increasingly politically involved population. The commitment for public reforms deserve special mention as Seychelles is considered an example in the region in the rolling out of results-based management (RBM) reforms. RBM is composed of four pillars: strategic planning; programme performance-based budgeting (PPBB); performance monitoring and evaluation (PM&E) and performance management system (PMS). The full implementation of RBM in all ministries, departments and agencies (MDAs) in government will ensure efficiency, effectiveness and accountability - which will also go a long way towards improving the climate outside of government such as facilitating the operation of the private sector. Restructuring efforts are also being undertaken to rationalise government structure, separate the regulators from the operators and ensure good systems of checks and balances. Seychelles also enacted the "Access to Information Act" in July 2018 to improve transparency. Another commitment to good governance is Seychelles' recent approved membership to the Open Government Partnership (OGP). Good governance also features prominently in the United Nation's Sustainable Development Goals (SDGs) - with emphasis on Goal 16: Peace, justice and strong institutions, and Goal 17: Global partnership to achieve the SDGs. In addition to the SDGs, the African Union's Agenda 2063 includes governance in the dimension entitled "Aspiration for the Africa We Want", specifically in the following aspiration – i.) An Africa of good governance, democracy, respect for human rights, justice and the rule of law and ii.) A peaceful and secure Africa. - Therefore, to ensure a democratic, transparent, secure, accountable and efficient state that is able to facilitate socioeconomic transformation, address the growing issues of economic inequality and social ills, and honour our international commitments - the following goals will need to be met. 45 45#47CHAPTER 2 / BROAD STRATEGY FOR DEVELOPMENT GOALS AND STRATEGIES GOAL 1: A TRANSPARENT, ACCOUNTABLE AND CITIZEN-CENTRIC GOVERNMENT THAT DELIVERS EFFICIENT, EFFECTIVE AND QUALITY SERVICES. This goal targets the performance and accountability of the three branches of government, with the aim of building a government that is able to deliver efficient, quality and cost-effective services that are of use to the population. Empha- sis will be placed on performance management, data management, accountability frameworks, public participation, and technology and innovation. Strategies 1.1. Promote a performance-based, accountable and transparent public sector. A high-performing public service requires skilled, motivated and responsible employees. The government will promote an effective and meritocratic public sector through implementation of the performance management pillar of the re- sults-based management (RBM) reform, improved data management, as well as improved capacity for enforcement at relevant public oversight institutions. 1.2. Strive for open government and empower citizens in the decision-making process. Citizen participation in the decision-making of government is important in order to build trust in the process and to ensure that policies are relevant. This strategy will be achieved through further public consultations, the implementa- tion of the Access to Information Act, and engagement with the media and civil society to improve participation and accountability. 1.3. Enhance the efficiency of the public sector through innovation and the use of appropriate technologies. Given the ambitious agenda, it is crucial that the public service becomes more efficient, innovative and cost-effective. This will require new ways of delivering services through innovation in the public service. GOAL 2: A SECURE AND FAIR STATE WHERE THE RULE OF LAW IS UPHELD AND HUMAN RIGHTS ARE RESPECTED. The goal is to build capacity within the three branches of the state, the private sector and civil society regarding the necessary political and institutional environment that upholds human rights, democratic principles, the rule of law and good governance. This goal will include strengthening the enforcement of laws and regulations, strengthening the judiciary, ensuring better border control and a stronger stance against corruption. Strategies 2.1. Strengthen enforcement of laws and regulations. In order to protect citizens from crime and uphold justice and the rule of law, it is not enough to enact appropriate laws and regulations; it is important that all the laws and regulations are also properly and consistently enforced and that public awareness is raised with regard to those laws. This strategy will be achieved through ensuring effective com- munity policing, promoting good work ethics, equity before the law and strengthening the justice system. 46 46#48CHAPTER 2 / BROAD STRATEGY FOR DEVELOPMENT 2.2. Strengthen border security. Seychelles' vast Exclusive Economic Zone (EEZ) is vulnerable and will need to be properly protected. This will be achieved through a comprehensive strategy aimed at increasing capacity of the marine security and safety entities, together with strong border control at all ports of entry. 2.3. Prevent corruption in all forms. Corruption undermines policy effectiveness and is a barrier to development. This strategy calls for the strengthening, independence and access to redress of the Office of the Ombudsman, Public Officers Ethics Commission, Public Ser- vice Appeal Board, Human Rights Commission and Anti-Corruption Commission of Seychelles (ACCS). The strategy also calls for an executive that is fully subject to the laws of the country as well as an independent legal system guar- anteeing equality for all before the law. It will also require the people who have been affected (e.g. asked for a bribe) to report the offending persons to the appropriate authority. Key indicators and targets Governance Indicator Data Source Baseline Target (end of period) Ibrahim Index of African Mo Ibrahim Foundation Score 73.2, Ranked 2/54 (2018) Score 83.0 Governance Perception of Corruption Transparency International Score (66/100), Score 76/100 Ranked 28/180 Index (2018) 47 +2#4948 48 CHAPTER 2 / BROAD STRATEGY FOR DEVELOPMENT PILLAR 2: PEOPLE AT THE CENTRE OF DEVELOPMENT The quality of human capital is critical for the development of the country as well as for sustainable global develop- ment. Considered as an asset, human capital represents a measure of the economic value provided by the stock of knowledge, skills, and abilities within a country. Thus, the process of human capital development requires investing in skilled, healthy and productive citizens to promote a prosperous and inclusive economy. Recently, Seychelles has been ranked as the top country in the African region based on the Human Development Index (HDI) 2016 of the United Nations Development Programme (UNDP). This can be attributed to the country's strong health indicators such as free primary and universal access to healthcare, a robust primary care system and a generally high life expectancy. However, challenges exist such as the wide life expectancy gap between women and men and an ageing population. Moreover, it has been observed that Seychelles has experienced a rise in non-communicable diseases (NCDs). The graph below shows that cardiovascular, respiratory diseases and cancer account for about 60 percent of deaths in Seychelles. 