Monday Nov 25, 2024
Monday Nov 25, 2024
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I am also delighted that the Vice President of Seychelles Danny Faure, is present at this forum, and I consider it a great privilege to deliver this address in his presence. The presence of two of my childhood friends, Judge of the Court of Appeal of the Seychelles, Justice Anthony Fernando, and Judge of the Supreme Court of the Seychelles, Mohan Burhan, is another reason for my special joy today, because it is wonderful to see the familiar faces of one’s countrymen serving in such exalted positions, when one visits a foreign country.
Governor Abel, this is my second visit to your most serene archipelago. As you may recollect, I was in the Seychelles previously as a member of the Sri Lankan President’s team, when President Mahinda Rajapaksa made an official visit to this country in April 2013. That visit was a wonderful and satisfying experience, and it also helped me to learn about your country and experience the warmth, kindness and generosity of your people.
Today, our team from the Central Bank of Sri Lanka is experiencing that warm hospitality once again, and I am sure these experiences would tempt us to come back, over and over again, to your beautiful country.
Relationship between Seychelles and Sri Lanka
Vice President Faure, Governor Abel, my dear friends, over the past few years, the relationship between the Seychelles and Sri Lanka has been progressing at a rapid pace, and across many frontiers. The high level contact between the Presidents of our two nations has led to a firm foundation for the strong relationship that has been built between Sri Lankan and Seychelles businesses, governments and people, and the level of interaction today is much higher than what we have ever experienced in the past. At the same time, I also believe that these growing relationships are only the beginning of an exciting, ever-widening and internationally beneficial partnership that would surely blossom further in time to come.
Vice President Faure, when we witness the developments of the Seychelles with a comparatively small population, we marvel at the way your Government has been able to position the country and put it on the world map. When we examine further, we also observe the country’s vision of ‘Doubling the GDP of Seychelles by 2017 through focused fisheries and tourism expansion programs, the development of the financial services industry, and resultant growth of other economic sectors’. Such a vision, and the efforts that are being taken to realise such vision, suggests that the Seychelles is on track for a great future.
Translating vision into practical reality
In that background, when Governor Abel invited me to speak on the topic, ‘Buttressing Seychelles’ Financial System – Embracing Globalisation while preserving our Specificities,’ I realised that the Central Bank of Seychelles also means business to translate your country’s vision into a practical reality. Here, I see a wonderful example of a Central Bank being sensitive to a country’s policies, and taking action to fashion its own policy framework to deliver the outcomes as envisaged by the country.
I appreciate such a policy stance, and am convinced that you are on the right path, particularly because the Central Bank of Sri Lanka too, followed a similar policy direction over the past seven years, where we were sensitive to our country’s vision and goals. That policy stance, which ensured policy congruence between the Government and the Central Bank, served our country well, and that is why I am confident that the current policy stance of the Central Bank of Seychelles would greatly assist the Seychelles to realise the developmental goals of the government and its people.
Governor Abel, over the past few weeks, during the time of my preparation for this lecture, I had the pleasant opportunity of studying about your country and economy. As a result, I was able to gather a reasonable amount of material for my lecture today, but I must hasten to state that what I would have learnt is only a tiny fraction of what all of you already know. Therefore, I must humbly acknowledge at the beginning of this lecture, that what I would do today, would be to merely offer some suggestions about the opportunities that are likely to emerge and materialise in your country over the next few years, and to place such matters in perspective, so that you could view your own picture with greater clarity and emphasis. 
That approach is consistent with the methodology that I practised in my consulting work that I used to carry out before entering public service. During the time, when I used to have my own corporate consulting practice, my endeavour was to “shed light, add value, and make it happen” for my clients, and therefore, in a way, I feel as if I am having an opportunity to do so once again, and hence, am grateful to Governor Abel for helping me to relive my past!
In that regard, I could probably be compared to a photographer who places his subject in the right light and desirable background, while gently adjusting the subject’s posture, so as to be able to capture an image of the subject from the most appropriate angle, and thereby highlight the interesting features so as to enhance the quality of the image. At the same time, we all know that the photographer should not change the basic features of subject, although of course, in today’s digital age that too is sometimes done by trick photographers or image manipulators. However, let me assure you that I shall not indulge in such trickery, but practice the more traditional and old fashioned type of photography, without any electronic doctoring. Nevertheless, I shall make an attempt to focus on the inner beauty of the subject, while endeavouring to preserve its authenticity and characteristics.
