Maldives: Private Sector Development Project (PSDP)

Sovereign Project | 41149-013

Summary

The intended impact of the Project is a developed and expanded micro-, small-, and medium-sized enterprise (MSME) subsector leading to broad-based, private sector-led, and sustainable inclusive growth. The intended outcomes are (i) enhanced access to finance by MSMEs by providing Bank of Maldives (BML) with a line of credit facility (LCF) to pilot credit assistance to MSMEs in designated regions, (ii) enhanced access to markets, technology and information and strengthened capacity of MSMEs through the establishment of business development services centers (BDSC) and a cost-sharing facility (CSF) designed to meet their special needs, and (iii) improved support infrastructure through PPPs.

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Project Name Private Sector Development Project (PSDP)
Project Number 41149-013
Country Maldives
Project Status Closed
Project Type / Modality of Assistance Loan
Source of Funding / Amount
Loan 2427-MLD: Private Sector Development Project (PSDP)
Asian Development Fund US$ 7.50 million
Strategic Agendas Inclusive economic growth
Drivers of Change
Sector / Subsector Industry and trade - Small and medium enterprise development
Gender Equity and Mainstreaming
Description The intended impact of the Project is a developed and expanded micro-, small-, and medium-sized enterprise (MSME) subsector leading to broad-based, private sector-led, and sustainable inclusive growth. The intended outcomes are (i) enhanced access to finance by MSMEs by providing Bank of Maldives (BML) with a line of credit facility (LCF) to pilot credit assistance to MSMEs in designated regions, (ii) enhanced access to markets, technology and information and strengthened capacity of MSMEs through the establishment of business development services centers (BDSC) and a cost-sharing facility (CSF) designed to meet their special needs, and (iii) improved support infrastructure through PPPs.
Project Rationale and Linkage to Country/Regional Strategy

Private sector development (PSD) is one of the key pillars of the 7th National Development Plan (NDP) for 2006-2010. The plan encourages strategies that are market-based and actively promote competition, innovation, and the development of PPPs. To foster greater private sector participation, the plan envisages the government and the private sector working as partners to (i) provide opportunities for MSMEs to participate in a more competitive environment; and (ii) to maximize the potential of PPP, with a view to increasing private investment.

In alignment with the NDP, the Asian Development Bank (ADB) country partnership strategy (CPS) for the Maldives prioritizes support for PSD. It follows the ADB Operations Evaluation Department's validation report of the country strategy and program completion report as well as Special Evaluation Study on Private Sector Development and Operations. ADB will thus primarily focus on developing an enabling environment for MSMEs and help build capacity for the introduction of PPPs in line with the PSD strategy and in coordination with ADB's Private Sector Operations Department.

The ADB technical assistance (TA) on MSME development conducted a survey to identify factors impeding private sector activity. Major obstacles include (i) high cost and limited access to finance, (ii) asymmetries of market information and business-related expertise among MSMEs, (iii) lack of infrastructure including poorly developed inter-island transportation and high cost of power generation, and (iv) lack of skilled labor. These factors are to be addressed under the PSDP.

Moreover, even though the Maldives is one of the fastest growing economies in South Asia, the benefits of growth have not been equitably distributed among the people. Income disparities between households in Mal and those in remote atolls are large. Economic activity is constrained by the dispersed population residing in various atolls, leading to inefficiencies and diseconomies of scale. In addition, weak institutional capacity and human resource deficiencies are constraints across the entire spectrum of the development process in the Maldives.

To ameliorate domestic regional inequalities, the Government identified regional economic growth and diversification as key objectives of economic development in both the 6th NDP for 2001-2005 and the current 7th NDP for the northern, north central, central, south central, and southern regions of the Maldives. As part of its plan, the Government is attempting to develop infrastructure in outlying atolls by developing domestic regional centers designed to have airports, ports, and other infrastructure facilities. This is expected to foster employment and income generation opportunities in the MSME subsector.

However, due to its limited financial capacity and the need to ensure efficient services, the Government is pursuing PPPs for infrastructure development.

Impact Developed and expanded MSME subsector with adequate support infrastructure leading to accelerated private sector inclusive growth for broadbased and sustainable local economic development in the northern and southern regions and targeted sectors in the Maldives.
Project Outcome
Description of Outcome Improved capacity for doing business and greater access to finance and business knowledge, as well as expanded business opportunities.
Progress Toward Outcome Project is under winding up period.
Implementation Progress
Description of Project Outputs

1. Strengthened business support infrastructure through enhanced access to BDS products and improved procedures for MSME development through capacity development of EDU, MNCCI, and WEC

2. Enhanced access to finance for MSME through the LCF and CIB, capacity development for the establishment of CMAR and enhanced capacity development of BML.

3. Enhanced capacity for PPP from legal, regulatory, financing, and institutional aspects, as well as building a pipeline of PPP projects especially at targeted atolls in selected sectors

Status of Implementation Progress (Outputs, Activities, and Issues)

The Credit Information Bureau is fully operational.

The cost-sharing facility (CSF) and line of credit facility (LCF) mechanisms and supporting infrastructure have been designed and have been substantially subsidized.

Substantial progress in the PPP component supporting PPPs in a school, hospital and rehabilitation center have been made.

