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Malshini Senaratne, “COVID-19, Blue Economy, and the Climate Change Agenda: The Case of Seychelles,” ORF Issue Brief No. 360, May 2020, Observer Research Foundation.
INTRODUCTION
Located four degrees south of the equator, the Seychelles archipelago comprises 115 low-lying islands scattered across the Indian Ocean. It relies heavily on oceanic resources for livelihood generation and economic growth. Consequently, the country is particularly vulnerable to the adverse effects of climate change.[1]In recent years, the government has sought to transition towards a more integrated and inclusive ocean-based economy. After successfully undertaking the world’s first debt-for-nature swap[2] in 2016, the Seychelles went on to implement a Blue Economy (BE) Strategic Roadmap in 2018 aimed at enhancing economic diversification, reducing small-sector vulnerability, and improving climate resilience.[3]
Table 1.
| Seychelles’ Blue Economy[4] | |
| Scope of Activities | Outlined Sectors |
| Activities which explore and develop ocean resources | Renewable ocean energyMineral explorationHydrocarbons |
| Activities which use ocean space | AquacultureMariculture |
| Activities which protect the ocean environment | Maritime Security |
| Activities which use ocean products as a main input | TourismFisheries |
| Activities which provide goods and services to support ocean activities | Port Developmentand Shipping |
The Seychelles is often touted as a success story for the development and implementation of its BE strategy. In March 2020, approximately a third of its exclusive economic zone (EEZ) was declared a Marine Protection Area (MPA) under the country’s National Parks and Nature Conservancy Act. The MPA totals 410,000 square km and is larger than the landmass of Italy. The declaration comes as a result of the Seychelles’ Marine Spatial Planning (SMSP) initiative and is viewed as a milestone, having met international targets 10 years ahead of schedule.
However, the outbreak of COVID-19 has drastically affected the islands’ BE ecosystem, of which tourism and fisheries are the main drivers; the former accounts for well over 50 percent of Seychelles’ gross domestic product (GDP) and contributes significantly to earnings and employment. In 2019, the country’s real GDP was estimated at 3.5 percent, with visitor arrivals recorded at 384,204.[5] The virus has effectively crippled these sectors because of the imposition of travel bans, isolation requirements and widespread shutdown of the international tourism industry.
THE IMPACT OF COVID-19 ON SEYCHELLES’ BLUE ECONOMY
As of 11 May 2020, the Seychelles has confirmed 11 cases of COVID-19, of which ten patients are in recovery.[6] Despite such a relatively low incidence of infections, much of the country’s economic activity has come to a standstill due to the virus. The dearth of flights and tourists, coupled with the imposition of stricter domestic containment measures, has resulted in plummeting consumer demand. Indeed, the pandemic has created a global wave of uncertainty for BE entrepreneurs in the Seychelles.
The “Great Lockdown” has put almost one-third of the human population under some form of containment. The International Monetary Fund (IMF) predicts that this will cause the worst economic downturn since the Great Depression, far more dire than the 2008 global financial crisis.[7] Swift policy measures have since been employed to combat these fallouts. The Central Bank of Seychelles has reduced the Monetary Policy Rate (MPR) to four percent to alleviate stress on borrowers.[8] Further, it announced a credit facility of approximately US$36 million to assist the country’s commercial banking system with emergency relief measures. To reduce the strain on a business system that relies heavily on imports, consumers are being encouraged to be frugal in their spending. The Bank has also warned that pressure placed on the country’s foreign-exchange reserves will be reflected in consumer prices and inflation rates.
The state had initially predicted growth of 3.5 percent for the year, with tourism continuing to be the principal contributor to GDP.[9] However, the decline in global travel and tourism has led to anticipations of a substantial economic downturn. Growth for the archipelago is estimated to contract by the double-digits. With less than US$1 million now entering the system—down from an average of US$3 million daily—severe pressure has been placed on the country’s economy.[10] The state has since requested and received approval from the IMF for emergency financial assistance under the Rapid Financing Instrument (RFI) for approximately US$31.2 million.[11]
Some of the measures being taken may demonstrate the early stages of a revolution in standard policymaking and business operations. Considering COVID-19’s impact on international visitor arrivals and foreign-exchange earnings, the Seychelles government amended its 2020 Budget. This revised budget of SCR10,447,151,547[12] includes provisions to guarantee salaries in the private sector for three months. Since the private sector is the biggest employer on the island, the state’s assessment payroll was approximated at US$30 million per month.[13] Sectors expected to apply for this aid include tourism, wholesale/retail and construction, with monthly turnarounds of approximately US$14.00 million, US$3.01 million, and US$1.06 million, respectively.
