Meeting the challenge of Financing post 2015 held on the occasion of the Third UN Conference on Financing for Development
July 17, 2015
Remarks by Jean-Paul Adam, Minister of Finance, Trade and the Blue Economy, Chair of the panel on Small Island Developing States
Africa Hall, United Nations Economic Commission for Africa- Wednesday 15th July 2015, Addis Ababa
Fellow panellists, ladies and gentlemen,
First of all, I would like to express our sincere appreciation to UNDP and UNDESA for convening this event. Our special thanks to Helen Clark, UNDP Administrator and Mr. Gyan Chandra Acharya, Under Secretary General of the UN- your support for SIDS is evident and we look forward to continue to work with you to bring about the action we need.
The questions that are before us today are fundamentally about what are the changes that need to be made that help us as Small Island Developing States to make the Sustainable Development Goals a reality. Making them a reality for ourselves- at a domestic policy level. And making them a reality at a global level.
I hope through this panel and discussion we can use our respective experiences to highlight both constraints and opportunities for SIDS. But I believe that we must start with the premise that there must be CHANGE.
Thank you for allowing me to underline some of the change that Seychelles would like to see- and some ideas on how we can implement it.
First of all- we need to change the categorisations that define access to resources for development. Access to concessional finance is currently based almost exclusively on GDP per capita criteria.
If we are to truly speak of Sustainable Development Goals- we cannot simply measure income. Because sustainability is about more than money.
There are 17 goals and 169 targets as part of the SDGs. Not one of them will be achieved simply by increasing GDP per capita.
By only measuring one thing- we risk devaluing the SDGs. We need a broader measure of progress. This is particularly obvious for SIDS. But it is in fact evident that it is valid for all.
In SIDS, relatively high GDP per capita ratios hide the high cost per capita that we pay for development.
We don't have economies of scale. We have a narrow resource base. We have a narrow tax base.
Increases in per capita income in SIDS do not increase resources available for development. In fact they limit them because access to concessional finance is linked to GDP per capita. Therefore we should not be surprised when many SIDS are unwilling graduates to middle income or high income status.
Seychelles has called for the adoption of a vulnerability or resilience index as a means of better measuring their ability to leverage development. It does not mean that high income countries should have the same access to resources as LDCs. But it does mean that every country- LDC, land locked country, SIDS, should have access to reasonable resources to build their resilience based on specificities.
By committing to SDGs- we are moving beyond quick wins. We are investing in fundamental transformations. We must be able to measure those transformations effectively.
We must also multiply the tools available for SIDS to drive this transformation.
Our challenge as SIDS is always focused on the fact that structurally- there are a limited number of development drivers. We have often been effective in mobilising FDI- but we see diminishing returns from this investment.
And because of our small domestic markets- we are overly reliant on a narrow band of exports or concentrated FDI in one or two sectors such as tourism.
The Blue Economy is a key part of widening our perspectives as SIDS. The second key point wish to make is that Improved governance of our oceanic spaces can further mobilise resources for our development.
First of all this involves making better use of what we know is already there. We should invest in more brand based value addition around fisheries for example. Speaking in the context of Seychelles- it's not just fish- it is fish which has been sustainably caught by Seychellois.
By developing a Marine Spatial Plan we are better making use of our oceanic space to maximise value based on sustainability.
To leverage additional financing for sustainable fishing, Seychelles is exploring options for the launch of a 'Blue Bond'. Under this proposal we would seek market based capital that can be channeled with the assistance of a development institution into financing the implementation of a comprehensive fisheries management plan.
Through a 'Blue Bond' part of the funds would be available to fishermen and fisheries entrepreneurs directly to create more value added sustainable products.
In terms of financing for development- a 'Blue Bond' mobilises funds that are already available, but by working with a development institution we can make it sustainable both financially and environmentally.
Ladies and gentlemen,
A third critical consideration in terms of financing options for SIDS is the twin challenge of debt reduction and affordable financing.
The lack of affordable financing for middle income or high income SIDS leads to unsustainable borrowing trends that result in spiralling levels of public debt. This high level of debt then further hampers the ability of SIDS to invest in sustainable development.
We cannot solve one problem without addressing the other. Seychelles has successfully restructured its debt since 2009 where our debt to GDP ratio was over 175% and is on track to reach a debt to GDP ratio of below 50% by 2018. Our current debt to GDP ratio is 63%.
But we are limited in this period in terms of our access to financing.
One innovation we have proposed is to leverage our debt against climate change adaptation. Using funds provided by an NGO- the Nature Conservancy- we are buying back around USD 30 million of our debt. These funds will then be invested into a climate change and conservation trust fund. Seychelles will continue to service its payments to that fund, with the advantage that this fund will be channelling its actions towards building Seychelles resilience against climate change, while also enhancing 'blue economy' opportunities such as through eco-tourism.
Looking at SIDS in general- debt for adaptation swaps can be useful policy options- particularly if additionally linked to climate financing opportunities.
But we also need to have clear pathways for debt restructuring for SIDS based on our vulnerability to global fluctuations. And we need sustainable financing which is predictable, affordable and adapted to our specificities.
Finally, ladies and gentlemen, climate finance is not just about adaptation funding, mitigation funding or development finance.
It is about our viability as nation states.
Our GDP per capita is meaningless in the context of the scale of the impact of climate change.
We must ensure that there is specific funding available for SIDS under the Green Climate Fund.
In conclusion, I would like to underline that the gaps that currently exist in relation to development financing for SIDS are actually indicators of wider gaps in relation to the ability of the global development architecture to address the forthcoming SDGs.
Better support for SIDS will also support more effective development finance.
Thank you for your attention.