Financial Sector Development Implementation Plan in Seychelles
Project Development Objective (PDO)
The objective of this project is to facilitate financial sector reforms by helping national authorities in the Seychelles adopt a coherent vision and strategy for financial sector development, including a well-sequenced, time-bound, and prioritized roadmap for implementing reforms.
Background
The banking sector in the Seychelles is well capitalized and enjoys high levels of profitability. However, banks do not seem to adequately engage in the lending business. The level of competition among the players in the financial market is weak, and the players are risk averse, as observed by the extreme disparity between interest on loans and deposits. Financial sector–related laws, instruments, and technologies are lagging. Modern payment systems and secured lending are either missing or at a very basic stage. In addition, non-banking finance is not only largely untapped, but also stunted by weak capacity and small scale. Against this background, the overarching deterrent to development is the lack of a coherent vision and strategy for development of an integrated financial sector.
The proposed Financial Sector Development Implementation Plan (FSDIP) project will provide the coherent framework. It will help the government undertake prioritized and sequenced activities to strengthen and deepen the financial sector, including identifying the responsible authorities; detailing any issues, challenges, or additional work to be done; and outlining any key policy decisions to be made by the authorities for implementation.
Activities
The envisaged activities of this project are as follows:
1. Developing a comprehensive FSDIP, including a prioritized, time-bound sequence of actions and
roadmaps for interventions and cost estimates for responsible authorities
2. Conducting internal workshops and seminars to ensure that the action plan is supported by the
relevant government agencies (for example, Central Bank of Seychelles, Ministry of Finance, and
Seychelles International Business Authority) and by all other relevant private sector stakeholders
(for example, representatives from relevant industries and associations
3. Conducting workshops with external donors and dissemination material to mobilize support and
financial resources for implementation
The comprehensive FSDIP complements and supports several ongoing implementation activities:
1. Conducting a stocktaking exercise of completed and on-going work and projects (from bilateral
and multilateral donors) on financial sector areas
2. Performing a review of the relevant legal framework and related roadmap for interventions
3. Drafting roadmaps for (a) banking and financial system infrastructure and for related
interventions, (b) access to finance (with a particular focus on finance for micro, small, and
medium enterprises and related interventions, (c) financial markets and related interventions,
and (d) non-bank financial institutions’ supervision and regulation and related interventions
Expected Outcomes
The expected outcomes of the project are the following:
1. Implementing key financial sector reforms and interventions to achieve a more efficient, sound,
and inclusive financial sector in the Seychelles with a coherent policy view
2. Establishing a sound financial sector that promotes healthy competition among strong financial
institutions in rendering diverse and appropriate financial products to the public
3. Establishing a more efficient financial sector that increases private sector credit and lowers costs
4. Providing a more inclusive financial sector that increases access to finance by micro, small, and
medium enterprises and by low-income households