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Executive Summary

Seychelles is an archipelagic nation of 115 islands located off the eastern coast of Africa in the Indian Ocean. The majority of the country’s 99,202 inhabitants live on three most-populated islands of Mahé, Praslin, and La Digue. Seychelles gained its independence from the United Kingdom in 1976, at which time the population lived at near subsistence level. With a GDP of $1.1 billion as of 2021, Seychelles has the highest GDP per capita in Africa at $10,764. Although the World Bank has designated Seychelles as a high-income country since 2015, the country’s wealth is not evenly distributed. According to the United Nations Development Program’s Human Development Report for 2020, the richest 10 percent of Seychellois earn 40 percent of the total income. Seychelles’ main economic activities are tourism and fishing, and the country aspires to be a financial hub.

Seychelles experienced a coup d’etat in 1977, just a year after independence, which brought to power a one-party socialist government. Multiparty democracy was restored in 1993 after the adoption of a new constitution, but the United Seychelles Party (USP) continued to hold power until October 2020, when the opposition coalition Seychellois Democratic Union(Linyon Demokratik Seselwa, or LDS) won both the presidential and legislative elections. This opposition victory ushered in the first democratic transition of power in the country’s history. LDS holds 25 of the 35 assembly seats and includes four main parties: the Seychelles National Party (SNP); the Lalyans Seselwa (Seychellois Alliance); the Seychelles Party for Social Justice and Democracy (SPSD); and the Seychelles United Party (SUP). The former ruling United Seychelles Party (USP currently holds 10 seats in the National Assembly. The next presidential and legislative elections will be held in 2025.

Heavy reliance on the tourism industry makes the overall economy vulnerable to external shocks, such as the COVID-19 pandemic. In January 2021, the Central Bank of Seychelles (CBS) announced that January to November 2020 tourism revenues decreased by 78 percent. Tourism-related contributions to GDP fell from 22.3 percent in 2019 to 15.5 percent in 2020, per the National Bureau of Statistics. The CBS estimated that the economy contracted 11.3 percent in 2020 compared to 3 percent growth in 2019.

Following the reopening of borders in March 2021, tourism in Seychelles gradually picked up, with the country registering a total of 182,849 tourist arrivals for the January to December 2021 period, compared to 114,858 visitors for the same period in 2020 and 384,224 visitors in 2019. According to the IMF, real GDP grew by 6.9 percent in 2021, compared to a decline of 12.9 percent in 2020. The Seychelles National Bureau of Statistics reported a year-on-year percentage increase of 21.7 percent in real GDP for the third quarter of 2021 as compared to the same quarter in 2020. The main drivers of this increase were the accommodation industry, transport and storage, and the information and communication sector. The IMF forecasted that real GDP would increase by 7.7 percent in 2022.

In 2019, the government was on track to reduce the debt-to-GDP ratio to 50 percent by the end of 2021. According to the Ministry of Finance, however, by the end of 2020 the debt-to-GDP ratio had spiked to 99.4 percent. As was the case during the global economic crisis in 2008, the government turned to the IMF for support. In July 2021, Seychellois authorities and the IMF reached an agreement on economic and structural policies that would be supported by $107 million under the Extended Fund Facility (EFF) for the duration of 28 months. Seychellois authorities and the IMF agreed to reduce fiscal and debt vulnerabilities while promoting economic growth and protecting the environment and the most vulnerable segments of the population. Governance and transparency commitments included the completion of an audit of COVID-19 emergency spending and related procurement, and improvements in the AML/CFT regime. In November 2021, the IMF assessed that the Seychellois government was making impressive progress in implementing the IMF-supported program and restoring macroeconomic balances. Per the Ministry of Finance, by December 2021, the total government and government-guaranteed debt represented about 74 percent of GDP.

Despite the government’s attempts to diversify the economy, activity remained focused on fishing and tourism. However, Seychelles’ Exclusive Economic Zone (EEZ), which spans 1.3 million square kilometers, 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 natural environment. The Seychellois government planned to reduce overall greenhouse gas emissions by 26.4 percent of the business-as-usual scenario 2030 value by undertaking reforms in its energy, refrigeration and air conditioning, transport, and waste sectors. Authorities planned to use solar and wind energy to increase the share of renewable energy production from 5 to 15 percent by 2030.

While Seychelles welcomes foreign investment though the Seychelles Investment Act, 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 increases to productivity levels, but stress that these changes must be implemented in an environmentally sound and sustainable manner. 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.

Table 1: Key Metrics and Rankings
Measure Year Index/Rank Website Address
TI Corruption Perceptions Index 2021 23 of 180 http://www.transparency.org/research/cpi/overview
Global Innovation Index 2021 N/A https://www.globalinnovationindex.org/analysis-indicator
U.S. FDI in partner country ($M USD, historical stock positions) 2020 $575 https://apps.bea.gov/international/factsheet/
World Bank GNI per capita 2020 $12,200 https://data.worldbank.org/indicator/NY.GNP.PCAP.CD

 

Policies Towards Foreign Direct Investment

Seychelles has a favorable attitude toward most foreign direct investment, though the government reserves certain types of business activities for domestic investors only. The Reserved Economic Activity Policy, enacted in April 2020, provides a detailed list of the types of business in which only Seychellois may invest and is available here: https://www.investinseychelles.com/component/edocman/reserved-economic-activities-policy,-april-2020/download . The Seychelles Investment (Economic Activities) Regulations also provide details on the limitations on foreign equity for certain types of businesses, as well as a list of economic activities in which need-based investment may be allowed by a foreigner: https://www.wto.org/english/thewto_e/acc_e/syc_e/WTACCSYC61_LEG_4.pdf . In June 2015, Seychelles implemented a moratorium on the construction of large hotels (25 rooms and above) on the country’s inner islands. This includes the three most-populated islands of Mahé, Praslin, and La Digue.

