PESA
Trade and Regional Integration in Seychelles: FY2019/20

Trade and Regional Integration in Seychelles: FY2019/20

Seychellois exports have been growing slower than imports during the period from 2015 to 2018. This has not led to a significant deterioration in gross official foreign exchange reserves supported by the persistent depreciation of the SCR. The slower growth in exports has led to a minor deterioration of Seychelles’ current account balance. Seychelles is still dependent on agriculture-based exports which are also amongst its top-traded goods with its neighbours in the Common Market for Eastern and Southern Africa (COMESA) and the Southern African Development Community (SADC). However, Seychelles is poorly integrated in both COMESA and SADC and its trade is unbalanced due to the persistent merchandise trade deficit in both regions. This suggests that there is significant room to increase Seychelles’ exports to both regions and Seychelles might want to rebalance its trade towards greater reliance on COMESA in order to reduce its overreliance on SADC.

 

Figure 1: Merchandise Trade Balance in the Seychelles (2015-2018)

Merchandise Trade Balance in the Seychelles (2015-2018)

Source: UNCTAD 2019, UNCTADStat Database.

 

Total merchandise imports to Seychelles have increased to USD 1.3 billion in 2018, from an annual average of USD 1.1 billion from 2015 to 2017[1]. Exports increased to USD 619.8 million in 2018, from an annual average of USD 496.6 million from 2015 to 2017[2]. The slower growth in exports has worsened Seychelles’ merchandise trade balance which deteriorated to a deficit of -USD 709.2 million in 2018 from a deficit averaging -USD 624.7 million from 2015 to 2017[3]. The slower growth in exports has not led to a significant deterioration in gross official foreign exchange reserves supported by the persistent depreciation of the SCR.

 

Figure 2: Gross Official Reserves in the Seychelles (2016-2024)

Gross Official Reserves in the Seychelles (2016-2024)

Sources: IMF 2019a, Seychelles Second Review Under the Policy Coordination Instrument; IMF 2019b, Seychelles 2019 Article IV Report. Note: (*) Figures from 2019 onwards are projections from the IMF, 2019b.

 

Gross official foreign exchange reserves increased to USD 548.0 million in 2018 from an annual average of USD 535.1 million from 2015 to 2017[4]. During this period, the SCR depreciated by -2.2% in 2018 to SCR 13.9 per USD (2017: -1.6%)[5]. The SCR depreciated by an annual average of -2.2% from SCR 13.3 per USD in 2015 to SCR 13.6 per USD in 2017[6]. Gross official reserves are projected to increase to USD 551.0 million in 2019, which is equivalent to 3.5 months’ import cover[7]. In the forward-looking medium-term from 2020 to 2024, gross official reserves are projected to increase to an annual average of USD 600.0 million (approx. 3.3 months’ import cover)[8]. The slower growth exports and growing imports has not affected Seychelles’ current account balance in 2018 but in the forward-looking medium-term the current account balance is projected to return to its persistent current account deficit.

 

Seychelles’ current account balance improved to a deficit of -USD 270.0 million in 2018, from a deficit averaging -USD 283.0 million from 2015 to 2017[9]. Apart from the growth in merchandise imports, which deteriorated the current account balance, the balance of services trade and net income have improved which slowed the deterioration of the current account balance. The balance of services trade improved to a surplus of USD 483.0 million in 2018 from a surplus averaging USD 393.7 million from 2015 to 2017[10]. Seychelles’ net income from abroad improved to a deficit of -USD 81.0 million in 2018 from an annual average deficit of -USD 134.3 million from 2015 to 2017[11]. The current account balance is projected to deteriorate to a deficit of -USD 296.0 million (approx. -17.4% of GDP) in 2019[12]. In the forward-looking medium-term from 2020 to 2024, the current account balance is projected to deteriorate further to annual average deficit of -USD 344.0 million (approx. -17.8% of GDP)[13].

 

Figure 3: Current Account Balance in the Seychelles (2016-2024)

Current Account Balance in the Seychelles (2016-2024)

Sources: IMF 2019a, Seychelles Second Review Under the Policy Coordination Instrument; IMF 2019b, Seychelles 2019 Article IV Report. Note: (*) Figures from 2019 onwards are projections from the IMF, 2019b.

 

However, Seychelles is still is still dependent on agricultural exports which have made exports earnings volatile due to exports being vulnerable to the adverse impact of climate change. The top agricultural exports such as fish and animal feed constituted 59.4% of Seychelles’ total export earnings in 2018 which has decreased from the average of 69.0% from 2015 to 2017 (2014: 71.4% of exports)[14]. In addition to this concentration of exports, Seychelles is relatively poorly-integrated in terms of regional trade with neighbouring countries in COMESA and the SADC and its trade is unbalanced.