Let us now begin our “photo shoot” session by examining some relevant factors that comprise the background of the Seychelles in relation to the future of its economic development.
Economic background
The World Economic Forum’s Travel and Tourism Competitiveness Report for 2013 states that the Seychelles has emerged as “the top ranked African nation in terms of tourism”. From an African perspective, it states that the small Indian Ocean nation seems to be “punching above its weight” in the country’s inaugural inclusion in the tourism ranking. The report also compliments the bold moves of the Seychelles President and Government to harness tourism growth in order to boost the economy and create jobs.
The International Monetary Fund’s Article IV describes the Seychelles as a “Middle income island economy which is recovering strongly from the 2008 crisis, and is transitioning to market based economic policies”. The report further states that “macroeconomic stabilisation has been successful, and that the authorities have made significant strides towards improving financial discipline at the central government level”.
Knowing as I do, of the reluctance of the IMF to positively acknowledge or describe the strides of Asian and African countries with the same generosity that it describes certain other more advanced nations, I am inclined to believe that the IMF comments are quite complimentary of the Seychelles. However, we must also note that the IMF has issued a gentle caution that the Seychelles’ economy remains vulnerable to global developments and domestic shocks. In that background, the IMF has suggested (perhaps, appropriately in my view) that the necessary steps be taken by the government and the Central Bank, to continue to build the buffers and spaces that are necessary to deal with such shocks, should they materialise.
The African Economic Outlook for 2012 has recognised the Seychelles as a country that has “Achieved the Millennium Development Goals in relation to Education with a near 100% primary completion rate and about 93% secondary school enrolment rate”. The AEO report has also acknowledged the country’s focus on better health care, poverty reduction, social protection, improvement of labour practices, and gender equality, as being laudable. At the same time, the report suggests that the promotion and continuation of youth employment appears increasingly challenging, particularly in the emerging scenario where the GDP of the Seychelles is expected to double in the next five years.
The analysis further highlights the fact that, meeting such challenges would place significant pressure on the wage structures of the country in the light of the probable doubling of the per capita incomes during that time horizon. In my view, the AEO comments appear reasonable, since the outcome of doubling per capita incomes would essentially demand a massive improvement in the productivity levels of the current work force, whilst also requiring a significant sector migration from some sectors of the existing work force, towards the new sectors of growth, including the financial sector.
Moving towards a new equilibrium
My dear friends, all the above factors seem to suggest that the Seychelles economy will have to gear itself to undergo a major transition, while moving towards a new equilibrium. That transformation would of course, mean that the country’s financial sector 
robustness and resilience would have to be substantially enhanced. At the same time, the quality of the country’s human resources would have to be suitably improved to service this new financial sector. In addition, the global connectivity of the country would have to be improved through wider air links and better IT capability, while the financial sector regulatory processes too, would have to be strengthened to reach international levels.
Towards that outcome, the required global and regional players in the financial sector would have to be attracted into the country. To do so, awareness about the country conditions will have to created, together with a positive “word of mouth” campaign as well. In the meantime, the physical infrastructure such as housing, health, education, entertainment and internal travel conditions that international participants in the financial sector generally demand, would have to be delivered, together with the improvement of the doing business conveniences to globally competitive levels.
Vice President Faure, Governor Abel, my dear friends, the list of deliverables that I just mentioned, is obviously a formidable ‘To do’ list. In fact, you would realise that to achieve such outcomes, a significant investment of ideas and funds would have to be made by your government, the business sector, and the people. It is obvious that it is not going to be an easy task. But yet, upon reflection, I think many would agree that the Seychelles has all the ingredients to be able to make that happen.
“Cash cows” and “stars”
My dear friends, all management students know that in the case of conglomerates, the continuity and sustainability of the organisation is only assured via their key income and cash generating sectors, which support the conglomerate’s day-to-day activities, whilst providing a reasonable return to all its stakeholders. The financial and business analysts call these sectors the “cash cows” of the respective organisations.
