Selected Issues


Selected Issues

Blue Economy Development Priorities for Shared Prosperity in Seychelles1

A. Current Situation and Policies

1. Seychelles aspires to make better, and more managed, use of the marine resources that underpin its economy. Seychelles’ economy is based on exploiting its abundant marine natural resources (0). The tourism sector, centered on Seychelles’ beaches and ocean-based recreational activities, contributes directly about one quarter of gross valued-added. Tourism’s contribution is much greater considering also its indirect contributions, since it also generates additional demand for goods and services from across the wider economy—generating by one estimate over half of GDP expenditures.2 Tourism is also the primary source of foreign currency earnings. These foreign earnings are complemented mainly by those from two other marine-related sources, arising from Seychelles’ strategic location on the tuna migration and shipping routes through the western Indian ocean: exports of tuna, as well as re-exports of oil by its fuel bunkering industry.

Table 1.

Seychelles: Marine-related activity contributions to Seychelles’ Economy

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Sources: Ministry of Finance, Trade & Economic Planning; National Bureau of Statistics; Seychelles Fisheries Authority; World Travel & Tourism Council

2. Seychelles supports some of the world’s most pristine, diverse and productive marine ecosystems. Seychelles’ large (1.4 million km2) marine Exclusive Economic Zone (EEZ) ranks 7th/221 on the Ocean Health Index.3 Most of Seychelles’ 115 islands are surrounded by coral reefs. Large sea grass beds exist and are an important nursery for reef fish, invertebrate sea turtles and manatees. Fishing grounds are abundant and include a wide variety of species.

3. There are growing concerns about sustainability. No comprehensive evaluation of the impact of current or projected economic activity on the marine environment has yet been made, but in Seychelles, as globally, there are growing concerns about sustainability. In tourism, the government has frozen new approvals for large establishments (with 20 rooms and above) through 2020, reflecting concerns about the impact of the recent rapid pace of development. In the industrial fishing sector, some species are deemed overfished, and the Indian Ocean Tuna Commission (IOTC) has placed an annual ceiling on yellowfin tuna to protect the stock. The IOTC ceiling implies a sharp reduction in Seychelles’ quota of the catch. Catch rates of many of the other main species of fish are declining, reflecting pressures from overfishing in the artisanal, recreational and sport fishing sub-sectors, and from an increasing environmental footprint of the tourism industry. The artisanal, recreational and sport fisheries are open-access, which impedes measures to limit the fishing effort and ensure sustainability.

4. Going forward, Seychelles’ marine natural resources will continue to support livelihoods, and can help to generate additional shared prosperity, if preserved. The challenge for Seychelles is to develop the institutional setup that further develops marine-dependent economic activity, while protecting and enhancing the stock and quality of marine assets. The opportunity for Seychelles is to consolidate its regional, and even global, leadership status in the management and sustainable use of these resources.

5. The government is aware of this challenge and opportunity. A Department of the Blue Economy, situated in the Office of the Vice-President, is preparing a National Blue Economy Roadmap, which will aim to protect and recover ocean ecosystems and biodiversity; ensure that existing ocean industries (e.g. shipping and bunkering) cause minimal environmental impact and meet the highest sustainable practice standards; integrate cross-sectoral spatial planning and implement coastal zone management; increase sustainable use of bio resources (biotechnology, marine ecosystems services); plan for natural disasters and adapt to climate change; increase surveillance of offshore waters; brand Seychelles as a “blue tourism” destination; and, foster knowledge development. These goals are fully aligned with the UN Sustainable Development Goal 14: “Conserve and sustainably use the oceans, seas and marine resources for sustainable development”.

6. The prospect of hydrocarbon discoveries in Seychelles’ marine territory would pose a particular potential policy challenge, and the country has begun to prepare for this. The government has encouraged exploration in the EEZ and is working with Mauritius to develop exploration in their Joint Management Zone (JMZ, of 400,000 km2). In anticipation of hydrocarbon discoveries and extraction, the state-owned regulator (PetroSeychelles) has revised its Model Petroleum Agreement, complementing provisions in the Petroleum Mining Act and the Petroleum Taxation Act. Seychelles is a candidate country to join the Extractive Industries Transparency Initiative (EITI), to which it has committed to submit its first report in 2017.

