Seychelles is an island nation located off the eastern coast of Africa in the Indian Ocean with a population of 97,265. Seychelles gained its independence from the United Kingdom in 1976, at which time the population lived at near subsistence level. Today, Seychelles’ main economic activities are tourism and fishing, and the country aspires to be a financial hub. Although the World Bank designated Seychelles as a “high income” country in 2015, its wealth is not evenly distributed. According to the United Nations Development Program’s Human Development Report for 2019, the share of income held by the richest 10 percent in Seychelles amounts to 40 percent.
Seychelles experienced a socialist coup in 1977, which resulted in a centrally planned economy and, in the short term, rapid economic development. However, serious imbalances such as large deficits and mounting debt contributed to persistent foreign exchange shortages and slow growth that plagued Seychelles through the first decade of the 21st century. After defaulting on interest payments due on a $230 million bond in 2008, the Government of Seychelles (GOS) turned to the International Monetary Fund (IMF) for support. To meet the IMF’s conditions for a stand-by loan, the GOS implemented a program of reforms, including a liberalization of the exchange rate regime, devaluing and floating the Seychellois Rupee (SCR), and eliminating all foreign exchange controls. As a result, the country has experienced economic growth, lower inflation, a stabilized exchange rate, declining public debt, and increased international reserves.
Drivers of economic growth include fisheries, tourism, and construction. However, heavy reliance on the tourism industry, which contributes to 60 percent of GDP, makes the overall economy vulnerable to external shocks, such as a slowdown in the economies of European, Middle Eastern, and Asian countries from which most tourists travel. According to the Central Bank of Seychelles, real GDP grew by 3.9 percent in 2019, down from 3.8 percent in 2018. The IMF forecasts that the GDP will contract by 10.8 percent in 2020 due the Covid-19 crisis. Despite GOS attempts to diversify the economy, it remains focused on fishing and tourism. Seychelles’ vast Exclusive Economic Zone (EEZ), which spans 1.3 million square kilometers of the western Indian Ocean, is a potential source of untapped oil reserves and represents potential business opportunities for U.S. companies. Seychelles also has a small but growing offshore financial sector. There is also potential for U.S. investment in renewable energy as Seychelles seeks to reduce its heavy dependence on imported fossil fuels while preserving its naturally beautiful environment.
Seychelles welcomes foreign investment, though the Seychelles Investment Act and related regulations restrict foreign investment in a number of sectors where local businesses are active, including artisanal fishing, small boat charters, taxi driving, and scuba diving instruction. The country’s investment policies encourage the development of Seychelles’ natural resources, improvements in infrastructure, and an increase in productivity levels, but stress that this must be done in an environmentally sound and sustainable manner. Indeed, Seychelles puts a premium on maintaining its unique ecosystems and screens all potential investment projects to ensure that any economic, social or industrial benefits will not compromise the country’s international reputation for environmental stewardship.
Politically, Seychelles’ first multiparty presidential election was held in 1993, after the adoption of a new constitution. In September 2016, the opposition coalition Linyon Demokratik Seselwa (made up of the four opposition parties: the Seychelles National Party, the Seychelles Party for Social Justice and Democracy, the Lalyans Seselwa, and the Seychelles United Party) won the legislative elections for the first time. Before the elections, the ruling Parti Lepep (now also called United Seychelles) held all 25 directly elected seats in the National Assembly and an additional seven proportionate seats, leaving just one seat for the opposition. Currently, and for the first time since the return of multi-party democracy in 1993, Parti Lepep (United Seychelles) does not have a parliamentary majority, holding only 14 of 33 seats. The next presidential election is scheduled to be held between September and November 2020.
|TI Corruption Perceptions Index||2019||66 of 175||http://www.transparency.org/
|World Bank’s Doing Business Report||2020||100 of 190||http://www.doingbusiness.org/en/rankings|
|Global Innovation Index||2019||N/A||https://www.globalinnovationindex.org/
|U.S. FDI in partner country ($M USD, historical stock positions)||2019||N/A||https://apps.bea.gov/international/factsheet/|
|World Bank GNI per capita (USD)||2018||15,600||http://data.worldbank.org/indicator/
1. Openness To, and Restrictions Upon, Foreign Investment
Policies Towards Foreign Direct Investment
Seychelles has a favorable attitude toward most foreign direct investment, though the GOS reserves certain types of business activities for domestic investors only. The Seychelles Investment (Economic Activities) Regulations provide a detailed list of 65 types of business in which only Seychellois may invest, available here: . The Regulations also provide details on the limitations on foreign equity for certain types of businesses and a list of economic activities in which need-based investment may be allowed by a foreigner. In June 2015, Seychelles implemented a moratorium on the construction of large hotels of 25 rooms and above in the island. In 2017, the President announced the decision to extend the moratorium until the end of 2020.
The Seychelles Investment Board (SIB) is the national single gateway agency for the promotion and facilitation of investment in Seychelles. The government’s objective is to promote economic and commercial relationships to diversify the economy, as well as to sustain its tourism and fishing industries, which are currently the main drivers of economic growth. The SIB organizes sector specific meetings with investors periodically and hosts a National Business Forum every two years to engage with the private sector.
