lundi 10 novembre 2008

Seychelles 2008 Economic Reform: Are We Living The Same Reality?

Barely a week ago, the 85K population of the Seychelles were released from the anxiety of the awaited and feared program of economic reforms. Since then, a lot has been said and written and, I warrant, still a lot more awaits to be said and written on the announced Reform Package.

There are those who saw in the reform package clear signs that the country was on the verge of economic collapse and had been forced to call on the IMF for economic bail- out.
Some would find not unreasonable cause to see the current national economic dire straits as the cumulative results of misguided policies and short-term planning as the national and political leaders chased one mirage of economic robustness after another and thus steered the country to the edge of the abyss.
Others saw in the reform package, a mere transitory moment of national hardship, on the way to the visionary future of national prosperity, charted under the current incumbent political party that has ruled the destiny of the nation these past 30 years.
Some others yet, strengthened in their self-imposed delusion, see in the reform package, a rallying call for national unity and an opportunity for the sons and daughters of the land to dig deep into their patriotic resolves to forget the past and strive harder to keep the country upright.

It is enough to make one wonder whether we all live in the same country and therefore exposed to the same realities.

Let there be no doubt about both the bitterness and the painful bite of the ’economic reform’ program proposed by the Government. All indications are that the measures announced are simply the tip of the iceberg. As with any self-respecting iceberg, as the exposed tip melts, it is replaced by part of the greater submerged, hidden mass until the whole mess suddenly looses that subtle balance and tips over, causing supremely dangerous conditions for anyone in close orbit. So it shall be with the Seychelles Reform.
The exposed tip is the floating rupee. The submerged mass is the repercussions from escalating costs that will come from market adjustment to its true value that it will be granted by local and international traders.
As it stands, the value of the rupee is already fluctuating wildly. Conflicting local and international reports give its value as at 3rd November at an average 16.97 to the US $ (20:1, 18:1, 15.58:1,14.29:1). This represents a near 100% depreciation translated into a halving of its pre-November 08 purchasing power.

For the average household with non-elastic income, this dramatic reduction of purchasing power will likely be further exacerbated when retailers will start to adjust local commodity prices.
Then will come the crunching moment where families will have to confront the reality of being turned into paupers in so far as their income no longer allows them to be decently fed, clothed and housed.
Whatever money they had, in the bank or under the mattress, will have suddenly lost half its worth in the space of a few days! Those lucky enough to have retained their employment in the public service will likely be bemused by the 17% pay rise against the 50% devaluation and 20% rise in service costs.
I fear for my country. I fear for the welfare of my fellow countrymen. We have stoically endured, over the past 30 years, a plethora of empty promises from our national leaders.
Wasn’t it in the mid 1990s, therefore some 15 years ago, that the erstwhile single party President demanded of us that we make a little sacrifice and tighten our belts while we trudge through the dark tunnel of economic dire straits towards the brilliant light of prosperity that he and his party had prepared for the nation?

What happened since then? Why is it that the nation seems forever condemned to travel the path of illusory and therefore elusive prosperity? Did the former President finally understand that he had been a lousy captain and had not stopped the ship of the nation to drift and finally coast dangerously towards the reefs of economic collapse?
Was this ultimate dawning of the truth the compelling motivation for him to step down and allow his 2IC to handle the emergency manoeuvres to keep the ship of state afloat?
And why does the new man have to tell us today, that the national economic hardship is a “transitory phase for us to see the light at the end of the tunnel.”
Is there no one with the guts to swim through the bilge water of the state-engineered misinformation to admit that the ship of state is truly in poor condition and will sink unless all hands come on deck to receive precise orders of where to go and with what tools and in what manner to carry out emergency repairs?

Before we even begin to start thinking about pulling “our resources and ideas together and work so as to keep our country standing and strong” we need to be certain that our individual and collective actions will not be another fart in the wind.
We need to know in precise details what went wrong, when and how.
From there, we can make an informed decision about the best course of action to take so as to avoid the same pitfalls of yesterday.
Above all, we must resolve not to heed the advice of those who steered and led us to the edge of the precipice. If they had any sense of decency, they would have at least accepted their failures as leaders and stepped aside to allow others from the ranks to come forward and take the lead.

