2018 Index of Economic Freedom

Seychelles

overall score61.6
world rank88
Rule of Law

Property Rights60.7

Government Integrity38.8

Judicial Effectiveness38.8

Government Size

Government Spending63.0

Tax Burden73.4

Fiscal Health90.6

Regulatory Efficiency

Business Freedom63.4

Labor Freedom57.5

Monetary Freedom81.5

Open Markets

Trade Freedom86.7

Investment Freedom55.0

Financial Freedom30.0

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Quick Facts
  • Population:
    • 0.1 million
  • GDP (PPP):
    • $2.6 billion
    • 4.4% growth
    • 5.0% 5-year compound annual growth
    • $27,602 per capita
  • Unemployment:
  • Inflation (CPI):
    • -1.0%
  • FDI Inflow:
    • $155.2 million
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Seychelles’ economic freedom score is 61.6, making its economy the 88th freest in the 2018 Index. Its overall score has decreased by 0.2 point, with declines in the government integrity and tax burden indicators outpacing higher scores for property rights and trade freedom. Seychelles is ranked 7th among 47 countries in the Sub-Saharan Africa region, and its overall score is above the regional average and close to the world average.

Economic growth in this Indian Ocean tourist destination has moved Seychelles to upper-middle-income status. To reduce dependence on tourism, improve the business environment, and encourage investment in other sectors, the government is focusing structural reforms on debt reduction, restructuring loss-making state-owned enterprises, and “cross-subsidizing” electricity prices (charging higher prices to some consumers to subsidize lower prices for others). An inefficient legal framework and pervasive corruption severely hamper economic freedom. Additional reforms and market-opening measures are critical to improving competitiveness.

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Background

After independence from the U.K. in 1976, France-Albert René of the People’s Party seized power in a bloodless coup in 1977. In 1993, he was elected to serve as Seychelles’ first president. In 2004, he ceded power to Vice President James Michel, who was elected to his third five-year presidential term in 2015. In October 2016, President Michel resigned and transferred power to Vice President Danny Faure. Seychelles enjoys a stable economic environment with lucrative fishing and tourism industries. In recent years, the government has encouraged foreign investment to upgrade hotels and other services while at the same time moving to reduce dependence on tourism by promoting the development of farming, fishing, and small-scale manufacturing.

Rule of LawView Methodology

Property Rights 60.7 Create a Graph using this measurement

Government Integrity 38.8 Create a Graph using this measurement

Judicial Effectiveness 38.8 Create a Graph using this measurement

Secured interests in real property and contracts are enforced. The judicial branch is independent, but well-connected individuals are perceived as receiving special treatment in the courts. Court processes are inefficient and subject to lengthy delays. Government corruption stems from a lack of transparency in government-owned land and businesses as well as toleration of official corruption with impunity.

Government SizeView Methodology

The personal income tax rate is a flat 15 percent. The top corporate tax rate is 33 percent. Other taxes include interest, vehicle, and value-added taxes. The overall tax burden equals 36.7 percent of total domestic income. Over the past three years, government spending has amounted to 35.1 percent of total output (GDP), and budget surpluses have averaged 1.8 percent of GDP. Public debt is equivalent to 68.6 percent of GDP.

Regulatory EfficiencyView Methodology

In 2016, according to the World Bank, the ease of starting a business and getting credit declined in the Seychelles. Obtaining electricity was made easier. The largest share of private-sector employment is in the tourism sector, which, along with tuna fishing, has driven growth in recent years. The state-owned airline and the Seychelles Public Transport Corporation continue to record large operating losses.

Open MarketsView Methodology

Trade is extremely important to the Seychelles’ economy; the combined value of exports and imports equals 181 percent of GDP. The average applied tariff rate is 1.6 percent. Nontariff barriers impede some trade. Government openness to foreign investment is below average. The financial sector remains rudimentary. Much of the population lacks access to formal banking services, and limited capacity for lending to the private sector inhibits growth.

Country's Score Over Time

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Regional Ranking

rank country overall change
1Mauritius75.10.4
2Botswana69.9-0.2
3Rwanda69.11.5
4South Africa630.7
5Uganda621.1
6Côte d'Ivoire 62-1.0
7Seychelles61.6-0.2
8Burkina Faso600.4
9Cabo Verde603.1
10Tanzania59.91.3
11Namibia58.5-4.0
12Nigeria58.51.4
13Gabon58-0.6
14Mali57.6-1.0
15Guinea-Bissau56.90.8
16Madagascar56.8-0.6
17Benin56.7-2.5
18Comoros56.20.4
19Ghana56-0.2
20Swaziland55.9-5.2
21Senegal55.7-0.2
22Kenya54.71.2
23Zambia54.3-1.5
24Mauritania54-0.4
25Lesotho53.90.0
26São Tomé and Príncipe 53.6-1.8
27Ethiopia52.80.1
28The Gambia52.3-1.1
29Guinea52.24.6
30Democratic Republic of Congo52.1-4.3
31Malawi52-0.2
32Cameroon51.90.1
33Sierra Leone51.8-0.8
34Burundi50.9-2.3
35Liberia50.91.8
36Niger49.5-1.3
37Sudan49.40.6
38Chad49.30.3
39Central African Republic49.2-2.6
40Angola48.60.1
41Togo47.8-5.4
42Mozambique 46.3-3.6
43Djibouti45.1-1.6
44Zimbabwe440.0
45Equatorial Guinea42-3.0
46Eritrea41.7-0.5
47Republic of Congo 38.9-1.1
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