Limits on Foreign Control and Right to Private Ownership and Establishment
The Seychelles Investment Act of 2010 and Seychelles Investment (Economic Activities) Regulations 2014 govern foreign direct investment (FDI) in Seychelles and are available at: . Since the financial crisis of 2008 and the implementation of subsequent IMF reforms, Seychelles has successfully attracted FDI. According to the Central Bank of Seychelles, gross FDI inflows in 2019 amounted to $246 million, representing a decrease of $62 million compared to 2018. This decrease is principally due to delays in the implementation of a number of tourism projects that were not affected by the 2015-2020 moratorium on large tourism developments. The SIB advises foreign investors on the laws, regulations, and procedures for their activities in Seychelles.
The Seychelles Investment (Economic Activities) Regulations of 2014 lists the economic activities in which only Seychellois can invest. This regulation is currently being reviewed to convert the list into a list of foreign activities in which foreigners can invest to allow for increased transparency and better governance. Seychelles also places financial limits on foreign equity in certain types of resident companies – these limits are detailed in the Seychelles Investment (Economic Activities) Regulations 2014. The Regulations also provide a list of economic activities in which need-based foreign investment may be allowed. While SIB and the GOS encourage foreign investors to collaborate with a local partner, there is no formal requirement.
SIB also assists in screening potential investment projects in cooperation with other government agencies. For a business to operate, investors need to apply for a license from the Seychelles Licensing Authority. The GOS established an Investment Appeal Panel in 2012 to provide an appeal mechanism for investors to challenge GOS decisions regarding investments or proposed investments in Seychelles. More information is available in the Seychelles Investment Act 2010:
Other Investment Policy Reviews
To date, Seychelles has not conducted an investment policy review through the Organization for Economic Cooperation and Development (OECD) or the World Trade Organization (WTO). Seychelles became the 161st WTO member in April 2015. UNCTAD is currently conducting an investment policy review in Seychelles and the report is expected to be finalized by the end of 2020.
The GOS committed to improving the business environment through measures such as using public-private partnerships (PPP) to upgrade the country’s infrastructure. The GOS announced a draft PPP law in 2018; as of March 2020, the National Assembly had not yet voted on the measure. In his 2018 budget speech, the Minister of Finance announced that the Customs Department would be restructured to modernize its activities and facilitate trade. Seychelles reviewed its Customs Management Tariff Classification of Goods Regulations and adopted the 2017 version of the Harmonized System of classification in 2018. The GOS is also currently reviewing the Companies Act of 1972.
Seychelles is ranked 100th in the World Bank’s 2020 Ease of Doing Business Report. On average, it takes eight days to obtain a certificate of incorporation and 14 days to obtain a business license. Details on starting a business in Seychelles are available on the World Bank website: https://www.doingbusiness.org/en/data/exploreeconomies/seychelles#.
Information on registering a business in Seychelles can be obtained on the SIB website: https://www.investinseychelles.com/investors-guide/start-your-business. Companies, including those foreign-owned, can register business names online through the business registration portal: . However, part of the registration process, such as payment of fees, still must be completed in-person.
The Enterprise Seychelles Agency (ESA) is responsible for providing business development services to improve the performance of micro, small, and medium enterprises in Seychelles. Services provided by ESA include business planning, training, marketing expertise, and identification of business opportunities for SMEs.
The GOS does not promote or incentivize outward investment. However, it does not restrict local investors from investing abroad.
3. Legal Regime
Transparency of the Regulatory System
Although the government has made considerable efforts to liberalize the economy, Seychelles continues to suffer from overregulation. Concerns over government corruption have focused on the lack of transparency in the privatization and allocation of government-owned land and businesses. However, following the last election in 2016, the new government, pressed by the opposition majority in parliament, has taken a number of measures to combat corruption and nepotism. For example, an Anti-Corruption Commission has been set up, the Auditor General’s Office has begun more frequently publishing special audits of questionable government transactions, and the President appointed opposition supporters to many boards of national organizations and important positions.
In an attempt to promote transparency in the public procurement system, Seychelles’ National Tender Board publishes all tenders both on its website ( ) and in local newspapers. It publicizes contracts that have been awarded and includes the name of successful bidders and bid amounts. The government has also set up a Procurement Oversight Unit, which serves as a public procurement policy and monitoring body ( ).
During the September 2016 parliamentary elections, the opposition alliance won a majority in the National Assembly for the first time in 40 years, resulting in significant procedural changes. In 2017, there was considerably more legislative debate about the 2017 budget than in prior years. Similarly, in preparation for budgets since 2017, a series of focus group discussions were held with stakeholders such as the business community and NGOs.
Proposed laws and regulations, as well as final laws, are published in the Official Gazette on a monthly basis. Regulatory transparency has improved with the new administration which has proposed several new laws, including a Freedom of Information Act. Additionally, ministries are now required to submit white papers and consult with stakeholders before legislation is adopted.
