Seychelles cancels hotel over food security fears

The Guardian | Wednesday 1 April 2009

by Xan Rice in Nairobi

The Seychelles has cancelled a large new hotel development that was to be have been built on prime agricultural land, following strong objections from local residents worried about food security.

The archipelago country, which is heavily dependent on imported food, has been hit badly by the global financial crisis, with the government forced to seek emergency funding for the IMF. Critics accuse the authorities of ignoring food concerns by offering arable land to foreign investors looking to build luxury resorts.

"The proposed project will not go ahead and the land will remain state property," Jacquelin Dugasse, the development minister, said. "The strong feeling was that we should not stop agricultural development when food security is an issue."

The 20-hectare (49-acre) resort was to have been built by an unnamed foreign investor.

The use and ownership of arable land has become a heated issue in Africa since the global food shortage and resultant hike prices that began in 2007. Several Gulf and Asian states have sought to increase their own food security by leasing land to grow crops in countries such as Sudan, Ethiopia and Kenya, which all rely on outside help to feed their citizens.

In the most controversial deal, the South Korean conglomerate Daewoo announced in November that it would lease 1.3m hectares (32.m acres) of land in Madagascar to grow palm oil and corn. The agreement caused widespread anger on the Indian Ocean island, and was rescinded two weeks ago by Madagascar's new president, Andry Rajoelina.

The Seychelles' financial problems stem from being the world's most indebted country per capita. By 2008 it had accumulated $800m (£558m) in external debt, with successive governments running large budget deficits and borrowing heavily from banks and foreign governments to invest in health, education and housing for its 85,000 citizens. As tourism revenue began to fall last year and global credit dried up, the government defaulted on interest due on $230m (£161m) of bonds, taking it to the verge of bankruptcy.

The IMF agreed to a $26m (£18m) rescue package, tied to economic reforms. In November the government asked 2,000 of its nearly 17,000 civil servants to resign voluntarily in order to cut costs. The Seychelles rupee, which had been pegged to the dollar at an artificially high rates, was floated and lost more than half of its value on the first day of trading. Inflation shot up to 60%.
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