Geographical Location Republic of Maldives
Safeguard Categories
Environment C
Involuntary Resettlement C
Indigenous Peoples C
Summary of Environmental and Social Aspects
Environmental Aspects Likely to have minimal or no adverse environmental impacts. No further action is required.
Involuntary Resettlement Has no involuntary resettlement impacts. No further action is required.
Indigenous Peoples Not expected to have impacts on Indigenous Peoples. No further action is required.
Stakeholder Communication, Participation, and Consultation
During Project Design Under the Project, public awareness seminars and campaigns will be undertaken to introduce BDS, the cost-sharing facility, the line of credit facility; and a credit information bureau registry. Moreover, key stakeholder seminars will be arranged to develop and deliver critical infrastructure and services through PPP.
During Project Implementation Concerted efforts will be made to disseminate lessons and major outcomes
Business Opportunities
Consulting Services

Consulting services for the following will be provided by either individual consultants or consulting firms as follows:

A. Supporting Micro-, Small and Medium-Sized Enterprise (MSME) Promotion (by individual consultants)

1. Project Coordinator (full time international consultant, 24 person-months)

2. SME Portal and Communications Specialist (full time local consultant, 24 person-months)

3. Monitoring and Evaluation Specialist (full time local consultant, 24 person-months)

4. BDSC Operational Desks (2 Full Time Local Consultants, 24 person-months)

B. Enhancing Access to Finance: Credit Information Bureau Registry (by individual consultants)

1. Procurement Specialist (International Consultant, 3 person-months)

C. Project Preparation and Development on Pubilc Private Partnership (by 1 consulting firm)

1. PPP Expert and Team Leader (International Consultant, 6 person-months)

2. Infrastructure Financing Expert and Deputy Team Leader - Transport and Power (International Consultant, 6 person-months)

3. Procurement Expert (International Consultant, 4 person-months)

4. Legal and Regulatory Expert (International Consultant, 4 person-months)

5. Environmental and Social Expert (International consultant, 2 person-months)

6. Sectoral Experts (2 International Consultants, 4 person-months)

7. Support consultants (2 National Consultants, 5 person-months)

D. Enabling PPP Environment and Capacity Development (by 1 consulting firm)

1. PPP Institutional Expert & Team Leader (international consultant, 6 person-months)

2. Financing Management Specialist (international consultant, 3 person-months)

3. Public Finance Expert (international consultant, 3 person-months)

4. Legal and Regulatory Expert (international consultant, 3 person-months)

5. Support Consultants (2 National Consultants, 5 person-months)

Procurement

Hardware and software for Credit Information Registry will be procured through international shopping.

The credit bureau implementation and operations require a combination of proprietary skills and experiences in the areas of (i) consumer finance and banking in general; (ii) credit reporting and financial industry legislation on a local and worldwide basis; (iii) personal data security, consumer protection and other legal compliance; (iv) public relations and media coverage, crisis management; (v) data processing management; (vi) operational support of credit bureau; (vii) documentation and training support; (viii) overall corporate managerial capabilities; (ix) IT project management; (x) software development and maintenance; and (xi) providing continuous evolution of solutions as technologies change and business needs. The Maldives Monetary Authority is seeking a technology partner with international experience to assist with the establishment of a World "best practice" credit bureau through this procurement bid. Against this background, the required solution should be both functionally rich and flexible, and moreover, it should be priced at a level appropriate to the scale and sophistication of the local market.

It is anticipated that the technical specification will have, as a minimum, the following features functionality, such as user access (user ID, user log-on, etc.), inquiry access, inquiry input fields (date and time, member details, product type, value of creidt sought, etc), application security, database content, data maintenance application, bililng system, etc.

Responsible ADB Officer Martin Jensen
Responsible ADB Department South Asia Department
Responsible ADB Division Public Management, Financial Sector and Trade Division, SARD
Executing Agencies
BANK OF MALDIVESIMPLEMENTING AGENCY-LCF
MALDIVES
Ministry of Finance and Treasury66032EXTRES MF/MINFIN@DHIVEHINET.NET.MVAmeenee Magu
Male'
Republic of the Maldives
Timetable
Concept Clearance 28 Sep 2007
Fact Finding 30 Aug 2007 to 04 Sep 2007
MRM 12 Dec 2007
Approval 20 Jun 2008
Last Review Mission -
Last PDS Update 30 Sep 2013

Loan 2427-MLD

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
20 Jun 2008 13 Jan 2009 08 Apr 2009 31 Aug 2011 28 Feb 2013 01 Oct 2013
Financing Plan Loan Utilization
Total (Amount in US$ million) Date ADB Others Net Percentage
Project Cost 7.80 Cumulative Contract Awards
ADB 7.50 20 Jun 2008 6.28 0.00 100%
Counterpart 0.30 Cumulative Disbursements
Cofinancing 0.00 20 Jun 2008 6.28 0.00 100%
Status of Covenants
Category Sector Safeguards Social Financial Economic Others
Rating - - - - - Satisfactory

Safeguard Documents

See also: Safeguards

No documents found.

Evaluation Documents

See also: Independent Evaluation

No documents found.


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  • 15 Oct 2012 | Project Result / Case Study

    Maldives: Private Sector Development Project – 2010

    To amend domestic regional inequalities in the Maldives, the government identified regional economic growth and diversification as key objectives of economic development in both the 6th and 7th National Development Plans. Infrastructure is to be developed in outlying atolls fostering regional centers designed to have airports, ports, and other facilities. This is expected to foster employment and income generation opportunities in the micro and small and medium enterprise (MSME) subsector.