Seychelles’ budget is easily accessible to the general public: . Budget documents, including the executive budget proposal and the enacted budget, provide a substantially full picture of Seychelles’ planned expenditures and revenue streams. Publicly available budgets included expenditures broken down by ministry and revenues broken down by source and type. Information on debt obligations is also readily available. In 2019, for the first time, the government included a fiscal risk statement, which identified substantial fiscal risks emanating from public enterprises in Seychelles. Details on explicit and contingent liabilities are available in the fiscal risk statement, which is available on the following link: .
International Regulatory Considerations
Seychelles has signed trade agreements with regional blocs such as COMESA, SADC, and the iEPA. Seychelles has also signed the Tripartite Free Trade Agreement (TFTA) and the African Continental Free Trade Agreement (AfCFTA) but has not yet ratified these agreements. In January 2019, four Eastern and Southern African (ESA) countries including Seychelles signed the UK-ESA Economic Partnership Agreement, which would safeguard trade preferences currently enjoyed under iEPA after Brexit.
Seychelles joined the WTO in 2015, becoming the 161st member. Seychelles does notify draft technical regulations to the WTO Committee on Technical Barriers to Trade. In 2016, Seychelles ratified the Trade Facilitation Agreement (TFA). Further details on Seychelles’ TFA notifications to the WTO can be found here:
Legal System and Judicial Independence
Seychelles’ legal system is a blend of English common law, the Napoleonic Code, and customary law. Civil matters, such as contracts and torts, are governed by the Civil Code of Seychelles, which is derived from the French Napoleonic Code. However, the company law and criminal laws are based on British law. In both civil and criminal matters, the procedural rules derive from British law. Seychelles does not maintain a specialized commercial court. Judgments of foreign courts are governed by Section 3 of the Foreign Judgments (Reciprocal Enforcement) Act of 1961. The World Bank ranked Seychelles 128th out of 190 countries in enforcing contracts in its 2020 Ease of Doing Business Report. Under the current government, the perception among Seychellois is that the judiciary is no longer influenced by the executive.
Laws and Regulations on Foreign Direct Investment
The GOS established the SIB ( ) as a one-stop shop for all matters relating to business and investment in Seychelles. The SIB’s main functions are to promote investment and facilitate the investment process within the country’s administrative and legal framework. The SIB also assists in screening potential investment projects in cooperation with other government agencies. The GOS is keen to ensure that business activities are not conducted at the expense of Seychelles’ natural environment. For a business to operate, investors need to apply for a license from the Seychelles Licensing Authority ( ). The GOS established an Investment Appeal Panel in 2012 to provide an appeal mechanism for investors to challenge GOS decisions regarding investments or proposed investments in Seychelles.
Competition and Anti-Trust Laws
The SIB only reviews competition cases initiated by other government authorities, private sector entities, or investors. Current legislation does not empower SIB to sua sponte review all transactions for competition related concerns. The Fair Trading Commission ( ) is responsible for investigating competition-related concerns. Such investigations may be initiated by the Commission or may be carried out following a complaint.
Expropriation and Compensation
The Lands Acquisition Act 1978, last amended in 1990, states that when the government takes possession of property, it must pay prompt and full compensation for the property. The GOS may expropriate property in cases of public interest or for public safety. Following the 1977 coup, the GOS engaged in expropriation of land for redistribution or for use by the state. With the return of a multi-party political system in 1993, the GOS compensated some of those who had lost land to expropriation/redistribution in the late 1970s. In 2017, Seychelles set up a Land Compensation Tribunal to look into cases where compulsory land acquisition was made by Government without adequate compensation. Seychellois whose land was taken by the government from 1977 to 1993 have until June 2020 to make their claims. The Land Compensation Tribunal also works in close collaboration with the Truth Reconciliation and National Unity Commission (TRNUC) which is investigating cases of human rights abuses prior and after the 1977 coup. Illegal land acquisition by the government also forms part of the TRNUC’s mandate. The Embassy does not anticipate major expropriations in the near future, nor is it aware of any pattern of discrimination against U.S. persons.
ICSID Convention and New York Convention
In 1978, Seychelles joined the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (ICSID Convention). In February 2020, Seychelles deposited its instrument of accession to the Recognition and Enforcement of Foreign Arbitral Awards (1958 New York Convention), which will enter into force in May 2020.
Investor-State Dispute Settlement
The Embassy is aware of at least one investor-government dispute in the reporting period. The dispute involves the operation of a large hotel resort by a company with U.S. shareholders that the GOS also had a small stake in. In 2008, the GOS sought to wind up the company on the grounds that it “had disappeared in its ability to operate as a hotel resort” arguing that the hotel resort had been allowed to fall into disrepair, and resulted in the cancellation of its operating license. The liquidation and subsequent sell-off of the hotel, formerly the country’s second largest hotel, raised suspicions of government corruption among many local press outlets and business institutions, including the chamber of commerce. The former owner of the hotel claimed that he was threatened into selling the hotel by a businessman with ties to the government. The purchasers of the hotel were the lowest bidder, a newly formed group allegedly led by the same businessman with close government ties who threatened the previous owner. In October 2019, the Supreme Court recommended that a Commission of Inquiry be set up to inquire into the matters pertaining to the sale of the hotel. As of June 2020, President Faure appointed a Commission of Inquiry to look into the dispute and a report is expected in six months.