 

The top-five exports from Seychelles to COMESA are fish, machinery, ships and boats, animal feed and gold which constituted 3.7% of total exports in 2018 (2015-‘17: 8.3% of total exports)[15]. The value of the top-five exports from Seychelles to COMESA decreased to USD 23.1 million in 2018 from an annual average of USD 42.1 million from 2015 to 2017[16].

 

The value of total exports from Seychelles to COMESA decreased to USD 23.6 million (approx. 3.8% of total exports) in 2018 from an average of USD 46.3 million (approx. 9.3% of total exports)[17]. These are relatively poor or below-average levels of intra-regional trade given that the COMESA average intra-regional exports level was 11.9% of total exports in 2018. The COMESA intra-regional exports, meaning total exports amongst COMESA countries, as a share of total exports to the world increased from an average of 10.5% from 2015 to 2017[18]. Given Seychelles’ balance of merchandise trade in the region, there is room to increase its exports to COMESA countries.

 

Figure 4: Nominal Exchange Rate in the Seychelles (2015-2018)

Nominal Exchange Rate in the Seychelles (2015-2018)

Source: CBS 2019, External Sector Statistics: Exchange Rate - Monthly.

 

Seychelles’ top-five imports from COMESA are refined vegetable fats & oils, printed material, animal feed, paper and paperboard, and vegetables. Although these imports are diversified they constituted only 2.0% of total imports to Seychelles in 2018 (2015-‘17: 2.2% of total imports)[19]. The value of the top-five imports from COMESA to Seychelles increased to USD 26.3 million in 2018 from an annual average of USD 23.6 million from 2015 to 2017[20].

 

The value of Seychelles’ total imports from COMESA increased to USD 60.2 million (approx. 4.5% of total imports) in 2018 from an annual average of USD 55.2 million (approx. 4.9% of total exports) from 2015 to 2017[21]. These are relatively poor or below-average levels of intra-regional trade given that the COMESA average intra-regional imports level was 6.5% of total imports in 2018[22]. The COMESA intra-regional imports, meaning total imports amongst COMESA countries, as a share of total imports from the world increased only from an average of 5.5% from 2015 to 2017[23].

 

Table 1: COMESA Regional Trade for the Seychelles (2015-2018)

COMESA Regional Trade for the Seychelles (2015-2018)

Source: UNCTAD 2019, UNCTADStat Database.

 

Seychelles maintains a persistent and growing merchandise trade deficit in COMESA which increased to a deficit of -USD 36.6 million in 2018 (2015-’17: -USD 8.9 million). Hence, there is room to increase Seychelles’ exports to COMESA countries. This would make Seychelles’ intra-regional trade balance in COMESA more equitable.

 

The top-five exports from Seychelles to the SADC are ships and boats, fish, medical equipment, jewellery and animal feed, which constituted 8.7% of total exports in 2018 (2015-‘17: 8.3% of total exports)[24]. The value of the top-five exports from Seychelles to SADC increased to USD 53.9 million in 2018 from an annual average of USD 42.3 million from 2015 to 2017[25].

 

The value of total exports from Seychelles to the SADC increased to USD 64.1 million (approx. 10.3% of total exports) in 2018 from an average of USD 50.1 million (approx. 10.1% of total exports)[26]. These are relatively poor or below-average levels of intra-regional trade given that the SADC average intra-regional exports level was 17.9% of total exports in 2018. The SADC intra-regional exports, meaning total exports amongst SADC countries, as a share of total exports to the world decreased from an average of 20.8% from 2015 to 2017[27]. Given Seychelles’ balance of merchandise trade in the region, there is room to increase its exports to SADC countries.

 

Table 2: SADC Regional Trade for the Seychelles (2015-2018)

SADC Regional Trade for the Seychelles (2015-2018)

Source: UNCTAD 2019, UNCTADStat Database.

 

Seychelles’ top-five imports from SADC are printed material, ships and boats, wood, paper and cardboard, and animal feed. Although these imports are diversified they constituted only 1.9% of total imports to Seychelles in 2018 (2015-‘17: 2.3% of total imports)[28]. The value of the top-five imports from SADC to Seychelles increased to USD 25.7 million in 2018 from an annual average of USD 24.4 million from 2015 to 2017[29].