To be eligible for this assistance, applicants need to demonstrate how COVID-19 has affected their business and guarantee that no worker will be made redundant in the near future. To assist businesses and individuals further during this pandemic, the country also amended key legislation such as the Central Bank Act and the Financial Institutions Act, and approved the new budget for 2020.[14] The state is also seeking to amend the Employment Act in an attempt to ensure that no Seychellois employee is made redundant or left unpaid until June 2020. However, the government has announced that salaries of foreign workers will not be covered after 1 July 2020.[15] Contrary to the norms in a standard economic downturn, the Seychelles was initially seeking to stop unemployment and business shutdowns completely. This may have proved too drastic; the effects of the pandemic have caused the state to reconsider allowing employers to negotiate the lay-off of workers or establish redundancy plans. With no confirmed cases since 6 April 2020, the country has eased most of the containment measures and kickstarted the domestic economy.
The ongoing pandemic offers policymakers and decision-makers the opportunity to re-design their strategies for the future. The ability and willingness of governments across the world to implement drastic measures in response to a public health crisis suggests that in a post-pandemic era, similar urgent strategies can also be employed towards addressing climate change.[16] According to the United Nations Conference on Trade and Development (UNCTAD), the pandemic will likely cost the global economy US$1 trillion in 2020. Meanwhile, future funding requirements for climate adaptation are estimated at US$140–300 billion by 2030.[17] The outbreak has not only exacerbated the financing gap for climate action but also reinforced ‘climate complacency’ behaviour around a threat that has and will continue to impact humanity long after COVID-19. This has implications for the Seychelles’ BE journey as well as for other SIDS who continue to bear the brunt of adverse climate-change effects.
CLIMATE CHANGE AND SEYCHELLES’ BLUE ECONOMY AGENDA
The BE agenda in Seychelles aims to strategically and sustainably diversify the country’s existing sectors and explore the potential to introduce emerging ones such as marine biotechnology, renewable energy, and aquaculture. Consequently, the archipelago has seen a surge in Small and Medium Enterprises (SMEs) within the BE space in recent years. However, the process has not been smooth. In 2019, the Seychelles’ ranking in the World Bank’s Ease of Doing Business Report was 100 (out of 190 economies), a decline from the 96th position it secured in 2018.[18] This downward trend lends weight to reinforcing the BE concept in the Seychelles as a means to maximise entrepreneurial potential and drive the sustainable expansion of the business environment through local investment, innovation and entrepreneurship.[19]
Similar to other SIDS, however, the Seychelles islands are economically, socially and environmentally vulnerable to the impacts of climate change.[20] According to the Seychelles’ Climate Strategy Report,[21] over 90 percent of the population and almost all economic activities are located on the coastal plateau of Mahe, at an average elevation of two metres above sea level. Rising seas, increased storm and tidal surges, coupled with extreme sea surface temperature changes, threaten the livelihoods of most Seychellois entrepreneurs operating within the BE space. Climate change further increases the country’s vulnerability to external economic and environmental shocks, leading to widening inequalities amongst the population and a rise in diseases and death.
Table 2.
| Impact of Adverse Climate Change on SIDS | |
| Climate Concerns | Potential Impacts |
| Rising ocean temperatures and ocean acidification | Coral bleaching events, leading to reduced fish populations, species loss and food-stock decline and loss of revenue from the tourism and fisheries sector |
| Rising sea levels | Tidal surges and flooding, impacts on coastal infrastructure and rise in vulnerability of sectors such as tourism, agriculture and marine/terrestrial biodiversity |
| Changes in long-term rainfall patterns | Severe reduction in availability of water, which will adversely affect the local population and economic sectors such as tourism, agriculture, health and biodiversity |
| Rise in climate-sensitive diseases | Spread of vector and non-vector borne diseases, widening inequalities amongst the population and increase in deaths. |
Studies suggest that changes in long-term rainfall patterns and temperatures will have adverse consequences for the islands’ food, water, and health security.[22]Changes in precipitation will impede the availability of water, which will consequently affect the local population, key economic sectors such as tourism and agriculture, as well as biodiversity. Left unchecked, the current climate-change patterns and model projections will prevent many SIDS from meeting their water demands in the future.
