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Rewards of keeping a clear head.

Summary: Caroline Abel is in her second and last term as the Governor of the Central Bank of Seychelles. She is the first woman in the history of the Seychelles archipelago to hold that post. She is a daughter of Antoine Abel, Seychelles' first playwright. She holds a first degree in economics and a master's degree in monetary economics from the University of Leeds and the University of Glasgow respectively.

Her career started in 1994 when she was employed as a senior bank clerk at the Central Bank of Seychelles where she served in several capacities before she was appointed deputy governor of the institution in 2010.

In 2012, Abel became the first woman to be appointed Governor of the Central Bank of Seychelles, succeeding Pierre Laporte. She discusses her life and career with Rafiq Raji.

CAROLINE ABEL, GOVERNOR, CENTRAL BANK OF SEYCHELLES

Who is Caroline Abel, the person?

I was born in 1973 and hail from the district of Anse Boileau, on the western side of the main Seychelles island of Mahe. I completed my primary and secondary education in the same district before moving to the former National Youth Service (NYS).

As I love mathematics, I studied the sub- ject along with economics and geography at Advanced Level at the School of Humanities and Sciences at the Seychelles Polytechnic.

I successfully sat for my A-Levels in November 1993 and qualified for a government scholarship to pursue university studies abroad. However, I wanted to gain some work experience prior to undertaking further studies and thus, took up a junior position at the Social Security Fund in December 1993. Having noticed my abilities, my superiors decided to have me transferred to the Central Bank of Seychelles in March 1994 on a probationary six-month period. In September 1994, I was formally appointed as Senior Bank Clerk.

I proceeded for my undergraduate stud- ies at the University of Leeds between 199Oe and 1999, where I graduated with a BA in Economics, with a distinction. I then returned to the bank as Research Officer in the Research and Statistics Division. In 2004, I was offered the opportunity to further my studies and decided to pursue a Masters in Philosophy (MPhil) in monetary economics and finance at the University of Glasgow, which I completed with a distinc- tion in 2005.

A year later, I was promoted to the role of Head of Division, a post I held until my appointment as Deputy Governor in July 2010. Following amendments to the Central Bank of Seychelles Act, I was appointed as First Deputy Governor in December 2011. In March 2012, I was appointed Governor of the Central Bank of Seychelles, essentially becoming the first woman to hold the position. I was re-appointed for a second and final six-year term, effective March 2018.

In terms of personal achievements, I was presented with the African Female Public Servant of the Year Award by the African Leadership magazine and a Special Com- mendation Award from the US Georgia Legislative Black Caucus, both in July 2015. However, I would say that being part of the transformation that the bank has gone through, and seeing how the people within the institution have grown, is one of the most rewarding aspects of the job.

Has being a woman in a very high position helped or hindered you?

Ever since assuming the position, I have looked at it from the perspective of the role itself, because to me it does not matter if you are a man or a woman, as long as you are prepared to discharge your duties with zeal and confidence.

I joined the Central Bank in 1994 and have since acquired much experience and exposure from working with all the divisions, coupled with the necessary technical training, including at other Central Banks and international institutions to boost my knowledge and skills.

Through this, I have gained a thorough understanding of how the institution func- tions and acquired a wealth of experience and expertise that has helped me to settle in the role. I have also worked closely with past Governors.

When you first become Governor, you do take note that now everything seems to be coming at you, but over time you are able to navigate, and manage the challenges and pressure that come with the role.

At the end of the day, however, what is really important is to have the support and dedication of the team you are working with, to collectively address challenges, take decisions and move forward to attain the objectives of this very important institution.

How unique is it for women to reach such heights as you have in Seychelles?

In recent years, women in Seychelles have been venturing into previously male- dominated fields. We see more young girls going into the maritime field, we have women in the army, working as bus driv- ers and even pilots. Many women are now also venturing into businesses and heading their own companies.

When it comes to leadership roles, more women now hold decision-making posi- tions in government. The Seychelles' Judici- ary is headed by a woman, who is also the first female to be appointed as the island nation's Chief Justice. We also have women holding ministerial positions, with cur- rently five women being part of the Cabinet alongside seven men.

Even in politics, in the last Presidential election in 2015, we had one woman who took part in the presidential race, the first time Seychelles had a female presidential candidate.