The Seychelles Investment Board (SIB) is the national 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 periodically organizes sector-specific meetings with investors 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 2010 Seychelles Investment Act and 2014 Seychelles Investment (Economic Activities) Regulations govern foreign direct investment (FDI) in Seychelles. These documents are available at: https://www.investinseychelles.com/investors-guide/investor-resources/policies-guidelines-acts . Since the implementation of IMF reforms after the 2008 financial crisis, Seychelles has successfully attracted FDI. According to the Central Bank of Seychelles, gross FDI inflows amounted to $149 million in 2020, representing a decrease of $105 million compared to 2019. This decrease is principally due to investments that were put on hold because of the pandemic. The SIB advises foreign investors on the laws, regulations, and procedures for their activities in Seychelles.

The 2014 Seychelles Investment (Economic Activities) Regulations and the 2020 Reserved Economic Activity Policy list the economic activities in which only Seychellois can invest. This regulation is currently being converted into a list of foreign activities in which foreigners can invest to allow for increased transparency and better governance. In the 2021 budget speech, the minister of finance highlighted that the current government aims to protect Seychellois businesses and plans to review the categories in which only Seychellois can invest. This review was still ongoing as of March 2022. Seychelles also places financial limits on foreign equity in certain types of resident companies. These limits are detailed in the 2014 Seychelles Investment (Economic Activities) Regulations. The regulations also provide a list of economic activities in which need-based foreign investment may be allowed. While the SIB and the government encourage foreign investors to collaborate with a local partner, there is no formal requirement to do so.

The SIB, in cooperation with other government agencies, also assists in screening potential investment projects. For a business to operate, investors must apply for a license from the Seychelles Licensing Authority. In 2012, the government also established an Investment Appeal Panel to provide a mechanism for investors to challenge the government’s decisions regarding existing or proposed investments in Seychelles. More information is available in the 2010 Seychelles Investment Act: https://www.investinseychelles.com/component/edocman/seychelles-investment-act-2010/download?Itemid=0  .

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. The investment policy review of Seychelles by UNCTAD was published in November 2020: https://investmentpolicy.unctad.org/publications/1238/investment-policy-review-of-seychelles  .

Business Facilitation

The Seychellois government is committed to improving the business environment through public-private partnerships (PPP) to upgrade the country’s infrastructure. In March 2021, the cabinet of ministers approved the migration from the 2017 version of the harmonized system of classification to the 2022 version. The government is also currently reviewing the 1972 Companies Act.

On average, it takes eight days to obtain a certificate of incorporation and 14 days to obtain a business license.

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 that are foreign owned, can register business names online through the following portal: http://www.sqa.sc/BizRegistration/WebBusinessRegsitration.aspx . However, parts of the registration process, such as payments of fees, still must be completed in person. A full digitalization of the registration process is currently ongoing and is expected to be completed in June 2022.

Since December 2021, applications for business licenses can be completed online at https://eservice.egov.sc/eGateway/homepage.aspx.

SIB also provides post-investment support in the form of consultancy services regarding the laws, regulations, guidelines, minimum operational standards, and land acquisition. This service is provided free of charge and is available to every investor, regardless of the size or nature of the business.

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.

Outward Investment

The Seychellois government does not promote or incentivize outward investment. However, it does not restrict local investors from investing abroad.

Seychelles is a member of the following trade blocs: Common Market for Eastern and Southern Africa (COMESA); the European Union (EU); Eastern and Southern Africa States Interim Economic Partnership Agreement (iEPA); the Indian Ocean Commission (IOC); and the Southern African Development Community (SADC). As of June 2021, Seychelles is also a member of the African Continental Free Trade Area (AfCFTA). In January 2019, Seychelles was one of four Eastern and Southern African (ESA) countries to sign the UK-ESA Economic Partnership Agreement, which preserves the trade preferences currently enjoyed under the iEPA post Brexit. There is no bilateral taxation treaty between the United States and Seychelles.

Seychelles has signed tax information exchange agreements (TIEAs) with the following countries: Denmark, Faroe Islands, Finland, Greenland, Guernsey, Iceland, India, Netherlands, Norway, Sweden, and the Swiss Confederation. In July 2019, Seychelles signed an inter-governmental agreement to implement the Foreign Account Tax Compliance Act (FATCA). The agreement has not yet been ratified by the Seychellois government and the regulations have not yet been approved by the Cabinet of ministers or the National Assembly.

Seychelles has signed a total of 28 double taxation avoidance agreements (DTAAs) with the following countries: Bahrain, Barbados, Belgium, Bermuda, Botswana, China, Cyprus, Ethiopia, Guernsey, Indonesia, Isle of Man, Jersey, Kenya, Luxembourg, Malaysia, Mauritius, Monaco, Oman, Qatar, San Marino, Singapore, South Africa, Sri Lanka, Swaziland, Thailand, United Arab Emirates, Vietnam, and Zambia. Updated information on TIEAs and DTAAs can be accessed at https://www.src.gov.sc/pages/resources/dtas.aspx .

Seychelles is a member of the OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting (BEPS) and is party to the Inclusive Framework’s October 2021 deal on the two-pillar solution to global tax challenges, including a global minimum corporate tax. In his 2022 budget speech, the Seychellois minister of finance announced that the government is working closely with the OECD on the taxation of revenues collected by multinational entities. Consultations are scheduled to begin in 2022, and the regime is scheduled to take effect by 2023.

Transparency of the Regulatory System

Although the Seychellois government has made considerable efforts to liberalize the economy, the country continues to suffer from overregulation. There is a lack of transparency in the privatization and allocation of government-owned land and businesses. To promote transparency in the public procurement system, Seychelles’ National Tender Board publishes all tenders both on its website (http://www.ntb.sc)  and in local newspapers. The board publicizes contracts that have been awarded and includes the names 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 (http://www.pou.gov.sc/ ).

Following the 2016 election victory of the opposition Seychelles Democratic Union (LDS) in winning a majority in the National Assembly for the first time in 40 years, significant procedural changes were implemented. The government also took several measures to combat corruption and nepotism, including establishing the Anti-Corruption Commission; more frequently publishing special audits by the Auditor General’s Office of questionable government transactions; and appointing opposition supporters to various boards of national organizations and important positions. Since 2017, the government has held budget preparation focus group discussions, including key stakeholders such as the business community and civil society organizations. Additionally, there has been considerably more legislative debate on the annual government budget. Increased budget debate and scrutiny has continued following the October 2020 presidential and legislative elections, in which the LDS won the presidency for the first time in the country’s history, and again won a majority in the National Assembly. Every government agency is called to the National Assembly to answer questions on their proposed budgets, as well as general questions related to their organizations.