Warming seas and ocean acidification have had a severe impact on Seychelles’ coral reefs, leading to reduced fish populations, species loss and food-stock decline. In 1998, the country lost up to 90 percent of its coral reefs during an El Niño event, severely jeopardising its delicate marine habitats and ecosystem. In 2019, the country witnessed another significant coral bleaching event, when surface sea temperatures around several islands rose to 31°C. Unless the effects of climate change are curbed, the country will continue to suffer annual bleaching events, with dire implications for its economy, environment and population by 2050.[23]
The Seychelles’ tourism sector, home to most local businesses, is also expected to suffer greatly due to climate change. Tourist numbers are at risk of declining due to changing weather patterns and disruptions in ocean chemistry from higher carbon dioxide concentrations.[24] Tourism-related coastal infrastructure will also be affected, since rising sea levels and mass coral mortality over the past decade has likely reduced the level of the fringing reef surface, increased wave energy over the reef, and amplified coastal erosion.
Marine litter has become a global environmental issue, with an estimated 12 million tonnes of plastic waste entering the oceans every year.[25] With its large oceanic territory and remote islands, the Seychelles is particularly vulnerable to plastic pollution. Despite mitigation efforts, marine debris continue to accumulate on the islands’ shores. A recent clean-up activity recorded over 10 tonnes of waste –mostly from other nations – that washed ashore on eight of Seychelles’ remote islands.[26] Indeed, the Seychelles serves as a global example in the fight against plastic pollution. In 2018, the country banned the importation and commercial use of plastic bags, cups, plates and cutlery; in 2019, it placed a complete ban on the manufacture, importation and use of single-use plastic straws.
The archipelago is at high risk for climate-sensitive diseases such as malaria, water-borne diseases, non-vector diseases, heat-related diseases, and diseases due to extreme weather conditions (e.g. floods and droughts). In the midst of the pandemic, the country is also tackling a dengue fever outbreak. COVID-19 has effectively highlighted the islands’ vulnerability to health-related impacts. The situation is indicative of the pandemic’s inextricable link to climate change and foreshadows the potential scale of human suffering should climate complacency endure.[27] The post-COVID-19 narrative should focus on the need for a collaborative global response to tackle climate change and foster the necessary environmental safeguards. To this end, the development of a resilient BE might prove crucial.
CHALLENGES FOR BLUE ECONOMY DEVELOPMENT AFTER COVID-19
In addition to climate change and the ongoing COVID-19 pandemic, the Seychelles faces other obstacles in its pursuit of BE development. According to the World Bank, the lack of skilled human capital hinders the ability to harness job creation and growth for innovative BE sectors. With a population of approximately 95,000, the country relies heavily on foreign labour from India, Bangladesh, Sri Lanka and other countries. In 2019, the average number of employed persons for all sectors was 55,805, with expatriate workers making up approximately 30 percent.[28]Moreover, government figures show that nearly 10 percent of the national workforce suffer from heroin addiction and substance-related illnesses, which further strains the country’s public health system.
For the last five years, the Seychelles has also recorded an increase in annual visitor arrivals, resulting in increased pressure to provide housing, infrastructure, and appropriate land-use needs. The country’s perceived over-reliance on tourism has led many to question the long-term sustainability of the industry.[29] In 2015, the government imposed a moratorium on the construction of large hotels until the end of 2020. Ahead of this deadline, the state has also commissioned a feasibility study to assess the sustainability of the tourism sector and the implications of the growing tourist numbers.
Many BE entrepreneurs in the Seychelles cite a fear of failure and lack of networking and mentorship opportunities as major obstacles to innovative venture creation.[30] Additionally, limited access and know-how to tap into appropriate financing may have fuelled a culture of imitation business models, with entrepreneurs preferring this low-risk, go-to market strategy by avoiding expensive disruptive innovation. While the country has demonstrated flashes of innovation, copycat ventures in the form of car rentals, self-catering accommodations and taxi operators tend to accumulate in Seychelles’ tourism sector since they promise the most returns.
