Seychelles must now engage in a Capital Flow Reversal exercise | 17 February 2021
Capital Flow Reversal (CFR) is an economic strategy used in the old days to transfer wealth from the rich to the poor. In our current day situation in Seychelles, the wealth of our nation is in the hands of a few people while 40% of our population live below the poverty line. Such a situation cannot be allowed to continue because this is when unrest and public disorders show their ugly faces because poverty leads to desperation.
In business and in a country, there are two important kinds of capital – human capital, which are the workers and monetary or fiscal capital, which are assets and trade worth any money. For success to prevail both have to be managed well by trained managers. Unfortunately in most countries the head of State is not a trained manager but it is up to him or her to make sure that trained managers, not friends, hold important positions in the management of an economy which is why in our last election campaigns our members were delighted to hear Alain St Ange say if he, through One Seychelles, won the elections, all our ministers would be technocrats, in other words people who know their trade and industry and not just anyone who has to go through a long learning curve to get a handle.
We cannot play the Robin Hood game of robbing from the rich to give to the poor like it happened during the period following our coup d’état. Today we must utilise fiscal policies and good management to achieve Capital Flow Reversal. In America, England and some European countries they utilised strong Trade Union Movements to achieve Capital Flow Reversals from the overpaid bosses to the poorly paid workers and this created what is known as the “Middle Class” or middle income segment in a society. In Seychelles today we have a miniscule middle class income group and they are made up of mainly people who work for the government at high level and in a few businesses. Most Seychellois live a “hand to mouth” existence and bills can hardly get paid and this sector includes essential workers like nurses, doctors, teachers, engineers and even returning graduates who find it hard to make ends meet. This cannot continue, the gap is too wide. Our Creator put Arabs in deserts with oil and in Seychelles we have been blessed with an abundance of fish in our ocean and a very beautiful and fertile land where if you drop a seed anywhere today by next week it will have germinated. Our beautiful climate is the envy of the world and yet our people are comparatively very poor, so what has/have gone wrong? Who has/have purloined all our wealth and left the rest of us to live on a pittance? In addition we have not made good use of our resources instead we have put all our eggs in the Tourism Basket. It is time for us to wake up to reality and take steps that will reverse the flow of capital.
Raising our income threshold through a Capital Flow Reversal exercise
Capital Flow Reversal begins with equalisation of earnings in the working population and this has a direct impact on our Gross Domestic Product (GDP). In 2020 Seychelles’ GDP was 12,323 US Dollars which is an increase of only 3.17% over the 7,663 US Dollars in 2001, 19 years ago. This is very poor performance. In short, GDP represents wealth creation which includes taxation and has a knock on effect on our Inflation Rate which today stands at 3.9% and our Unemployment Rate which was 3% in 2020, which was way too high for the small size of our population. We are told that we have a working Seychellois population of around 48,000 (estimated) from a population of 98,722 as of Friday February 12, 2021, but we have something like over 80,000 (estimated) jobs to fill which is why we have so many foreign workers in Seychelles and we need foreign workers in some jobs and the disadvantage is they naturally work longer hours and send their earnings home to their families and there goes our Forex. However when some of us do work we must be paid a decent wage. It is a known fact that rich people do not spend their money in our economy instead they put their money in Numbered Swiss Bank Accounts (NSBAs) or in Offshore Tax Havens like Andorra, the Bahamas, Belize, Bermuda, the British Virgin Islands, the Cayman Islands, the Channel Islands, the Cook Islands, The Island of Jersey, Hong Kong, The Isle of Man, Mauritius, Lichtenstein, Monaco, Panama, St. Kitts, and Nevis. Although Seychelles is listed as an Offshore Tax Haven rich Seychellois do not use Seychelles as a place to hide their wealth and avoid paying taxes for obvious reasons that they fear they would be found out. Foreign drug dealers use Seychelles as their tax haven but not local drug dealers or politicians who have received an excess of money as a result of their position, dealings or connection.