At the same time, we also know that conglomerates have to regularly introduce and nurture new ventures, popularly described as “stars,” in order to ensure the long term sustainability of the conglomerate, since many “cash cows” have a finite lifespan, and may face decline and sometimes even extinction, over time. In that background, successful conglomerates factor such reality into their decision making processes, and in fact, consciously introduce new areas of activities at regular intervals. Often, they do so whilst the existing “cash flows” are performing well, in order to ensure that the conglomerate continues in its operations without undue stress or interruption.
My dear friends, in my view, countries also need to follow similar policies. Just like conglomerates, countries need to recognise and acknowledge that, due to external and internal factors, their traditional range of cash flows could change over a period of time. Therefore, countries too, should not place their entire dependence on a particular sector or sectors, for lengthy periods of time. In fact, countries must realise that, if they were to persist with the same traditional sectors without diversification, they may be overly exposed to significant vulnerabilities that may sometimes even lead to major economic, social and political disasters, due to circumstances beyond their control.
That is why it is always sensible for countries, particularly, when they enjoy reasonably stable political and economic times, to scientifically and professionally introduce a diversification strategy for their economies, based on their strengths and opportunities, and diligently implement such strategies to give themselves the capacity to deal with possible new shocks that could emerge from time to time.
Sri Lanka’s
diversification strategy
My dear friends, in that context, I think it may be useful to consider the case study of Sri Lanka’s recent diversification strategy.
That story begins in 2005, when the then Prime Minister and Presidential Candidate, Mahinda Rajapaksa prepared and presented his plans for the country to usher a strong and sustainable economic growth, over the succeeding decade. At that time, the existing mainstays of the Sri Lankan economy were the plantations, apparels, industries and foreign remittances. It was in that scenario, that the then Prime Minister invited his economic planning team to prepare a plan that would give a Sri Lankan bias to the economy, provide a thrust within the economy, develop a consistency in the economic outlook, kick-start the sluggish economic growth, improve the weak macro fundamentals, and generate new hope for the then prevailing bleak and gloomy economy.
Prime Minister Rajapaksa was elected President, and immediately thereafter, he has to face a massive set of challenges. As a critical start, the 30-year-old deadly terror that had engulfed the country, had to be defeated. The disorderly economy had to be put in order quickly, and the necessary resources had to be found for the large scale development activities. The huge gap that existed in the infrastructure, in terms of telecommunications, roads, IT coverage, power availability, business practices, education, housing and health, ports, and airport systems, etc, had to be reduced. Macro fundamentals, including inflation, interest rates, debt levels, foreign reserves, and financial system health had to be improved to be in line with international norms. Fortunately, the intense commitment towards realising these several objectives paid off, and by 2009, Sri Lanka was able to defeat terrorism as well as establish a vastly improved and reasonably sound economic platform.
A presidential election followed in early 2010, and by that time, the stage was well set for the President to formally articulate the new economic diversification strategy in clear terms. He did so, by providing a national as well as international focus to the creation of five new “stars” for Sri Lanka Incorporated! As is now well known in Sri Lanka, these new “stars” conveniently referred to as the country’s five new hubs, established five new thrust sectors in the economy: maritime, aviation, knowledge, commercial, and energy. Soon after, the revitalised tourism sector was added to these five new hubs, and these six sectors were identified as the thrust areas of the Sri Lankan economy, which in a way, could be described as the equivalent of a corporate conglomerate’s “stars”.
In keeping with this new plan, Sri Lanka committed itself to diligently strengthen and support the key components of each of these newly identified sectors over the next 4 years, in order to transform such sectors to become the “cash cows” of the future. In our assessment, these new stars aka hubs will have different incubation and maturity periods, but yet, all are expected to become major thrust areas in their own right, over the next few years. In that regard, at least by the year 2020, each of these six sectors are expected to become multi-billion dollar industries, and are expected to contribute extensively to the growth and expansion of Sri Lanka’s economy over the next several decades, and maybe, even over the next century!
In addition, the serious focus on these new sectors in a professional manner will also provide all Sri Lankan stakeholders with a vibrant road map, which facilitates the coordination amongst all the inter-connected components, thereby providing another useful benefit to the country.
Strategy for Seychelles
Vice President Faure, Governor Abel, my dear friends, I am happy to see a similar growing commitment on the part of the Seychelles in their attempt to develop their own financial sector. By inviting focus on this topic at this anniversary lecture, Governor Abel has confirmed that the Central Bank of Seychelles is seriously examining the challenges of globalisation, on your diversification strategy which envisages the positioning of the Seychelles at the forefront of the financial services industry.
