Can the Seychelles fulfil its debt obligations in the midst of a heroin epidemic?
According to the Agency for the Prevention of Drug Abuse and Rehabilitation in the Seychelles, between 5,000 and 6,000 people – from a population of around 94,000 – are addicted to heroin. This means that the Seychelles has the highest usage of heroin per capita in the entire world.
Most of those affected (83%) are young men that haven’t been educated beyond secondary school.
The epidemic coincides with efforts to prove that debt instruments tailored to small island nations are essential to their economic success.
In October 2018, the Seychelles raised $15 million from the international capital markets from the first ever blue bond.
This was the country's first foray into the international capital markets since it graduated to a high-income country (HIC) in 2015. As defined by the World Bank, a HIC is a country with a gross national income per capita of $12,376 or more.
In reality, wealth in the Seychelles is concentrated in the hands of the few, and inequality is "significant", according to the World Bank.
While the Seychelles campaigns for different ways of measuring vulnerability, for now it will have to accept its categorization. And one of the biggest consequences of this is that the Seychelles is unable to access concessional funding like many of its African peers.
The blue bond created a sort of loophole for the Seychelles. Because it is a new instrument, with specific conditions attached and with stakeholders keen to ensure its success, certain concessions were made. $5 million of the blue bond is guaranteed by the World Bank and another $5 million is a concessional loan from the Global Environment Facility (GEF), which will partially cover interest payments for the bond.
Three investors bought the debt: Calvert Impact Capital, Nuveen and Prudential Financial. Standard Chartered acted as placement agent for the bond, Latham & Watkins advised the World Bank as external counsel and Clifford Chance acted as transaction counsel.
Rehabilitation works – and in the Seychelles, it has the potential to spur on the economy
The main condition of the blue bond is for the Seychelles to maintain the sustainable use of marine resources to develop its 'blue economy' – one that leverages the nation's exclusive economic zone of nearly 1.4 million km-square to develop its tourism and fisheries industries sustainably.
From the outset, this feels like a pretty good deal for three main reasons.
Firstly, the Seychelles accesses debt at a discount. Secondly, the institutions and investors involved in the deal have bragging rights for working on the first ever blue bond while feeling smug that they are involved in an instrument that puts sustainability and the environment at its core, something that is very fashionable at the moment. And lastly, its successful roll-out provides a blueprint for other island nations to raise debt in a similar fashion.
But with approximately 10% of the entire working population in the country addicted to heroin – many of whom are unemployed or only in casual employment according to research by the government – the economy has a problem. So, fulfilling its economic goals will be difficult and meeting its debt obligations will be tough.
At the moment, the Seychelles is tackling the heroin epidemic head on. In 2016, the government appointed the impressive Patrick Herminie as secretary of state for Prevention of Drug Abuse and Rehabilitation. He was previously Speaker of the House in Seychelles Parliament and trained as a medical doctor.
Under his direction, the Seychelles has introduced a Portuguese-style programme that seeks to rehabilitate users as opposed to a US-style "war on drugs".
Today, 2,000 people are registered under one of the rehabilitation programmes on offer in the Seychelles. They are able to access support from a number of fixed and roaming clinics in the country and get their daily dose of methadone to help wean themselves off heroin.
I visited one of these clinics on a Saturday morning. Once visitors show their ID, counsellors and nurses dispense the required dose of methadone and pass it out from their spot in an unmarked white van.
It’s a pretty relaxed affair: most of those receiving treatment stay a while and chat with one of the counsellors or with one another. Some even bring family members along with them for the ride. Once they have had their fill of daily gossip, many of them make their way into work.
And that is the point. Rehabilitation helps people in the Seychelles get back into work. According to Herminie, 68% of those enrolled in a programme are now employed.
I spoke to 35-year-old Jed, who had been using heroin for 14 years, smoking it up to three times a day. He's now been clean for two months and has since found a job in a luxury hotel as a pastry chef. I met many other people with a similar experience to Jed. All had managed to find gainful employment once they had given up heroin.
Rehabilitation works – and in the Seychelles, it has the potential to spur on the economy.
But this isn't the end of the Seychelles' drug problems. The price of heroin has plummeted as demand has fallen, so dealers are starting to offer other drugs to keep their business buoyant. The prevalence of cocaine, ecstasy, crystal meth and synthetic drugs has increased, according to Herminie.
And while heroin can be treated using methadone, there is no equivalent for these other drugs.
A new strategy is needed to tackle a potential new drugs epidemic in the Seychelles, one that is preventative as opposed to reactive. It also has to tackle the core of the epidemic and stop drugs reaching the islands in the first place – something incredibly difficult for a country made up of 115 islands with porous borders.
There doesn’t appear to be much focus on this as yet, but it will be essential if the Seychelles wants to continue along its economic trajectory.