UAE investment windfall for many Seychellois |07 June 2010

Thanks to them, there is plenty of money in many Seychellois pockets. It is estimated that those small businessmen are sharing about R2 million a day.

This has been going on since the United Arab Emirates (UAE) started to carry out a number of projects in Seychelles, most notably the electricity power supply to Barbarons, the upgrading of the water supply to La Misère, roadworks for Barbarons and La Misère and the diagnostic centre at Victoria hospital.

The economic impact of these investments is of undeniable importance.

It is also worth noting the “multiplier effect” of those investments. In other words, every UAE investment brings in its wake another series of investments in the country.

To better understand this let us take, for example, the diagnostic centre at Victoria hospital or the roadworks for Barbarons and La Misère.

 Carrying out these projects requires the services of many operators (architects, engineers, car hirers etc) which, in turn, have to sub-contract to other small enterprises whose revenue is bound to increase. 
This “multiplier effect” brings about new earnings which will be either saved or spent. As a result, the state gains in increased revenue.
 
The initial investment generates revenue, not only for established enterprises but also for many Seychellois families.

 The prime beneficiaries include pick-up owners, takeaway businesses, casual labourers, car hirers, as well as the state itself and its companies such as the Seychelles Petroleum Company, the Public Utilities Corporation and the Seychelles Civil Aviation Authority (SCAA).

To illustrate this point, one company alone that is involved in the UAE projects has spent, up to the end of March, the following:
Food expenses for labourers: R1,500,000
Food expenses for staff: R600,000
Accommodation:  R400,000
Car hire:   R500,000
Pick-up hire:   R700,000
Fuel for transport:  R460,000
Telephone charges:  R180,000

The state, for its part, has collected close to R4 million in terms of gainful occupation permits. It is expected that another R1.5 million in GOP fees will be collected by the end of the projects.

Up to April, the SCAA has collected some US $830,000 in landing charges. It projects to collect another $512,000 in the next three months.

Expenses related to utilities (power, water, cargo clearance, hiring of equipment, transport etc) amount, up to now, to nearly R52 million.

Never has there been such expenditure in the country in such a short period of time. This is a windfall at a time when interest rates are so high as to discourage investment and consumption, hindering economic growth.

It is estimated that by the time the various projects are completed, Abu Dhabi will have invested more than R515 million in Seychelles’ economy.

 And that in less than two years! The “multiplier effect” of these investments is of overwhelming importance and spurs on many sectors of the economy.

In addition to their social impact, it is to be noted that in the medium to short term these investments will have a far-reaching impact not only in the increase of earnings for families and businesses.

They will contribute to generate a constant stream of revenue for the state as well as for local enterprises, in addition to the services that will be provided by the roads, the diagnostic centre and the generators for many years to come.

Contributed