AfDB approves US $10-million loan to Seychelles for private sector development

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The African Development Bank has approved a US $10-million loan to the Republic of Seychelles in support of the Government's Inclusive Private Sector Development and Competitiveness Programme - phase II (IPSDCP-II).

This budget-support loan, designed to ensure continuity and deepening of reforms supported under the first phase, will be disbursed in one tranche in the fiscal year 2015. The first programme comprised a US $20-million loan approved in 2013, which supported the launch of a financing scheme for Micro, Small and Medium Enterprises (MSMEs) and a financing services authority.

The IPSDCP-II aims are to achieve inclusive and sustained economic growth through enhanced competitiveness of the economy of Seychelles. It will also support a series of ambitious reforms to address key constraints to private sector development, focusing on domestic SMEs.

This includes measures aimed at improving the regulatory environment for business development and investment, including full operationalization of e-government initiatives such as the electronic land registry system and e-taxation, modernizing the competition law to offer better protection for MSMEs, and improving access to finance and support services for business start-ups. In addition the programme will support implementation of the financial sector development implementation plan, specifically relating to strengthening the regulatory framework and transparency of the non-banking financial sector.

Under the programme, economic competitiveness will also be strengthened through a series of public sector efficiency reforms, including the development of a PPP policy, considered as crucial in the context of fiscal consolidation and critical to opening up new sectors and opportunities for investors.

Other policy actions to be supported include the production of a first monitoring report on procurement performance, and timely publication of budgetary reports to ensure greater transparency and facilitate civil society participation. These reforms will not only have a direct positive impact on the business environment, but they will also improve the quality and efficiency of public expenditure, thus maximizing the returns of public investment in economic infrastructure and public services which are key to economic competitiveness and inclusiveness.

Seychelles had embarked on an ambitious reform agenda focusing on macroeconomic stabilization, fiscal sustainability, and private-sector-led growth after the country experienced a major debt crisis in 2008.

However, the country still faces challenges with building resilience against external shocks by strengthening economic competitiveness, as well as ensuring that economic growth is inclusive and reaches out to vulnerable segments of the population.

The operation is aligned with the Seychelles 2017 Strategy and the new National Development Strategy approved this year; as well as the Bank's Country Strategy Paper 2011-2015.

Private sector operators (in particular MSMEs, with a special emphasis on those owned or operated by women and youth), and public institutions as well as civil society will be the key direct beneficiaries of the programme. Given the expected positive impact on growth, job creation and economic competitiveness, the entire Seychellois population can be considered to be indirect beneficiaries.

Bank staff working on the programme believe that it will have a positive impact on Seychelles women entrepreneurs. They argue that by supporting MSME development and increased access to finance, the IPSDCP-II will contribute to women economic empowerment in Seychelles. Furthermore, the financial literacy programme will benefit both men and women, through increased knowledge and understanding of financial products and affordable financing opportunities, as well as financial protection (insurances/pension), which will contribute to their economic empowerment and protection.

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