100% 80% 60% 40% 20% Trends in Causes of death as percentage of all deaths 0% 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 ■Cardio-vascular Respiratory system ■Infectious and parasitic ■Cancers External causes Other causes Source: World Bank staff calculations based on Ministry of Health data#50CHAPTER 2 / BROAD STRATEGY FOR DEVELOPMENT As per the global experience, ageing and the rise of NCDs increase the needs for expensive, long-term care and chronic care. Coupled with the spread of expensive health technologies, they can lead to escalations in health care costs. These challenges may lead to unsustainable healthcare spending. Service utilisation is already high in Sey- chelles: on average, a person visits health facilities six times a year, and in most cases (four of the six visits) is seen by a doctor. This number is higher than Nordic countries (3.8 visits per person). Also, quality of health services is critical to the "value for money" agenda in health spending. Successful manage- ment of NCDs in primary healthcare (PHC) settings can prevent hospitalisation and complications such as lower extremity amputation in diabetics. Such indicators are therefore used to assess the quality of PHC. Compared to OECD countries, Seychelles has very high avoidable hospital admission rates for common conditions such as asthma, hypertension and diabetes. The country's diabetes amputation rate is also much higher than the OECD average. For three common cancers (breast, cervical and colorectal), Seychelles has much lower survival rates compared to OECD countries, pointing to the need to improve the quality of care in Seychelles, especially in PHC. Table Quality of care: Seychelles vs. OECD in selected healthcare measures Indicator OECD Seychelles Lowest Average Highest Asthma: hospital admission rate 10 44 109 96 Hypertension" hospital admission rate 9 83 397 262 COPD: hospital admission rate 23 198 395 84 Chronic heart failure: hospital admission rate 74 244 548 230 Diabetes: hospital admission rate 44 150 338 938 Diabetes: lower extremity amputation rates 2.4 6.4 15.9 99 Cervical cancer 45 66 81 36 Breast cancer 74 85 89 44 Colorectal cancer 50 62 71 48 49 49#51CHAPTER 2 / BROAD STRATEGY FOR DEVELOPMENT In addition to health concerns, as Seychelles' economy develops further, this will demand higher and more specialised skills. Thus, quality education and skills development at all levels is fundamental in this aspect. The country has been successful in providing universal access to education. As can be seen below, the levels of enrolment up to secondary education have been comparable to those of most middle-income countries and those of many high-income coun- tries. NER Primary NER Secondary Chile 93.94 93.04 Costa Rica 96.13 78.12 Finland 99.43 94 Malaysia 94.6 69.1 Mexico 95.6 67.41 Rep of Korea 96.31 96.15 Seychelles Turkey 94.69 74.57 86.69 92.9 Note: "NER" stands for Net Enrolment Rate. Source: UNESCO Institute of Statistics and Edstas 50 60#52CHAPTER 2 / BROAD STRATEGY FOR DEVELOPMENT However, there are concerns over both the quality and equity of educational outcomes in Seychelles. The following graph depicts how the education system delivers very few high-scoring graduates. National secondary-school leaving (P6) exam results by subject and grade - 2015 Number of Candidates 1000 900 800 700 600 500 400 300 200 100 English French Maths Science Social Creole Science Subject Source: CCATS Database, December 2015 A-C D-G Ungraded Moreover, benchmarking cross-regional comparisons of PISA + results suggests that Seychelles may score lower than upper middle income comparators such as Malaysia, Costa Rica, and Chile. This indicates that education quality lags behind upper middle-income countries (MICs), and certainly below that of its high income economy peers. Overall, there are high returns from attaining an education, although this is mostly for those who study to degree level. This, together with a shift in labour demand towards higher skilled jobs, are evidenced in the graphs below. Relative change in employment (by occupation), 2011 and 2014 51 .064 238 80% Average incremental (total) return over primary level 8 70% 675 60% 6 50% ا ان .14 2 0 40% 30% 20% 10% 0% Secondary Vocational Polytechnic Degree Post-graduate Managers Professionals Technicians Clerical support Source: World Bank staff calculations based on household budget survey and labour force survey data. .103 .125 Service & Sales Skilled Agricultural 273 Craft/Trade Workers -012 -053 Elementary Plant operators#53CHAPTER 2 / BROAD STRATEGY FOR DEVELOPMENT As the economic opportunities in Seychelles' economy increase, it is important that the local population is not left behind and is thus equipped with the education and skills required to participate. Additionally, the challenge for the de- velopment of the blue economy is that the local workforce is trained with the skills needed to partake fully in this sector. Over 70 percent of people in the Seychelles labour market work on a full-time basis, with about 10 percent operating their own business and about four percent operating a business with regular, paid employees. Since the mid-2000s, imported labour has increased rapidly and this has been linked with the corresponding growth of output over the years. Total +14.7% 100,000 90,000 Seychellois population ■Total 30% Decomposition of change in real output per permanent resident population 20% 80,000 Seychellois empoyed 10% 70,000 Labor 0% 60,000 migrants -10% 50.000 +29.5% -20% 40,000 -30% 30,000 +540.1% 20,000 10.000 0 2002 2015 Demographics (local workers/population) ■Labor migration (lotal/local workers) ■Domestic labor productivity (output/local worker) Source: Staff estimates based on data from Agency for National Human Resource Development, Ministry of Home Affairs, United Nations. 1981-85 1986-90 1991-95 1996-00 2001-05 2006-10 2011-15 חקה. 52 52#54CHAPTER 2 / BROAD STRATEGY FOR DEVELOPMENT Seychelles has high labour market participation and an overall low unemployment level of approximately four percent, with less than 2,000 individuals recorded as unemployed. However, youth unemployment levels are significant at about 14 percent and are also slightly high relative to total employment. Labor Number Share participation Unemployment (%) (%) Gender Male 22 368 49.6 79.6 4.0 Female 22 661 50.3 76.8 4.1 Age cohort 15-24 years 6 993 15.5 57.4 13.3 25-34 years 10 962 24.3 88.1 3.8 35-44 years 10 505 23.3 90.6 2.5 45-54 years 10 725 23.8 86.9 1.2 55-65 years 5 874 13 64.8 1.7 Educational level None 443 1 45.0 3.2 Primary 3 974 8.8 57.8 5.0 Secondary 19 230 42.7 76.0 4.4 Post- 17 470 38.8 89.4 11.5 Secondary Degree 2 045 4.5 90.5 1.0 Postgraduate 1 423 3.2 87.7 0.3 Not specified Total 474 1.1 44.8 7.0 45 059 100 78.2 4.0 Moreover, another constraint is that job flexibility is limited and the structure of the labour market is likely to be limiting opportunities. This is mainly driven by the fact that there is a lack of flexibility in local employment rules and norms, such as those regulating work hours and contractual arrangements. Although Seychelles has a high level of human development, there are still many challenges to overcome. It is urgent to address the factors that constrain the abilities and opportunities for Seychellois. Having people at the centre of develop- ment as a pillar of Vision 2033 and the NDS for Seychelles will take into account health, education, skills development and employment. By covering these, it will be ensured that socioeconomic progress is continuously achieved through the contributions of the country's residents. 