Parties involved in investment disputes are encouraged to resolve their disputes through arbitration and negotiation. The Seychelles Investment Act created an Investment Appeal Panel to which aggrieved investors may appeal for a review of a decision made by a public sector agency with regard to their investments or proposed investments in Seychelles. In addition, investors may appeal to the Court of Appeal in the event they are not satisfied with the decision of the Investment Appeal Panel. Seychelles has effected the accession to the New York Convention on the recognition and enforcement of foreign arbitral awards. The convention entered into force on May, 3 2020. In the World Bank’s 2020 Ease of Doing Business Report, Seychelles ranked 143rd out of 190 countries for protecting minority investors.
International Commercial Arbitration and Foreign Courts
Due to Seychelles’ small size and relatively short recent history with foreign direct investment, there is no precedent for international arbitration in Seychelles, although the legal framework exists through the Seychelles Investment Act.
Bankruptcy in Seychelles is governed under the Insolvency Act of 2013 ( ). According to the Act, an individual may be discharged from bankruptcy three years from the date of its declaration. Bankruptcy is not criminalized in Seychelles. According to the 2020 World Bank Doing Business Report, Seychelles ranks 75th out of 190 countries on the resolving insolvency index. It takes on average two years to complete a bankruptcy.
4. Industrial Policies
The GOS enacted legislation providing incentives for investment in several sectors. Examples include the Agriculture and Fisheries (Incentives) Act 2005, the Tourism Incentives Act, the Seychelles International Trade Zone Act, and fiscal incentives under the Investment Code. Incentives under these laws most often take the form of tax credits, tax holidays, duty-free access for the import of materials required for initial investment, and expedited work permits for foreign employees who move to Seychelles.
The SIB has the mandate to promote investment in Seychelles and assists in screening potential investments. In 2018, the GOS announced an investment policy guided by the following principles: (i) creation of a conducive and transparent environment to attract investment and operate business; (ii) modernization of the legal framework for investment; (iii) application of international best practices and standards for investment; and (iv) respect for the environment and sociocultural fabric of the country. The investment policy statement is available on the following link: .
According to the SIB, the GOS does not issue investment guarantees, but Seychelles’ Public Private Partnership framework allows public and private sector entities to jointly finance foreign direct investment projects.
Foreign Trade Zones/Free Ports/Trade Facilitation
The provides for the establishment of free trade zones, which aim to combine the benefits of a freeport and an export processing zone. A number of locations have been declared International Trade Zones under this regime. Updated in 2018, the list of concessions available to SITZ license holders includes the following:
- Exemption from customs duties on certain capital equipment to be used in the SITZ;
- Exemption from certain taxes;
- Exemption from fees with respect to work permits;
- Entitlement to full foreign ownership;
- Entitlement to employ 100 percent foreign labor; and
- Exemption from national labor laws.
Activities of the SITZ are regulated by the Seychelles Financial Services Authority, formerly known as the Seychelles International Business Authority. Foreign-owned firms benefit from the same incentives as local firms operating in the SITZ. In order to meet the requirements of the Base Erosion and Profit Shifting (BEPS) standard of the Organization for Economic Cooperation and Development (OECD), licensable export services activities under the International Trade Zone Act have been amended. Under the revised regime, the holder of an export services license will not be allowed to provide services other than repair and reconditioning of goods, warehousing and rental of storage space, or logistical services, provided that these activities relate to goods physically handled in the zone in Seychelles.
Export services operators licensed on or before October 16, 2017 will still enjoy all concessions and exemptions accorded under the International Trade Zone Act until June 30, 2021, provided that the benefits do not extend to assets or activities introduced on or after October 17, 2017. In his 2020 budget speech, the President announced that further amendments will be made to the tax regime governing manufacturing activities under the International Trade Zone and a grandfathering period, which will not extend beyond December 31, 2022, will be applied for the new regime. In his 2020 State-of-the-Nation Address, President Faure announced that foreign workers will pay into the Seychelles Pension Fund and recover only 25 percent of their pension payment when they leave the country.
Performance and Data Localization Requirements
The government of Seychelles does not mandate local employment, nor are there local employment mandates for senior management or directors. Visa, residence, and work permit requirements are not excessively onerous. The GOS has announced that the Gainful Occupation Permit (GOP) fees for foreign workers working in Seychelles for more than 12 years as well as for top management level jobs in big companies will increase this year.
Investors operating in Seychelles are expected to abide by the following obligations:
- Comply with the provisions of the governing laws on investment procedures and carry out investment activities correctly in accordance with the approvals granted. This includes the responsibility of the investor for accuracy and truthfulness in materials submitted in investment proposals and registration;
- Fully discharge their financial obligations, including taxation, in accordance with the law;
- Carry out the provisions of the laws on accounting and auditing;
- Carry out the provisions of the laws on registration of companies and other legal entity; and
- Carry out the provisions of the employment laws and regulations.