In this regard, I believe you realise that your own rather small population and the level of opportunities available in your real economy, may not provide you with the critical mass that is necessary to establish and maintain a robust and highly specialised financial system. Therefore, it is practical to assume that it will be a necessary element of your growth model, to also position the Seychelles to serve and service a more international financial centre, perhaps with an eye on the large African continent.
That objective would of course, demand that your financial system meets the twin needs of supporting the requirements of a small real economy, while also playing host to a much larger and sophisticated international “off shore” financial world. Such a two-pronged strategy suggests that you would need to develop certain strong and strategic partnerships with different countries, regional blocs and strong institutions. At the same time, it is likely that you will need to identify certain initiatives in the financial world which could be conveniently taken advantage of by you, in keeping with your present strengths, as well as the new strengths that you are hoping to acquire and develop over the next few years.
Vice President Faure, Governor Abel, my dear friends, I am sure all of you are also deeply conscious of the fact that a major advantage that you possess is your strategic location as a gateway to Africa. That inherent advantage, coupled with the beauty of your country and the friendliness of your people, gives you the edge to position yourselves as an obvious choice, as a regional financial hub. However, such inherent strength would need to be buttressed by the other initiatives which we discussed earlier, and those would help you to become an important destination in finance, servicing both Africa and Asia. I am confident that with the type of leadership and the vision that has been articulated by your government, and the commitment displayed by your Central Bank, you would be well on your way to achieving such a goal.
What more can the Seychelles do?
Let us now take a few minutes to also examine as to what more the Seychelles could do, in order to achieve this result within a reasonable time frame.
My dear friends, when we study basic management theories, we are generally advised that new “stars” take around five to 10 years to mature and become regular cash generating sectors. At the same time, when we examine and consider the ground conditions in the Seychelles, we may also probably reach the conclusion that the Seychelles’ financial sector has the potential to be a new “star” in the horizon. Those factors would therefore suggest that, over the next few years, the Seychelles would need to develop the required plans on the several areas that were discussed, while establishing time lines and deliverables, and thereafter ensure the diligent implementation of such plans.
In this regard, the initial investment towards supporting each of the identified plans, would be vital. You will probably also need to be conscious that such investment is your initial capital towards the new “star,” and that in the first few formative years, the returns may not be high, and perhaps may even be none at all. As a result, you may be subjected to regular criticism, and even ridicule by various detractors. Some may claim that your targets cannot be achieved. Some may allege that the investment on the new venture is a massive waste. Some may cite legal and/or administrative obstacles. But, if the transformation is to succeed, you will need to stick firmly to your plans, and work on the key areas diligently, in order to usher the vital transformation of your economy.
Preserving specificities
Governor Abel, I am also particularly pleased that the topic you entrusted to me today, is suggesting your Central Bank’s commitment towards the overall goal of buttressing Seychelles’ financial system, while “preserving your specificities”.
In order to comment on the latter part of the topic, let me narrate a somewhat regular conversation that I have had with several journalists over the past few years. The conversations I refer to are the ones with the more theory-oriented journalists, who have asked me to describe as to what type of economic model Sri Lanka is “following”. “Is it liberalised or semi-liberalised? Is it centre, or centre-right or centre-left? Does it follow Singapore or Chinese or Indian models? Is it restrictive, highly regulated or de-regulated?”
In response, I reply that Sri Lanka’s economic policy framework cannot be fitted into a single box in a simple manner, and it is essentially a ”home grown” Sri Lankan model, where we do what we believe is best for our country based on our information at the particular time and after considering many alternatives. To my mind, such a broad basis with a practical and pragmatic bias, without being overly dependent upon a single theory or philosophy, is vital for policymakers and policy implementators, particularly in today’s volatile world. We must also appreciate that each country has certain specific priorities, characteristics and practices, and therefore we need to understand such local factors as well, when deciding on our own courses of action. 