53#55CHAPTER 2 / BROAD STRATEGY FOR DEVELOPMENT GOALS AND STRATEGIES GOAL 1: THE ATTAINMENT OF THE HIGHEST LEVEL OF HEALTH AND WELLBEING Health is a fundamental human right, and the pursuit of better health is both a personal and a societal endeavour. The goal of ensuring healthy lives and promoting wellbeing for all at all ages (SDG3) reflects the central position of health in sustainable development, and underscores the fact that health status is the result of many social determinants. In turn, investment in health influences the attainment of other SDGs, and good health is also key to human capital development. Strategies 1.1 Pursue effective health protection and promote empowerment and personal and societal responsibility for holistic health. It is necessary to coordinate national initiatives to increase and strengthen health promotion and disease prevention programmes, with the continued focus on keeping people healthy. The annual "My health, my responsibi- lity" campaign recognises that individuals and the community at large need to be engaged and empowered to choose healthy behaviours and lifestyles. It is also important to educate people on the benefits of private medical insurance and encourage them to invest in this. 1.2 Build a high-quality integrated healthcare system with a focus on people-centred care. The objective is to improve the quality of care and ensure that the services are directed at meeting the changing needs of individuals who use them. Moreover, within the health sector there should be closer interaction and partnerships between public and private service providers to improve a range of health services. GOAL 2: EDUCATED, EMPOWERED AND RESPONSIBLE CITIZENS ENGAGED IN BUILDING A SUSTAINABLE, INCLUSIVE AND EQUITABLE SOCIETY. Investing in education leads to significant development benefits. However, to achieve sustainable development, it is not enough to provide access to education, but central to the de- velopment of human capital is the quality of education provided. This is in line with the achievement of SDG 4 which is to ensure inclusive and equitable quality education and promote life-long learning opportunities for all. It is therefore recognised that the quality of the education system is a critical determinant in sustaining the future of the country. Addi- tionally, a culture of learning should be encouraged to ensure that education is valued by all. Strategies 2.1 Promote greater and more effective inclusiveness in education and lifelong learning for every age group. Seychelles recognises that sustainable development also means "leaving no one behind". For education, this means everyone receiving equitable access to learning opportunities and thus entails broadening the access to high-quality education and skills development to the whole population regardless of their gender, race, religious beliefs, social status or any other individualities. Moreover, a holistic approach involving all stakeholders needs to be adopted to ensure that lifelong learning opportunities are provided to everyone. This will ensure that people will be provided with the relevant skills for employability and also encourage the development of engaged citizens. 2.2 Reform the education system for the realities of Seychelles today and for the future. The education system in Seychelles needs to be reformed in order to ensure that it is more responsive to the needs of the economy, both in terms of content and quality. Examples of how this can be done includes adapting the curriculum to emphasise acquiring skills that will be needed for the socioeconomic transformation agenda of the country. Moreover, the education system will provide learners with the complete set of skills needed i.e. academic, soft, and vocational skills. There is a need to embrace new technologies as drivers of improvements in education outcomes and in ensuring more engaged citizenry in the education system. 54#56CHAPTER 2 / BROAD STRATEGY FOR DEVELOPMENT GOAL 3: A PRODUCTIVE AND SKILLED LABOUR FORCE TO SUPPORT SOCIO-ECONOMIC TRANSFORMATION. In the pursuit of sustainable development, it is important to achieve full and productive employment and decent work for all (SDG 8). Ensuring this will require an efficient labour market, a well-trained workforce with opportunities for lifelong learning, and upgrading of skills. Strategies 3.1 Develop an efficient and effective labour market. The recently developed human resource strategy which responds to the needs of Vision 2033 will be implemented for Seychelles to have an efficient and effective labour market. The focus will be placed on aligning the country's human resources with the changing demands of the labour market. It is important for planners to think strategically about the skills required and number of employees within priority areas over the medium to long-term, particularly to address and support the government's drive to diversify the economy. 3.2 Manage and upskill the labour force. For the successful implementation of Vision 2033, the development of a skilled workforce in Seychelles will be required to satisfy the needs that will emerge from knowledge-based industries, such as the blue economy. It is thus critical to ensure there are sufficient opportunities for training knowledge-based workers as well as continuous workplace development and lifelong learning. A renewed focus to improve the quality of basic education in science, technology, engineering and mathematics (STEM) fields and strengthening the linkage with productive sectors at technical and vo- cational education and training (TVET) and tertiary levels of education is fundamental to achieving this goal. Moreover, the National Labour Migration Policy will be used to ensure that Seychelles has a robust national strategy to better manage labour migration and labour migration flows, and as well as to ensure effective protection of migrant workers' rights while making sure that social cohesion in Seychelles remains secure. Key indicators and targets People at the centre of development Indicator Data Source Baseline Target Human Development Index (HDI) United Nations Human Capital Index (HCI) Development Programme World Bank Score 0.797, Ranked 62/189 (2018) Score 0.85 Score 0.68, Ranked Score 0.75 43/157 countries (2018) 55#57CHAPTER 2 / BROAD STRATEGY FOR DEVELOPMENT PILLAR 3: SOCIAL COHESION Social cohesion addresses issues of national unity, national identity, togetherness and community spirit. It relates to the rules and norms that allow people to work and live together. A socially cohesive society is one which works towards the wellbeing of all its members, fights exclusion, racism and marginalisation, creates a sense of belonging, promotes trust and tolerance and offers its members the opportunity of upward mobility. Poverty, social inclusion and culture are key features of the 2030 Agenda for Sustainable Development, and its 17 Sus- tainable Development Goals. Goal 1: No Poverty explicitly seeks to end poverty in all its forms, everywhere, in line with Vision 2033 and its related strategies. Goal 5: Gender Equality, addresses the universal desire to migrate towards a fu- ture inclusive of all genders. The social cohesion pillar reflects the development outcomes of Agenda 2063, for example, Aspiration 5 of Agenda 2063: Africa with a strong cultural identity, common heritage, values and ethics. Furthermore, Aspiration 4: A peaceful and secure Africa, reiterates the quintessential role of peace, security, and stability as a platform for inclusive and sustainable development. Social cohesion is a fundamental pillar of the NDS 2019-2023, reflecting the desire to address socioeconomic challen- ges of present-day Seychelles, as well as to maintain the fabric of Seychellois society. The broad public consultations brought forward several issues for which the people are seeking resolutions. These include poverty, social protection and welfare, drug and alcohol abuse, crime and security, cultural identity and religious tolerance to name a few. The cost of social protection is high, at 4.3 percent of GDP in 2015. The current social protection system reduces poverty but it is not positioned to counter growing pressures on equity and social cohesion. The composition of social protection spending is mostly skewed towards the elderly, which raises equity and efficiency concerns (see table below). In 2015, 79 percent of total social protection spending was on the elderly. It is projected that the proportion of the population aged 65 years and above will be approximately 21 percent by the year 2050. The Agency for Social Protection (ASP), in 2015 had expenditures in excess of SCR400m on the Universal Retirement Benefit, as a single line item. Furthermore, in the same year, the expenditures (from ASP) to the Home-Care scheme for the elderly exceeded SCR170mn. There are lingering concerns surrounding the sustainability of such far-reaching social protection expenditures. The figure below provides some more detailed information on the scope and cost of social protection programmes. 