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Countries and Regions Country Partnership Strategies Document
II. Implementation of the Country Strategy and ProgramA. Poverty Reduction11. While abject poverty and severe malnutrition are almost nonexistent, a large segment of the population subsists on very low incomes. The 1998 Vulnerability and Poverty Assessment reports that, on the basis of per capita income per day, 42 percent of the population subsist on Rf15 ($1.3) or less, 22 percent on Rf10 ($0.85), and 13 percent on Rf7.5 ($0.6) or less. Average per capita incomes of about $3 per day were reported for Malé. 12. Poverty in the Maldives differs from that in many other developing nations. A large segment of the population is highly vulnerable to global shocks and has a limited ability to effectively manage risk. Since the economy is very open and narrowly based on tourism and fisheries, the effects of export shocks are quickly transmitted to the poor. Both domestic environmental degradation and a rise in the sea level as a result of global warming threaten physical habitats and the two main industries. The scope for risk mitigation by diversifying income sources or sharing resources is limited because of the small populations of the islands, high transport and communication costs, lack of land and other mineral resources, and a low level of skills development. 13. Regional disparity between Malé and the atolls is a key poverty concern. Income disparities between Malé and the atolls were found to be in the order of 2:1, with the ratio increasing to 3:1 in the case of Malé and the atolls when the lowest average per capita income is considered. In addition, inequalities between Malé and the atolls in access to social and physical infrastructure and services were found to be far more pronounced, averaging 4:1. 14. Factors that contribute to poverty include physical and information isolation; limited institutional capacity to foster socioeconomic development in the atolls; skill shortages; quality deficiencies in basic education, and limited capacity in secondary and postsecondary education; the unreliable and poor quality of electricity, transport, and telecommunications services in the atolls; limited access to curative emergency care services outside of Malé; lack of access to term lending and savings facilities; limited product diversification and efficient marketing services in the fisheries sector; and high rates of infant malnutrition. 15. ADB is in the process of developing a new country strategy for the Maldives with a clear focus on poverty reduction. The strategy will reflect the result of ADB’s poverty analysis, the high-level forum on poverty reduction, and other discussions with the Government, funding agencies, the private sector, and civil society. The strategy will also consider ADB’s strengths. ADB’s future operational strategy for the Maldives will support poverty reduction through a combination of pro-poor growth, social development, and good governance initiatives. To foster pro-poor growth, ADB will assist in (i) regional development including the provision of basic infrastructure and capacity building; (ii) creating an enabling environment for private sector development, including reform of the financial sector and the legal system; and (iii) developing an information and communication network in the atolls. To further raise the level of social development, ADB will provide assistance for postsecondary education and skills development. ADB will also assist in improving the quality of primary education. To support good governance, ADB will build the capacity of key public institutions and assist in computerization for the Government, with the aim of improving public sector management efficiency. B. Thematic Priorities1. Economic Growth16. The cost of supplying appropriate economic and social infrastructure to each of the 200 inhabited islands would be prohibitively expensive. The Government has thus launched policies aimed at encouraging the population to consolidate on a smaller number of focus islands. To diversify the economic structure and shift from its heavy reliance on fisheries and tourism, the Government has made plans to nurture port-related boat building and transshipment activity, expand indigenous agricultural cultivation, and promote offshore financial services as three possible new sources of growth. Diversifying the fisheries sector and lowering its high degree of dependence on skipjack tuna, and adding new dimensions to tourism services are part of the solution to broadening economic opportunities. 17. ADB will assist the Government’s public investment programs for regional development in enhancing transport access and creating an enabling environment for private sector investment in fisheries, tourism, and a range of supporting small- and medium-sized enterprise (SME) activities. Improving electricity supply in the atolls and harnessing modern information technology for a wide range of site-independent e-activities may also be an integral part of the solution to expanding the employment base. There is a need to improve connectivity of people by expanding telecommunications access in the atolls and lowering charges for telecommunication services through appropriate policy reforms in the sector. 