Maldives: Inclusive Micro, Small, and Medium-Sized Enterprise Development Project

Sovereign Project | 43566-013 Status: Active

ADB is supporting the development of micro, small, and medium-sized enterprises in the Maldives. The project will improve access to finance and fund a new line of credit, expand business development services, and strengthen the legal and institutional framework for enterprise development. It will also enhance the capacity of women micro- and small entrepreneurs.

Project Details

Project Officer
Hidalgo, Ma. Kristina South Asia Department Request for information
  • Maldives
  • Grant
  • Loan
  • Industry and trade
Project Name Inclusive Micro, Small, and Medium-Sized Enterprise Development Project
Project Number 43566-013
Country Maldives
Project Status Active
Project Type / Modality of Assistance Grant
Source of Funding / Amount
Grant 0290-MLD: Inclusive Micro, Small, and Medium-Sized Enterprise Development Project
concessional ordinary capital resources lending / Asian Development Fund US$ 4.45 million
Loan 2867-MLD: Inclusive Micro, Small, and Medium-Sized Enterprise Development Project
concessional ordinary capital resources lending / Asian Development Fund US$ 2.91 million
Loan: Inclusive Micro, Small, and Medium-Sized Enterprise Development Project
Islamic Development Bank US$ 10.30 million
Strategic Agendas Inclusive economic growth
Drivers of Change Governance and capacity development
Private sector development
Sector / Subsector

Industry and trade - Small and medium enterprise development

Gender Equity and Mainstreaming Effective gender mainstreaming

The Asian Development Bank initiated the Private Sector Development Project (PSDP) loan in 2008 which was intended to develop and expand the micro-, small-, and medium-sized enterprise (MSME) subsector leading to broad-based, private sector-led, and sustainable inclusive growth. Being an ADB initiative, MSME development was a part of the development strategy for Maldives under the 7th National Plan 2006-2010. The impact of the project is expected to be inclusive and broad-based MSME sector. The outcome of the project will be a further expanded and strengthened MSME sector. For this purpose, the MSMEDP will focus on enhancing the business environment and support infrastructure for doing business with better knowledge, greater access to financing, and expanded business opportunities for MSMEs. The project has three components.

The first component of MSMEDP will increase MSME access to business development services and support institutional capacity building for Business Development Services Centers (BDSCs) by (i) expanding BDSCs' geographical coverage to all seven provinces within the country; (ii) introducing new business development services (BDS) including business incubator programs offered by the BDSCs, including institutionalized support in creating and enforcing market linkages; and (iii) strengthening the institutional, infrastructural, and human resource capacity of an expanded network of BDSCs to better support BDS demand needs of MSMEs. This component will also support energy sector linkages to value chain business opportunities having potential for MSME participation.

The second component will improve MSMEs' access to finance through (i) additional a line of credit facility (LCF) to meet with a huge credit demand from MSME sector, (ii) extension of credit information bureau to improve information quality and reduce credit risk, and (iii) establishment of secured transaction registry providing database information on fixed and movable assets.

In line with previous PSDP implementation, information communication technology (ICT) will be managed by Bank of Maldives (BML) to promote MSME by providing them with financing for investment. The eligibility criteria for such financing includes (i) MSMEs which are registered in the MSME database; (ii) MSME activities focus on target clusters as per government policy (agricultural commercialization, fishery processing, handicrafts, and tourism-related activities which are environment impact neutral activities), and special emphasis will be given to non-traditional sectors such as ICT and renewable energy project (e.g. solar panel citizen service centers); and (iii) the MSME has adequate cash flow or enterprise budget as well as collateral.

BML will undertake an independent credit risk assessment for proposals to determine if they meet the lending criteria agreed among the government, ADB, and BML. If the credit risk assessment is satisfactory, BML will approve subloans and execute an onlending agreement. Onlending agreements will be signed between BML and the subborrower on terms and conditions, as agreed among the government, ADB, and BML. The maximum sub-loan size for individual applicants will be local currency equivalent to $80,000 and the anticipated average sub-loan size is local currency equivalent to $40,000. It is expected that BML will provide around 200 MSMEs with subloans under LCF. Any deviation will be subject to ADB prior approval. The terms of lending will be on a commercial basis at the prevailing market rates of interest and tenor, reflecting costs of raising such funds locally and guaranteeing adequate spread of interest rates for BML to cover transaction costs and risks.

MSMEDP needs to be classified based on its minimum or no environmental impact (as category FI treated as C). An eligibility criteria will be further developed in the LCF guidelines to ensure that the qualified MSME subproject shall be for activities that (i) are not included in the list of prohibited investment activities set out in Appendix 5 of the Safeguard Policy Statement (SPS) (2009); and (ii) have minimal or no adverse environmental impacts in accordance with ADB's SPS, and in compliance with the laws and regulations of the Republic of Maldives. Given protection of the environment is critical for the Maldives to maintain its environment resources for tourism industry, Maldives environment protection rules and regulations belong to high standards.