56#58Social protection expenditures and beneficiaries CHAPTER 2 / BROAD STRATEGY FOR DEVELOPMENT 2012 2013 2014 2015 2016 2017 Social security expenditure No. of beneficiaries 15,311 14,721 15,276 16,201 19,759 21,955 Total amount paid (SCR million) 470 435 467 508 857 1,085 Defined benefits: No. of beneficiaries Retirement 6,774 6,800 6,735 6,669 7,617 10,413 Invalidity 1,186 1,071 1,140 1,180 1,360 1,675 Disability (1) 144 611 Orphans 59 75 66 67 60 63 Semi-Orphan (2) 138 513 653 Others 719 848 595 627 875 997 Discretionary payments: No. of beneficiaries Unemployment Relief Scheme(3) 11 11 8 3 0 0 Youth Training Scheme (4) 0 27 7 8 & 0 Home Carers Scheme 2,502 1,976 2,593 2,641 2,882 3,263 Bursary 2,016 1,617 2,092 1,890 1,619 1,771 Welfare 2,044 1,888 2,040 2,978 4,681 2,509 Amount paid (SCR million) Retirement (5) 213 207 238 252 442 612 Invalidity 34 32 39 41 91 107 Sickness/maternity 8 13 15 12 7 7 Orphans 1 1 1 1 N 1 Semi-orphan (2) Others (6) 2 6 - 10 3 2 3 in 5 2 2 4 Source: Agency for Social Protection 4(1) Prior to 2016, the disability benefit was paid under the invalidity benefit (2) Newly introduced category as of 2015 (3) As of 2016, the scheme was phased out (4) The scheme was relaunched in 2013 (5) As of 2016, retirement includes transfers from Seychelles Pension Fund (6) Includes survivors, funeral and injury benefits 57 40#59CHAPTER 2 / BROAD STRATEGY FOR DEVELOPMENT A recent study5 commissioned by the Office of the Secretary of State for the Prevention of Drug Abuse and Rehabilita- tion revealed an estimate of approximately 4,800 heroin users in Seychelles with a prevalence of HIV at 8.0 percent and a prevalence of Hepatitis C at 35.6 percent among this group. The figures below display a substantial heroin dependence issue in Seychelles and this is a serious public health matter. Country Seychelles Source/Type of study IBBS¹, 2017 Age range Population size estimate Proportion of population 15 yrs. + 15 yrs. + 4,800 heroin users 2,560 PWID² 5.6% 3.3% The level of heroin dependence in the population is having and certainly will continue to have a major impact not only on public health including its expenditures and management, but also on the national development of the country, through its impact on labour, employment, education and training and the ability of the population affected to participate fully in the socioeconomic development of the country. The Agency for the Prevention of Drug Abuse and Rehabilitation (AP- DAR) is working towards the stabilisation of patients physically, psychosocially and spiritually, as well as providing skills acquisition opportunities to prepare patients for reintegration into the work force and the community. On the cultural scene, Seychellois culture in its various forms is an integral part of daily life. The three official national languages (Creole, English and French), food, built heritage, music, dance and visual arts come together to form the Seychellois identity. A Culture Policy adopted in 2004, sets forth 11 aims for the cultural development and management of Seychelles. These include: (i) to protect, safeguard, and develop the moral, ethical, and spiritual values of Seychellois culture and dignity, including the protection of intellectual property, and the cultural, as well as the natural heritage of Seychelles and (ii) to preserve our traditional culture and values alongside contemporary lifestyles and developments, in order to ensure the preservation and protection of our small island culture against all adverse cultural industries, national and international³. The country has achieved success in inculcating the unity of a diverse and multiracial society, of which members are descended from Asia, Africa, and Europe. The phrase "Seselwa, en sel desten"9 was adopted as the national theme for the year 2017. This alludes to the acknowledgment of the oneness of the Seychellois nation, the recognition of a shared sense of belonging and concern for each other, and the determination to forge a better future for all through national unity. Sports at national level has continued to evolve over the years with traditional sports such as football, volleyball and swimming remaining prominent. More recently, Seychelles has also seen the emergence of beach football and other emerging types of sport. The sports sector has had some notable success in recent years. Major achievements of this sector in 2017 and 2018 include: Seychelles won three gold, three silver and five bronze medals at the "Commission de la Jeunesse et des Sports de l'Océan Indien" (CJSOI) games which were held in Djibouti. In addition, the national volleyball team won gold at the Indian Ocean Club Championship (IOCC) for men and silver for women. Seychelles won two gold medals at the 2017 Regional Sailing Championship and one gold at the "Mauritius Defi❞ 40km crossing in windsurfing. 1 Integrated Behavioral and Biological Surveillance Survey 2017 2 People who inject drugs 5 Seychelles Biological and Behavioral Surveillance of heroin users 2017: Round one 6 Integrated Behavioral and Biological Surveillance Survey 2017 7 People who inject drugs 8THE CULTURAL POLICY OF THE REPUBLIC OF SEYCHELLES ISBN: 99931-59-02-5 O Ministry of Local Government, Sports and Culture, 2004 9 "Seychellois one destiny" 58#60CHAPTER 2 / BROAD STRATEGY FOR DEVELOPMENT Furthermore, the various sports federations have been active in organising their respective tournaments and leagues. At national level, top-performing athletes are recognised annually through the Sports Awards ceremony. Furthermore, a total of 44 "Duke of Edinburgh International Award" participants successfully completed and received their Gold Award over 2017 and 2018, a notable success for the youth of Seychelles. In 2018, the Department of Youth and Sports was able to revise its youth policy as well as its sports policy, allowing for clearer and more up to date guidelines and operational frameworks. The various sociocultural challenges that the country faces necessitate various levels of intervention. Poverty, drug and alcohol abuse, and dependency on social protection mechanisms are key issues which must be addressed strategically. Furthermore, concerns such as changes in family structure, globalisation, and modernisation may have direct effects on the very fabric of Seychellois society. Social cohesion therefore is pivotal for a successful, peaceful and stable society. GOALS AND STRATEGIES GOAL 1: HAPPY, HEALTHY PEOPLE LIVING IN A HARMONIOUS AND PEACEFUL COMMUNITY Within our communities, peace and wellbeing at all levels is essential for the advancement of our nation. The happier and healthier our people are, the more capable they will be to take an active stance in national development. We envision a state in which harmony reigns in our communities, enabling men, women, children, young and old to flourish according to their personal aspirations and talents. This goal addresses the need to cultivate our social capital. Social capital can be thought of as the links, shared values and understandings in society that enable individuals and groups to trust each other and so work together. Strategies 1.1 Strengthen social protection mechanisms. Social protection and prevention measures must ensure that society's most vulnerable and marginalised members are catered for, with no one left behind. This requires a more strategic and targeted social safety net to ensure long-term sustainability. Furthermore, there is a need to ensure greater availability of social specialists to counsel and provide support to those with social challenges. The development process should be inclusive, promoting poverty reduction and gender equality in line with the 2030 Agenda for Sustainable Development. All societal groups are to be considered in addressing the country's development needs. The challenge remains to reduce inequality via appropriate mechanisms, taking into account Seychelles' specific characteristics. Moreover, issues of building the capacity and resilience of all groups of society will be the key to their greater inclusion in the socioeconomic development of the country. 