Seychelles does not have a single comprehensive law that addresses the collection and use of personal data. The Data Protection Act (DPA) was enacted in 2003 to provide individuals with privacy rights regarding processing of their personal data, but as of February 2020 it has not entered into force. Other sectoral laws that include data protection provisions are: Civil Code of Seychelles (1976), Computer Misuse Act (1998), Electronic Transactions Act (2001), Financial Institutions Act (2004), Central Bank of Seychelles Act (2004), Anti-Money Laundering and Combating the Financing of Terrorism Act (2020), Financial Services Authority Act (2013), Anti-Corruption Act (2016), and International Business Companies Act (2016).
Currently there is no legal requirement obliging foreign IT providers to hand over their source code or provide access to the encryption utilized. Seychelles does not have any legal instrument that prevents or restricts companies from transmitting customer or business-related data outside the country. Consequently, at the moment there are no Government agencies involved in enforcing any rules or regulations with regards to local data storage in Seychelles.
The Embassy is not aware of any investment performance requirements.
5. Protection of Property Rights
The courts enforce interests in real property. Mortgages and liens are enforced, and the land registrar resolves land disputes. All lands in Seychelles are either publicly or privately held. According to the World Bank’s 2020 Doing Business Report, Seychelles ranked 65th out of 190 countries in the Registering Property index. In 2014, the GOS discontinued selling state land to non-Seychellois.
The Immovable Property Tax Act, which was enacted in December 2019, introduced an annual tax of 0.25 percent on the assessed market value of residential property owned by all foreigners.
Intellectual Property Rights
The GOS has measures in place to enforce intellectual property rights (IPR) but awareness of IPR is limited and enforcement is weak. Seychelles joined the World Intellectual Property Organization (WIPO) in March 2000. The country became a contracting party to the Paris Convention for the Protection of Industrial Property and the Patent Cooperation Treaty (PCT) in November 2002. The Cabinet of Ministers has approved plans for Seychelles to accede to the Madrid Protocol . Seychelles also signed the Beijing Treaty on Audiovisual Performances in June 2012. and ratified the Nagoya Protocol on Access to Genetic Resources and the Fair and Equitable Sharing of Benefits Arising from their Utilization (ABS) to the Convention on Biological Diversity (CBD) in October 2014. Additionally, the Cabinet of Ministers approved Seychelles’ membership in the African Regional Intellectual Property Organization (ARIPO) by way of acceding to the Harare Protocol on Patents and Industrial Designs.
The Copyright Act 2014 and the Industrial Property Act 2014 contain provisions that set forth the laws relating to infringement of intellectual property rights. The Customs Management (Border Measures) Regulations 2014 provides enforcement measures at the border with respect to counterfeit goods. There is currently no legislation for plant variety protection. As required by WTO principles, Seychelles IP law treats foreign nationals and Seychellois citizens equally. Enforcement of IPR protection laws is limited since very few international brands and trademarks have local or even regional representatives.
In 2017, the Cabinet of Ministers established a National Intellectual Property Committee to serve as a coordinating body for consultations with stakeholders on IP matters. The Committee, which falls under the purview of the Trade Division of the Ministry of Finance, Trade, and Economic Planning, comprises representatives from government, non-governmental organizations, and the private sector and meets on a monthly basis. In the 2018 budget speech, the Minister of Finance announced that that Government would develop a modernized Intellectual Property Office that would serve as a “one stop shop” for IP issues. While the Registrar General’s Office services as the one-stop-shop for both copyright and intellectual property, a new facility is expected to be built in the future.
Chapter 13 of the Customs Management (Border Measures) Regulations 2014 provides for enforcement measures at the border with respect to counterfeit and/or pirated goods. Furthermore, the Trade Division has, in consultation with the Customs Division, developed Procedural Guidelines on Border Measures for the Protection of Intellectual Property Rights ( ) to counter the import and export of counterfeit and pirated goods. While no statistics are available, the Seychelles Revenue Commission’s customs officials monitor incoming shipments for counterfeit goods. However, their focus is on counterfeit products that pose a public health risk, such as medications and electrical appliances. Counterfeit apparel, CDs, and DVDs are widely available in Seychelles markets.
Seychelles is neither listed on the United States Trade Representative (USTR) Special 301 Report nor the s Notorious Markets List..
Embassy Contact for IPR:
Port Louis, Mauritius
+230 202 4430
Some Law Firms in Seychelles also handling IPR:*
Room 8, Trinity House
Huteau Lane 41
+248 422 6243
Room 104, Premier Building
+248 423 28 41
ANTONY G. DERJACQUES
Suite 5 & 6, Trinity House
+248 432 19 00
FRANK ALLY LAW CHAMBERS
Suite 213, Premier Bldg.,
+248 432 30 80
*List for convenience only, not intended to imply endorsement by the U.S. Government.
6. Financial Sector
Capital Markets and Portfolio Investment
Seychelles welcomes foreign portfolio investment. The Seychelles Securities Act ( ) provides the legal framework for the Seychelles stock market. The Seychelles Securities Exchange, owned by South Africa’s Quote Africa Group, has operated since 2012. The exchange, which was previously known as Trop-X, was rebranded MERJ in 2019. Listing and trading are available in U.S. Dollars, Euros, Pounds Sterling, Seychelles Rupees, and South African Rand. In August 2019, the exchange listed its own security tokens on its main board. This was followed by an initial public offering (IPO) in September, where 16 percent of the company’s tokenized shares were offered to the general public. Portfolio investment in Seychelles is limited by the small size of the economy and banking sector. The buying and selling of sizeable positions may have an outsized impact on the Seychelles Rupee and the economy in general. There are no restrictions on trading by foreigners. By the end of February 2020, there were 38 equity listings with a total market capitalization of $1.244 billion and two debt listings with a market capitalization of EUR 205 million. MERJ is also a partner exchange of the Sustainable Stock Exchanges Initiative.