Proposed laws and regulations, as well as final laws, are published in the official gazette on a monthly basis and are available online at https://www.gazette.sc/ . Regulatory transparency improved with the balance of power between the opposition-controlled National Assembly and ruling party-controlled presidency following the 2016 elections. This included several new laws, such as the Freedom of Information Act. In 2018, the access to information law came into force. In 2019, the government appointed a chief executive officer for the Seychelles Information Commission, and appointed information officers in all ministries and departments. The law makes provisions for how citizens may access government information that is not classified as sensitive for security and defense reasons. It also makes provisions for how agencies should respond to requests, mandates proactive disclosure and a duty to assist requestors, and defines information that is deemed classified for security and defense. In 2020, the government also published a manual for using the Freedom of Information Act and accessing information. 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: http://www.finance.gov.sc/national-budget/47 . 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, the government also included a fiscal risk statement, which identified substantial fiscal risks emanating from public enterprises in Seychelles. The statement also contains details on explicit and contingent liabilities, and is available at https://bit.ly/3ivTzDq 

In its 2022 budget, the government announced a bill for the oversight of public enterprises to be presented to the National Assembly in early 2022. This legislation will establish new obligations for public enterprises and will help the Public Enterprise Monitoring Commission (PEMC) be more efficient and rigorous in its supervisory function. The PEMC oversees 32 state-owned enterprises, which have either been established using public financial resources, or of which the government is a significant shareholder.

Other measures to improve transparency and accountability announced by the Seychellois government in 2021 include: (a) a framework for better transparency and justice related to taxes paid by charitable organizations on private sector donations; (b) review of the Income and Non-Monetary Benefits Tax Act to bring more transparency to salaries that are not taxed; (c) implementation of a Results Based Management (RBM) framework to inculcate principles of efficiency, transparency and accountability in public service; and (d) creation of a Public Sector Commission to ensure better transparency and to remove any political agenda in the appointment of senior executives in the public sector.

In November 2021, the Seychellois government also announced the establishment of a high-level domestic regulations (HLDRC) committee to represent the public sector and members of the National Assembly. This committee will discuss ways of improving the transparency and efficiency of licensing administrative procedures, especially with regards to business with foreign investors.

International Regulatory Considerations

Seychelles has signed trade agreements with regional blocs such as COMESA, SADC, and the EU. Seychelles has also signed the COMESA- East African Community (EAC)-SADC Tripartite Free Trade Agreement (TFTA) and AfCFTA. Seychelles ratified the AfCFTA in June 2021 and announced its withdrawal from the TFTA in September 2021 to focus its resources on the AfCFTA. The AfCFTA started during the TFTA negotiations but moved at a faster pace and covers a larger number of African countries (54), including the 28 countries negotiating the TFTA. In January 2019, four eastern and southern African (ESA) countries, including Seychelles, signed the UK-ESA Economic Partnership Agreement, which safeguards trade preferences currently enjoyed under iEPA post 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 at https://tfadatabase.org/members/seychelles .

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. Under the current government, the perception among Seychellois is that the judiciary is no longer influenced by the executive. In its 2022 budget, the government announced that it will start working with the judiciary to introduce a separate court that will deal specifically with commercial cases.

Laws and Regulations on Foreign Direct Investment

The Seychellois government established the SIB (Seychelles Investment Bureau, https://www.investinseychelles.com/ ) 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 investment processes within the country’s administrative and legal framework. The SIB, in cooperation with other government agencies, also assists in screening potential investment projects. It has also implemented a digital customer relations management system to follow up on applications submitted by investors. In 2021, the government announced that it is working on a digital system to integrate functions of all government agencies involved in the administration of online business applications to further improve ease of doing business.

The government is keen to ensure that business activities are not conducted at the expense of Seychelles’ natural environment. For a business to operate, investors must apply for a license from the Seychelles Licensing Authority (http://www.sla.gov.sc/ ).

The government established an Investment Appeal Panel in 2012 to provide an appeal mechanism for investors to challenge the government’s decisions regarding investments or proposed investments in Seychelles.

Competition and Antitrust Laws

The SIB only reviews competition cases initiated by other government authorities, private sector entities, or investors. Current legislation does not empower SIB to review on its own accord all transactions for competition-related concerns. The Fair-Trading Commission (http://ftc.sc/ ) is responsible for investigating competition-related concerns. Such investigations may be initiated by the Commission or may be carried out following a complaint.

In November 2021, the government announced new measures to promote competition in the financial services sector: (a) modernization of the National Payments System; (b) a new fintech strategy; and (c) the introduction of financial consumer protection legislation, which will give the central bank and financial services authority more power to protect the interests of financial consumers. This new law will likely be complemented by other actions to enhance competition, such as reducing or eliminating costs for switching providers, eliminating abusive practices aimed at keeping customers tied to one particular service provider, and educating the public on its rights.

The government also announced measures to promote competition in the telecommunication sector. A new bill that will be presented to the National Assembly in 2022 will address competition issues and establish legal provisions to enable consumers to switch operators.

Expropriation and Compensation

The 1978 Lands Acquisition Act, last amended in 1990, states that when the government takes possession of property, it must pay prompt and full compensation for the property. The government may expropriate property in cases of public interest or for public safety. Following the 1977 socialist takeover, the government 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 government compensated some of those who had lost land to expropriation/redistribution in the late 1970s. In 2017, Seychelles established the Land Compensation Tribunal to investigate cases where compulsory land acquisition was made by the government without adequate compensation. Seychellois whose land was taken by the government from 1977 to 1993 had until December 2020 to make their claims. The Land Compensation Tribunal completed judgments in all its cases in 2021. 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 to and after the 1977 takeover. Due to the COVID-19 pandemic, both the Land Compensation Tribunal and the TRNUC have not been able to function as planned. The TRNUC’s work is further hindered by an insufficient budget. Illegal land acquisition by the government also forms part of the TRNUC’s mandate.