2. Human Development18. A combination of low-quality primary education in the atolls, limited coverage of secondary schools, and lack of skilled workers constrains economic development. The strategy for human resource development needs to further target quality improvement by developing curricula, upgrading poorly staffed and underserviced primary schools, developing distance learning, and developing skills through vocational training. ADB will assist the Government in upgrading the quality of atoll primary schools and in strengthening postsecondary education. 3. Gender and Development19. Women's access to higher education, participation in political decision making, and favorable representation in senior administrative posts at all levels of government have been limited. Moreover, the rate of female participation in employment has rapidly declined in recent years, owing largely to the mechanization of fish processing where the female workforce used to be engaged. ADB will actively mainstream gender considerations into its loan and technical assistance program support. Regional development initiatives will ensure that women are adequately represented in decentralized atoll administrations. Increasing women's access to quality education will improve their social awareness and increase opportunities for productive employment. ADB will ensure that future investments in human resource development assist the Government to promote gender equality, particularly through an increase in opportunities for higher education and technical training. Expanding access to financing for SMEs in the atolls, and support to SMEs with female heads, will also contribute to gender equality. 4. Good Governance20. Both the Fifth National Development Plan (1997-2000) and the Sixth National Development Plan (2001-2005) highlight good governance as a key development objective. Establishing a modern public administration, a comprehensive and transparent set of laws, and an impartial and competent judiciary is emphasized as a priority goal in the Government’s development agenda. Shortages of skills are recognized as a serious constraint to modernizing the public sector and to the continued growth of the private sector. Another area of concern is decentralization and devolving the responsibilities for planning and management of development to the atoll, and island levels. By increasingly involving island communities in the decision making process, island development will be promoted through more accountable and responsive governance. ADB will help the Government build the capacity to effectively adopt good governance standards through each of its investment projects and a wide range of advisory technical assistance activities: improving public accounting procedures, building Internet connectivity to improve public services, and improving public utility regulation. 5. Private Sector Development21. The Government recognizes the importance of the private sector as the engine of growth. The private sector will help sustain growth and generate employment opportunities. ADB carried out the Private Sector Strategy Study for the Maldives in 1999. Considering the results of the study, ADB will create an enabling environment for the private sector to flourish in three ways: ADB will (i) assist the Government to adopt a more facilitative and regulatory role and to be less directly involved in providing commercial services; (ii) support the strengthening of the financial sector to more effectively mobilize savings and fund long-term development; and (iii) continue to provide support for improving the legal system so as to improve credibility and gain investor confidence that is necessary to sustain a vibrant private investment environment. 6. Environmental Protection22. Environmental concerns are likely to increase as population and incomes rise. Given the limited human resources and institutional capacity, there is an urgent need to integrate and mainstream environmental management concerns into all sector development initiatives. In this context, ADB will focus its approach on assisting the Government to ensure that environmental management concerns are properly mainstreamed and integrated into ADB’s proposed loans and technical assistances (TAs). Rather than undertake specific environmental projects, ADB will support sustainable environmental practices in each investment that it supports. ADB recognizes the Government's effort and the need to develop environmentally sustainable energy resources in the Maldives where diesel generator sets significantly contribute to local pollution and greenhouse gases. Future ADB assistance will help promote environmentally sustainable and renewable energy technologies. 7. Regional Cooperation23. As a small island country with limited domestic resources, the Maldives has much to gain from regional cooperation. ADB is assisting the South Asian Cooperation on Environment Program (SACEP) involving the Maldives and other South Asian countries. Through this forum, best practices on reef management technology are being shared. In the area of higher education, ADB will continue to foster regional collaboration in tertiary education by helping to forge partnerships between institutions of higher education in the Maldives and in other parts of the region. ADB's assistance aimed at fostering peace in neighboring Sri Lanka is expected to have substantial positive spillover effects on the Maldives, through greater cross-border investment and increased regional tourism flows.
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