The third component will facilitate and enable use of information, communications and technology (ICT) to promote information and knowledge sharing between MSMEs and the government; and implementation of a pilot ICT project to (i) demonstrate the use of ICT and viability of solar energy as a cost effective energy option; (ii) creation of a platform for delivery of e-governance services such as e-commerce, e-banking, and online submission of government taxes through citizen service centers; and (iii) create revenue stream for BDSCs through a public private partnership model, with a view to grow their economic contribution to the gross domestic product.

The proposed Inclusive MSME Development Project will promote economic and financial inclusion in the Maldives by enhancing economic activities including those in the remote islands through more opportunities and access to finance for MSMEs which will thereby contribute to private sector development and overall growth.

Project Rationale and Linkage to Country/Regional Strategy

The Maldives has faced a number of important challenges over the past 10 years which has had a severe impact on the economy. In December 2004, the Maldives faced the ravages of the tsunami which destroyed, in relative terms, a higher share of natural infrastructure than any of the other stricken economies. In 2007, the country was mired in its own fiscal crisis linked to excessive spending and acute structural distortions in the economy which was further compounded by the slowdown in tourism following the global crisis. In 2008, the country managed a successful transition from over 30 years which, in the interim and given the resulting uncertainty, led to capital outflow and limited investment in the economy.

While much effort has focused on rebuilding the economy, the government's effort is now more concentrated on the pursuit of more inclusive growth that addresses some more pressing shortcomings. These include the lack of economic opportunities outside of Male and the skewed concentration of enclave economic activity centered in the tourism resorts industry. Political, administrative, and economic decentralization has been pursued by the government to address these shortcomings. Greater availability of credit is an important platform to promote financial inclusion and more inclusive growth for engendering economic and employment opportunities.

The Maldives has an overall unemployment level of 14.5% (146th among 200 countries), and the level of youth unemployment is even higher at around 25%. Income disparities between Mal_ and the atolls are large and increasing. The Gini coefficient has remained almost constant over time at around 0.4, which is notably higher than those in neighboring countries. Over time inequality between Mal_ and the atolls has continued to increase. MSME development has been identified as one of the key solutions towards fostering greater economic inclusion. Access to finance has been continuously raised as the most significant issue preventing the promotion and development of MSMEs. As part of ADB's earlier effort to support inclusive growth through private sector development, a Technical Assistance Project Loan for the Private Sector Development Project (PSDP) was approved in 2008 to develop and expand the MSME sector in the Maldives.

Impact More inclusive and broad- based MSME sector achieved

Project Outcome

Description of Outcome MSME sector further expanded and strengthened
Progress Toward Outcome

-Increase in number of MED registrations: 1143 MSMEs already registered in the MED system as of January 2017

-Business Center capacity enhanced and strengthened: 22 Business Center staff development training programs completed, 731 MSME consultations and visits completed, 165 MSME client training programs completed for 3549 entrepreneurs (1652 women and 2462 youth)

-Increase in MSME access to credit to Line of Credit Facility (LCF): 94 MSMEs availed of LCF, evaluation of applicants for LCF balance ongoing

Implementation Progress
Description of Project Outputs

Business support infrastructure built

Access to finance improved for private sector MSMEs

Technologies for MSME development established

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

As of January 2017

Business support infrastructure built:

-1652 females and 2462 youth provided business and business start-up training

- SME Act Amendment drafted, sent to AGO in April 2016, awaiting presentation to parliament by AGO

- 7 BDSCs established

- Credit Guarantee Unit was established in MMA in August 2016.

Access to finance:

LCF/ADB (BML) Phase I: 100 loans under LCF with 31 women lead SME's.

LCF/FM IDB (BML) Phase I: 119 applications received, representing 12 women (5 youth, 7 non-youth) and 74 youth; 116 applications processed; 42 loan applications approved as of 31st January 2017

GetSet loan scheme (BML): 34 loans approved but 1 loan disqualified after the approval stage. These loans represent 72 youth; 33 initial loan disbursements made.

SME Loan program (MVR 50 million) (MED): 400+ applications, 61 applications approved, including 9 women and 59 youth, including 12 female youth applicants.

CIB membership includes banks and financial institutions (MFLC and HDFC), expansion to include insurance companies, telecoms and STO expected by end of April 2017. Credit scoring service will not be introduced under the MSMEDP as recommended by operational consultant and system vendor as minimum 5 years of complete data is required to enable the said service.

CIB has generated 12,114 reports during the period February 2011 to January 2017.

Technologies for MSME development:

- MED website platform designed and developed. BC website domain name and registration secured, populated and operational (

- The Enterprise Development Facebook page provides regular updates on ED programs and business center network. (

- Enhancement of Boli system: Completed the developments of online logo, online trademark registration and business name registration module. Sole Proprietor module has been deployed to the live system

Geographical Location

Safeguard Categories

Environment FI
Involuntary Resettlement FI-C
Indigenous Peoples FI

Summary of Environmental and Social Aspects

Environmental Aspects FI treated as C.
Involuntary Resettlement FI treated as C.
Indigenous Peoples FI treated as C.
Stakeholder Communication, Participation, and Consultation
During Project Design The project will help develop an enabling environment for MSMEs and thus create more business opportunities for MSME in the provinces which leads to employment creation and poverty reduction.
During Project Implementation Related stakeholders' participation and consultation will be ensured during project implementation..