We had no, or little, say in the decision our leaders took to draw huge financial loans to pave the way to their vision of economic progress and stability. If our understanding of the complexities of directing and running national economic affairs is limited, we know that it shares some basic truths with the more modest family business. Progress is ensured by getting your priorities right. By only investing after a careful and realistic appraisal of your growth and returns potential. By shunning big short-term relief in favour of small sustainable returns to cumulate in long-term benefits.

Somewhere along the line we, as a nation, lost interest in the bigger picture and naively surrendered our destiny in the hands of those who had nice words to lull our vigilance. Time and again, at each election time, we allowed ourselves to be too easily bought by the little honey and big promises handed out.
The country’s economic recovery will be launched. Investor confidence will be boosted. Houses will be built for all, and GDP will be doubled by 2017!!.
Those were big promises that required equally big investment and loans.

Ironically, the real cause of the country taking that final step that led into our current economic abyss, may be the defaulting on the repayment on one such big loan and investment that instead of launching us off, bowled us over and could very well bury us in.

There will be hard times indeed for us now to face.

Some average families will be forced on their knees, as they see their live savings and projects to safeguard the future of their children and their own retirement suddenly wiped away.
When the basic Rs.100K Life Insurance Policy matures after 15 years to a potentially only 50% purchasing value!
When contributions over the past years into the Pension Scheme are wiped down to a fraction of their worth.

Some families will fade away in silent disavowal, with memories of what life used to be and the acid taste of dreams for the children that would now never be fulfilled. Others will seek to understand how they were so wrong and so easily fooled, and in the process, break and tear themselves apart, unwilling to accept the inevitable and will seek to demand from their local leaders, at the least, an explanation that is not another rehearsal in the usual empty rhetoric.
It will be a moment of greatest risk to national peace and cohesion when a man will be faced with the sight of his family forced on its knees, his children going hungry, his house falling in disrepair, apathy pushing him further into depression and an overwhelming sense of powerlessness to stay the descent into despair.
Then there will rise such a wail of protest at being so humiliated, of hopes and dreams nurtured on empty promises, of being reduced to paupers as the inevitable result of poor national vision, planning and leadership.
There will then be no place for national unity. There will then be no place for forgiveness. The time to swallow bitter pills coated in honey will have passed.

The only thing left to do before we start the rebuilding process shall be to force those responsible for our woes, to account!
It will be the time when we as a nation will ask of the current President, to explain why after so many years, his ruling party is, in 2008, still locked in “working to put the national economy on a sound footing,” and how do we make the difference of the “right track “ of today from all the other right tracks of yesterday?

You, who may be a completely lost surfer who accidentally strayed onto this page, don’t read it as an incitement “to riot or create disturbances or to insult others”. Don’t read it as simply another ‘Red-Basher’. It is intended to be a mere small contribution towards national mind awakening to embrace reality.