My dear friends, it is also useful and necessary for us to remind ourselves of yet another fundamental, universal and practical truth, i.e., While the people of any country have certain aspirations, they also have certain tolerance limits to undergo changes and reforms. Governments would do well to be sensitive to those absorption limits as well. Sometimes, when change is brought about too fast or when reforms (even those with excellent long term benefits), are pushed too aggressively, (maybe sometimes based on politically insensitive advice), such rapid changes lead to violent and/or unforeseen resistance, or to disastrous unintended consequences. It is therefore, essential that practical considerations be given priority in selecting new initiatives, and in that context, a strategy which has a healthy mix of new ideas, whilst preserving certain key existing structures and values, would almost always, provide an effective and workable framework, when launching new initiatives and reforms.
Working together
Vice President Faure, Governor Abel, my dear friends, my recent studies of the two countries has convinced me that there are many ways in which Sri Lanka and the Seychelles could work together in the fulfilment of our respective missions, to bring prosperity to our peoples. Both countries share democratic and cultural values. Both are keen to progress fast, and in a sustainable manner. As island nations, both countries share some common values and traits, while having many commonalities.
As a result, our “people to people” contact is that much easier, and our mutual understanding and respect for each other, is higher.
In that background, we now see the significant and auspicious partnerships that Sri Lanka and Seychelles have begun in a few new exciting areas in our joint journey forward. Last week, Sri Lanka’s Mihin Lanka commenced its inaugural flight to the Seychelles. Very soon, the biggest bank in Sri Lanka, the Bank of Ceylon will open its doors to the Seychelles and through the Seychelles, to Africa. Discussions are taking place to develop new relationships in the health, education and fisheries sectors. The Central Bank of the Seychelles and the Central Bank of Sri Lanka are in discussions relating to technical assistance and swap arrangements. All these strategic alliances are definitely steps in the right direction, and are very important building blocks for further cooperation in time to come. We, in Sri Lanka, are naturally excited about these developments, and I am sure, you are too.
Commercial dominance
Vice President Faure, Governor Abel, my dear friends, let us also remind ourselves that many of the world powers at different times of history have not been “big” countries. Turkey, Italy, Mongolia, Portugal, Holland, England and France were comparatively small in size and population, but were world powers at different times of history. They punched far above their weights. They ruled much larger countries, albeit not always in a benign fashion. They stamped their dominance globally, and were sometimes able to maintain their dominance for centuries.
Today, although countries are sometimes shy to speak of military and political dominance that is “unofficially” exerted by certain globally powerful nations, they are not so shy to acknowledge certain instances of commercial dominance of various countries and/or organisations in various markets, products and processes. Such situations are often visible all over the world. Sometimes, this type of commercial or trade dominance is exerted by very small countries. Very often, they do so by dominating certain niche markets in the world with sustained success. For example, Switzerland is the world leader for designer type, top quality, wrist watches.
Closer home, Sri Lanka has established a global benchmark for quality tea, has become the largest producer of cinnamon, and has now made a name as a manufacturer of the best quality lingerie of the world! Those simple examples should inspire us, and serve to remind us that, if we maintain a positive and a “can-do” attitude, we could fashion the transformation that is needed to take us forward. Let us therefore consciously attempt to convert our size and capacity to our advantage, and use the nimbleness and agility that such size affords us, to our advantage. Let us leverage the growing aspirations of our peoples, as our strength. Let us use the strategic locations of our countries, as launching pads to propel ourselves to new heights.
Transformation model
In this regard, I am reminded about the transformation model that was preached by The Enlightened One, Lord Buddha, over 2,500 years ago in the ‘Chakka Nipatha’ in the ‘Anguththara Nikaya’. In that sermon, Lord Buddha enumerated the ingredients that are needed to carry out a successful transformation. First, Arambhaka Dhathu: Start the action. Second, Nikkhama Dhathu: Continue the action. Third, Parakkama Dhathu: Do not allow the action to be affected by interruptions and challenges. Fourth, Thithi Dhathu: Ensure that the action stays firm in the intended path. Fifth, Thawara Dhathu: Ensure the action is carried out with commitment and dedication. Sixth, Upakkama Dhathu: Wisely steer the action so as to induce others to support its performance.
My dear friends, these eternal teachings were true then, and are true today, and we would all do well to follow such wise advice when we attempt any transformation in our respective countries.
