COVID-19 FSA injects R25m in foreign currencies in the economy | 09 May 2020
The Financial Services Authority is injecting foreign exchange worth R25 million as dividend into the economy to support the government’s economic and development strategies in the post coronavirus pandemic.
It was the Financial Services Authority (FSA) chief executive, Dr Steve Fanny, who made the announcement during a press conference yesterday morning at the authority’s headquarters, Bois de Rose.
Present were the chairperson of the Seychelles International Financial Services Association (Sifsa) Ina Laporte, vice-chairperson Tatiana Balavanova and FSA’s director for fiduciary supervision Randolf Samson.
Dr Fanny explained that further to the R25 million in dividend for the first three months of the year and to be payable in foreign exchange to government, the financial industry has also paid R4 million (also in foreign exchange) as tax revenue for the first quarter of the year. The R25 million in foreign exchange, he said, will be paid in the Central Bank of Seychelles’ (CBS) account.
Though the industry was not classified as an essential service during the COVID-19 pandemic, he noted that the contribution from the financial industry is a result of its continued activity which was at more or less 90%, despite the lockdown.
He said the contribution will further ease some of the country’s economic burden in regards to minimal influx of foreign exchange from the tourism industry, considered as the main pillar of the economy and which has been affected by the COVID-19 pandemic.
“Despite some constraints during the time of restrictions as a result of the COVID-19 pandemic, the industry was effectively very active and to contribute R25 million in foreign exchange in this short period of time, from January to March, is a great achievement,” Dr Fanny said, claiming that from information gathered, banks will be exempted from paying dividends for the next two years.
Dr Fanny stated that for the same period – January to March 2019 – due to heavy capital expenditure in the forms of new warehouses, the financial industry’s contribution toward dividends in that first quarter was above R8 million from a yearly contribution of R35 million.
He claimed the first quarter of this year was financially good for the financial industry because the overseas international business companies (IBCs) registered with our offshore financial sector, paid their renewals on time rather than during the year as it had been the case over the past years.
He said renewal of company licenses by the IBCs shows that they still have confidence in our financial jurisdiction in spite the COVID-19 pandemic.
He noted that though the sector is considered risky like many other business sectors, much effort should be put together collectively to see how to minimise and mitigate the risks and to achieve the reward. There are 60,000 overseas companies registered with the FSA.
Dr Fanny claimed that despite the contribution in dividend, some of the service providers, especially those with European markets affected by the COVID-19 pandemic, have been facing difficulties as compared to service providers from Asian markets.
He said the FSA is so far getting 60% rate of renewals while incorporation is trailing from 40% to 50% and the future looks unprecedented.
Ms Laporte, on her part, stated that it was very sad that the offshore financial sector was not categorised as an essential service provider and given the fact that it has contributed significantly to the economy in terms of foreign exchange, it must be included as an essential service provider in the event of another lockdown which may arise in the future.
She also pointed out that the corporate service providers (CSPs), the IBCs’ local agents, do pay their taxes through the FSA as she refuted allegations or perceptions that they do not do so.
“I hope that in this new climate of the COVID-19 pandemic, the importance of the industry is taken into consideration,” she said, noting that the industry also has a great role to play at this time.
Ms Laporte stressed on the need for the law to allow IBCs to hold local banks accounts that will allow for better monitoring in due diligence and other transaction, plus the money will stay in the Seychelles’ economy.
Adding on to that, Dr Fanny claimed that in the event of an illegal activity by a registered company, the country could benefit from proceedings from the IBCs’ bank account if found guilty by the court.
The FSA is the autonomous regulatory body responsible for the non-bank financial services in Seychelles. Apart from being responsible for the registration of IBCs, foundations, limited partnership and international trust in Seychelles, it also regulates fiduciary services, capital market and collective investment schemes, and insurance and gambling activities.