mercredi 5 novembre 2008

Barrack Obama : A beacon for dreams kept alive

Individually we are, each of us, a minute piece of insignificance in the great swirl of life and cultures. What makes each of us count is that now and then, we become conscious of what we are and are humbled by the enduring intensity of our profound desire to seek and reach out for change.
Today, the world woke up to the reminder that change does come about when the flame of hope is kept alive, when there are among us those who are strong-willed and dedicated enough to not only dream of change but to reach out and make it happen.
Today something stirred in each of us living far beyond the direct and immediate realities of partisan politics of the United States of America, as we received the news that the modern-day wealthiest and militarily most powerful nation went beyond their resignation and cynicism to embrace the change nurtured in the hearts and minds of millions of her children.
To those of us who sought to look deeper at what this new stirring represents, we embrace the comfort and warmth it brought in our renewed hope for a better world. A world where this time-round, we all may rally in spirit by the USA, to confound the forces that seek to tear our civilisations and cultures apart, to reinvigorate our national institutions in the battle for social justice against vested selfish interests and to channel our resolves to halt the deterioration of our living environment and preserve a safer home for future generations.
Barrack Obama is the name borne by the person who embodies this defining and historical moment.
He represents far beyond being head of the USA Democrats’ party ticket and the first non-white to occupy the Chief Executive post of that great country.
He is the beacon that we now know was shining during our long dream and around whom we will gather, each in our separate corners, united in a common purpose to confront the tasks ahead.
Today is our moment. Today is our awakening call. It was long in coming. We were long in dreaming. We are now awake. Our futures do not seem to be as bleak, despite the challenges of global world crises, from wars, financial depression and economic recession to hunger, famine, civil strife and human rights abuse, oppression and global warming.

It is now time to get to work. To nurture the flame of our renewed hope. Yes, We Can!!

mardi 4 novembre 2008

On the Seychelles 2008 Economic Reform Program

I must have missed something in the 4k-word and much-anticipated, Presidential Address on the Seychelles 2008 Reform Program.
Either that or I am much thicker than 2 madrier bodamyen to fully grasp what the much touted and feared reform is all about.
For my own benefit, I need to summarise the Reform Program as outlined by what could pass as an early State of the Nation Address, the President made on the night of 31st October.
Once the usual rhetorical veneer is removed, it would seem that the World Bank, the African Development Bank, the European Union, some bilateral partners and certain friendly countries and the International Monetary Fund (IMF) have contributed to put together a Reform package for Seychelles, which the president finds as

1.the logical extention and application of his April 2004 Presidential vision for the nation:
To build upon (unspecified) ‘socio-economic acquis’, based on the principle of social justice which puts the people at the centre of development
For the public sector to be at the service of the people and the private sector to be the fountain of economic prosperity
For solid democracy, marked by transparency and good governance, to prevail and spiritual and moral values social well-being to flourish
For every citizen to enjoy the rights and discharge the responsibilities and every able-bodied person to work, enjoy the fruits their labour and contribute to national development
For the (2004) economic difficulties to be overcome and the country integrate fully in the world economy in such a way that it can continue to enjoy a good quality of life.

2. an unfortunate spin-off from the world financial and economic crisis and rising cost of living, which presented Seychelles with challenges requiring new strategies and approaches to modernise the national economy

3. allowing:
Increases of salaries by an average 15-16%; social security (retirement benefits) by around 15%; welfare benefits by 20%; minimum wage by 6.89% (from 14.50 /hr to 15.50/hr);
Reduction of the public service work force by 12.5% ;
Expenditure control by public service departments: slow down or shelve a number of national projects, manage their budgets efficiently and in transparency ,do away with abuse and wastage, promote good governance, transparency and openness; Unspecified means by which 8000 positions in the private sector will be localised;
Introduction of 15% General Service Tax on tenancies and 10% tax on interests earned through savings account .
The floating of the national currency, hoping that this will : open a number of new business opportunities, including possibilities for more exchange bureaux, boost Seychellois’ confidence in the capacity of the country to attract foreign exchange, allow a more equitable distribution of currency throughout the economy and ensure stability
The removal of all foreign exchange controls
The hope for the restructuring of the US$800M national debt
Once and for all, to put order where necessary and doing away with wastage and abuse.
A culture of hard work where :every able-bodied Seychellois works, tolerance is not mistaken for laissez-faire attitudes, privileges are not arrogated as rights, where compassion does not degenerate into abuse.
An opportunity to stop blaming the past, to turn a new leaf and work to modernise Seychelles;
Implementation of a modern taxation system that is uniform and simple;
An audit of the biggest companies operating in Seychelles to allow for points of references to ascertain true and correct declarations of revenue and improve on revenue collection;
The removal of subsidies on certain (unspecified) basic commodities and services; The re-adaptation (by as yet unspecified means) of the education system to better meet emerging needs and respond to the challenges of our economy;
To provide SCRs R25,000 to each primary and secondary school to help the most needy children ;
The reorganisation (by means unspecified) of the national health care services to increase our resources and to better utilise the available infrastructure to enable the public to benefit from a higher standard of care.