Currently Seychelles is ranked 94th in the world, according to the proportion of women in parliament, with women hold- ing seven of the 33 seats in the National Assembly. However, it is to be noted that in 2011, Seychelles was ranked 5th, when women held 14 of the 32 seats in parliament. This shows that in Seychelles, women do reach great heights and aspire to do great things. While some barriers to gen- der equality and women's empowerment may exist, both men and women from all walks of life are given equal opportunities to develop their full potential in Seychelles, and this from a very young age.

Under your stewardship, inflation and exchange rates have largely been stable. To what do you owe this success?

Prior to 2008, the Seychelles economy went through a crisis period. In order to pri- marily to address the serious balance of payments and external debt difficulties, Seychelles embarked on a macroeconomic reform programme supported by the In- ternational Monetary Fund (IMF) in No- vember 2008.

This led to a series of measures, begin- ning with the removal of exchange restric- tions and floating of the Seychelles rupee. While in the past, the Central Bank's mon- etary policy generally accommodated the fiscal stance, the reform programme focuses on strict fiscal discipline, containment of inflation, and the need to ensure proper li- quidity management in the banking system.

An important component of the reform programme is the continuous modernisation of the monetary policy framework with the objective to improve its effectiveness such that the Central Bank is able to meet its objectives.

We have been able to achieve this with the support of technical assistance from the IMF, as well as ensuring that monetary and exchange rate policies remained coor- dinated with other macroeconomic policies in place.

We are now in the 11th year since the reforms started, and generally I would describe the past years as having been both challenging and interesting from the perspective of the Central Bank.

Due to the reforms implemented, we have had to take on more responsibilities; new divisions have been created to accommodate the increased activities we are undertaking, compared to the previously quite monotonous tasks.

Today, I would say that although the Seychelles economy remains vulnerable to external shocks, the reforms that we have embarked on have generally been achieved with success, and I attribute this to the dedication and hard work of a competent team.

I became Governor in 2012, four years after the reforms had started, and ever since, my role at the helm of the institution has been to ensure its continued success. All in all, it is a team effort that has and is still contributing to the results that we are seeing.

How independent is the CBS?

The year 2018 marked the 40th anniversary of the establishment of a central banking institution in Seychelles. The Seychelles Monetary Authority (SMA), the precursor to the Central Bank of Seychelles, was es- tablished a mere two years after Seychelles gained its independence, in 1978.

The Central Bank of Seychelles Act 2004 bestowed the institution with a high degree of autonomy in the conduct of its operations. Under the new legislation, the Board of the Central Bank assumes full policy responsibility for the attainment of a number of macroeconomic objectives.

Since December 2011, the primary ob- jective of the bank has been to promote domestic price stability, along with its other objectives of advising the government on banking, monetary and financial matters, including the monetary implications of proposed fiscal, credit policies or operations of the government; and to promote a sound financial system.

While being fully independent opera- tionally, the laws make provisions for the ministry responsible for finance to share policy costs through the issuance of gov- ernment securities for monetary policy purposes. In the formulation of its poli- cies, the Central Bank takes into considera- tion the environment in which it operates and this includes the political aspects, all of which can influence economic behav- iours.

However, there is no political interference in the operation of the Central Bank, which endeavours to make objective policy decisions while operating as an independent institution.

As required by the law, on an annual basis, the Bank publishes its report as well as its audited financial statement, which is also submitted to the President and National Assembly.

Would you say that your entire career being at the CBS has contributed to your independent streak?

My father's background as an educator ensured that from an early age, I was taught to think independently and not to take anything at face value. He would get me to figure things out by questioning everything rather than providing a straight answer.

This helped me to develop my thought process, in that I would scrutinise and evaluate a piece of work or a decision from all angles, by questioning, before taking a stance.

When I joined the Central Bank, it was not operationally independent, with the then Governor also holding the post of principal secretary at the ministry respon- sible for finance. I have therefore been for- tunate to experience the difference between a Central Bank that is autonomous, as well as one that is not independent.

While the coordination of policies -- par- ticularly between monetary and fiscal -- re- mains critical under both setups, an inde- pendent Central Bank is able to implement policies without political interference and without consideration of the election cycle. Working for the Central

Bank has allowed me to appreciate the advantages associated with the institution being independent and the need for such to be preserved.

As a central banker, you have a more consolidated view of the entire economy compared to other institutions. This is a privileged position from which you can effectively contribute towards the country's economic growth and development.

The first five years of your stewardship coincided with 4-6% economic growth and slower inflation. Lately, growth has been slowing. What has changed?