1.2 Strengthen prevention, rehabilitation and detoxification programmes. The toll taken on our society by drug and alcohol abuse will necessitate a comprehensive prevention, detoxification and rehabilitation initiative. The strengthening of such initiatives with the assistance of support groups is therefore pivotal. Furthermore, it will be necessary to engage the public at large in changing their mind set towards victims of substance abuse in order to address the stigma associated with this particular issue. 59#61CHAPTER 2 / BROAD STRATEGY FOR DEVELOPMENT 1.3 Building safe, resilient communities. At community level, the prevalence of a conducive and safe environment is of highest importance, as families require peaceful, stable living conditions to thrive. This strategy works towards the development of such an environment. 1.4. Increase sports education, awareness and cultural change. The role of sports has long been an important one in Seychelles. Sport represents a healthy, active lifestyle choice. An increase in awareness aims to ensure that the popu- lation at large has a sound understanding of the benefits of sports and an active lifestyle. This strategy aims to inculcate the culture of physical activity and to encourage people to enjoy the habit of being active. GOAL 2: ENSURING CULTURAL SUSTAINABILITY FOR THE WELLBEING OF ALL. Our rich Seychellois culture is one of our key assets as a nation. As Seychelles becomes increasingly modern and joins the "global village", Seychellois are now more exposed to a great variety of popular culture from across the world. This has meant that our Seychellois culture is under threat of disappearing in the face of modernisation and globalisation. Nevertheless, Seychellois dance, food, music, poetry, visual art and unique Creole mannerisms remain at the core of our identity as a people. Our local culture complements and adds value to our tourism industry, as hundreds of thousands of visitors flock to our shores every year to experience Seychellois culture in addition to the country's scenic beauty. Strategies 2.1. Promoting, developing and preserving our local artworks, literary works, language, cultural heritage and identities. Seychelles possesses an evolving and dynamic culture based on its traditions and values. Local artwork has long been a source of pride and inspiration, allowing Seychellois to express themselves in several artistic forms. By promoting, developing and preserving artwork and culture, Seychelles stands to enrich its cultural scene, while simul- taneously providing a mechanism for the preservation of cultural knowledge and practices. 2.2. Creating economic value from our Creole culture. Seychellois culture has the potential to generate a subs- tantial amount of income for all parties involved. Promotion of creative industries, cultural tourism, and investment in various sustainable artistic ventures are some of the ways in which national development efforts can harness the diverse culture which Seychelles possesses. Moreover, promoting investment in our traditional practices in collaboration with local experts will help to maximise and sustain the ensuing socioeconomic benefits. Furthermore, it will remain vital that, at national level, there is consistent encouragement and support for local artists to take on a more active role on the cultural scene by allowing them access to appropriate facilities and creative spaces to expand on their talent. 2.3. Preserving and promoting the country's cultural & World Heritage sites. Seychelles' diverse history has re- sulted in a substantial physical heritage. It is therefore of paramount importance to encourage the preservation and protection of national landmarks such as buildings and monuments, all the while building the public's awareness on their historical and cultural value. Key indicators and targets Social cohesion Indicator Life expectancy Data source National Bureau of Statistics Baseline Target 74.3 years (2017) 80 years 60 60#62CHAPTER 2 / BROAD STRATEGY FOR DEVELOPMENT PILLAR 4: INNOVATIVE ECONOMY Investment in science, technology and innovation (STI) is imperative for economic development and social progress. STI plays a critical role in furthering the transition to a "knowledge-based and innovation driven economy" for sustainable development. The latter is to be realised by also taking into account the commitments of the Republic of Seychelles to the SDGs, also referred to as Agenda 2030, specifically SDGs 4, 7, 9, 14 & 17 as well as the African Union's Agenda 2063, most notably aspirations 1, 2 and 6, which are primarily geared towards the promotion of STI through use of mechanisms such as education. STI has for many years been recognised as a key driver of economic growth and human development. Innovation, by means of scientific discovery and the creation of new technologies, serves as a key element in augmenting international competitiveness for any nation. Likewise, research and development (R&D), which refers to the process of creating new or improving technology, helps in contributing to increasing the competitive advantage of businesses, industry or society as a whole. An analysis of the local situation in Seychelles indicates that while there a multitude of research is being carried out, access to the research findings is often limited. This is exacerbated by the absence of a central repository to store datasets and reports. In addition, the lack of a governing body impedes the flow of funds for research under- takings, hinders the publication of research and heightens the tendency for duplication of work. To make the situation worse, although relevant research is being carried out, utilisation of the findings for the development or improvement of products and services is in most instances lacking. STI is steadily moving away from a set of buzzwords and technical jargon, incomprehensible to non-scientists, to a tangible means for the betterment of people's lives due to its influence in the progression of other sectors such as edu- cation, health, social welfare and behaviour, environmental conservation, and finance. STI is cross-cutting and pervasive in all ministries, departments and agencies of the government, as it also is in the private sector and civil society. In fact, STI is a vital contributor to all areas of socioeconomic development. However, to ensure the optimisation of socioecono- mic impact and the highest returns on the investment of Seychelles' scarce resources, a general focus on some critical sectors that will be targeted in the first five-year NDS is shown in the table below. Blue economy Education Areas of focus for STI Social Tourism Private sector Fisheries Environment Cleaner energy Agriculture and food security Health ICT Governance 61#63CHAPTER 2 / BROAD STRATEGY FOR DEVELOPMENT Mainstreaming sustainable development involves the informed inclusion of sustainability concerns into national deve- lopment policy and plans which are better and more coherent. More efficient planning fosters technological innovation and seeks novel ways to improve productivity, resilience and the adaptive nature of human systems. Such