SUSTAINING SOCIAL DEVELOPMENT IN A SMALL ISLAND DEVELOPING STATE: THE CASE OF SEYCHELLES Liam Campling and Michel Rosalie

SUSTAINING SOCIAL DEVELOPMENT IN A SMALL ISLAND DEVELOPING STATE: THE CASE OF

SEYCHELLES

Liam Campling and Michel Rosalie

OVERVIEW

• Seychelles in context: population and economic ‘vulnerabilities’

• Seychelles in transition: the changing composition of the economy

• Government policy: people-centred development • Social development: indicators, programmes

and implementation • Sustaining socio-economic development: past,

present and future

SEYCHELLES IN CONTEXT: POPULATION

1971 1977 1987 1994 1997 2002

Population Average annual growth rate (%) Total fertility rate Expectation of life at birth

MalesFemales

Age Distribution (%)

0-1415-6363 and above

54695 2.2 6.0 64.9

61.867.9

43.650.16.3

61786 2.6 4.0 67.9

64.671.1

39.753.86.4

68499 1.1

3.1 70.1

66.273.5

35.757.46.9

74331 2.2 2.6 71.6

67.272.9

31.061.77.3

78064 1.2 2.2 71.6

66.077.2

28.663.67.9

81777 -0.5 2.0 71.0

66.675.8

26.066.18.0

SEYCHELLES IN CONTEXT: SEYCHELLES AS A

SMALL ISLAND DEVELOPING STATE

LIMITEDRESOURCES

SMALL DOMESTIC

MARKET

SIDS



• Small domestic market: Seychelles population of 80,000 creates market inefficiencies due to small economies of scale that discourage competition

• Limited and undiversified resource base: a micro population limits labour-intensive production and the diversity of human capital; a land mass of 455 sq km reduces scope for agricultural production; smallness and economic difficulties reduce sources of domestic finance capital

(Both factors severely limit economic diversification)



VULNERABLETO EXTERNAL

SHOCKS

OPEN TOINTERNATIONAL

TRADE

LIMITEDRESOURCES

SMALL DOMESTIC

MARKET

SIDS



• Structural openness to international trade: Seychelles imports around 90% of what it consumes; in 1992-2001 it suffered an average annual balance of trade deficit of SR976 million

• High vulnerability to external shocks: Seychelles is a ‘price-taker’ and lacks capacity to influence international markets in its trade of goods and services, thus world fluctuations are simply absorbed



POLITICALSOVEREIGNTY

LOCATION/TRANSPORT

COSTS VULNERABLETO EXTERNAL

SHOCKS


TRADE

LIMITEDRESOURCES

SMALL DOMESTIC

MARKET

SIDS



• Locational determinants: the economy is physically isolated from its main West European trading partners and 1,500 km from the nearest market or supply in East Africa. Remoteness leads to permanently high transport costs.

• Political sovereignty: Seychelles per capita spending on physical infrastructure, environmental protection and international relations is very high. Independence is expensive!



POLITICALSOVEREIGNTY

LOCATION/TRANSPORT

COSTS

VULNERABLETO EXTERNAL

SHOCKS


TRADE

LIMITEDRESOURCES

SMALL DOMESTIC

MARKET

SEYCHELLES

SEYCHELLES IN TRANSITION: THE CHANGING COMPOSITION OF THE ECONOMY

• In 1974 ‘traditional’ agricultural commodities dominated engagement with the world economy, i.e. copra and cinnamon were 90% of visible exports

• Deepened integration with world economy in 1971 with opening of the international airport, i.e. by 1976 tourism constituted 18% of GDP

• In the ten-year period 1992-2001 tourism contributed a stable 16.1% to GDP


• Exclusive Economic Zone (EEZ) of 1.3 million sq miles = comparative advantage in fisheries

• Tuna industrially exploited from early 1980s+• In 1995 Heinz formed Indian Ocean Tuna (IOT)

Ltd attracted by EEZ, industrial tuna fleet, SITZ, and preferential access to EU market

• IOT processed tuna exports contributed US$202 million in gross foreign exchange earnings in 2001 (35% of the national total)


• In 1995 the offshore sector became legally operative and SIBA was formed

• SIBA broke the 15,000 mark of registered international business companies by mid-2004

• In 2003 the direct financial benefits of the offshore sector were US$5-6 million

• SIBA achieved financial autonomy by end-2003• Lack of offshore banking is a key limiter


2. GNP at current market prices, 1980-2002

500

1,000

1,500

2,000

2,500

3,000

3,500

R m

illion

GOVERNMENT POLICY: PEOPLE-CENTRED DEVELOPMENT

• Pre-independence: substantive class divisions• Post-1977 emphasis on principles of social

justice and national modernisation• Social development implemented through free

and universal access to health care, education and social welfare

• Modernisation implemented through national development plans: focus on top-end tourism and import-substitution industrialisation

SOCIAL DEVELOPMENT

• Education – 10 years free & compulsory

• Health care – available free at point of use in all clinics & hospitals

• Income security – employment generation schemes available

• Other means of social provisioning

SOCIAL DEVELOPMENT: EDUCATION & HEALTH

Indicators 1980 1985 1990 1995 2000 2002

Infant Mortality Rate (per 1,000 live-births)

17.5 17.9 13.0 18.3 9.9 17.6

Under five Mortality Rate (per 1,000)

24.6 23.1 14.2 20.2 13.2 18.2

Maternal Mortality Ratio (per 100,000)*

58.6 57.8 61.8 63.2 0.00 67.5

Population/Doctor Ratio 1,543.0 1,470.7 1,198.4 865.6 854.0 758

Population/Nurses Ratio 419.0 226.5 246.5 228.2 210.7 214.2

Adult Literacy Rate (%)

MaleFemale

--

----

--

----

--

----

88.5

89.088.0

91.5

91.791.2

91.0

90.291.09


1. Public expenditure on education and health, 1989-2002

50

70

90

110

130

150

170

1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002

R m

illion

Expenditure on education Expenditure on health


• Human resource development – limited availability of the right mix of human resources to meet targets in the two sectors

• Cardio-vascular disease and cancers are today’s main killers. ‘Diseases of development’?