Existing policies facilitate the free flow of financial resources in and out of the economy. The GOS respects IMF Article VIII by refraining from restrictions on payments and transfers for current international transactions. Foreign investors are able to obtain credit on the local market and through the Seychelles banking system, and a variety of credit instruments are available to both local and foreign investors.
Money and Banking System
Seychelles has a two-tier banking system that separates the central and commercial bank functions and roles. Commercial banks, both domestic and foreign, are regulated and supervised by the Central Bank of Seychelles (CBS). According to the Central Bank of Seychelles Act 2004, the CBS is responsible for the formulation and implementation of Seychelles’ Monetary and Exchange Rate policies. The CBS is the only administrative body responsible for receiving applications for banking licenses, whether domestic or offshore, and issuing the corresponding licenses.
As of February 2020, there were eight commercial banks in operation: Absa Bank, Bank of Baroda, Mauritius Commercial Bank (Seychelles), Nouvobanq, Seychelles Commercial Bank, Al Salam Bank Seychelles Ltd, Bank of Ceylon, and the State Bank of Mauritius (SBM) (Seychelles). According to a 2016 report by the CBS, 94 percent of Seychellois use banks. Seychelles also has three non-banking financial institutions: the Seychelles Credit Union, a savings and credit cooperative society; the Development Bank of Seychelles, which provides flexible financing for businesses and projects to promote economic growth and employment; and the Housing Finance Corporation, a government-owned company that provides financing to Seychellois for the purchase of land, the construction of homes, and financing home improvements.
Seychelles has a number of laws that govern the financial services sector: Financial Institutions Act 2004, Anti-Money Laundering and Combating the Financing of Terrorism Act 2020, Data Protection Act, Mutual and Hedge Fund Act 2007, and Central Bank Act 2004. The Seychelles banking sector is generally healthy, though it is limited by small size and reliance on correspondent bank relationships. Due to concerns about money-laundering and illicit finance in the Seychellois financial sector, some local banks have lost their correspondent banking relationship with foreign banks, a phenomenon known as de-risking, making it difficult for local banks to perform international transactions. In 2017, the CBS and the Financial Services Authority visited foreign financial centers to address de-risking. The government is actively working with international experts, including the World Bank and International Monetary Fund, to ensure Seychelles is not perceived as high-risk jurisdiction. In February 2020, the European Union added Seychelles to the list of non-cooperative jurisdictions for tax purposes as Seychelles had not implemented the tax reforms by the agreed deadline of December 2019 to which it had committed. Two months earlier, France added Seychelles to its blacklist of tax havens for not providing adequate information on French offshore entities operating in the island nation’s jurisdiction. On March 5, 2020, the President signed the National Assembly passed the Anti-Money Laundering (AML) and Countering the Financing of Terrorism (CFT) Act 2020 and the Beneficial Ownership (BO) Act 2020. These two pieces of legislation address the deficiencies identified in the 2018 Mutual Evaluation Report of the Eastern and Southern Africa Anti Money Laundering Group (ESAAMLG).
According to the CBS, in February 2020 non-performing loans to total gross loans in the Seychelles banking sector stood at 2.99 percent, and foreign currency deposits totaled 8,059 million Seychelles Rupees ($573 million).
A wide range of financial services such as checking accounts, savings accounts, loans, transactions in foreign currencies, and foreign currency accounts are available in the banking system. Foreigners and foreign/offshore firms must establish residency or proof of business registration to obtain a bank account.
Foreign Exchange and Remittances
Since the IMF reform package of 2008-2013, the GOS places no restrictions or limitations on foreign investors converting, transferring, or repatriating funds associated with investment. Funds are freely converted. Seychelles maintains a floating exchange rate for the Seychelles Rupee (SCR), which has mostly fluctuated between SCR 12 and SCR 14.5 to $1 over the past five years. In 2019, the SCR remained fairly stable against the USD with an average exchange rate of SCR 14.1 to $1. Between March and April 2020, the SCR depreciated by 27 percent with the rate at the end of April being SCR 17.9 to $1. Due to the Covid-19 crisis, there has been a notable decrease in foreign exchange inflows and the CBS has intervened by disbursing $10 million in the domestic market.
Foreign exchange controls were removed in 2008 and foreign investors are free to repatriate their profits and other incomes. The Embassy is unaware of any planned changes to remittance policies, time limits on remittances, or use of any legal parallel market.
Sovereign Wealth Funds
Seychelles does not maintain any sovereign wealth funds. However, in his State of the Nation address in March 2018, the President said that a law would be presented to the National Assembly later during the year to establish a sovereign wealth fund. As of April 2020, this had not materialized.
