FEATURE STORY June 14, 2019

Maldives Ushers in a New Development Path

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Photo Credit: World Bank


STORY HIGHLIGHTS

  • Maldives has a thriving tourism industry and boasts impressive health and literacy indicators.
  • Modernizing fisheries and nurturing small and medium enterprises can help boost the economy, create more jobs, and bring prosperity for all.
  • The upcoming Maldives Partnership Forum represents the government’s determination to improve the business environment and boost private sector investments.

The archipelago of Maldives is one of the most beautiful places in the world.

One of the world’s least developed nations upon gaining independence in 1965, the country has now reached middle-income status and is scoring high on the latest Human Development Index. Its health and education indicators are impressive: The literacy rate nears 100 percent, and life expectancy stands at over 77 years.

What’s mainly driving that success are the high-end resorts that provide much-needed revenues to finance public services, build health and education facilities, and bolster the nation’s economy. 

But depending solely on tourism for economic growth, together with a heavy reliance on imported commodities, has left Maldives vulnerable.

A global economic slump could impact the tourism industry, igniting challenges posed by existing public debt, structural constraints, and climate change threats. Of particular concern is the high youth unemployment rate of 15.3 percent, with nearly half of all unemployed youth located in the capital city of Malé.

To avoid derailing the progress it painstakingly won, Maldives now seeks to implement vital reforms to improve education, healthcare and housing, and usher in greater prosperity for all.


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Photo Credit: Maldives Times


Growth in the Maldives can be more equitable

Maldives’s per-capita gross national income doubled over the past ten years from $4,460 in 2007 to $9,760 in 2017.

The Maldives has also made much progress in combatting extreme poverty.

However, many people live just above the poverty line and remain vulnerable. Large spatial inequalities also persist: More than 90 percent of poor Maldivians live in the atolls, away from Malé.

Young men are amongst the most vulnerable. They are one and a half times more likely to be unemployed than young women and six times more likely to be unemployed than older males.

Girls do well in school and enjoy better educational outcomes than their male peers.

However, too many are left out of the workforce as female labor force participation stands at 44 percent. Traditional gender norms, particularly regarding childcare and household duties, have prevented women from participating fully in the economy.

Additionally, a skills mismatch coupled with a preference for work in the public sector, seem to stand in the way of young people claiming the 3,300 or so jobs in tourism every year.

Modernizing fisheries and boosting small and medium enterprises

The public sector, which brings in the promise of greater job security and higher wages, remains the biggest job creator and accounts for 40 percent of all employment.

However, Maldives needs to nurture its private sector to diversify the economy, sustain growth, and create more employment.  

A clear path forward is to modernize fisheries, which are a vibrant source of employment and a traditional employer of women.

While the sector has faltered thanks to declining fish stocks, locals have rebounded by switching to other marine activities such as sea cucumber and grouper farming.

Compared to fishing, such businesses offer a better and more predictable source of income as families can export their products.

Meanwhile, opportunities exist for talented young entrepreneurs in tourism and related sectors.

But linkages between tourist resorts and local enterprises are few as entrepreneurs face inadequate infrastructure and transportation, and lack access to finance to start a business.

To bridge that gap, authorities need to ensure greater access to financial services as well as better internet and electricity connectivity even in the most remote atolls.

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Photo Credit: World Bank


Maldives Partnership Forum 2019: Good governance and bold reforms can bolster growth

In this context, the Maldivian government is hosting the Maldives Partnership Forum 2019 to expand on their Jazeera Raajje (island nation) vision. This includes the Greater Malé development strategy and archipelago-wide decentralization that aims to facilitate investments in the larger islands.

Scheduled for June 17-18, the event will bring together a broad range of bilateral and multilateral development partners, including the World Bank Group, a trusted partner for over 40 years, to discuss “Investing in a Resilient and Sustainable Maldives” and strategize on the way forward.

Central to the discussion is how the government can leverage new partnerships to meet its ambitious national sustainable development agenda, anchored in a blue economy, and increase the decentralization of bounded ces while improving social outcomes and judicial reform. 

For the Maldivian government, future development will build on existing strengths, especially in the tourism sector and creating more and better jobs. This entails redirecting the energy sector toward renewables, implementing resilient and sustainable urban infrastructure solutions in water and sanitation.

By embracing innovative strategies to sustain its development and invest in its people, the Maldives is well on its way to creating a more prosperous future for its citizens.



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