The International Finance Corporation (IFC), an affiliate of the World Bank, which lends money to the private sector in developing countries, will not disburse a US$10 million loan facility it had approved for the state owned Seychelles International Mercantile Banking Corporation, better known by its local trading name as Nouvobanq. The reason for not disbursing the loan more than a year later is not known, but IFC documents claim that the government promised to privatise the bank.
The facility was approved, however, as far back as January 25, 2006, although the original application was submitted in May 2003, when the last administration of President Rene was designing the infamous Macro Economic Reform Programme better known as MERP. This is the second time IFC has provided a US$10 million to Nouvobanq. IFC made available an earlier loan of US$ 10 million to Nouvobanq in 1999, which was repaid in 2004.
The purpose of the loan to Nouvobanq, according to IFC was to “provide long-term financing to Nouvobanq for onlending to small and medium export-oriented enterprises in the agro-industry, fisheries and services sectors. This will help the small but open
In 1999, like today, the government promised IFC that it would sell 51% of the shares of Nouvobanq to the public, effectively giving control of the bank to the private sector. Then the government claimed that the loan would help to “strengthen Nouvobanq’s balance sheet, making it more attractive to private investors. In addition, IFC will help Nouvobanq find a suitable strategic partner, which would accelerate the full privatization of the bank.” Since 22% of the shares of Nouvobanq was already owned by Standard Chartered Bank, a very reputable British based international bank, one wonders why the Government needed the help of IFC to find a suitable strategic partner to accelerate the privatisation?
Eight years since the first promise to IFC that it would privatise it, the state continues to hold 78% of the shares in the bank. The remaining 22% is still held by the Standard Chartered Bank. After he became president, James Michel too promised to privatise Nouvobanq. He said it follows after the State Assurance Corporation of Seychelles (SACOS), which was privatised early last year. So far nothing. Hence, it is believed, why IFC is holding back disbursing the new loan even though there are many small businesses that are desperately looking for foreign currency loans in the fisheries and tourism sector.
This week an official delegation of the World Bank has been in town. The three-member delegation was headed by Mr Colin Bruce, the country Director for the African Region that includes
Strategy 2017, according to President Michel is to double the Gross Domestic Product (GDP) in ten years. Even if we succeed in this endeavour, the standard of living of the average Seychellois is unlikely to improve since most of the wealth will have to go towards repaying the massive public debt, which the government last week acknowledged has exceeded seven billion rupees – twice the estimated GDP of today. Since one third of those debts are denominated in foreign currency and the rupee is depreciating very fast by the day, the surplus the government has to run on the budget each year must be bigger each time.