7. State-Owned Enterprises
Seychelles is one of 14 countries participating in the State-Owned Enterprises (SOE) Network for Southern Africa, which was launched in 2007 to support, in collaboration with the OECD, southern African countries in their efforts to improve the performance of SOEs.
According to the Public Enterprise Monitoring Commission Regulations 2019 there are currently 34 state-owned which have either been established using public financial resources or in which the government has a significant shareholding. These government-owned organizations are responsible for the delivery of both commercial and social objectives. They offer a range of essential services, including electricity, water, roads, seaports, fuel supply, import/export, retail, transport, civil aviation, housing, and tourism. In his 2019 State of the Nation Address, President Faure announced that the government would inject $6 million into Air Seychelles each year for the next five years. At the end of 2018, total assets of SOEs amounted to $2 billion, representing 189 percent of total GDP while the total net income was $89 million.
SOEs are generally free to purchase and/or supply goods and services from private sector and foreign firms. However, there is a growing concern in the business community that SOEs such as the Seychelles Trading Company (STC) have been allowed to exceed their explicit mandate and compete unfairly. For example, STC has expanded its operations in the retail business with the opening of a hypermarket, a hardware store, and a luxury goods department selling perfumes and designer bags. Most SOEs and parastatal bodies maintain a board of directors and make regular reports to the corresponding ministry. The President and the responsible Minister have authority over the size and composition of the boards of SOEs. The Public Enterprise Monitoring Commission (PEMC), set up in 2013 through the PEMC Act, is an independent institution responsible for monitoring financial, governance, and transparency issues related to public enterprises. Governance and operational assessments of six major SOEs were conducted in 2016 with World Bank assistance. On this basis, an implementation plan for governance and operational review of public enterprises for the period 2017-2019 was prepared and approved by the Cabinet of Ministers.
Audited financial statements of SOEs are published annually on the PEMC website ( ). The GOS has published a Code of Governance for Public Entities to provide guidelines to improve the governance, monitoring and control of public entities in Seychelles. The Code, which was developed by the PEMC along with other stakeholders, can be accessed on its website: https://www.pemc.sc/resource-centre.
In his 2018 budget speech, the Minister of Finance announced that his Ministry will call on private sector investors to enter into public-private partnership initiatives or partial privatization of the following SOEs: (i) L’Union Estate Company, (ii) Indian Ocean Tuna, (iii) Land Marine Ltd., (iv) European Investment Bank’s shares in Development Bank of Seychelles, and (v) Agence Francaise de Developpement’s shares in Development Bank of Seychelles. In his March 2018 State of the Nation address, the President announced that 20 percent of the Seychelles Petroleum Corporation would be privatized beginning November 2018, but this decision was later withdrawn. Similar privatization plans were announced in previous years, but progress has been slow. The Embassy is not aware of any other formal legal barriers to foreign investors participating in privatization.
8. Responsible Business Conduct
Seychellois society has a high level of awareness of Corporate Social Responsibility (CSR), especially in environmental protection and social programs, but CSR is generally regarded as a function of government. Since 2013, the Seychelles Revenue Commission has been collecting a CSR tax of 0.5 percent on monthly turnover for businesses with an annual turnover of SCR 1 million or more. More information on the CSR tax is available via the following link: . Officially, there are no waivers available for foreign investors with regard to labor law, employment rights, consumer protection, or environmental standards.
The Citizens Engagement Platform Seychelles (CEPS), an umbrella organization for Seychelles’ NGOs, provides a list of NGOs active in the country to the Ministry of Finance, which then decides which organizations would benefit most from the CSR tax revenues. The GOS revised the CSR guidelines in January 2017, with focus on programs linked to social needs. In particular, the following sectors benefit from the CSR fund: environment; health and society; community, youth, sports and arts; and drug rehabilitation and substance abuse. It was announced again in the 2020 budget that all CSR contributions from public enterprises will be used to build an elder care facility.
Seychelles currently has no production in the extractive sector, but international companies have undertaken petroleum exploration activities offshore. The Extractive Industries Transparency Initiative (EITI) accepted Seychelles as a candidate country in August 2014 and Seychelles’ validation against the standard began in January 2018. The 2017 EITI annual progress report published in July 2018 can be accessed at: . In October 2018, the EITI Board assessed Seychelles as having achieved “meaningful progress” against the EITI standard.
Ruling with transparency and accountability are stated priorities of the current government. In 2016, the government established the Anti-Corruption Commission of Seychelles (ACCS) under the Anti-Corruption Act, which gives it authority to investigate, detect, and prevent corrupt practices. The ACCS is now functional and, though small, has carried out a number of investigations. A local chapter of Transparency International, Seychelles Transparency Initiative (TI), was set up in 2017. TI’s focus is currently on increasing transparency in tourism, fisheries, finance and construction.
In his March 2018 State of the Nation address, the President stated that the government will review anti-corruption laws and provide more resources to the ACCS so it can fulfill its mandate. The (https://seylii.org/sc/legislation/bill/2020/4 ) was voted in by the National Assembly in 2019 giving the ACCS investigative and arresting powers similar to that of the police.
