Address by President Danny Faure to the National Assembly, July 25, 2017 |31 July 2017

‘Growth and development need to be more inclusive’

President Faure also touched on food security where he said the Government is responsible to ensure that these sectors have the necessary infrastructure to move to the next level of performance

One of the key points in President Danny Faure’s address to the National Assembly on July 25 was that growth and development need to be more inclusive, where no segment of our population gets left behind and the dignity of each of our citizen needs to be preserved at all cost.

He cited various areas that need to be looked into or revamped in order to achieve such objective. These include salary structure, small and medium enterprises, interest rates, cost of living and a KIS tax system, to name some.

“Next year will be exactly five years since the National Assembly approved the salary table that guides salary allocation in the public sector. The time has come to conduct an exercise to identify the strengths and weaknesses and to see how we can improve the structure,” said Mr Faure.

Another area is the small and medium enterprises which he said are functioning in a very competitive environment.

“It is important that new policies reflect this dynamism, and we must establish the framework to support such businesses. This is why I have created a single ministry to be responsible for small and medium businesses, enterprises, business innovation as well as industry,” he said.

Another hot topic of conversation that has pre-occupied all of us is interest rates on bank loans. President Faure also touched on that topic.

“The Central Bank’s decision to review the way that it implements the monetary policy will have a more positive and direct impact on the interest rates than was the case previously. Its application came into force on July 19 of this year.

“Every three months, the Central Bank sets a target on the liquidity level in the economy, and in return this determines whether the interest rates in the financial market increase or decrease. This target that is applicable for the third quarter of this year 2017 is expected to translate into a decrease in the interest rate on loans. For the individual this means that loan repayments will reduce. For the businesses, this will mean more access to affordable financing to facilitate investments,” President Faure said.

But he cautioned against a more relaxed monetary policy which he said brings with it a risk of increased consumption on the part of the individual. And that one way to reduce this risk in consumption is our approach as individuals and businesses, which is one that has to be prudent – focused on investment.

“After all, all individuals together form the country. All businesses together form the economy. This means that we all have a responsibility and our responsibility is collective,” he remarked.

What is important, the president said, is that the banks orient loans to the productive sectors. As investment has an important role in inclusive growth, it will also help in the development of other sectors that need this oxygen.

“I encourage individuals where possible to invest in other instruments that will come out in August. This is because in a small economy like the Seychelles that depends a lot on importation, a huge increase in consumption translates into an increase in importation and as a result an increased need for foreign exchange. Increased demand for foreign exchange will in the short term lead to a depreciation of the rupee and an increase in the price of commodities and services, and therefore a rise in the cost of living,” explained President Faure.

President Danny Faure also talked about cost of living where he mentioned that the Central Bank will adjust its monetary policy in line with its principal objective of ensuring that price changes remain at an acceptable level.

“The aim of this change in the monetary policy is to increase investment in the economy while at the same time maintaining a stable macro-economic situation. I appeal to the private sector to ensure that benefits in line with this change in monetary policy touch the consumers and help reduce the cost of living,” he said.

He also renewed the government’s commitment to consolidating its partnership with all sectors and economic actors. He believes for the private sector to develop their business and strategic plans they need certainty on the economic direction of the country.

“As we have announced, government will begin work on a Vision 2032 and a National Development Strategy for 2018-2022. This will be done in consultation with all stakeholders. Once the Vision and Strategic Plan have been adopted in June 2018, we will have a clearer road and a vision of where Seychelles wants to go in the long term and how we will realise that vision together,” President Faure said.

On the Keep It Simple (KIS) tax system which he said he would give more details on it last May, President Faure said by simplifying procedures, this will make life easier for everyone that does business and that depend on the services of government. For example, he said, it will allow us to increase the collection of taxes within increasing the tax rates.

“Our aim is to simplify the collection procedure and have a more equitable system in all sectors,” he said.

The president admitted delays in elaborating a comprehensive system; to allow for discussions with the private sector on the impact of the changes; and changes to the legal structures that will be necessary for the implementation of the system from 2018. But he assured all final details on the KIS concept will be presented by the Minister responsible for Finance during the budget 2018 presentation at the end of October.

Another announcement made by President Danny Faure was that there will be no increase on any taxes or charges and fees for next year. He said this is an important decision as it helps the private sector to have more certainty and confidence in the Seychelles economy. And for them to more effectively plan their operation that will in return contribute to the economy.

“All sectors have their importance in the Seychelles’ economy. But today, I want to talk about two sectors that are directly linked to our food security.  They are agriculture and fisheries.  The government is responsible to ensure that these sectors have the necessary infrastructure to move to the next level of performance. It is for this reason that government has decided that as from January 2018, a special fund on the development of infrastructure in those two sectors to the value of R50 million will be available. A dedicated project team will be set up to oversee the implementation of projects financed under this special fund,” said the president.

Government, he said, has realised that it is necessary that the level of agency support given to operators in those two sectors should increase. And that it is also important the agencies and authorities in the two sectors have the right resources and manpower to support development in these sectors.

Compiled by M. Julie