Vice President Faure, Governor Abel, my dear friends, today, all indicators are that the Seychelles has embraced a new path for its transformation and are possibly practicing many of the steps that have been set out so wonderfully, in the ‘Chakka Nipatha’. In the meantime, Sri Lanka too has been steadfast in its commitment to create a renaissance, which is surely and steadily, unfolding before the eyes of all Sri Lankans. However, let us, in all humility, remind ourselves, as the celebrated poet, Robert Frost so eloquently stated in his ever popular poem, “Stopping by the woods on a snowy evening”, that “there are miles to go before we sleep,” and that “we have many promises to keep”.
Governor Abel, I have no doubt that the Seychelles would continue to record successes and reach milestones over the future years, and I wish the Central Bank of Seychelles all success in fulfilling a pragmatic role in fashioning such a transformation in your beloved country.
Thank you.
That story begins in 2005, when the then Prime Minister and Presidential Candidate, Mahinda Rajapaksa prepared and presented his plans for the country to usher a strong and sustainable economic growth, over the succeeding decade. At that time, the existing mainstays of the Sri Lankan economy were the plantations, apparels, industries and foreign remittances. It was in that scenario, that the then Prime Minister invited his economic planning team to prepare a plan that would give a Sri Lankan bias to the economy, provide a thrust within the economy, develop a consistency in the economic outlook, kick-start the sluggish economic growth, improve the weak macro fundamentals, and generate new hope for the then prevailing bleak and gloomy economy.
Prime Minister Rajapaksa was elected President, and immediately thereafter, he has to face a massive set of challenges. As a critical start, the 30-year-old deadly terror that had engulfed the country, had to be defeated. The disorderly economy had to be put in order quickly, and the necessary resources had to be found for the large scale development activities. The huge gap that existed in the infrastructure, in terms of telecommunications, roads, IT coverage, power availability, business practices, education, housing and health, ports, and airport systems, etc, had to be reduced. Macro fundamentals, including inflation, interest rates, debt levels, foreign reserves, and financial system health had to be improved to be in line with international norms. Fortunately, the intense commitment towards realising these several objectives paid off, and by 2009, Sri Lanka was able to defeat terrorism as well as establish a vastly improved and reasonably sound economic platform.
A presidential election followed in early 2010, and by that time, the stage was well set for the President to formally articulate the new economic diversification strategy in clear terms. He did so, by providing a national as well as international focus to the creation of five new “stars” for Sri Lanka Incorporated! As is now well known in Sri Lanka, these new “stars” conveniently referred to as the country’s five new hubs, established five new thrust sectors in the economy: maritime, aviation, knowledge, commercial, and energy. Soon after, the revitalised tourism sector was added to these five new hubs, and these six sectors were identified as the thrust areas of the Sri Lankan economy, which in a way, could be described as the equivalent of a corporate conglomerate’s “stars”.
In keeping with this new plan, Sri Lanka committed itself to diligently strengthen and support the key components of each of these newly identified sectors over the next 4 years, in order to transform such sectors to become the “cash cows” of the future. In our assessment, these new stars aka hubs will have different incubation and maturity periods, but yet, all are expected to become major thrust areas in their own right, over the next few years. In that regard, at least by the year 2020, each of these six sectors are expected to become multi-billion dollar industries, and are expected to contribute extensively to the growth and expansion of Sri Lanka’s economy over the next several decades, and maybe, even over the next century!
In addition, the serious focus on these new sectors in a professional manner will also provide all Sri Lankan stakeholders with a vibrant road map, which facilitates the coordination amongst all the inter-connected components, thereby providing another useful benefit to the country.
Strategy for Seychelles
Vice President Faure, Governor Abel, my dear friends, I am happy to see a similar growing commitment on the part of the Seychelles in their attempt to develop their own financial sector. By inviting focus on this topic at this anniversary lecture, Governor Abel has confirmed that the Central Bank of Seychelles is seriously examining the challenges of globalisation, on your diversification strategy which envisages the positioning of the Seychelles at the forefront of the financial services industry.
In this regard, I believe you realise that your own rather small population and the level of opportunities available in your real economy, may not provide you with the critical mass that is necessary to establish and maintain a robust and highly specialised financial system. Therefore, it is practical to assume that it will be a necessary element of your growth model, to also position the Seychelles to serve and service a more international financial centre, perhaps with an eye on the large African continent.