Seychelles signed the UN Convention against Corruption in February 2004 and ratified it in March 2006. Seychelles is not party to the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions.
In 2003, the GOS published the Public Service Code of Ethics and Conduct, the stated purpose of which is to provide guidance to public sector employees on the standards of behavior required of them. The Public Officer’s Ethics Act of 2008 prohibits personal enrichment through public office, defines and outlaws bribery, provides guidelines for avoiding conflict of interest, and mandates declaration of financial assets for public officials including members of the National Assembly. The government does not require private companies to establish internal codes of conduct.
Resources to Report Corruption
May De Silva
Chief Executive Officer
State House Avenue
Office of the Ombudsperson
Room 306, Aarti Chambers, Mont Fleuri, Mahe
10. Political and Security Environment
The constitution provides citizens the right to change their government peacefully, and citizens exercise this right in practice through periodic elections based on universal suffrage. Seychelles has not experienced large-scale political violence since the late 1970s. The United Seychelles party, formerly known as Parti Lepep, governed Seychelles following the 1977 coup and won every election from the introduction of multi-party democracy in 1993 until 2016, when a coalition of opposition parties won the majority of the National Assembly seats. Shortly afterward, President James Michel resigned in favor of his Vice President, Danny Faure. The current era of divided government, with one party in the Presidency and another in control of the legislature, has so far resulted in political stability.
11. Labor Policies and Practices
The national unemployment rate for the year 2019 was 2.7 percent, 2.9 percentage points lower than in 2018. In the fourth quarter of 2019, 61.9 percent of the unemployed population were male. The annual youth unemployment rate fell from 10.5 percent in 2018 to 9.4 percent in 2019.
The private sector accounted for 67 percent of formal employment in the fourth quarter of 2019. Within the private sector, the largest categories of employment were accommodation and food services activities (27 percent) and construction (19 percent). Major challenges that persist in the labor market include difficultly recruiting locals for certain jobs and low productivity level.
Seychelles has long been an importer of foreign labor due to its small population and low human resource base. The share of foreign labor to total employment in the private sector is approximately 40 percent, with the majority working in the fishing and construction sectors. Since 2014, a quota system has applied to industries for which demand for foreign labor is high.
Seychelles has been a member of the International Labor Organization (ILO) since 1977 and has ratified all fundamental International Labor Organization (ILO) conventions. Under Seychellois law, all workers, with the exception of police, military, prison, and firefighting personnel, have the right to form and organize unions of their own choosing, to participate in collective bargaining, and to conduct legal strikes. However, these rights are limited or restricted by other provisions of law. Although collective bargaining is legal, it rarely happens because the law gives the right to the government to review and approve all collective bargaining agreements in both the private and public sector. Strikes are illegal in Seychelles unless all other arbitration procedures have been exhausted. About 15 percent of the workforce is unionized.
In January 2020, the President raised the minimum wage to SCR 5,804 ($426) per month. In 2017, the government re-introduced the Unemployment Relief Scheme (URS) for Seychellois aged above 18 and who are dependent on welfare. In the event of layoffs where there is no employee misconduct, the employer must provide the worker with one month’s notice or the equivalent of one month’s salary. Additionally, for workers that have been employed for five years or more, the employer must pay one day’s pay for each month that the employee has worked for the employer. For severance calculation, there is no distinction between layoffs and firing with severance.
The Employment Tribunal handles employment disputes for private-sector employees. The Public Service Appeals Board handles employment disputes for public-sector employees, and the Financial Services Authority deals with employment disputes of workers in the Seychelles International Trade Zone. The law authorizes the Ministry of Employment, Immigration and Civil Status to establish and enforce employment terms, conditions, and benefits, and workers frequently obtain recourse against their employers through the Employment Tribunal.
The GOS introduced the Occupational Safety and Health Decree in 2012 and the Prohibition of Trafficking in Persons Act in 2014. Seychelles Police and Customs personnel have traveled to U.S. Government-led training at the International Law Enforcement Academy in Gaborone, Botswana. However, there are very few health or labor inspectors in Seychelles and they are limited by meager public resources and the vast ocean distances they are expected to cover.
In November 2011, Seychelles and the ILO signed the 2011-2015 Decent Work Country Program, which seeks to address such issues as employment creation, consolidation and protection of workers’ rights, enhancing social protection, and strengthening social dialogue. Compliance with international labor standards has in recent years been sufficient such that business in the country should not pose a reputational risk to investors. Concerns about trafficking in persons, however, do exist.
13. Foreign Direct Investment and Foreign Portfolio Investment Statistics
|Direct Investment from/in Counterpart Economy Data (2018)|
|From Top Five Sources/To Top Five Destinations (US Dollars, Millions)|
|Inward Direct Investment||Outward Direct Investment|
|Total Inward||945||100%||Data Not Available|
|“0” reflects amounts rounded to +/- USD 500,000.|
|No detailed information is available on the IMF’s Coordinated Portfolio Investment Survey (CPIS) website and no information is available on outward direct investment from Seychelles.|
14. Contact for More Information
Political and Economic Officer
+230 202 4465
Economic and Commercial Specialist
+230 202 4430