• Adolescent reproductive health a main area of health concern, especially related to teenage pregnancy and HIV/AIDS

SOCIAL DEVELOPMENT: UNEMPLOYMENT

Labour Force Unemployment Rate (%)

197119771987199419972002

162823384408355037773159

8.71015.510.210.2 7.1

SOCIAL DEVELOPMENT: SOCIAL WELFARE

• Employment generation projects:

i) Full Employment Scheme (1980)

ii) Work Experience Programme (1984)

iii) Unemployment Relief Scheme (1995)

• Lack of effective implementation, systemic abuse, demotivation amongst users

SOCIAL DEVELOPMENT: SOCIAL WELFARE

• Social Security System:

i) Sickness, disability and chronically ill

ii) Old age, i.e. home care programme

iii) Maternity, i.e. 12-week leave

iv) Children, i.e. needs-based dependents allowance

• Systemic abuse, formation of a ‘culture of dependency’

SOCIAL DEVELOPMENT: PUBLIC UTILITIES

Piped Water Supply (%)

Electricity FlushedSupply (%) Toilets (%)

1971 60 -- 19

1977 71 43 33

1987 77 76 62

1994 84 90 78

1997 86 92 86

2002 89 96 --

SOCIAL DEVELOPMENT: POVERTY• Single women-headed households – predominantly

women who had children as teenagers and/or several out of wedlock

• The ‘hidden poor’ – mainly the younger and older generations who are unaware of social welfare programmes

• The seasonally employed – mainly fishermen, stevedores and small farmers

• Those who mismanage household income

• Children and the disabled

(Questions of analysis and integration in national policy)

SUSTAINING SOCIO-ECONOMIC GAINS: PAST

• Social development partly enabled through export-orientated sectors of the modern economy, i.e. tourism and fisheries

• Rent-seeking behaviour during the Cold War sustained social spending

• Domestic and international debt subsidised government policy (and poor economic management – centrality of the petty bourgeois)

SUSTAINING SOCIO-ECONOMIC GAINS: PRESENT

• Seychelles as a victim of its success in people- centred development? (Non-LDC status)

Real GDP and GNP per capita, 1980-2002

10,000

20,000

30,000

40,000

50,000

R p

er y

ear

GNP per capita Real GDP per capita


• Decline in rent-seeking capacity, i.e. end of Cold War, high GDP per capita, reputation as loan defaulter and global decline in ODA

• Debt at crisis-point (defaults on ‘donor’ loans and rise in commercial borrowing): external debt at 200% of GDP

• Environmental protection is now the primary source of donor assistance (decline in external social support)

• Vulnerability to external shocks, i.e. Gulf War (1991), coral bleaching (1998), Iraq (2003+)

• Monetary and financial crisis constraining import of some social and economic inputs

• Macroeconomic reform (austerity programme) increases cost of living for low-income brackets


1. Current account balance, 1976-2002

-160

-140

-120

-100

-80

-60

-40

-20

0

US$

million

SUSTAINING SOCIO-ECONOMIC GAINS: FUTURE (POLITICAL-ECONOMIC)

• EU market for Seychelles canned tuna will be under threat in 2008

• Stagnation in tourism sector likely to continue (poor price-quality perceptions)

• Eastern and Southern Africa Economic Partnership Agreement = limited benefits to Seychelles

• Accession to the WTO negative implications for national sovereignty in policy orientation and social, economic and environmental controls

• Environmental decline may have a negative effect on tourism and thus socio-economic prosperity

• Present moves to economic diversification (i.e. offshore sector), improving environmental consciousness (i.e. eco-tourism) and recent domestic macroeconomic reforms may allow sustainability of social development gains

SUSTAINING SOCIO-ECONOMIC GAINS: FUTURE (SOCIAL)

• Cultural globalisation has led to a rapid rise in individual expectations and consumer demand, but a decline in community networks

• Global decline of sympathy for the ‘welfare state’ model

• Culture of dependency on social services threatens the equitable transfer of resources

• Family: threat of disintegration• Land conflicts and sustaining social

development

CONCLUSION

Seychelles demonstrates the centrality of

the ‘social’ in terms of:

1) analysing islands (i.e. social forces);

2) understanding SIDS ‘vulnerabilities’ (i.e. the nexus of social development-environment-economy), and;

3) island peoples offering creative solutions to developmental challenges (e.g. building ‘resilience’) beyond the narrow interests of political-business elites.

Documents

SUSTAINING SOCIAL DEVELOPMENT IN A SMALL ISLAND DEVELOPING STATE: THE CASE OF SEYCHELLES Liam Campling and Michel Rosalie