Shortage of foreign exchange more acute

The government has finally admitted in public what everyone has been saying in private over recent months that the economy is in more serious trouble than our political leaders are prepared to admit.

The admission came in the form of a news item on the state controlled broadcasting media that revealed the dire condition of the animal feed supply. As usual, the news was presented not as problem arising, but as a solution to a problem no one knew existed anyway, except if you were a pig or poultry farmer. At least one farm entity has advertised to sell its pig and chicken rearing farm because of a shortage of animal feeds.

First, the government rolled in Dr Bernard Moulinie – head of the agricultural division in the new super ministry of the environment and natural resources. Dr Moulinie did not mince words. He said openly and matter-of-factly that he had been warning the government for some time now of the crisis.

Then it was the turn of Mr Ahmed Afif, Principal Secretary in the Ministry of Finance. Afif admitted that there were difficulties in obtaining the foreign currency necessary to import the critical ingredients needed to make animal feed. SMB, he said, needed US$500,000 each month to import the ingredients. He said, however, that a consignment of seven containers of corn was arriving soon. That, according to many reckonings, will suffice only for a few days of production.

Last year, the Chinese government offered to supply a consignment of maize to the Seychelles. The gift was to be received by the state marketing board. The maize being donated, the marketing board discovered, was of a high quality destined for its supermarket shelves. The Chinese government was discreetly asked to tell the supplying company, itself a state entity in China, to repack the maize in bags of animal feeds because SMB needed them to make animal feed. The maize did arrive and used to produce animal feed. Instead of SMB saving the foreign exchange as a reserve for the future, however, they squandered them for other uses, which accounts for the crisis we are in today.

What Afif did not tell us, however, was that maize is not the only ingredient needed in the production of animal feeds. For years, SMB relied on a company in Belgium to supply protein ingredients needed in animal feeds. That supplier was a privately owned chicken abattoir and the person running the animal feed factory of SMB also came from Belgium. That person no longer manages the animal feed factory, but instead has obtained a license to establish cold storage facilities on the SITZ to stock frozen meat to sell to hotels (or buyers approved by the Central Bank) who must pay in foreign currency.

The location (Seychelles International Trade Zone - SITZ) of this entity is itself controversial, since under the law all goods entering the SITZ must be exported. As usual under the SPPF, laws are made to inconvenience the enemies of the party and reward its friends. Understandably, no one can obtain an SITZ license on demand, and if you are so close to the big shots as to smell their faeces even before they have reached the orifices, you could have your establishment located anywhere in Seychelles declared an SITZ, for the purpose of trading using foreign currency. As a result today, there is more meat sitting in cold storage facilities of those specially licensed trading entities than in all the refrigerators of the 22,000 households in Seychelles, the SMB cold stores included.

Meanwhile, our readers would be shocked to know, that Seychelles produces thouands of tonnes of protein destined for animal feed factories in Australia, Philippines, South Africa, Sri Lanka etc. In 2006 IOT exported 7,320 tonnes of fish meal to these aforementioned countries worth over R 25, 000,000. Between January and September 2007, a further 5394 tonnes worth over R 22,000,000 was exported to these same countries. So why can’t we use the fish meal produced by IOT as the protein ingredient for our animal feed?

What Afif did not tell us was that under an agreement signed by the government with IOT, SMB must pay for the fish meal it bought from IOT in foreign currency not rupees. This secret agreement was crafted and signed by Francis Chang Leng, then the principal secretary of the Ministry of Finance. At that time, Chang Leng was also wearing the hat of Governor of the Central Bank. Under that hat, he crafted and signed another secret agreement for the Central Bank to supply IOT with all its rupees in exchange for foreign exchange. As a result IOT cannot pay its Seychellois employees in a foreign currency even though the management realises that this would have been a good incentive to get Seychellois to work at the factory.

Over recent years, a perception has grown that Seychelles was virtually “self-sufficient” in eggs, poultry meat and pork production. It made good reading and useful for SPPF propaganda abroad. This measure of self-sufficiency, however, was never statistically tested using free trade yardsticks. Until very recently, the production as well as the importation of chickens, eggs and pork was the monopoly of the Seychelles Marketing Board (SMB) the state owned trading and manufacturing commercial entity. To rear chickens or pigs in Seychelles, one needed a license which had to be approved by SMB. Furthermore, local production would be limited so that SMB could import 25% of “consumption”, which SMB alone determined. In addition, SMB had been the sole provider of animal feeds as well as controlling the only slaughter house in the country. As a result, SMB virtually determined the prices of these commodities as well as their supply.

The revelation early in January, 2008, that the economic crisis facing our country is even worse than previously admitted, opens up a can of worms. For one, it showed that President Michel’s JJ spirit was a fraud all along, as we had always maintained. For another, the proverbial ostrich has finally lifted its head from the sand to discover that the lion had eaten half of its body.