The Seychelles Column - By Christopher Gill

Mush Mash and Cooking with Your Feet

The Seychelles Central Bank Governor Pierre Laporte has come out with an advisory further to the recently enacted legislation called the Foreign Exchange Act, 2009. The title of this advisory, which has no legal implication is “Explanatory Note”. Usually when a legislation has been poorly written, or is vague, ambiguous, or unenforceable, in layman’s terms: “stupid”, the authorities of some banana republics will come out with an Explanatory Note to explain the mess. Mr. Laporte seems to have done that now.

Mr. Laporte envisions the primary focus of the Act will be that the local currency the Seychelles Rupee will be accepted as a means of payment all around the country. In other words, it will never be refused. However, the explanatory note says payments can be made in foreign currency wherein supported by written or oral agreement.

In other words, the law has no teeth and it cannot regulate as it suggest it is to do. More mush, more mash, and legislative cooking with feet, at its best.

Currency confidence cannot be legislated successfully. This is a simple concept and nothing fancy. But it takes an intelligent insightful mind to understand the complexity of such a simple proposition as Mr. Laporte has now showed us.

Mr. Laporte’s explanatory note also advises us that only authorised dealers can set rates of exchange. However, any person can also set rates of exchange subject to agreement. If this is not double talk, I do not know what is.

Mr. Laporte‘s attempt now to limit the scope of economic market forces to authorized dealers is nothing more then the farmer saying his pig will only be used for bacon. It is ridiculous of course. Any butcher will tell you, that you can get bacon in only a particular part of a pig; its under belly.

That means the only people that will follow Mr. Laporte’s notes are the authorized dealers and anyone else that sees it convenient to, on that particular day. The next day, or next transaction, may have a different consequence.

In this dynamic environment, the only way authorised dealers can remain viable, is if they remain financially competitive. This means they must offer the best prices for hard currency or the best prices for Seychelles Rupees. If they fail to live up to that challenge, the Black Market, which will be made up of written and oral contracts under Mr. Laporte’s explanatory notes, will take over the market place and send all the effort at regulation and control down the drain like the one party state, SMB, Orchid Farm, Coetivy Prawns, Pastella, bottled water, and all the other funny but expensive exercises we have embarked on and placed us on the wrong track for many years.

Careful now Mr. Laporte!

Anytime, a regulation attempts to control currency values beyond market forces and dictates thereof, the black market will surface. Regulations must not attempt to legislate supply and demand. When legislation tries to artificially regulate supply and demand, in this case, our Rupee currency, the drafter will be left with egg on his face. Don’t forget Mukesh and Albert’s MERP fiasco, currency searches at the airport, lines at the banks asking for a measly US$ 400 while suitcases of dollars were leaving the country through the VIP lounge, let alone the poor taxi drivers having to hide their hard earned dollars and tips in the sole of their shoes!

In his explanatory summary, Mr. Laporte admits that, “the Act is geared to regulate the market”....so it will not be long before egg lands on his face as the Black Market will dish out his breakfast for him.

In the meantime, we are all welcome to dine on mush and mash cooked with someone’s feet! And the lyrics of Pete Seeger’s 1956 song “Where have all the flowers gone” still rings true today:

“WHEN WILL THEY EVER LEARN?”

May God Bless All Freedom Loving Seychellois and Our Beloved Seychelles!