mainstrea- ming depends upon a change in mind set and approach, with more stakeholders working together towards the vision and seeing how linkages may be achieved to bring about the desired outcome with the best possible benefits to society and the environment. As a result, the government is committed to providing unwavering support for the implementation, monitoring and eva- luation of an inclusive, progressive and people-centred STI policy and strategy initiatives. The formation, approval and gradual implementation of the necessary institutional infrastructure will bring about this transformation and enhance the relevance of STI to the people. This began with the creation of the National Institute for Science, Technology and Innovation (NISTI) in 2014. The institute is mandated to formulate a focused roadmap in the form of a policy and strategy for 'Science, Technology and Innovation for Seychelles 2016-2025' with an action-oriented, medium-term plan covering 2019-2023. To successfully accomplish mainstreaming efforts, planned and adequate funding for R&D will need to be ensured and indices developed to monitor and measure the impact of STI initiatives on the socio-economic of the beneficiaries. A baseline (2017) of 0.4 as a percentage of GDP for gross expenditure on research and development (GERD) was establi- shed. This would aid towards establishing a proper funding mechanism for investment and development which would better inform the government of prevailing funding gaps in this sector. GERD is expected to increase by one percent in 2020 and will be further increased to two percent by 2025. This is to be realised through the 10-year National STI Capacity and Research Infrastructure Development Plan" formulated and being implemented by NISTI and the National Research Fund. STI creates opportunities, promotes a conducive socioeconomic environment, encourages investment and improves living standards. Despite this, to date, the benefits of STI are deemed not to be sufficiently reaching the people where it really matters. STI initiatives are not always focused towards the population's needs. People's recurrent and pervasive issues, such as cardio-vascular ailments, obesity, cancer, substance abuse, breakdown of the family structure, invasive species impacting the environment and everyday life, traffic congestion and personal financial constraints do not always get the right priority and funding for research. Of late, the Republic of Seychelles has taken the strategic initiative of focusing on economic diversification through the development of its blue economy. The concept is one of critical importance to small island states such as Seychelles as it stresses the need to sustain and protect terrestrial, coastal and marine ecosystems. To ensure that the sector's true importance is recognised, the University of Seychelles established the Blue Economy Research Institute (BERI). The institute's core mandate entails the creation of a regional, knowledge-based network which would aid in facilitating partnership and research, advance sustainability initiatives, and identify and coordinate opportunities for collaboration between local and international research partners. The institution focuses on several blue economy research develop- ment areas, including specific strategies and case studies, socio-cultural issues, ocean governance and ecosystem change and modelling. As a result of Seychelles' adoption of the blue economy concept, one of the fundamental changes in perspective being projected to the world is nation's transformation from being viewed as a small island developing state (SIDS) to a large blue oceanic economy, with diverse and ample maritime resources for sustainable exploitation and development. Ma- king this shift will require significant investment, trained and able human resources as well as an intense national focus on related research, science, technology and innovation in full recognition of SDG 14: To conserve and sustainably use the oceans, seas and marine resources for sustainable development. 62 62#64CHAPTER 2 / BROAD STRATEGY FOR DEVELOPMENT The progression of this pillar is highly dependent on skilled human resources in the science and technology domain. It can be considered to be of strategic importance therefore to build a pool of home-grown expertise in the relevant STI areas of interest. This can be achieved through strengthening the current education system, particularly in the STEM-re- lated disciplines. Reviewing the 2013-2018 results of the STEM related subjects for the country's IGCSE examinations (see the table below showing the percentages of students attaining grade C or better) show poor performance in STEM subjects. These results suggest that prioritisation and additional resources are needed to boost the educational outco- mes in these subject areas. Percentage of students attaining grade C or better (%) 2013 2014 2015 2016 2017 2018 Biology 27 34 41 44 42 40 Chemistry 30 30 40 38 40 46 Physics 30 25 32 41 42 30 Combined Science 2 5 10 5 17 19 ICT 30 29 34 42 35 33 Mathematics 34 27 35 34 41 49 Table 3: Trends in grade C or better for STEM related disciplines in IGCSE subjects In 2014, an 'ICT in Education' strategy was established, however its implementation has thus far been relatively weak. The school curriculum ensures delivery of basic digital skills, being offered as a subject to pupils of Secondary one to three, and thereafter becomes a compulsory undertaking for students in the academic route in Secondary 4 and 5. Moreover, several other factors have an impact on learning. This includes limited teacher capacity in schools as well as internet capacity. However, over the last two years the internet capacity has improved considerably, particularly after agreed terms for Internet Service Provider, which set out to free provide internet access to all schools. The main provider being the Seychelles Cable Systems Company which caters for the provision of the bandwidth, whereas three providers namely Cable and Wireless, Airtel and Intelvision cater for service delivery each for a particular set of schools. In addi- tion, there exists weak education-industry linkages which precipitate a mismatch between the supply and demand of advanced digital skills. STI has the potential to serve as a catalyst for the development of all sectors, hence its prominent role in the NDS. Strategic concerns such as funding and the role of appropriate research and development stand to be addressed in the coming years. However, not enough is happening in research and innovation, despite progress in income and education standards. Despite the fact that there are a large number of national and sectoral policies, which implicitly promote STI, such as fisheries, agriculture, health, ICT, SMEs, industrialisation, tourism, etc. 63 883#65CHAPTER 2 / BROAD STRATEGY FOR DEVELOPMENT GOALS AND STRATEGIES GOAL 1: AN ENABLING ENVIRONMENT FOR RESEARCH AND DEVELOPMENT This goal focuses on enhancing the current environment for the promotion of research and development within the country. R&D is vital for obtaining new knowledge and for the seamless integration of new and relevant technologies within our society. In addition, appropriate research can aid in the formation of sound policies for the betterment of the people. Strategies 1.1: Incentivise relevant stakeholders to promote a research culture. Provision of incentives to relevant stakeholders for R&D purposes can act as a motivation and a catalyst in fostering a research culture across all sectors. The promotion of such a culture can serve as a tool for policy formulation and to en- sure aid in informed decision-making across all levels of government. The achievement of such a strategy would require the development of a National Innovation System which would provide people, enterprises and institutions access to technology and information which is essential to innovation on the national level. 