 

The value of Seychelles’ total imports from SADC increased to USD 119.4 million (approx. 9.0% of total imports) in 2018 from an annual average of USD 108.3 million (approx. 9.7% of total exports) from 2015 to 2017[30]. These are very poor levels of intra-regional trade given that the SADC average intra-regional imports level was 20.9% of total imports in 2018[31]. The SADC intra-regional imports, meaning total imports amongst SADC countries, as a share of total imports from the world increased only from an average of 20.7% from 2015 to 2017[32].

 

Seychelles maintains a persistent merchandise trade deficit in SADC which decreased to a deficit of -USD 55.3 million in 2018 (2015-’17: -USD 58.2 million). Seychelles is quite reliant on the SADC for its imports and there is significant room to increase its exports to SADC countries. This would make Seychelles’ intra-regional trade balance in SADC more equitable.

 

In addition, Seychelles might want to reassess the balance of benefits to its COMESA and SADC membership given that it received greater benefit from COMESA on the account of its relatively more favourable merchandise trade balance. Therefore, there is room to rebalance the Seychelles’ imports towards COMESA and increase Seychelles’ exports to both regions. This would also make Seychelles’ intra-regional trade balance with COMESA and SADC more equitable.

 


[1] UNCTAD 2019. UNCTADStat Database, United Nations Conference on Trade and Development: Geneva. Available At: https://unctadstat.unctad.org/ [Last Accessed: 26 September 2019].
[2] UNCTAD 2019. UNCTADStat Database, ibid.
[3] UNCTAD 2019. UNCTADStat Database, ibid.
[4] IMF 2019a. Seychelles 2019 Article IV Report, International Monetary Fund: Washington, D. C. Available At: https://www.imf.org/ [Last Accessed: 15 October 2019]; IMF 2019b. Seychelles Second Review Under the Policy Coordination Instrument, International Monetary Fund: Washington, D. C. Available At: https://www.imf.org/ [Last Accessed: 15 October 2019].
[5] CBS 2019. External Sector Statistics: Exchange Rate – Monthly, Central Bank of Seychelles: Victoria. Available At: https://www.rbm.mw/ [Last Accessed: 15 October 2019].
[6] CBS 2019. External Sector Statistics: Exchange Rate – Monthly, ibid.
[7] IMF 2019a. Seychelles 2019 Article IV Report, ibid.
[8] IMF 2019a. Seychelles 2019 Article IV Report, ibid.
[9] IMF 2019a. Seychelles 2019 Article IV Report, ibid.; IMF 2019b. Seychelles Second Review Under the Policy Coordination Instrument, ibid.
[10] IMF 2019a. Seychelles 2019 Article IV Report, ibid.; IMF 2019b. Seychelles Second Review Under the Policy Coordination Instrument, ibid.
[11] UNCTAD 2019. UNCTADStat Database, ibid.
[12] IMF 2019a. Seychelles 2019 Article IV Report, ibid.
[13] IMF 2019a. Seychelles 2019 Article IV Report, ibid.
[14] UNCTAD 2019. UNCTADStat Database, ibid.
[15] UNCTAD 2019. UNCTADStat Database, ibid.
[16] UNCTAD 2019. UNCTADStat Database, ibid.
[17] UNCTAD 2019. UNCTADStat Database, ibid.
[18] UNCTAD 2019. UNCTADStat Database, ibid.
[19] UNCTAD 2019. UNCTADStat Database, ibid.
[20] UNCTAD 2019. UNCTADStat Database, ibid.
[21] UNCTAD 2019. UNCTADStat Database, ibid.
[22] UNCTAD 2019. UNCTADStat Database, ibid.
[23] UNCTAD 2019. UNCTADStat Database, ibid.
[24] UNCTAD 2019. UNCTADStat Database, ibid.
[25] UNCTAD 2019. UNCTADStat Database, ibid.
[26] UNCTAD 2019. UNCTADStat Database, ibid.
[27] UNCTAD 2019. UNCTADStat Database, ibid.
[28] UNCTAD 2019. UNCTADStat Database, ibid.
[29] UNCTAD 2019. UNCTADStat Database, ibid.
[30] UNCTAD 2019. UNCTADStat Database, ibid.
[31] UNCTAD 2019. UNCTADStat Database, ibid.
[32] UNCTAD 2019. UNCTADStat Database, ibid.

 


Siya Biniza

Role: Executive Director
Contact: siya@politicaleconomy.org.za
Siya is a Political Economist specialising in Development Finance, Industrial Development, and Regional Integration...

Advertisement

Follow PESA Online

Follow PESA Online

Follow us on some of your favourite social media.

Contact Us

Please complete the General Enquiry form and submit it to us for a response. Please use the subject “Media” for all media-related requests.