Laying the foundation for a deeper financial sector in Seychelles
October 07, 2016
The ICF-funded Seychelles Financial and Regulatory Capacity Support project has come to an end. Implemented since August 2015, the project sought to increase the ability of the Seychelles Government to diversify the financial services sector in the country and provide better regulation and oversight within the sector.
|The Steering Committee for the Seychelles Financial Sector project meets for the last time to close the project.
The objective of the Seychelles Government is to create an enabling environment for private sector investment through deepening and diversification of the financial services sector, development of financial infrastructure, capital markets, financial inclusion and capacity building for the implementation of the requisite regulations.
ICF’s assistance laid the foundation for these changes by working with three different Government departments to support law reviews, research studies, policy papers, and capacity building missions.
The project helped the Central Bank of Seychelles (CBS) to assess the remittances market, do a diagnostic study on Government payments, and a baseline survey on financial literacy. As a result of these studies, the Government will issue a payment services regulation for the remittances market that sets out minimum standards and creates greater transparency. It will implement a National Payment Switch to facilitate financial transfers. It will also conduct a financial literacy education campaign for all citizens to increase their understanding and enable them to take advantage of financial services on offer. Although 98% of the population have a bank account, less than 50% have insurance, something that the Government wants to change.
In addition, the support also helped CBS to draft a policy paper on Islamic Banking and Finance. Islamic Banking is a new financial sector product that the Government wants to introduce in Seychelles in an effort to broaden the sector.
|Caroline Abel, Governor of the Central Bank of Seychelles, says improvement of the financial sector is a continuous journey for the country
"The contribution of financial services to the GSP is currently 10%,” said Caroline Abel, Governor of the Central Bank of Seychelles. “We expect financial services to create high value jobs and therefore increase employment. We are already starting a conversation with tertiary education institutions to improve capacity building in the country so that people can take advantage of the opportunities that the sector offers.”
The project also worked with the Financial Services Authority to review the Mutual and Hedge Fund Act, as well as its supervisory framework. In addition, it created supervisory frameworks for Insurance, Pension, and Hire/Purchase, as well as reviewed the Securities supervisory frameworks. Along with these frameworks, procedural manuals were created and staff trained to enable them to effectively supervise each sector.
Working with the Attorney General’s Office, the project has helped them to review the 1972 Companies Act, creating a modernised Bill that meets international best practice and simplifies company creation, especially for small and medium enterprises.
“The revised Companies Act will be a lot simpler to understand,” said Dr Steve Fanny, who is the Special Adviser to the Minister of Investment, Entrepreneurship Development and Business Innovation. “It will make it a lot cheaper to incorporate a company as it will not be mandatory to use the services of a lawyer or accountant. SMEs will also have a simpler way of reporting their accounting transactions.”
The Companies Bill will be presented to Parliament in November 2016. For the first time, Government and the private sector collaborated in the drafting of the Bill which helped greatly in bringing compromise between both sides and creating common understanding. The project also created a Corporate Governance Code that sets out minimum governance procedures that companies will have to adhere to.
Lastly, the project helped to create a new Procedures Manual for the Registrar General’s Office. The Office deals with all manner of registrations from company to land and does not have the capacity to keep up with changes. The creation of a new procedures manual is now helping them to be on the same page.
|Minister Michael Benstrong thanks ICF for its support.
Underlying all these changes was a strong capacity building element for each area. Government officials from each of the institutions mentioned above undertook visits to other countries, including African countries, to learn how to implement the new changes.
“On behalf of the Government of Seychelles, I would like to thank ICF for their support,” said Michael Benstrong, Minister of Investment, Entrepreneurship Development and Business Innovation. “The new Companies Bill will go a long way to improve the ease of doing business and simplification of registration. People expect the Government and the financial sector to offer specific services. This is what we want to offer them. We want to put people in the centre of our initiatives. ”
Seychelles’ economy is heavily reliant on tourism and fisheries so the Government is keen to increase diversity by making the financial sector the third pillar of the economy. A nationwide Financial Sector Development Implementation Plan (FSDIP) has been created to addressing this.
The Seychelles Financial and Regulatory Capacity Support project has contributed to strengthening the FSDIP and provide a foundation for the Government to move forward its diversification agenda.
The closing meeting for the project was chaired by Minister Benstrong and brought together Government and ICF officials.