There is a need for an integrated and collaborative focus around BE development in the country once the pandemic subsides.[31] To harness the expansion of the BE ecosystem with an understanding of wider sustainability implications, entrepreneurs will require significant reinforcement. Capacity-building projects that are inclusive, forward-looking and oriented towards resiliency will depend upon national support and funding. By definition alone, the BE concept may become an integral response to combatting not only the effects of climate change but other crises as well. To this end, long-term investment—in tandem with regional and international collaboration—must involve a low-carbon, inclusive and nature-sensitive approach to growth.[32]
THE FUTURE OF THE BLUE ECONOMY ENTREPRENEURIAL ECOSYSTEM
The COVID-19 outbreak has revealed far-reaching consequences that will go beyond the confines of Seychelles’ BE entrepreneurial ecosystem. Tourism has always been one of the Seychelles’ economic pillars. Insistence on reaching for this low-hanging fruit—without wider sustainability considerations—and its foreign labour requirement may shift down the line, demonstrating a further reversal of globalisation. As the virus craters demand for travel and leisure, the country might consider boosting other existing BE sectors or sustainably developing alternative and new industries that will generate similar streams of foreign exchange and income for its population. Perceived over-reliance on imports may also lead to policies that seek to encourage self-sufficiency in the domestic production of basic commodities. For instance, the national emphasis has already shifted to optimising local production by upskilling domestic producers with modern, climate-smart agricultural techniques.[33]
The state’s role within the ecosystem may yet be the greatest harbinger of change. The government’s actions in bailing out the private-sector actors around the world during this crisis has been unparalleled. Such policy measures have been met with mixed reactions, but The Economist argues that they may serve to normalise the notion that governments should preserve jobs, businesses and income at any cost in any situation, even with the inclusion of sunset clauses in their interventions.[34] Given the similar threat climate change poses globally, it is hoped that the capabilities of the state will no longer be viewed through a climate-complacent lens in the post-COVID era.
The pandemic has given policymakers an opportunity to focus on accelerating sustainable business development in the ecosystem, for instance, by increasing job creation through a blue/green economy, focusing on sustainable energy transitions, and reinforcing resiliency in the ecosystem. The existence of developmental challenges such as complex governance and institutional frameworks, low adaptive capacity, poverty and ecosystem degradation[35] has made the region one of the most vulnerable to climate change and such policy measures may require urgent action.
Developing resilience within the BE ecosystem might therefore help achieve sustainable growth, reduce existing vulnerabilities, and encourage quicker recovery from external shocks. This, in turn, requires improving appropriate trade and travel infrastructure, diversifying the global value chain, and facilitating greener job creation.[36] In its wake, COVID-19 may re-centre core thinking around finding ways to build back businesses that are viable for the region’s environment, people and economy.
CONCLUSION
Across the globe, climate change is causing an estimated 150,000 deaths annually.[37] However, this ever-present threat has not galvanised the international community in the way COVID-19 has. The current situation is a warning that the pandemic and climate change might not be mutually exclusive. Indeed, the latter may be an increasing stressor that will come to define public health crises in the future. COVID-19 has temporarily disrupted Seychelles’ BE journey, but it may help revolutionise the ecosystem in the long run.
The country’s pursuit of the development of a resilient and sustainable BE might be a key response measure that can be replicated in the fight against climate change. Governments across the world have responded to the pandemic by implementing swift and urgent policy measures, within an international collaborative effort aimed at stemming the outbreak. This demonstrates the capacity for a similar global response to climate change. While it is too soon to draw any precise conclusions around the impact of the pandemic, the crisis may force policymakers to rethink the climate ‘modus operandi’ in a post-COVID era.
About the Author
Malshini Senaratne is a Lecturer at the University of Seychelles.
BIBLIOGRAPHY
Endnotes
[1] The Seychelles National Climate Change Committee, “Seychelles National Climate Change Strategy”, Prevention Web.
[2] Seychelles Conservation and Climate Adaptation Trust, “Debt for Nature – Seychelles Case Study”, SeyCCAT.