That’s it!

The Presidential Address seemed to have been more mired in rhetoric than in heeding its own calls for Good Governance , Accountability and Transparency.
It was not forthcoming on the most vital information regarding the type and modality of fund assistance the country sought from the IMF for the Reform Program to address what the IMF called the “problem of acute balance of payments and public debt crisis, (….) which jeopardizes living standards and economic development. “

Economic Reform and Political Popularity are not good bedfellows. Dishing out money while preaching austerity just does not seem to rhyme.

I fail to see the IMF jumping on the Seychelles 2008 Macroeconomic Reform Program without specific agreements of economic restructuring.
The measures announced, other than floating the rupee, do not seem to add up to a rat’s piss worth on economic restructuring. They could be achieved without the IMF’s involvement.
For the IMF, the World Bank, the EU and the African Development Bank, to come over together in a concerted effort and bail out the country, there must have been specific agreements, with firm, fresh financial input.

Similar agreements most certainly have been reached with the still rather opaque “bilateral partners and certain friendly countries”.

What are these agreements and what do they entail for the country and future generations further down the road?
These are, in my view, the real questions that beg to be answered.

The President would have done better to come clean and closer to transparency by providing facts about the commitments taken rather than attempting to distract the nation from the realities gathering on the national socio-economic horizons.

For example, why even bother to raise the subject of abuse and wastage in the context of the economic reform program? His predecessor proclaimed and ostensibly waged his war on these beastly things nearly every year since 1977!
If 25 years down the road we still have to fight abuse and wastage in the public service, then clearly the conclusion seems to be that the country was not waging the right war and has missed its target completely. Perhaps we failed to understand that abuse and wastage of public assets derive from the culture of “mwan ki la” and cronyism where, at least for the nomenclature, priviledges were indeed synonymous with rights and went far beyond the usual scope of issues such as executives who uses GoS vehicles for private purposes.!!

Why did the president have to go further and insult our intelligence in seeking to dull local public opinion about the quality of grass in other pastures!
“ Poverty is being felt everywhere, including in America and in Europe. Recently, we saw on our television screens people queuing up in Australia for certain commodities. “
His speech-writer must be reminded that poverty in so-called rich countries has been around since before JC did his thing! This neither justifies nor makes it acceptable. Poverty being merely a socio economic reality where, because of the accepted (selected) wisdom that direct national policies, some survive better than others. The rich and the poor…get it?
There really was no need to add colour to the presidential address by throwing out this bone of dubious worth. What are we supposed to say? Oh good!!! We are not so badly off, after all!!??

While on petty issues, does anyone take note that cost of fuel and living in some countries have dropped since the last few months? In France, it went down by at least 17% (SP95 from 1.49€/L in July to 1.24€ in November) and (according to recent news reports) living costs barely nudged beyond 6% in the EU. Some basic commodity costs at retail outlets seem even to be dropping!

Pointing these out is not so much to contradict the President, as to offer a different angle in viewing the same reality resulting from the recent global speculation that both drove fuel costs through the ceiling and partly ushered in the current global confidence crises in international finances, investment and economies.
In my view, what the country needed to hear was more on specific programs that the Government would put in place to facilitate the creation of wealth. If the country is bankrupt or was near to it, a few million faces of Benjamin Franklin, however welcome they may be, will be unlikely to provide us with a long enduring recovery!

Like in any other country, a President, by advisers, professionals and technicians interposés, has his fingers on the national socio economic pulse and realities. Whether or not he is able to correctly interpret what he feels and has the capacity to offer a proper diagnosis and treatment course, remains to be seen.

In the meantime his patient will probably groan and suffer some more and may do better to seek a second opinion!