In October 2021, the Seychellois government also introduced a program to return land that was forcibly acquired between 1977 and 1993. This program applies to land acquired through the 1977 Lands Acquisition Act or purchased under a private agreement. The measure is based on the principle that land acquired by the government either compulsorily or through private agreement for a public purpose or in the national interest and which is still undeveloped and not earmarked by the government to be utilized in the public interest or for a public purpose will be considered for return to the original owner or his executor or heir. More information on this is available here: https://bit.ly/3IOIGY3 .

U.S. Embassy Port Louis does not anticipate major expropriations in the near future, nor is it aware of any pattern of discrimination against U.S. persons.

Dispute Settlement

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 entered into force in May 2020.

Investor-State Dispute Settlement

Seychelles has been a party to the Convention on the Settlement of Investment Disputes between States and Nationals of Other States since April 1978. Seychelles has signed five bilateral investment treaties (BITs), of which two are currently in force: the 2007 France-Seychelles BIT and the 1998 Cyprus-Seychelles BIT.

U.S. Embassy Port Louis is aware of at least one investor-government dispute in the current reporting period. The dispute involves the operation of a large hotel resort by a company with U.S. shareholders, in which the Seychellois government also owned a small percentage share. In 2008, the Seychellois government sought to close the company on the grounds that it “had disappeared in its ability to operate as a hotel resort,” allowing the hotel to fall into disrepair. The government’s effort was successful and resulted in the cancellation of the hotel’s operating license. The liquidation and subsequent sell-off of the hotel, formerly the country’s second largest hotel, raised suspicions of government corruption among local press outlets and business institutions, including the chamber of commerce. The former majority shareholder 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, a newly formed group allegedly led by the same businessman who threatened the previous owner, were the lowest bidder. In October 2019, the Seychellois Supreme Court recommended that the Seychellois president establish a commission of inquiry to investigate the sale of the hotel, and, in June 2020, then-President Danny Faure appointed such a commission. The commission’s report was expected to be published by the end of May 2021 but has not yet been published as of March 2022.

Parties involved in investment disputes are encouraged to resolve their disputes through arbitration and negotiation. The Seychelles Investment Act created the Investment Appeal Panel to which aggrieved investors may appeal a decision made by a public sector agency regarding their investments or proposed investments in Seychelles. In the event investors are not satisfied with the decision of the Investment Appeal Panel, they may appeal to the Court of Appeal. Seychelles has acceded to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, which entered into force in May 2020.

International Commercial Arbitration and Foreign Courts

The legal framework for international arbitration exists through the Commercial Code of Seychelles, the Seychelles Code of Civil Procedure, and Seychelles Investment Act. Seychelles has acceded to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, which entered into force in May 2020. Arbitration legislation in the Seychelles is not based on the UNCITRAL Model Law; however, several provisions are compatible with the Model Law. In general, international arbitration is not yet a regular feature of dispute resolution in Seychelles, even though arbitration clauses are used in contracts.

Bankruptcy Regulations

Bankruptcy in Seychelles is governed under the Insolvency Act of 2013 (https://www.seylii.org/sc/legislation/act/2013/4 ). According to his act, an individual may be discharged from bankruptcy three years from the date of its declaration. Bankruptcy is not criminalized in Seychelles.

Investment Incentives

The Seychellois government has enacted legislation which provides incentives for investment in several sectors. Examples include the 2005 Agriculture and Fisheries (Incentives) Act, 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 assist in screening potential investments. In 2018, the government announced an investment policy guided by the following principles: creation of a conducive and transparent environment to attract investment and operate business; modernization of the legal framework for investment; application of international best practices and standards for investment; and respect for the environment and sociocultural fabric of the country. The investment policy statement is available at the following link: https://www.investinseychelles.com/downloads/investment-policy/seychelles-investment-policy/download .

According to the SIB, the government does not issue investment guarantees, but Seychelles’ public-private partnership framework allows public and private sector entities to jointly finance foreign direct investment projects.

The government offers tax incentives in the form of value-added tax exemptions on imported goods that (a) conserve, generate or produce renewable or environment friendly energy sources; (b) conserve fresh or potable water resources or re-use or recycle wastewater; and (c) recycle, reduce or re-use solid waste.  The government also provides rebates to businesses that use rooftop photovoltaic equipment for power generation.

Foreign Trade Zones/Free Ports/Trade Facilitation

The Seychelles International Trade Zone (SITZ) Act of 1995 (https://fsaseychelles.sc/component/edocman/sitz/legislations?start=0) provides for the establishment of free trade zones, which aim to combine the benefits of a freeport and an export processing zone. Multiple locations have been declared international trade zones under this regime. The list of concessions available to SITZ license holders includes the following:

  1. Exemption from customs duties on certain capital equipment to be used in the SITZ.
  2. Exemption from certain taxes.
  3. Exemption from fees with respect to work permits.
  4. Entitlement to full foreign ownership.
  5. Entitlement to employ 100 percent foreign labor.
  6. Exemption from national labor laws.

Activities of the SITZ are regulated by the Seychelles Financial Services Authority. Foreign-owned firms benefit from the same incentives as local firms operating in the SITZ. 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 export services licensee will not be allowed to provide services other than repair and reconditioning of goods, warehouse, and rent storage space, or to offer logistical services, provided that these activities relate to goods physically handled in the SITZ.

Export services operators licensed on or before October 16, 2017, 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.

Performance and Data Localization Requirements

Investors operating in Seychelles are expected to abide by the following obligations:

  1. Comply with the provisions of the governing laws on investment procedures and carry out investment activities in accordance with the approvals granted. This includes the responsibility for accuracy and truthfulness in materials submitted in investment proposals and registration.
  2. Fully discharge their financial obligations, including taxation, in accordance with the law.
  3. Carry out the provisions of the laws on accounting and auditing.
  4. Carry out the provisions of the laws on registration of companies and other legal entities.
  5. 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 March 2021 it has not entered into force. Other sectoral laws that include data protection provisions are: the 1976 Civil Code of Seychelles; the 2001 Electronic Transactions Act; the 2004 Central Bank of Seychelles Act; the 2004 Financial Institutions Act; the 2012 Central Bank of Seychelles (Credit Information System) Regulations; the 2013 Financial Services Authority Act; the 2016 Anti-Corruption Act; the 2016 International Business Companies Act; the 2018 Access to Information Act; the 2020 Anti-Money Laundering and Combating the Financing of Terrorism Act, and the 2021 Cybercrimes and Other Related Crimes Act. The drafting of a new data protection bill was approved by the cabinet of ministers in December 2021 and is currently ongoing.