1.2: Facilitate the creation of incubators. The creation of incubators for business and technology would facilitate new and start-up businesses to build the neces- sary capacities in an effort to increase their survival rate. Such an institution would provide services such as manage- ment training and office space. Incubators are regarded as a key driver for national economic development. 1.3: Facilitate the creation of a physical and virtual co-working space (OASIS). This is primarily aimed at attracting ta- lents, knowledge and skills in an effort to build networks globally. This could instill an innovation and entrepreneurship culture within our society which could help address the problems faced by our small island state. This will further allow more investment opportunities and new start-ups. GOAL 2: A KNOWLEDGE-BASED, INNOVATION-ORIENTED ECONOMY WITH THE INTEGRATION OF STI ACROSS ALL SECTORS AND PROGRAMMES. The attainment of an economy which is characterised by the recognition of knowledge as a source of competitiveness and the increasing importance of science, research, technology, and innovation in knowledge creation. It is also cha- racterised by the use of computers and the internet to generate, share, and apply knowledge. Hence, with this goal, Seychelles aims towards a higher dependency on knowledge, information and high skill levels. Strategies 2.1: Engage a wide proportion of the population, especially the youth, as innovators and end-users of relevant and appropriate STI for Seychelles. Successful attainment of Goal 2 requires a sharp penetration of science, research, and technology in all sectors. The education system can be utilised as a starting point for such an infiltration by increa- sing the number of STI-oriented programmes being provided at school level. Key indicators and targets Science, technology and innovation for development 64 Indicator Data source GERD as a percentage NISTI of GDP Baseline Target 0.4% 1.5% (2017)#66CHAPTER 2 / BROAD STRATEGY FOR DEVELOPMENT PILLAR 5: ECONOMIC TRANSFORMATION Economic transformation emphasises the progression of economic activities and resources from low-productivity to high-productivity activities within and across all sectors. Such movement of resources is a key driver of economic de- velopment. Within sector productivity, growth entails the adoption of new technologies and management practices that increase the efficiency of production. It can come about as a result of the increased efficiency of existing firms or as a result of the reallocation of resources away from the least productive firms towards more productive firms. Economic transformation can be measured through production or value-added measures. From the extensive consultations with relevant stakeholders, it became clear the economy needs to undergo a pro- cess of transformation for the successful achievement of Vision 2033. Since attaining its independence, Seychelles has transformed from a plantation-based economy to a service-based economy. In moving from agriculture to tourism, Seychelles' rich environmental endowment was utilised in a different way. Tourism currently accounts directly for about a quarter of GDP and employment. Seychelles has developed a strong tourism brand that places the country at the high end of the global tourism market. Below depicts the inverse relationship between the number of tourist arrivals and tourism yields between the periods of 2000-2015. While tourist numbers have surged, yields 300 200 Arrivals (thousands) 100 0 2000 have declined 2,500 Yield -Tourist arrivals 2,000 1,500 1,000 500 0 2006 2009 2012 2015 2003 Receipts/tourist (US$) Source: World Bank staff calculations based on National Bureau of Statistics and World Development Indicators data Overall, the service-based sector of the economy accounts for about three quarters of GDP. Industry contributes almost all of the rest of output, mainly fish processing (a tuna cannery is the largest single employer on the main island of Mahé). In addition, utilities and construction account for approximately five percent of output. 65#6766 CHAPTER 2 / BROAD STRATEGY FOR DEVELOPMENT Growth has been factor-driven through high investment and, increasingly, imported labour, with only moderate increases in overall productivity. If this continues, maintaining current growth rates will require ever-increasing resources. There- fore, there is a need to shift to a more productivity-led growth model. Seychelles is now a high-income economy, and for these economies, long-run growth is based on productivity gains and increased diversification. Moreover, Seychelles exports few products - mainly canned tuna - and its service exports are relatively large for a small island state due to the economy's dependence on tourism. The main area for prioritisation for this first NDS will be to ramp up our import substitution strategy. Over the past few years, tourism numbers have boomed, due mainly to Seychelles tapping into new markets and rising airline connectivity. The figure below illustrates the status of Seychelles on the global export market. SEYCHELLES HAS ONE OF THE MOST CONCENTRATED GOODS EXPORT BASKETS... Source: UN COMTRADE data Square root of HHI 0.8 0.6 0.4 0.2 0 18 23 28 33 In GDP (current US$) Non-small states Small states Seychelles#68CHAPTER 2 / BROAD STRATEGY FOR DEVELOPMENT ...BUT DUE TO TOURISM, SEYCHELLES' SERVICES ARE LARGER THAN AVERAGE FOR SMALL STATES Source: WDI data Luxembourg Maldives Seychelles Cyprus Bahamas, The Fiji Iceland Samoa Bahrain Guyana Brunei Darussalam 0.5 1.5 2 The Seychelles EEZ spans an area of approximately 1.4 million km2 and thus fisheries is a vital component in the eco- nomy of the country. It provides a source of employment, contributes to food and nutrition security, generates income, trade and foreign exchange and government revenue. The fisheries sector is one of the most important pillars of the economy, alongside tourism. With more than 65 percent of the fish landed in Seychelles being immediately transhipped for processing in other countries, there is scope to significantly increase the sector's value-added contribution and a need to place fisheries on a more sustainable footing to ensure a secure supply for future generations. In transforming our economy, the aim is to sustainably exploit this abundant natural resource to its full potential. The blue economy concept, although new to many, represents a potential area for beneficial gains to the Seychelles. The ocean brings untapped development opportunities for our people, as well as the responsibility for protection of our marine and coastal resources. The fundamental principles of sustainability and climate resilience are consistent with Agenda 2030 and the Paris Agreement on Climate Change Seychelles signed in 2015. The blue economy is about increasing human wellbeing through ocean-based sustainable development practices. Infrastructure investment needs are large, including in electricity, water, sanitation, the port, airport, road network, urban development, land, and second undersea cable. Many of these investments will go towards the replacement of obsolete infrastructure, such as that of the port and the electricity grid. The fast spread of digital technologies throughout the world, such as the current "Industry 4.0" trend towards industrial automation, digitalisation of machinery and artificial intelligence, is reshaping production processes and business mo- dels with important implications for the economic transformation of the country. Technology helps boost both labour and capital productivity and facilitate connections. In order to maximise the potential of digital technology for economic transformation, policy makers must proactively adjust the infrastructural, regulatory and policy