Economic Transformation Strategy

1.1 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

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