That objective would of course, demand that your financial system meets the twin needs of supporting the requirements of a small real economy, while also playing host to a much larger and sophisticated international “off shore” financial world. Such a two-pronged strategy suggests that you would need to develop certain strong and strategic partnerships with different countries, regional blocs and strong institutions. At the same time, it is likely that you will need to identify certain initiatives in the financial world which could be conveniently taken advantage of by you, in keeping with your present strengths, as well as the new strengths that you are hoping to acquire and develop over the next few years.
Vice President Faure, Governor Abel, my dear friends, I am sure all of you are also deeply conscious of the fact that a major advantage that you possess is your strategic location as a gateway to Africa. That inherent advantage, coupled with the beauty of your country and the friendliness of your people, gives you the edge to position yourselves as an obvious choice, as a regional financial hub. However, such inherent strength would need to be buttressed by the other initiatives which we discussed earlier, and those would help you to become an important destination in finance, servicing both Africa and Asia. I am confident that with the type of leadership and the vision that has been articulated by your government, and the commitment displayed by your Central Bank, you would be well on your way to achieving such a goal.
What more can the Seychelles do?
Let us now take a few minutes to also examine as to what more the Seychelles could do, in order to achieve this result within a reasonable time frame.
My dear friends, when we study basic management theories, we are generally advised that new “stars” take around five to 10 years to mature and become regular cash generating sectors. At the same time, when we examine and consider the ground conditions in the Seychelles, we may also probably reach the conclusion that the Seychelles’ financial sector has the potential to be a new “star” in the horizon. Those factors would therefore suggest that, over the next few years, the Seychelles would need to develop the required plans on the several areas that were discussed, while establishing time lines and deliverables, and thereafter ensure the diligent implementation of such plans.
In this regard, the initial investment towards supporting each of the identified plans, would be vital. You will probably also need to be conscious that such investment is your initial capital towards the new “star,” and that in the first few formative years, the returns may not be high, and perhaps may even be none at all. As a result, you may be subjected to regular criticism, and even ridicule by various detractors. Some may claim that your targets cannot be achieved. Some may allege that the investment on the new venture is a massive waste. Some may cite legal and/or administrative obstacles. But, if the transformation is to succeed, you will need to stick firmly to your plans, and work on the key areas diligently, in order to usher the vital transformation of your economy. 
Preserving specificities
Governor Abel, I am also particularly pleased that the topic you entrusted to me today, is suggesting your Central Bank’s commitment towards the overall goal of buttressing Seychelles’ financial system, while “preserving your specificities”.
In order to comment on the latter part of the topic, let me narrate a somewhat regular conversation that I have had with several journalists over the past few years. The conversations I refer to are the ones with the more theory-oriented journalists, who have asked me to describe as to what type of economic model Sri Lanka is “following”. “Is it liberalised or semi-liberalised? Is it centre, or centre-right or centre-left? Does it follow Singapore or Chinese or Indian models? Is it restrictive, highly regulated or de-regulated?”
In response, I reply that Sri Lanka’s economic policy framework cannot be fitted into a single box in a simple manner, and it is essentially a ”home grown” Sri Lankan model, where we do what we believe is best for our country based on our information at the particular time and after considering many alternatives. To my mind, such a broad basis with a practical and pragmatic bias, without being overly dependent upon a single theory or philosophy, is vital for policymakers and policy implementators, particularly in today’s volatile world. We must also appreciate that each country has certain specific priorities, characteristics and practices, and therefore we need to understand such local factors as well, when deciding on our own courses of action.
My dear friends, it is also useful and necessary for us to remind ourselves of yet another fundamental, universal and practical truth, i.e., While the people of any country have certain aspirations, they also have certain tolerance limits to undergo changes and reforms. Governments would do well to be sensitive to those absorption limits as well. Sometimes, when change is brought about too fast or when reforms (even those with excellent long term benefits), are pushed too aggressively, (maybe sometimes based on politically insensitive advice), such rapid changes lead to violent and/or unforeseen resistance, or to disastrous unintended consequences. It is therefore, essential that practical considerations be given priority in selecting new initiatives, and in that context, a strategy which has a healthy mix of new ideas, whilst preserving certain key existing structures and values, would almost always, provide an effective and workable framework, when launching new initiatives and reforms.
Working together
Vice President Faure, Governor Abel, my dear friends, my recent studies of the two countries has convinced me that there are many ways in which Sri Lanka and the Seychelles could work together in the fulfilment of our respective missions, to bring prosperity to our peoples. Both countries share democratic and cultural values. Both are keen to progress fast, and in a sustainable manner. As island nations, both countries share some common values and traits, while having many commonalities.