There is currently 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, there are currently no government agencies involved in enforcing any rules or regulations with regards to local data storage in Seychelles.

U.S. Embassy Port Louis is not aware of any investment performance requirements.

Real Property

Seychellois courts enforce property rights. Mortgages and liens are enforced, and the land registrar resolves land disputes. All lands in Seychelles are either publicly or privately held. In 2014, the government 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 Seychellois government 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 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 2014 Copyright Act and the 2014 Industrial Property Act, which are the two major laws regarding intellectual property rights, are currently being reviewed, along with their related regulations, with a view to updating them in line with international standards. The 2014 Customs Management (Border Measures) Regulations provide 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, as very few international brands and trademarks have local or even regional representatives.

In 2017, the cabinet of ministers established the 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, National Planning, and Trade, which comprises representatives from government, non-governmental organizations, and the private sector, meets on a monthly basis. The Registrar General’s Office serves as the one-stop-shop for both copyright and intellectual property.

Chapter 13 of the 2014 Customs Management (Border Measures) Regulations 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 (https://www.src.gov.sc/resources/Guides/2018/IPRs.pdf ) to counter the import and export of counterfeit and pirated goods. 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 Seychellois markets. During 2021, the Customs Division intercepted and seized one consignment of counterfeit goods, mainly counterfeit handbags, shoes, and articles of clothing.

Seychelles is not in the 2022 United States Trade Representative (USTR) Special 301 Report or on the 2022 Notorious Markets List.

For additional information about national laws and points of contact at local IP offices, please see WIPO’s country profiles at http://www.wipo.int/directory/en/ .

Some Law Firms in Seychelles also handling IPR:*

KAREN DOMINGUE
Room 8, Trinity House
Huteau Lane 41
Victoria, Mahe
Seychelles
+248 422 6243
icsey@sechelles.net

A.G. AMESBURY
Room 104, Premier Building
Victoria, Mahe
Seychelles
+248 423 28 41
a.g.amesburyattorney@gmail.com

*List for convenience only, not intended to imply endorsement by the U.S. Government.

Capital Markets and Portfolio Investment

Seychelles welcomes foreign portfolio investment. The Seychelles Securities Act  (https://fsaseychelles.sc/component/edocman/securities-act-2007/download?Itemid=0 ) provides the legal framework for the Seychelles’ stock market. The Seychelles securities exchange, now known as MERJ Exchange, has operated since 2012. Listing and trading are available in Euros, Pounds Sterling, Seychelles Rupees, South African Rand, and Australian Dollars. MERJ is an affiliate of the World Federation of Exchanges, a full member of ANNA and a partner exchange of the Sustainable Stock Exchange Initiative. By the end of 2021, MERJ reported a total of 54 listings (49 equity and 5 debt listings) with a total market capitalization of $1.29 billion. SECDEX Exchange Limited is the second exchange licensed by the Seychelles Financial Services Authority in 2020 to operate as a multi-asset securities and derivatives exchange. 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.

Existing policies facilitate the free flow of financial resources in and out of the economy. The government 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 2004 Central Bank of Seychelles Act, 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 March 2022, there were seven commercial banks in operation: Absa Bank, Bank of Baroda, Mauritius Commercial Bank (Seychelles), Nouvobanq, Seychelles Commercial Bank, Al Salam Bank Seychelles Ltd, and Bank of Ceylon. The Pakistani Bank AL Habib Limited closed its branch in Seychelles in September 2021. 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 multiple laws that govern the financial services sector: the 2004 Financial Institutions Act; the 2004 Prevention of Terrorism Act; the 2004 Central Bank Act; the 2007 Data Protection Act; the 2007 Mutual and Hedge Fund Act; the 2016 International Business Companies Act; the 2020 Anti-Money Laundering and Combating the Financing of Terrorism Act, and the 2020 Beneficial Ownership Act.

The Seychellois banking sector is generally healthy, though it is limited by its 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, thus 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 EU added Seychelles to the list of non-cooperative jurisdictions for tax purposes, as Seychelles had not implemented the tax reforms by the mutually agreed deadline of December 2019. In December 2019, 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. In 2020, the Anti-Money Laundering (AML) and Countering the Financing of Terrorism (CFT) Act and the Beneficial Ownership (BO) Act. 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).

The Beneficial Ownership Act (Compliance of Legal Persons and Legal Arrangements) Notice was enacted in September 2021 and the Beneficial Ownership Data Base digital platform, managed by the Financial Intelligence Unit, became operational in November 2021. All domestic registered companies, partnerships and associations are required to comply with the provisions of the 2020 Beneficial Ownership Act by January 31, 2022, to populate the information about their beneficial owners on the Beneficial Ownership Data Base, and to keep an up-to-date register of all their beneficial owners or shareholders.

In December 2021, the National Assembly approved five bills to make the jurisdiction compliant with FATF recommendations: the Anti-Corruption (Amendment No.3) Bill, the Licenses (Amendment) Bill, the Custody, Management and Disposal of Seized, Forfeited or Confiscated Properties Bill, the Anti-Money Laundering and Countering the Financing of Terrorism (Amendment) Bill, and the Prevention of Terrorism (Second Amendment) Bill.

In February 2022, the Financial Services Authority (FSA) announced that it was conducting a risk assessment of virtual assets and virtual assets service providers. This exercise will guide the authorities on policy decisions related to the development of laws that will allow Seychelles to comply with FATF’s Recommendation 15. The outcome of the risk assessment will feed into the Seychelles National Risk Assessment scheduled for publication in 2022. Other laws enacted during 2021 to upgrade the country’s financial services legal framework include: the Trusts Act, the Foundations (Amendment) Act, the International Service Providers (Amendment) Act, the International Business Companies (Amendment) Act, and the Limited Partnership (Amendment) Act.