framework. The ICT sector in Seychelles is a relatively small but well-established one. Multiple successes have been achieved in the ICT domain over the years, through the four established operators in collaboration with government. Some of the successes include the international connectivity of Seychelles through the submarine cable since the year 2012 through a public-private partnership (the SEAS consortium), and the recent decision to install a second fibre optic cable for redundancy purposes. A critical factor of these successes has been the continuous efforts of government to ensure 67#69CHAPTER 2 / BROAD STRATEGY FOR DEVELOPMENT effective regulation of the sector. However, Seychelles still lags behind its peers in some areas, particularly in the area of affordability of voice and data services on mobile networks. Seychelles would benefit in increasing its competitiveness regionally and globally to address these issues. Seychelles aspires to become a potential financial technology (FinTech) hub. The creation of a critical mass of FinTech start-ups creating a strong ecosystem for innovation. FinTech is defined as the use of necessary technologies in the financial services industry to enhance operational and customer engagement capabilities by leveraging analytics, data management and digital functions. The FinTech agenda is being led by a partnership between the Central Bank of Sey- chelles, the Financial Services Authority and the Ministry of Finance, Trade, Investment and Economic Planning. With the assistance of the World Bank Group, a national coordinated strategy is currently being drafted, in addition to the enabling regulatory framework. Seychelles' FinTech agenda is in its infancy stage and effort is being made to develop it further. This may serve as an avenue for new economic and investment opportunities. Additionally, the domestic private sector in Seychelles remains small, which points to persistent constraints that limit opportunities. One of the major impediments is the ease with which one can start and operate a business. There is there- fore a need to improve the enabling environment for the private sector. Evidence from business surveys and international benchmarking shows that businesses in Seychelles face significant operating challenges that government policies and improved regulations can tackle. In particular, micro, small and medium-sized enterprises (MSMEs) play an important role in the development of the eco- nomy. MSMEs represent the main source of new business start-ups, and they have great potential to contribute to eco- nomic growth and innovation. It is thus important to address the areas of constraints to enable their full development. The graph below shows the most problematic factors for doing business in Seychelles. WEF survey results: the most problematic factors for doing business 0 5 10 15 20 20 25 Access to financing Poor work ethic in labor... Inadequately educated.. Inefficient government... Inadequate supply of... Restrictive labor regulations Corruption Policy instability Foreign currency regulations Crime and theft Tax rates Insufficient capacity to... Poor public health Complexity of tax regulations Inflation Government instability/coups Source: WEF Developing countries and regional and global institutions have increasingly focused on economic transformation towar- ds greater productivity and higher value activities. All this is in line with the SDGs, which ensures that no one is left behind and all parties work together to reduce poverty and increase the prosperity of a nation. Goal 9 calls for countries to build resilient infrastructure, promote inclusive and sustainable industrialisation, and foster innovation while Goal 17 identifies technology and international cooperation as important means of achieving and implementing the goals of the 2030 Agenda. As part of its Aspiration 1, Agenda 2063 calls for African economies to be transformed structurally to create growth, decent job and economic opportunities for all. Vision 2033 is in line with these international commit- ments and in choosing economic transformation as one of the pillars, these commitments were strongly recognised. 68#70CHAPTER 2 / BROAD STRATEGY FOR DEVELOPMENT GOALS AND STRATEGIES GOAL 1: A CAPABLE GOVERNMENT ABLE TO FACILITATE SOCIOECONOMIC TRANSFORMATION. Proper macroeconomic management is essential for creating a stable and enabling environment for socioeconomic transformation driven by the private sector and other stakeholders. Macro maintenance is important to further reinforce the prudent approach to fiscal management achieved since the 2008 crisis. The goal places emphasis on public finan- cial management (PFM) as a strategy to improve the functionality of the government. In order to achieve Vision 2033, significant reforms will have to be undertaken to ensure a conducive environment for all economic agents, particularly for MSMEs, and improve our ranking on the Ease of Doing Business index by 2033. Strategies 1.1: Establish appropriate legal, regulatory and policy frameworks. This strategy aims to modernise laws and regulations, improve capacity for policy development in ministries and agen- cies, address capacity constraints in the drafting and enacting of new legislations and streamlining bureaucratic pro- cesses. This revised framework will provide clarity, consistency and certainty in the regulatory environment. It will help in encouraging, rather than hindering, economic activities and ensure a facilitating policy, regulatory and institutional framework for economic development. 1.2: Develop a strong infrastructure which will contribute to the socioeconomic development agenda. High-quality infrastructure contributes to social and environmental goals, by improving access to public services, redu- cing negative environmental impacts and supporting the sustainable use of natural resources. Seychelles will require excellent infrastructure to achieve its goals of socioeconomic transformation. It is particularly crucial as the nation is highly dependent on tourism and aspires to become a leading blue ocean economy within a generation. Improvements to transport, telecommunications, water supply and roads would help to integrate economic activities across its various islands and with global markets by enhancing the efficient movement of people, goods, services and information. 1.3: Promote efficiency, access and participation through the digitisation of the economy. The introduction of FinTech in Seychelles would serve to place the country in a more competitive position. The opera- tionalisation of FinTech will bring about several benefits, including enhanced and more tailored banking services with possible decrease in transaction costs and higher compliance standards to ensure that the jurisdiction remains interna- tionally credible and whitelisted. GOAL 2: THE STRENGTHENING OF EXISTING ECONOMIC SECTORS FOR HIGHER RETURNS AND SUSTAINABILITY. As the main pillar of Seychelles' economy, we recognise the importance of the tourism sector as well as the other major sectors and the critical role they play in the Seychelles' economy. This goal focuses on improving and strengthening these industries while simultaneously encouraging sustainable and environmentally-conscious practices and the ame- lioration of yields through greater value addition. Strategies 2.1: Promote high value products that are able to compete on the global market. This strategy aims to continuously promote existing sectors of our economy while embracing new technology through the use of ICT in the tourism sector, and improving value addition by promoting linkages with local producers across various industries. Sustainability issues will be given due priority by providing support to ensure certification and expan- sion of the sustainability label in the different industries. 69