Business Opportunities

Consulting Services All consultants will be recruited according to ADB_s Guidelines on the Use of Consultants. Consulting firms will be engaged using the quality- and cost-based selection (QCBS) method. Individual consultants shall be recruited using ADB_s Guidelines on the Use of Consulting. The consultancy packages will be used for MSME portal, Judgment Debt Database, and CSC operators under component 3.
Procurement All procurement of goods and works will be undertaken in accordance with ADB_s Procurement Guidelines. International competitive bidding (ICB) procedures are to be used for procurement of goods costing $0.5 million or more, and procurement of works, supply, and install contracts costing $1 million or more. National competitive bidding (NCB) procedures shall be used for the procurement of goods below $0.5 million, and procurement of works, supply, and install contracts below $1 million. Shopping will be used for contracts for procurement of works and equipment worth less than $100,000.

Responsible Staff

Responsible ADB Officer Hidalgo, Ma. Kristina
Responsible ADB Department South Asia Department
Responsible ADB Division Public Management, Financial Sector and Trade Division, SARD
Executing Agencies
Maldives Monetary Authority
Republic of Maldives
Ministry of Economic Development (MED)
[email protected]
Boduthakurufaanu Magu, Male 20125, Republic of Maldives
Ministry of Finance and Treasury
66032EXTRES [email protected]
Ameenee Magu
Republic of the Maldives


Concept Clearance 06 Dec 2010
Fact Finding 15 Oct 2011 to 25 Oct 2011
MRM 03 Feb 2012
Approval 25 May 2012
Last Review Mission -
Last PDS Update 07 Mar 2017

Grant 0290-MLD

Approval Signing Date Effectivity Date Closing
Original Revised Actual
25 May 2012 20 Sep 2012 21 Dec 2012 31 Dec 2016 31 Dec 2017 -
Financing Plan Grant Utilization
Total (Amount in US$ million) Date ADB Others Net Percentage
Project Cost 4.45 Cumulative Contract Awards
ADB 4.45 25 May 2012 3.52 0.00 79%
Counterpart 0.00 Cumulative Disbursements
Cofinancing 0.00 25 May 2012 4.26 0.00 96%

Loan 2867-MLD

Approval Signing Date Effectivity Date Closing
Original Revised Actual
25 May 2012 20 Sep 2012 21 Dec 2012 31 Dec 2016 31 Dec 2017 -
Financing Plan Loan Utilization
Total (Amount in US$ million) Date ADB Others Net Percentage
Project Cost 3.61 Cumulative Contract Awards
ADB 2.91 25 May 2012 1.00 0.00 37%
Counterpart 0.70 Cumulative Disbursements
Cofinancing 0.00 25 May 2012 1.42 0.00 53%

Project Data Sheets (PDS) contain summary information on the project or program. Because the PDS is a work in progress, some information may not be included in its initial version but will be added as it becomes available. Information about proposed projects is tentative and indicative.

The Public Communications Policy (PCP) recognizes that transparency and accountability are essential to development effectiveness. It establishes the disclosure requirements for documents and information ADB produces or requires to be produced.

The Accountability Mechanism provides a forum where people adversely affected by ADB-assisted projects can voice and seek solutions to their problems and report alleged noncompliance of ADB's operational policies and procedures.

In preparing any country program or strategy, financing any project, or by making any designation of, or reference to, a particular territory or geographic area in this document, the Asian Development Bank does not intend to make any judgments as to the legal or other status of any territory or area.

Safeguard Documents See also: Safeguards

Safeguard documents provided at the time of project/facility approval may also be found in the list of linked documents provided with the Report and Recommendation of the President.

None currently available.

Evaluation Documents See also: Independent Evaluation

None currently available.

Related Publications

None currently available.

The Public Communications Policy (PCP) establishes the disclosure requirements for documents and information ADB produces or requires to be produced in its operations to facilitate stakeholder participation in ADB's decision-making. For more information, refer to the Safeguard Policy Statement, Operations Manual F1, and Operations Manual L3.

Requests for information may also be directed to the InfoUnit.

  • 02 Jul 2013 | Article

    Social Enterprise in Asia: Businesses with a Mission

    Social enterprises have improved the lives of millions in developing Asia through better livelihood opportunities and access to affordable services, says Bart Édes, ADB’s Director of Poverty Reduction, Gender and Social Development.
  • 17 Oct 2012 | Article

    Social Enterprises in Cambodia, Indonesia and Singapore

    Social enterprises play a vital role in addressing social and environmental challenges in developing countries in Asia and the Pacific. With a significant number of people living in extreme poverty in Asia and the Pacific, social enterprises, i.e., organizations that pursue social goals through commercial strategies, serve as a vital link to narrow the gap in the region's income disparity.