In September 2021, the Business Tax (Amendment)(Commencement) Notice and the Business Tax (Amendment of Eleventh Schedule) were also enacted to bring into effect certain changes in Seychelles’ territorial tax system.

As a result of these new laws and amendments, the EU removed Seychelles from Annex I of its list of non-cooperative jurisdictions for tax purposes in October 2021. Seychelles has been moved to Annex II of the list of non-cooperative jurisdictions (the “EU grey list”) for criterion 1.2 (tax transparency), with removal from Annex II pending the positive outcome of a Global Forum supplementary review, scheduled in 2022.

According to the CBS in January 2022, non-performing loans to total gross loans in the Seychellois banking sector stood at 5.39 percent, and foreign currency deposits totaled 12.5 billion Seychelles Rupees (approx. $870 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

Foreign Exchange

Since the 2008 IMF reform package, the Seychellois government 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 fluctuated between SCR 12 and SCR 14.5 to $1 from 2015 to 2019. In 2020, the SCR depreciated by 53 percent with the average rate in January 2020 being SCR 14 to $1 compared to SCR 21.5 in December 2020, due to the unprecedented impact of the COVID-19 pandemic on the tourism sector. The average exchange rate gradually appreciated through 2021 and was back to SCR14 to $1 in February 2022 as tourism and other economic activities rebounded in the country.

Remittance Policies

Foreign exchange controls were removed in 2008 and foreign investors are free to repatriate their profits and other incomes. U.S. Embassy Port Louis 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 the 2022 state of the nation address, the president announced that a sovereign wealth fund will be established. This fund had not yet materialized at the time of this report.

Seychelles is one of 15 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 32 state-owned enterprises, 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. At the end of 2020, total assets of SOEs amounted to $2.2 billion, representing 186 percent of nominal GDP while the total net income was $33.3 million, equivalent to 3 percent of GDP.

SOEs are generally free to purchase and/or supply goods and services from private sector and foreign firms. There was growing concern in the business community that SOEs such as the Seychelles Trading Company (STC) had been allowed to exceed their explicit mandate and compete unfairly. For example, the STC had 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. The new government closed the loss-making retail outlets, rebranded the STC as a wholesale outlet, and introduced the recommended retail price system.

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. Excessive board and executive compensation are perceived to create inequities and inefficiencies in the operations of SOEs. However, the current government intends to carry out a review compensation in SOEs in 2022.

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. PEMC undertakes governance and operational assessments of SOEs using a risk-based approach annually. The government 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 PEMC along with other stakeholders, entered into force in April 2019 and can be accessed on its website:  https://www.pemc.sc/resource-centre. The PEMC issued the first report on the application of the Code of Corporate Governance for the year 2020 in January 2022.

In January 2022, Seychelles Petroleum Company (SEYPEC), a state-owned enterprise involved in importation and supply of fuel on the domestic market, bunkering activities, shipping, and aviation refueling, sold Seychelles’ first petrol tanker without informing the government. At the time of this report, SEYPEC’s CEO was suspended and the PEMC was investigating on the procedure of the sale.

The ownership policy, which applies to all SOEs and articulates the government’s expectations, policies, and functional relationships with respect to SOEs in the fulfilment of their mandates. was adopted in December 2020. The dividend policy for SOEs, which aims to establish a transparent framework for SOE dividend payments, was also adopted in December 2020. Audited financial statements of SOEs are published annually on the PEMC website (HYPERLINK “https://www.pemc.sc/reports” hhttps://www.pemc.sc/reports).

Privatization Program

Previous governments had announced privatization plans several times, but these plans did not materialize. U.S. Embassy Port Louis is not aware of any other formal legal barriers to foreign investors participating in privatization.

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 collected a CSR tax of 0.5 percent on monthly turnover for businesses with an annual turnover of SCR 1 million or more. In April 2021, the CSR Tax Repeal Bill was passed to abolish the CSR tax to provide businesses with additional liquidity during the pandemic and to deter businesses from operating in the informal sector to avoid this tax. Officially, there are no waivers available for foreign investors with regard to labor law, employment rights, consumer protection, or environmental standards.

The law prohibits all forms of forced or compulsory labor. While the government’s efforts to combat labor trafficking significantly increased in 2021, Seychelles still did not meet the minimum international standards. Migrant workers were the population most vulnerable to forced labor, including nonpayment of wages, physical abuse, fraudulent recruitment schemes, delayed payment of their salaries, and failure to provide them with adequate housing, resulting in substandard living conditions. In past years, there have been reports of passport seizures and confiscations to prevent workers from changing employers prior to the end of their two-year contracts. NGOs reported that traffickers have exploited migrant workers aboard foreign-flagged fishing vessels in Seychelles’ territorial waters and ports, including through nonpayment of wages and physical abuse. Labor recruitment agents based in Seychelles have exploited migrant workers, often with the assistance of a local Seychellois accomplice. Migrant workers often signed their employment contracts upon arrival in Seychelles and frequently could not read the language, which traffickers exploited in fraudulent recruitment tactics.

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. In September 2020, the EITI Board assessed Seychelles as having achieved “meaningful progress” in implementing the 2019 EITI Standard. The 2020 draft validation assessment can be accessed at: https://eiti.org/documents/seychelles-validation-2020.

Seychelles adopted a Beneficial Ownership Act in March 2020, which includes a definition of beneficial owners. The law entered into force in January 2021. Extractive companies are the only sector where beneficial ownership disclosures will be made publicly available. The next validation is scheduled to commence in January 2023.

Seychelles, a major player in the global tuna industry, joined the Fisheries Transparency Initiative (FiTI) in 2017. The FiTI International Board approved Seychelles’ candidate application in April 2020.  Seychelles has submitted two FiTI reports covering calendar years 2019 and 2020, and the next report is due by December 2022. The first validation against the FiTI standard is expected to be completed by October 2022.

