12 Oct Creating a fast-growing and robust financial sector
New regulations and improved transparency are helping the country create an attractive environment for investors
While Seychelles remains highly dependent on international tourism and fishing, in recent times the small island nation’s financial sector has grown in importance as a viable third economic pillar. This was emphasized during the COVID-19 pandemic, when travel became restricted and the country was deprived of its main traditional sources of revenue.
With a view to boosting economic diversification, the country has increased its international compliance and transparency levels to beef up and transform its financial sector. The Central Bank of Seychelles (CBS) has played a pivotal role in this process. Tasked with implementing the country’s monetary policy, which assists in maintaining price stability, the CBS helped numerous businesses during the pandemic and is now targeting the modernization of the entire banking industry.
“We are working hard to promote financial stability by enhancing our legal framework. Banking is the biggest component of our financial sector, hence we have a greater role to play in regulating and supervising that industry,” explains the governor and chairperson of CBS, Caroline Abel. “The other main focus we are pushing toward is the use of technology. This entails additional strengthening of our legal framework and allowing more innovation within our ecosystem, not just from banks but also from non-banks that are now participating in the provision of payment services. We are encouraging the system to offer more innovative services so that other segments of the economy can pursue a digital agenda alongside the government.”
New laws have also been enacted that raise the country’s international compliance even higher, while Seychelles has also scrupulously implemented the International Monetary Fund’s economic reform program. The CBS now has an advanced transparency framework covering the areas of foreign exchange (FX) management, FX reserve management and financial stability, while much has been done to progress the country’s anti-money laundering regulations and to counter the financing of terrorism.
One company that has witnessed the transformation of the financial sector is Absa Bank Seychelles. The largest bank in the country, with a substantial pan-African network, Absa has worked closely with the financial service regulators to ensure that investment in the country is safe and secure.
“Seychelles has put the right legislation in place and is very well poised to be a competitive financial service center,” says Nazim Mahmood, managing director of Absa Bank Seychelles. “A lot of legislation has come in in the last few years, which has further strengthened the framework — particularly for offshore banking and some other things around medium- to large-scale project financing. The country is very resilient and the public and private work in Seychelles is very conducive to business. The financial sector is very robust, very well capitalized and is also poised for significant growth. We are projecting double-digit growth year-on-year every year for the next five years.”
All of the work being done by the government to enhance the global reputation of the financial sector in Seychelles is also impacting foreign direct investment, which fell dramatically from 2018 to 2020. With the investment outlook now far more stable, Absa Bank Seychelles is positioning itself as an advisor to foreign investors. “We have an extensive business in Mauritius and we consistently get feedback from those customers who want to expand into the Seychelles. So, we’re channeling direct investment from that jurisdiction,” says Mahmood.
“Absa Group Limited, listed on the Johannesburg Stock Exchange in South Africa, is one of Africa’s largest diversified financial services groups with a presence in 12 countries across the continent. Absa Bank Seychelles is part of this network of countries and a lot of groups come to us because of the size of our balance sheet. We’re the largest bank in Seychelles so, comparatively speaking, we have a very large balance sheet and, therefore, our ability to lend on the continent and in Seychelles is significant. We are in touch with large and medium-sized groups that want to come in and invest in the tourism sector. We see significant appetite in the tourism sector, the fisheries sector and in the construction sector, which is the lifeline of the island.”
As well as attracting investment from neighboring countries, Mahmood is confident Seychelles will generate a growing interest from the US due to its massive draw as a tourist destination.
“Having lived in the US for many years and having visited the Caribbean on several occasions, I can tell you Seychelles is uniquely different,” he says. “Destination management companies are marketing in the US and US investors are coming and specifically building resorts in Seychelles that cater for US travelers. Seychelles is uniquely positioned from that potential tourism perspective. I would say it is in the top 1% in regards to destinations in the world. I think it is underexplored so there is a tremendous amount of business that can be generated from the US.”
With offices in New York, across Africa and in the UK, Absa Bank Seychelles is well geared to help international clients that are looking to explore the many benefits of establishing a presence in the African nation.
“What we bring to the table is that we have exceptionally strong capability in terms of trade and lending. We are embedded in the fabric of Seychelles’ development and we are intertwined to such an extent that we hold the largest market share,” adds Mahmood. “This means that we are able to do things much faster.”