B. Prospects for Seychelles’ Blue Economy to Boost Shared Prosperity

7. Further development of the blue economy can support shared prosperity. Three main channels for this can be considered, pointing to the policy levers for making further development pro-poor: direct effects on livelihoods through better jobs and Micro, Small and Medium Enterprise (MSME) development, indirect effects on livelihoods through food supply and macroeconomic effects, and redistribution through the public sector of increased ocean resource rents. First, direct poverty reduction and shared prosperity effects through higher earnings in the blue economy will center on the extent to which local labor market participants are able to obtain better jobs, and MSMEs are able to access opportunities, especially in tourism.

8. The policy challenge to guide blue economy development for inclusion should be seen in the light of Seychelles’ already services-oriented, full employment economy. This means that the challenge for the development of the blue economy, and of the private sector more generally, is to equip the local workforce with the skills to participate in supplying higher value-added services, and to ensure that other enabling factors for market work and MSME development are in place (e.g. childcare options, public transport, credit).

9. In fishing, blue economy measures such as those to sustainably raise the value of artisanal fishing catches can be expected to have a beneficial direct impact on the small share of households which rely on this as their main source of income. The poverty rate amongst households whose heads work in the primary sector, including fishing, is higher than that of households headed by workers in any other sector: 55.5%, as defined by the national poverty line (2013).4 However, only about 3 percent of the domestic workforce in Seychelles are recorded as having their main employment in the primary sector. Consequently, the aggregate poverty impact through this direct employment channel will be small.

10. More important direct employment effects can occur through the tourism industry, which offers a wide range of jobs, including high-earning opportunities, but fills many vacancies from abroad. Average tourism sector monthly earnings are considerably higher than the national average (Rs. 15,650 vs. Rs. 9,544)5 consistent with strong derived labor demand growth from what in recent years has been a fast-growing sector. Yet, the high sector average masks significant earnings dispersion, including a wide gap between male and female wages.6 There is a range of jobs in the industry, including many which are less desirable because of heavy manual workloads and difficult hours. A predominant share of the increased labor demand generated by the growth of the tourism industry has been met by importing foreign workers. Total recorded employment in tourism was about 9,000 in 2015, while the number of new and renewed temporary expatriate worker permits (Gainful Occupation Permits, GOPs) issued for tourism was 3,081 in 2015, rising to 4,028 in 2016.7

11. Opportunities for small businesses in the blue economy, for example to provide ancillary services in the fisheries and tourism sectors, could be expanded. Enterprise survey data are lacking but there is a concern that the market structure of the tourism sector discourages competition, despite a range of government programs to support MSMEs, such as the provision of credit guarantees. The market share and vertical integration of the main operators are high, likely limiting opportunities for small-scale providers of goods and services for tourists. Coupled with the limited pool of local start-up knowledge and capital, and skills, the result has been limited innovation and a largely undifferentiated offering of accommodation, transport, retail and excursion options by small-scale providers. Overall, the existing industry model has been successful in developing the tourist sector over the past two decades. The time now looks ripe, however, for fresh analysis of the approach, and especially for the identification of potential measures to reduce barriers to entry, and stimulate competition and innovation. This need is reinforced by the fast pace of change and innovation in tourism globally, and the emergence of new competitors to Seychelles, Second, further blue economy development can support shared prosperity through its food security, living cost and macroeconomic effects.

12. Seychellois have one of the highest levels of fish consumption per capita in the world, approximately 57 kg per annum, with fisheries products accounting for up to 50% of the total protein consumed. Most of this is supplied by Seychelles’ artisanal fishery, which lands about 4,000 tons of fish per year. This fishery is largely limited to catching the bottom-dwelling (demersal) fish inhabiting the Mahé Plateau, an area of around 41,000 km2 up to approximately 50m deep that surrounds the central islands and population centers. The plateau is fished by 140 whalers and schooners and at least 400 outboard vessels, as well as sport and recreational fishing boats. These vessels go to sea for a day to a week and use hook and line, and traps. The continued sustainability of this demersal fishery is critical to food security in Seychelles. Were the local supply to deteriorate and prices to rise, poorer households would be hardest hit, as they spend the greatest share of their income on food, including fish. Food items constitute just under 16 percent of the Consumer Price Index. One survey, albeit now dated (2011), found at that time that about one fifth of households did not have the ability to buy sufficient meat and fish.8

13. In addition to securing the domestic fish supply for food, further sustainable development of the blue economy would strengthen Seychelles’ external balances and support macroeconomic resilience. This would operate, first, through reduced food import demand, an import substitution effect which with further development of sustainable seafood production could be significant, as Seychelles imports about US$70m worth of food annually, constituting 9% of total goods imports, including to supply hotels.9 Second, increased export-oriented production of maritime products (e.g. crab, sea cucumber, seaweed, shrimp, and sponge-based biotech products), including through mariculture, could raise and diversify foreign currency earnings which are currently highly concentrated on tourism and tuna sales. In all cases, ensuring environmental sustainability will be critical, requiring appropriate regulations and enforcement capability to be in place, and, in light of Seychelles’ delicate and pristine ecology, likely meaning that production would need to be oriented to small, high value products supplied into the local tourism industry or to niche international markets.