Additional Resources

Department of State

Department of the Treasury

Department of Labor

Climate Issues

According to a UN International Strategy for Disaster Reduction (UNISDR) report, Seychelles is vulnerable to storms, floods, and landslides. The Seychellois Ministry of Agriculture, Climate Change and Environment (MACE) manages key climate policies.  Seychelles’ 2020 National Climate Change Policy created the National Climate Change Council chaired by the vice president to coordinate all climate change actions.  The council must report on the implementation status of all national and international climate change obligations to the cabinet of ministers and the National Assembly.

In November 2021, at the Conference of Parties 26 (COP 26), the Seychellois government pledged to reduce its greenhouse gas emissions to 26.4 percent of the business-as-usual scenario 2030 value.  To achieve this target, the government plans to reform in its energy, refrigeration and air conditioning, transport, and waste sectors.  Details of the reforms for each sector will be included in the 2022 Seychelles Updated National Climate Change Strategy and the Nationally Determined Contribution (NDC) implementation plan the government was preparing as of March 2022.  Seychelles has a long-term strategy to make its energy supply solely based on renewables as outlined in its 2010-2030 energy policy by focusing on the development of offshore wind and photovoltaic technologies.

The government expects private sector contributions to reform the energy and transport sectors and to develop the aquaculture sector.  While the contributions for the energy and transport sectors will be detailed in upcoming sectoral blueprints, the Ministry of Fisheries and Blue Economy has created an aquaculture department.

The government offers tax incentives in the form of value-added tax exemptions on imported goods that (a) conserve, generate or produce renewable or environment friendly energy sources; (b conserve of fresh or potable water resources or re-use or recycle wastewater; and (c) recycle, reduce or re-use solid waste.  There is a purchase rebate plan to incentivize businesses to resort to rooftop photovoltaic equipment for power generation.

Policies to preserve biodiversity include: (a) regulating coastal planning and infrastructure at the national and local level to prioritize the consideration of “blue” nature-based solutions for climate resilience; (b) protecting at least 50 percent of its seagrass and mangrove ecosystems by 2025, and 100 percent of seagrass and mangrove ecosystems by 2030; (c) establishing a long-term monitoring program for seagrass and mangrove ecosystems by 2025 and including the greenhouse gas sink of Seychelles’ blue carbon ecosystems within the national greenhouse gas inventory by 2025; and (d) committing to the implementation of its adopted marine spatial plan and the effective management of the 30-percent marine-protected areas within the country’s Exclusive Economic Zone.

Public procurement policies in Seychelles do not currently include environmental and green growth considerations such as resource efficiency, pollution abatement, and climate resilience.

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 Seychelles Transparency Initiative (TI), a Transparency International chapter in formation, was set up in 2017. TI’s focus is currently on increasing transparency in tourism, fisheries, finance, and construction. There is currently no legislation protecting NGOs involved in investigating corruption.

The Anti-Corruption (Amendment) Bill (https://seylii.org/sc/legislation/bill/2020/4 ) became law in 2019 giving the ACCS investigative and arresting powers similar to that of the police. The ACCS has received significant criticism for having only achieved one conviction: that of an ACCS employee who was convicted of extortion, corruption, and unlawful disclosure of ACCS information in 2018, when he demanded money in exchange for providing the ACCS’ evidence to an individual under investigation by the ACCS. In September 2021, the ACCS board was dissolved and replaced by an advisory council. The president gave an ultimatum to the ACCS to take actions to prevent, detect, and investigate acts of corruption. In March 2021, the ACCS signed cooperation agreements with the Seychelles Revenue Authority, the Central Bank of Seychelles, and the Registrar General’s Office to better facilitate the exchange of information and assist the ACCS’ investigations.

In November 2021, a prominent businessman and his wife, a senior military official, and former government officials were arrested for the alleged theft of more than $50 million in foreign aid given to Seychelles by the United Arab Emirates in 2002 to help overcome foreign exchange shortages and import basic goods. The money was never recorded in government accounts. The suspects are facing charges of conspiracy to commit corruption, conspiracy to commit money laundering, concealment of property, and stealing by person in public service.

Chapter 10 of the Seychellois Penal Code provides criminal penalties for conviction of corruption by officials. In 2003, the government published the Public Service Code of Ethics and Conduct. 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 2017 Public Persons (Declaration of Assets, Liabilities and Business Interests) Act requires all National Assembly members, councilors, and the mayor to submit a declaration on their assets, debts, and business interests. Asset declarations are not published but may be made public upon request to the ethics commissioner. Laws to combat corruption do not extend to political parties. The 2008 Public Procurement Act, as amended, counters conflict-of-interest in awarding contracts or government procurement.

In March 2021, the cabinet approved amendments to the Public Officers’ Ethics (POE) Act to abolish the POE commission entirely and to shift its responsibility to the ACCS, which has become the umbrella authority overseeing all matters of corruption in the public service. In September 2021, the Public Persons (Declaration of Assets, Liabilities and Business Interests) Bill was approved by the National Assembly to remove the obligation of a public person to submit declarations of assets for spouses or close family members. The bill also provides for establishment of a secure electronic system for submission of declarations and related documents. The government does not require private companies to establish internal codes of conduct.

Seychelles ratified the UN Convention against Corruption in March 2006. Seychelles is not party to the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions.

Resources to Report Corruption

Anti-Corruption Commission
May De Silva
Chief Executive Officer
Victoria House,
State House Avenue
Victoria, Mahe
+248 4326061
complaints@accsey.com

Office of the Ombudsperson
Nicole Tirant-Gherardi
Ombudsperson
Room 306, Aarti Chambers, Mont Fleuri, Mahe
+248 225147
ombuds@seychelles.net

The current constitution, promulgated in 1993, 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 (People’s Party), governed Seychelles following the 1977 coup d’etat 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. The October 2020 election was the first time since 1976 that Seychellois voters elected an opposition party candidate as president and there was a peaceful and smooth transfer of power. East Africa Standby Force election observers declared the election to have been peaceful, transparent, and orderly. Seychelles remained politically stable at the time of this report.

The national unemployment rate in the fourth quarter of 2020 was 3.3 percent, of which 51.6 percent was female. In the fourth quarter of 2020, the youth unemployment rate was 12 percent and disaggregation of the data showed that youth unemployment was higher among females. According to the Seychelles Bureau of Statistics, the unemployment rate would have been 4.3 percent if those affected by the COVID-19 pandemic had sought alternative employment, rather than waiting for the amelioration of the COVID-19 pandemic.