As a result, our “people to people” contact is that much easier, and our mutual understanding and respect for each other, is higher.
In that background, we now see the significant and auspicious partnerships that Sri Lanka and Seychelles have begun in a few new exciting areas in our joint journey forward. Last week, Sri Lanka’s Mihin Lanka commenced its inaugural flight to the Seychelles. Very soon, the biggest bank in Sri Lanka, the Bank of Ceylon will open its doors to the Seychelles and through the Seychelles, to Africa. Discussions are taking place to develop new relationships in the health, education and fisheries sectors. The Central Bank of the Seychelles and the Central Bank of Sri Lanka are in discussions relating to technical assistance and swap arrangements. All these strategic alliances are definitely steps in the right direction, and are very important building blocks for further cooperation in time to come. We, in Sri Lanka, are naturally excited about these developments, and I am sure, you are too.
Commercial dominance
Vice President Faure, Governor Abel, my dear friends, let us also remind ourselves that many of the world powers at different times of history have not been “big” countries. Turkey, Italy, Mongolia, Portugal, Holland, England and France were comparatively small in size and population, but were world powers at different times of history. They punched far above their weights. They ruled much larger countries, albeit not always in a benign fashion. They stamped their dominance globally, and were sometimes able to maintain their dominance for centuries.
Today, although countries are sometimes shy to speak of military and political dominance that is “unofficially” exerted by certain globally powerful nations, they are not so shy to acknowledge certain instances of commercial dominance of various countries and/or organisations in various markets, products and processes. Such situations are often visible all over the world. Sometimes, this type of commercial or trade dominance is exerted by very small countries. Very often, they do so by dominating certain niche markets in the world with sustained success. For example, Switzerland is the world leader for designer type, top quality, wrist watches.
Closer home, Sri Lanka has established a global benchmark for quality tea, has become the largest producer of cinnamon, and has now made a name as a manufacturer of the best quality lingerie of the world! Those simple examples should inspire us, and serve to remind us that, if we maintain a positive and a “can-do” attitude, we could fashion the transformation that is needed to take us forward. Let us therefore consciously attempt to convert our size and capacity to our advantage, and use the nimbleness and agility that such size affords us, to our advantage. Let us leverage the growing aspirations of our peoples, as our strength. Let us use the strategic locations of our countries, as launching pads to propel ourselves to new heights.
Transformation model
In this regard, I am reminded about the transformation model that was preached by The Enlightened One, Lord Buddha, over 2,500 years ago in the ‘Chakka Nipatha’ in the ‘Anguththara Nikaya’.
In that sermon, Lord Buddha enumerated the ingredients that are needed to carry out a successful transformation. First, Arambhaka Dhathu: Start the action. Second, Nikkhama Dhathu: Continue the action. Third, Parakkama Dhathu: Do not allow the action to be affected by interruptions and challenges. Fourth, Thithi Dhathu: Ensure that the action stays firm in the intended path. Fifth, Thawara Dhathu: Ensure the action is carried out with commitment and dedication. Sixth, Upakkama Dhathu: Wisely steer the action so as to induce others to support its performance.
My dear friends, these eternal teachings were true then, and are true today, and we would all do well to follow such wise advice when we attempt any transformation in our respective countries.
Vice President Faure, Governor Abel, my dear friends, today, all indicators are that the Seychelles has embraced a new path for its transformation and are possibly practicing many of the steps that have been set out so wonderfully, in the ‘Chakka Nipatha’. In the meantime, Sri Lanka too has been steadfast in its commitment to create a renaissance, which is surely and steadily, unfolding before the eyes of all Sri Lankans.
However, let us, in all humility, remind ourselves, as the celebrated poet, Robert Frost so eloquently stated in his ever popular poem, “Stopping by the woods on a snowy evening”, that “there are miles to go before we sleep,” and that “we have many promises to keep”. Governor Abel, I have no doubt that the Seychelles would continue to record successes and reach milestones over the future years, and I wish the Central Bank of Seychelles all success in fulfilling a pragmatic role in fashioning such a transformation in your beloved country.
Thank you.
Pix by Daminda Harsha Perera