The answer is a new Stimulus that creates Capital Flow Reversal
The answer is to raise our income thresholds because (with the exception of the rich) the more people earn the more people spend and the economy goes round. Money in the banks is no good to anybody not even to the banks. Every country in the world is borrowing to keep their economy afloat and Seychelles must borrow now and we pay later. Someone told me it was not fair for this generation to saddle the next generation with debt. What a load of cow dung. Our current generation inherited two world wars and a coup d’état and it is up to each generation to fend for themselves. However, Covid or no Covid we must take the following steps if we want our next generation to inherit a prosperous country. Seychelles Civil Society (SCS) proposes that on March 1, 2021, President Wavel Ramkalawan announces a new Capital Flow Reversal exercise which will take our minimum wage to R12,000.00 and pensioners get paid R12,000. Nurses and essential workers receive a minimum salary of R18,000.00 and rising based on experience and the banks make loans to businesses at 2% interest rate to cover admin cost. Take a look at the following countries’ national debts in this article.
Our Balance of Payment (BOP) has moved in the red anyway since we have no exports except a few morsels of fish foreign fishing fleets leave behind for us. Our import level is too high therefore we have to come up with new ideas to improve our economy and get people back to work. Nice speeches and jam tomorrow will not do anymore. Scaremongering and telling poor people to make sacrifices is egregious and unacceptable specially coming from our current President and his entourage who are on high income packages anyway. We cannot adopt the model of Capital Flow Reversal used by Robin Hood in Nottingham in England in 1240 like Albert Rene tried to do in Seychelles during the coup d’état period from 1977 which was then adopted by other presidents until October 2020. Albert Rene died in Seychelles on February 27, 2019 and Robin Hood died in Doncaster England on November 18, 1247. We need a fresh approach by the right people and guts to move Seychelles forward and here is Seychelles Civil Society’s proposals:
Mr President and Ministers please give our proposals your serious consideration
To engage in a Capital Flow Reversal exercise that will be self-funding and move Seychelles forward and overcome the current pandemic deficit we must:
- Repossess the assets stolen from the people and resell them and put the money in the economy.
- Put an end to political corruptions by changing the management of ACCS.
- Sell off 90% of SBC to the private sector to raise funds for the economy.
- Sell off 90% of Nation newspaper (NISA) to raise funds for the economy.
- Sell off 90% of PUC to the private sector to raise funds for the economy.
- Regain control of our oil and gas reserves which have been purloined by a few unscrupulous people and exploit these resources which belong to the people.
- Sell some of our outer islands to private owners to raise funds and we continue to make money on providing on-going services to the new owners, that’s the deal.
- Turn Seychelles into a Global Financial Hub with a Global Stock Exchange called Seychelles Global Financial Exchange (SEYGLOFINEX) and provide 24x24 non-stop financial services to clients from East to West with the marketing slogan “WE NEVER CLOSE”.
- Attract more Chinese investments in major infrastructure projects like the monorail.
- “Build to Rent” special accommodationsto house STB’s Workcation project.
- Stop funding ineffective NGOs.
- Close down more ineffective parastatals.
- Offer Seychelles as a Global Research and Development (R & D) Centre for research into sunlight based future energy sources to replace ageing and dangerous nuclear power plants around the world.
- Create an R & D complex in ocean based micro-organism medicinal technologies our creator has bestowed upon the people of Seychelles as a natural gift.
- Create high standard educational and vocational study environments using the UniSey as the hub for learning to attract Forex.
- Banks to give 2% interest loans to fishermen to purchase their own fishing boats and we conquer and “Seychelloislise” (new word meaning by Seychellois for Seychellois) our fishing industry.
- Banks to give 2% interest loans to farmers to grow the food we need and to export.
- Set an earning threshold of R750,000.00 p.a. for civil servants and politicians.
- Turn Air Seychelles into a freight and regional airline.
We must stop being introverts instead we must become extroverts and successful. Remember Covid-19 has created more millionaires than ever before and this increased wealth can be invested in projects in Seychelles if we know how to market Seychelles. We are sick of being poor; we have taken out a government that made sure we remained poor while some of them filled up their pockets since the coup d’état in 1977 up to October 22-24, 2020. All we need is the creation of a serious team of experts with marketing and management capabilities to create these projects. It is not brain surgery or wild dreams; these are realities at our disposal. We do not need to use our money, which we do not have anyway, we use someone else’s money and we pay back with interest, no free lunch. Now we will earn the money we need to pay back what we borrow to keep our economy ticking over during the pandemic. Let us not rush to open Seychelles up to a few tourists who will decimate our population and spread the five new variants of Covid-19 in our population. There is another safer way, let’s use our head.
Barry Laine FCIM, FInst SMM, MCMI, MBSCH
Seychelles Civil Society
The Wishing Well, Anse Des Genets,
The views expressed in this article are those of the author and do not necessarily reflect the views of the Seychelles NATION newspaper.