During the first five years of my stewardship, a number of structural reforms were implemented, which has allowed the economy to reap further benefits that stem from achieving macroeconomic stability in the initial part of the reform programme.

From the perspective of the Central Bank, the key has been to ensure the sta- bility of two important indicators, namely inflation and the exchange rate, both of which have contributed to the renewed confidence in the domestic economy and therefore helped to support growth.

Services, primarily tourism, drive the overall performance of the Seychelles economy. Taking this into consideration and in addition to the fact that the coun- try depends heavily on imports, domestic economic activity is heavily influenced by international developments. Hence, the relatively positive external environment has also contributed to the overall upbeat economic outcome.

On the domestic front, the tourism in- dustry has been performing remarkably to achieve record levels in terms of the number of visitors to the country, as well as income generated. In addition, investments in new projects, most of which were new tourism establishments and in the form of Foreign Direct Investment (FDI), were rising.

However, while the tourism sector con- tinues to record a positive performance, the rate of increase, which is now from a higher base, has slowed down.

In addition, due to capacity constraints, less investment into new tourism establish- ments has [now] been observed. Moreo- ver, given limited available domestic re- sources, the higher economic activities have also resulted in increased dependence on foreign resources, such as labour, which reduces the marginal growth in value-added output.

You instituted an interest-rate corridor and Monetary Policy Rate in December OaOaOaOi. How much diff erence has that made to monetary policy transmission?

When monetary policy was given more prominence in 2008, the adopted framework was monetary targeting with reserve money as the operational target.

While such a framework suits the environment characterised with structural liquidity overhang, some monetary policy implementation challenges were experienced, key in which was the limited role of short-term interest rates. As such, two major changes to the framework were the introduction of an interest rate corridor followed by a Monetary Policy Rate (MPR).

The MPR was introduced in January 2019, as the monetary policy framework transitioned from reserve money targeting to an interest rate-based framework, whereby the focus of monetary policy shifted from indirectly in- fluencing the intermediate target of money supply growth to guiding short-term inter- est rates.

The MPR now serves as the key policy variable used for signalling the prevail- ing monetary policy stance. This is com- plemented by the interest rate corridor, which adjusts accordingly to changes in the MPR. The shift from the quantitative target of reserve money to interest rate targets provides the market with clearer guidance on the monetary policy stance and therefore makes it easier for the public to understand, promotes increased competition amongst commercial banks and assists with the op- erationalisation of an interbank market, as well as reducing short-term interest rate volatility. While it is still early to measure the effectiveness of the MPR, the early in- dications suggest that it supports stability in short-term interest rates and enhances the management of liquidity, which should contribute to improving the transmission of monetary policy.

The recent IMF Article IV report had glowing words for the CBS. How much of the success with price stability would you attribute to your leadership?

Consistent with the primary objective set under the CBS Act 2004, promoting domestic price stability is at the forefront of all policies implemented by the Central Bank.

In recent years, with technical assistance from the IMF, the Central Bank has been modernising its monetary policy framework with the objective of incorporating a more forward-looking element and increasing the importance of short-term interest rates.

These changes, coupled with enhanced communication, are helping to improve policy effectiveness and consequently, con- tribute towards attaining the price stability objective.

What are your plans for the future? After your tenure expires at the CBS, will you be aspiring to higher office or go into politics? Throughout my professional life, I have loved being a technical person and this will continue after leaving the CBS. I have no aspirations to go into politics.

What would you like your legacy at the CBS to be?

I would like it to be that I have made a positive contribution to the growth of the institution and that the CBS is a leading institution [based] on good governance principles.

Is there any other thing you would like to share about your work, vocation, causes, passions, etc?

I am passionate about helping those in need. In May 2017, I was appointed the Patron of the Red Cross Society of Seychelles, which ties in well with this passion. One of my aspirations when I leave the bank is to become a mentor to the youth. I want to pass on what I have learnt to the upcoming generation such that we have future leaders who are solid in character.

Currently, women hold seven of the 33 seats in the National Assembly. However, it is to be noted that in 2011, women held 14 of the 32 seats in parliament. This shows that in Seychelles, women do reach great heights and aspire to do great things.

In my first 5 years in post, structural reforms were implemented, which has allowed the economy to reap further benefits that stem from achieving macroeconomic stability in the initial part of the reform programme.

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Publication:African Banker
Geographic Code:6SEYC
Date:Aug 5, 2019
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