Greece may still be facing bankruptcy – the Seychelles have already been through it. The island paradise went bankrupt four years ago, defaulted and recovered. Geopolitically, the Seychelles are part of Africa, but that’s where the similarities between the island state in the Indian Ocean and the mainland, 1,600 kilometers away, end. The 85,000 or so people who live on the main island of Mahe and the neighboring islands are doing well.
The huge economic problems that the Seychelles slipped into only four years ago are no longer noticeable today. Paradise was virtually bankrupt overnight. The small nation had simply taken on too much debt. “There was no precise regulation on repayment,” explains the German honorary consul Kerstin Henri. “However, the loans had to be repaid in foreign currency, which the country no longer had at the time.”
Then the global economy went downhill, the flow of tourists slowed and import prices for oil and other raw materials rose rapidly. Foreign currency was only available on the black market. As a result, the currency reserves were exhausted and the government was no longer able to service a bond in September 2008.
IMF helped island state to turnaround
In this hopeless situation, the International Monetary Fund stepped in and agreed a comprehensive program with the government to realign the economy – and lent it new money. One of the most important immediate measures was a drastic devaluation of the Seychelles rupee by over 40 percent. Since then, the currency has been freely convertible. “There’s no black market here anymore, it’s just not worth it,” says cab driver Ben, who emigrated from Tanzania to the Seychelles 28 years ago.
Tax reforms and improvements in financial administration and expenditure management were also introduced. This helped to support the credibility of the budget consolidation. In 2010, the IMF once again recorded above-average financial strength on the islands. With a per capita income of around 11,000 dollars (8,627 euros), the Seychelles are also one of the richest nations in Africa.
Tourism as the main source of income
The Seychelles’ scenic beauty in particular has saved it from ruin, as the tourism sector is flourishing again. Every year, 20,000 holidaymakers from Germany alone travel to paradise, with a total of around 150,000 sun-seekers worldwide booking a dream trip to one of the 115 islands. Around 30 percent of the working population are employed in tourism and generate around 70 percent of the national income.
To further strengthen the industry, the Seychelles’ tourism ministries, together with neighboring Madagascar, Mauritius and La Reunion, have recently developed a new marketing concept for the entire region. “Vanilla Islands” is the beguiling name of the idea. The aim is to develop a regional identity and make island hopping easier by improving transport routes, for example. “We have a master plan to attract more holidaymakers in the future, especially in the low season,” explains Lena Hoareau from the Seychelles Tourism Authority.
Those who are not employed in tourism usually work for Indian Ocean Tuna, one of the largest fish processing factories in the world, for the Seybrew brewery or in the construction sector. “However, the Seychelles are not competitive in agriculture, the country is simply not made for growing anything,” says Honorary Consul Henri.
“Anyone who is unemployed here is simply too lazy”
“But if you want to work in the Seychelles, you can have at least three jobs,” explains Henri. And cab driver Ben adds: “Anyone who is unemployed here is simply too lazy.” But even idlers have nothing to fear in the island paradise, according to the honorary consul: “If necessary, people can just sit on the beach and hold a fishing line in the sea – there’s always something to eat.”