Third, a larger blue economy can support public revenues, to the benefit of the poorest depending on the allocation and quality of public spending.

14. Seychelles’ high economic dependence on its abundant marine natural resources places into focus not only the preservation of these resources (i.e. sustainability), but also how the benefits from their use are shared. Government revenues and absorption of total expenditures are already relatively high, averaging 34% and 37% of GDP over 2011–2016, respectively.10 The tourism sector contributes directly about one third of total taxes. As the blue economy develops further and contributes more taxation revenues, the incidence of fiscal policy will change, and will need to be assessed and, if merited, adjusted. This, and a continued focus on raising the quality of public service provision, can help ensure that Seychelles’ blue economy not only drives economic growth, but increases shared prosperity.

C. Policies Priorities for Seychelles’ Blue Economy to Drive Shared Prosperity

15. The blue economy is a conceptual framework that encapsulates much of the existing economic activity in Seychelles, which is already marine-oriented, but places a new public policy emphasis on managing and ensuring the sustainability of the resources, and deepening the economic value that they provide.

16. The first prerequisite for this inclusive growth strategy to work is to strengthen the evidence base for policy reform and implementation. Examples include the need for improved satellite accounts for both tourism (where visitor spending figures are currently unreliable), and fisheries (where beyond estimation of the landed catch, large parts of the value chains for non-tuna fisheries lack systematic data collection, and there is little statistical capture of charter sport and recreational fisheries). These data could be used to apply analytical techniques such as the adjusted net savings approach to determine the sustainability with respect to preserving natural capital of Seychelles’ growth path. Investment in more regular, standardized household surveys (including of the subset of households whose livelihoods depend on fishing), and enterprise surveys, would also shed light on inclusiveness.

17. Second, planning, and regulatory requirements and enforcement, need to be further developed and streamlined. Coordination with relevant sector plans and regulatory bodies will be required due to the fundamentally multi-sectoral nature of the blue economy. In particular, Seychelles’ blue economy development strategy will need to be integrated with sectoral and national policy planning frameworks, including for sustainable development (land-focused, in the Ministry of Environment, Energy and Climate Change) and overall national development strategy (in the Ministry of Finance, Trade and Economic Planning). Regularity, clarity and consistency would support private sector investment (including in potentially high-returning, but unproven and hence riskier, projects), and are needed to ensure fair, transparent access to the benefits from further development of the blue economy.

18. Finally, making Seychelles’ further blue economy-based growth trajectory inclusive requires that local labor force participants are able to obtain the skills they need to access new, higher-earning opportunities in the sector, addressing general challenges to small business development (such as the high cost of credit), and, in the public sector, calibrating fiscal incidence to an evolving revenue base, while continuing to strengthen the quality of public services.


Prepared by Alex Sienaert, Luis Alvaro Sanchez, Ben Garnaud (All World Bank).


Current national accounts statistics compilation methods are insufficient to quantify sectors’ indirect contributions to total expenditures, but estimates by the World Travel & Tourism Council place tourism’s overall GDP and employment contributions at well above 50 percent (WTTC, 2015, “Travel & Tourism: Economic Impact 2015, Seychelles”).


The national poverty line defines poverty expansively compared with poverty lines developed for the purposes of international poverty comparisons.


As of 2015. Source: NBS, “Seychelles in Figures”, 2016.


Unconditional difference in average earnings of 128 percent in the 2011 LFS. Source: World Bank, Seychelles Labor Market study (forthcoming).


Official statistics Providing a Consolidate picture of the sectoral labor force (combining local and expatriate workers) are not available sources: official employment: NBS, 2016, “Seychelles in Figures”; GOPs: Ministry of Home Affairs.


Muller, C., 2011, Living Conditions Survey (2011) and Poverty Digest, NBS.


Source: Calculations based on CBS data for 2016. Figures exclude tuna imports for re-export.


Includes preliminary estimates for 2016, IMF.