The Seychelles Chamber of Commerce & Industry (SCCI) welcomes President Michel's invitation in his State of the Nation address calling on all citizens of Seychelles to come together in these difficult times with realism, resilience and responsibility. It is in this same spirit that the SCCI is calling upon Government, politicians, the business community and the general public to focus on resolving the economic crisis rather than making unfounded accusations of the business community.
The SCCI is responding recent statements in the National Assembly and in the national media in which the trading community of Seychelles has been blamed for the lack of essential commodities in the country on the grounds that private sector traders can now import any essential commodities, and should use their social conscious and review their import priorities. Although in theory Private sector enterprises may be free to import all essential commodities, the SCCI wishes to emphasise that, in practice, they are unable to do so for the following reasons:
1. Inability to import in sufficient quantities Essential commodities have always been and must always be imported in large quantities, preferably by sea freight, to maintain competitive prices. Hence, any importer must have the necessary funds in foreign currency to pay in advance for large consignments of items such as rice, sugar, powdered milk, cooking oil, butter, margarine, onions and potatoes, etc. Unless commercial banks can make provision for such payments overseas or open letters of credit, our traders cannot engage in transactions to purchase such goods in sufficient quantities to sustain supplies and low prices as did SMB.
2. Less foreign currency from the banks Some importers with backlogs of payments in the last Central Bank of Seychelles foreign exchange pipeline since 2004 have recently been informed by their banks that CBS has returned their Rupees and that they must now choose between the banks paying off the outstanding arrears or dealing with their more recent requests for foreign currency. Either way, the foreign currency will only be made available as and when the commercial banks have enough funds to meet surplus payments. It is an open secret that the banks are presently focussing their inflows on maintaining the travel allowance of airline ticket holders and the fuel bills for imports of petrol and diesel.
3. Storage space Essential commodities are usually imported in bulk and stored in properly secured rat-proof, health-approved premises, and for some products, in air-conditioned warehouses. In Seychelles today, no private sector traders own or have access to the size of warehouse that would justify such bulk imports. All such food warehouses in Seychelles over the last 25 years belongs to SMB. It is presumed that the new Seychelles Trading Company has acquired the storage facilities and now enjoys exclusive use thereof. The privatisation of SMB made no provision for Government to tender out warehouse facilities to private sector operators; hence any importer must find his own storage facilities.
4. Setting up new alternative storage facilities The Private Sector requires both land and financial resources to set up any new storage facilities. Foreign currency is essential for this as a large portion of the installation costs of new facilities will be in foreign currency for imports of materials.
5. Price control and Mark up remains on all food items In 2007 the SCCI was given to understand and did support Government's initiative to retain price control on essential commodities only, a list of which had been debated and generally accepted by both sides. However, price control has been maintained on all food items. The SCCI has long advocated that the 30% mark up set up in the late 1980's was no longer viable. It is now even less so since recent increases in the cost of utilities, fuel, cargo handling charges, salaries and social security for lower salaried shop and trade workers. All these costs are supposed to be covered by the 30% mark up. It must be remembered that in a recent television interview the SMB Communications Manager stated that “on essential commodities (the SMB) sometimes makes no profit at all” and that “for the organisation's self sustenance (it) needed to sell other things that can raise some money”. If SMB could not make any profits on essential commodities despite its monopoly, why should traders be expected to import essential commodities at a loss and remain in business?
SCCI 25th February 2008This communiqué must be published in its entirety.