The private sector accounted for 63 percent of formal employment in the fourth quarter of 2021. Within the private sector, the largest category of employment were accommodation and food services activities (30 percent). There were more local female employees in government (62 percent) and more local male employees in parastatals (44 percent). There were more expatriate males working parastatals, and roughly the same percentage of expatriate males and females in government. Disaggregated data by gender is not available for the private sector. In December 2021, the Employment Department, in collaboration with the Department of Information and Communication Technology, launched the first phase of the Internal Labour Market Information System (LMIS). The LMIS will be used register vacancies, jobseekers, job placements, and applications of redundancy, and will enable the Ministry of Employment, Immigration and Civil Status to better collect and process labor market statistics.

In June 2020, the 1995 Employment Act was amended to attempt to limit the impact of the COVID-19 pandemic on the labor market. The amendment regulated the deferment of payment, and reduction of wages of a worker pending the termination of the government program for salary support to workers because of the COVID-19 pandemic. The amendment also restricted the temporary lay-off or redundancy of Seychellois workers if the employer is employing a non-Seychellois worker in a similar position as the Seychellois workers, or if the employer has not started the negotiation to temporarily lay-off the employee.

Major challenges that persist in the labor market include difficultly recruiting Seychellois for certain jobs and reported 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 was approximately 40 percent pre-pandemic, with the majority working in the construction and tourism sectors. Since 2014, a quota system has applied to industries for which demand for foreign labor is high. In February 2021, the government restructured the Gainful Occupation Permit (GOP) framework to give local workers greater access to the labor market. The new framework eliminated COVID-19-related concessions that provided foreign nationals with certain rights while the country’s borders were closed. A three-month GOP extension that was granted to foreign workers due to COVID-19 restrictions is no longer applicable. Employers of GOP holders who left Seychelles are no longer permitted to hire GOP applicants. Under the new framework, labor market testing is strictly enforced to ensure that foreign workers are only hired when no qualified local workers are available. The new framework also prohibits non-local workers from changing employment in Seychelles when their contract ends. However, a change in employer is authorized in cases of labor exploitation and/or human trafficking.

According to statistics provided by the Ministry of Employment, Immigration and Civil Status, the informal employment rate was 16.9 percent in 2020. There were more males (80 percent) working in the informal sector than females. The three main sectors for informal employment include construction, wholesale and retail trade, agriculture, forestry, and fishing.

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, in practice, 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 minimum wage increased to SCR 5,804 ($426) per month. In 2017, the Unemployment Relief Scheme (URS) was re-introduced for Seychellois aged above 18 and who are dependent on welfare. The new government ended this scheme in February 2021 and the Ministry of Employment, Immigration and Civil Status has been mandated to conduct training and re-skilling programs to enable Seychellois to seek employment. 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 government introduced the Occupational Safety and Health Decree in 2012 and the Prohibition of Trafficking in Persons Act in 2014. 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.

In 2021, the U.S. State Department, in its annual Trafficking in Persons Report, upgraded Seychelles to a Tier 2 ranking, in recognition of its overall increasing efforts compared to the previous reporting period. The conclusion was that while the government of Seychelles does not fully meet the minimum standards for the elimination of trafficking, it is making significant efforts to do so.

Seychelles and the United States signed an OPIC investment agreement in 2012, the text of which is available on the following link: https://www.dfc.gov/sites/default/files/2019-08/Seychelles-signed-02-03-2012-entered-into-force-10-05-2012.pdf . As of October 1, 2019, the issuer for the purposes of the Agreement is the DFC, the successor U.S. agency to OPIC. Due to the small size of the economy, there is limited potential for DFC programs in Seychelles. Nevertheless, Seychellois firms and U.S. investors may seek DFC financing or insurance for joint ventures elsewhere in Africa and Asia.

Table 2: Key Macroeconomic Data, U.S. FDI in Host Country/Economy
Host Country Statistical source* USG or international statistical source USG or International Source of Data:  BEA; IMF; Eurostat; UNCTAD, Other
Economic Data Year Amount Year Amount  
Host Country Gross Domestic Product (GDP) ($M USD) 2020 $1,146 2020 $1,060 www.worldbank.org/en/country
Foreign Direct Investment Host Country Statistical source* USG or international statistical source USG or international Source of data:  BEA; IMF; Eurostat; UNCTAD, Other
U.S. FDI in partner country ($M USD, stock positions) N/A N/A 2020 $575 BEA data available at https://apps.bea.gov/international/factsheet/
Host country’s FDI in the United States ($M USD, stock positions) N/A N/A 2020 N/A BEA data available at https://www.bea.gov/international/direct-investment-and-multinational-enterprises-comprehensive-data
Total inbound stock of FDI as % host GDP N/A $N/A 2020 290.5% UNCTAD data available at

https://unctad.org/topic/investment/world-investment-report

* Source for Host Country Data: Annual National Accounts 2020, National Bureau of Statistics of Seychelles

Table 3: Sources and Destination of FDI
Direct Investment from/in Counterpart Economy Data (through 2020)
From Top Five Sources/To Top Five Destinations (US Dollars, Millions)
Inward Direct Investment Outward Direct Investment
Total Inward $497 100% Total Outward N/A 100%
Mauritius $222 45%
Cyprus $80 16%
Russian Federation $47 9%
United Kingdom $27 5%
United States $200 4%
“0” reflects amounts rounded to +/- USD 500,000.

Source: Data from the IMF’s Coordinated Direct Investment Survey database.  Data retrieved from IMF’s Coordinated Direct Investment Survey database presents a much different picture of FDI into Cambodia as compared to that provided by the Cambodian government. For example, the CDC reports USD 46 billion of FDI stock in terms of fixed assets through the end of 2021, while the IMF reports only USD 37 billion.

Smita Bheenick
Economic and Commercial Specialist
U.S. Embassy to Mauritius and Seychelles, Port-Louis, Mauritius
+ 230 202 4400
BheenickS@state.gov

2022 Investment Climate Statements: Seychelles
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U.S. Department of State

The Lessons of 1989: Freedom and Our Future