SMB still enjoying a monopoly despite the lifting of import restrictions!

SMB still enjoying a monopoly despite the lifting of import restrictions!

SMB should relinquish its monopoly on the importation of sugar!

Sugar, like most essential commodities consumed by the population, is not produced in Seychelles. It is imported already refined. For fifteen years, no one in Seychelles was allowed to import sugar except the State monopoly-trading organisation, the Seychelles Marketing Board (SMB). The last time the brewery was in the same predicament it was reported that the then SMB Managing Director, Mr Mukesh Valabhji, was in a tug of war with the other shareholders for a seat on the board of the company, representing a mysterious Swiss-based company, which had acquired 23% of the shares. Mr Valabhji never got his seat on the board but the shares have since been sold to the Seychelles Pension Scheme at six times the par value. Valabhji is no longer the Managing Director of SMB – a post he held for more than 10 years. He was succeeded by his deputy Mr Patrick Vel.

SMB, which is still the principal importer of sugar despite the lifting of import restrictions on the commodity, is conspicuously silent on the matter. For Seychelles Breweries to go public its management must be in the dark as to when it could be supplied. Private sector importers we have spoken to said that, although restrictions have been lifted, the government has not put in place a preferential foreign currency allocation for the importation of sugar by the private sector. Thus SMB continues to enjoy privileged access to the commercial banks to obtain foreign currency for imports. The same goes for cooking oil, which the private sector importers have only this year started importing in small quantities. Evidently, their prices are higher compared to that of SMB, as a result of relying on the black market for foreign currency. The same goes for rice, which the private sector importers had started to bring in small quantities last year. The dollar exchange rate on the black market has now reached SR12 up from SR 10 six months ago, two times the official Central Bank rate. The official rate of the dollar itself has dropped (depreciated) by 22% since November last year.

The shortages of essential commodities come six months after President Michel appointed an advisory committee of “high level officials and prominent businessmen” to advise him as to how he could sort out the nations economic problems. So far, the only result of their exercise has been to appear on the State television praising President Michel.

Meanwhile, the latest Central Bank statistics show that whilst the volume of official foreign currency earnings passing through the local commercial banks between January and November 2005 reached over SR 1,000 million (SR1 billion), in 2006, for the same period only SR 650 million went though the local banking system, a drop of 65%. In addition, the National Bureau of Statistics has release the external trade figures for the nine months of 2006, which show that the trade deficit – the difference between the value of import and export - was SR 1572.8 million, three times the value of the tourism earnings coming through the commercial banks.

At the same time figures published by the Central Bank also show that at the end of September 2006, the outstanding amount of rupees held in the Central Bank pipeline to pay for imports that had already arrived in Seychelles was SR 451.6 million. This suggests that up to SR 1,121 million of imports were not accounted for by transactions through the banking system during that period (or 36% of total imports). In fact, the situation is much worse. Almost the entire value of imports and exports of tuna by IOT (estimated at SR 800 million a year) never goes through the local banking system.

President Michel, it appears, prefers to bury his head in the sand – hoping the situation will not get worse while soaking the praises of his advisors. Former President Albert Rene, who usually plucked some face saving arrangement just before election time to create the feel good factor, seems to have been compelled to take control of the situation. It remains to be seen if the candidates this time around are credible enough messengers. Generally, it is always the messenger that is shot for bringing the bad news.