[3] The Commonwealth Secretariat, “Seychelles Blue Economy Strategic Roadmap and Implementation”, The Commonwealth, accessed 1 April 2020.
[4] Ministry of Finance, Trade and the Blue Economy, “The Blue Economy Progress on the Development of the Blue Economy in Seychelles”, Powerpoint presentation, 11 May 2020.
[5] The African Development Bank Group “Seychelles Economic Outlook”.
[6] The Department of Health “Statistics”, 11 May 2020
[7] Gita Gopinath, “The Great Lockdown: Worst Economic Downturn Since the Great Depression”, IMF Blog, 14 April 2020.
[8] Press release following the Central Bank of Seychelles Monetary Policy Meeting on 23 March 2020.
[9] Minister Maurice Loustau-Lalanne, “Remarks in the Seychelles National Assembly,” 8 April 2020.
[10] President Danny Faure, “Address to the nation on the COVID-19 situation,” 6 April 2020.
[11] International Monetary Fund, “IMF Executive Board Approves a US$31.2 Million Purchase in Emergency Assistance to Seychelles to Address the COVID-19 Pandemic,” 8 May 2020.
[12] President Danny Faure “President Faure Assents to the Revised 2020 Budget,” 11 April 2020.
[13] As noted in the Seychelles Nation Domestic Section, 30 March 2020, in Seychelles rupee equivalent at the time.
[14] Cabinet approved several legal memoranda during an extraordinary meeting on 21 March 2020.
[15] As noted in the Seychelles News Agency National Section, 11 May 2020
[16] Vijay Kolinjivadi, “The coronavirus outbreak is part of the climate change crisis”, Al Jazeera Opinion, 30 March 2020.
[17] As noted in the United Nations Environment Programme’s 2016 Adaptation Finance Gap Report.
[18] As noted in the Seychelles Nation 2019 Business Review Article on 31 December 2019.
[19] The World Bank, “Financing Sustainable and Climate-Resilient Ocean Economies in Africa”, A World Bank Event.
[20] The challenges for SIDS to attain long-term benefits to a BE agenda are discussed at length. See The World Bank Group, “The Potential of the Blue Economy”, World Bank.
[21] As noted in the Seychelles National Climate Change Strategy Report.
[22] As above
[23] See GVI Australia for a recount of these events, “Coral Bleaching in Seychelles,” GVI.
[24] As noted in Seychelles’ National Climate Strategy Report.
[25] Athanasios Valavanidis, “Global Plastic Waste and Oceans’ Pollution, Million Tons of Plastic Waste Have Gone Missing in the World Oceans”, ResearchGate Scientific Reports 1, no. 1 (2016).
[26] As noted in the Seychelles News Agency Environment Section, 13 May 2019
[27] “COVID-19 and Climate Change in Developing Countries: A Call to Action”, Institute for Sustainable Communities: Climate.
[28] National Bureau of Statistics, “Formal Employment and Earnings 2019 – Q4”. National Bureau of Statistics 2019, 31 March 2020.
[29] The moratorium was established to address environmental protection concerns and encourage smaller domestic hotels.
[30] Findings from the assessment of the BE entrepreneurial ecosystem in Seychelles, conducted in 2019.
[31] Jean-Paul Adam, “Building Back Better through the Blue Economy,” Presented during the Webinar “Ocean Optimism and looking ahead: Shark Conservation and Building the Blue Economy post-COVID-19,” Mahe, Seychelles, 1 May 2020.
[32] As above
[33] As noted in the Seychelles Nation Fishing and Agricultural Section, 12 March 2020.
[34] The Economist further argues crises tend to cement temporary state expansion measures.
[35] Contribution emanating from the Fourth Assessment Report of the Intergovernmental Panel on Climate Change by Africa.
[36] Jean-Paul Adam, “Building Back Better through the Blue Economy,” Presented during the webinar “Ocean Optimism and looking ahead: Shark Conservation and Building the Blue Economy post-COVID-19,” Mahe, Seychelles, 1 May 2020.
[37] Health and Environment Linkages Initiative, “Deaths from climate change”, HELI Climate.
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Malshini Senaratne is a lecturer at the University of Seychelles and a Director with Eco-Sol Consulting Seychelles. Her research interests include entrepreneurship Blue Economy ecosystem ...
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