Maldives’ economy hardest hit by climate change: Asian Development Bank

Climate change could cause annual economic losses of over 12% of the Maldives’ GDP by the end of this century, says a new Asian Development Bank (ADB) climate and economics report released today (August 19).

“A potential ocean rise of up to 1 meter by 2100 will have devastating consequences for this island archipelago, where the highest natural point is only a little over 2 meters above sea level,” said Bindu Lohani, ADB Vice-President for Knowledge Management and Sustainable Development.

The Maldives is the most at-risk country in South Asia from climate change impacts, said the report titled ‘Assessing the Costs of Climate Change and Adaptation in South Asia’.

Given the uncertainties of climate change, there is a slight possibility that the losses could swell to more than 38%. But if mitigation and adaptation steps are taken, the Maldives will benefit the most in the region, with annual losses limited to around 3.5% of GDP by 2100, the report concluded.

Programmes and Advocacy Manager at local environmental NGO Ecocare Maeed Mohamed Zahir, however, believes the government is currently far from taking such steps.

“There is no clear-cut adaptation strategy,” he added.

Energy supplies at risk

According to the report, the Maldives’ energy supplies are particularly at risk from climate change.

The Maldives’ energy vulnerabilities are related to the low elevation and small size of islands, the report explains. Their low elevation and narrow width makes powerhouses and associated infrastructure vulnerable to flooding and damage from severe weather events.

The report also notes that, with the commitment to become carbon neutral by 2020, the country is increasingly investing in renewable energy technologies, particularly solar power, for which there is abundant solar energy — 400 million MW per annum.

The environment ministry has recently announced a number of initiatives to minimise the country’s dependence on fossil fuels, including a pledge to convert 30 percent of all electrical use to renewable energy, and the Scaling-Up Renewable Energy Programme (SREP) set to “transform the Maldives energy sector.”

However, President Abdulla Yameen has also pledged to explore for crude oil in the Maldives as an alternative means of diversifying the economy and supplementing fuel supply.

Vector-borne diseases

In addition, the report highlighted that vector-borne diseases could be a major public health concern for the Maldives in the future.

Dengue is now endemic in the country with seasonal outbreaks, observed the report. Epidemiological data shows changes in the seasonal nature of dengue, spreading across the atolls, and leading finally to epidemic proportions.

Morbidity from dengue by 2090 could increase to 34,539, with 324 deaths per year, the report stated.

Moreover, although malaria is not prevalent in the Maldives, it could be future concern if left unchecked said the ADB.

During 1990–2003, the number of malaria cases averaged 16 per year, with no fatalities. However, the report warns that annual morbidity due to malaria incidence by 2090 could reach more than 200.

Unprepared

Ecocare’s Zahir argued that the government is at best unclear, and at worst unprepared, for climate change. Speaking with Minivan News, Zahir appealed to the government to reveal their policy for adaptation in the face of climate change.

He went on to explain that in the last four to five years there has been no clear stance on climate change from the government.

“The number one priority is to make everyone aware if they have one,” he said.

Back in 2009, former president of the Maldives, Mohamed Nasheed, unveiled a plan to make the Maldives carbon-neutral within a decade. Zahir suggested that the following administration’s have been less clear on the issue.

“In the last two governments we don’t have a clear-cut climate change plans,” he argued. “From 2009 to now – it’s a disaster for us.”

Ecocare has previously accused the Maldives as being “not prepared at all” for the projected acceleration of sea level rise caused by the collapse of a glacier system in Western Antarctica.

Officials from the Ministry of Environment and Energy were not responding to Minivan News at the time of publishing.

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Political instability is key concern at Maldives renewable energy investment conference

Participants attending this week’s Maldives International Renewable Energy Investors Conference consider the event a “good beginning”, but claimed political instability was presently hampering foreign investors’ confidence in the sector.

The two day event, which concluded yesterday (June 17), aimed to facilitate long-term partnerships between international investors, project developers, energy companies and utilities groups in order to enable successful renewable energy projects throughout the Maldives.

The Ministry of Environment and Energy hosted conference at Bandos Island Resort and Spa in an effort to boost investor confidence and attract renewable energy financing.

Although Environment Minister Dr Mariyam Shakeela noted that the conference was successful, she also urged participants to “reflect on our mutual needs” and emphasised that investments will be “protected, facilitated, and supported by the government” during her concluding speech yesterday.

“Your need to promote your [renewable energy] products and our need to reduce energy costs – that of course is a huge issue as was mentioned here so many times – and also of course to combat climate change,” said Shakeela.

“We currently rely extensively on imported fossil fuels, as we have heard here over and over and over again these last few days. Yet paradoxically, many islands have ample but underutilized renewable energy resource potential,” she continued.

“The Ministry of Finance and Treasury is working to create an enabling environment for investments in general, which I believe is a concern of a lot of investors,” she added.

Meanwhile, Maldives-based representatives from the World Bank (WB) and Asian Development Bank (ADB) present at the conference pledged their continued support in an effort to attract renewable energy investors.

ADB Director Mr Yongping Zhai pledged to “go as far as it costs” to transform Maldives into a renewable energy dependent country, as opposed to oil dependent, according to the Environment Ministry.

However, he noted that although the Maldives has the commitment, market potential, resources, and willing investors for renewable energy, there is a “missing link to put these pieces together”.

“In theory things should work, but why things are not working so far is [the lack of] the right business model,” said Zhai. “That’s the purpose of this conference and of the ADB’s work.”

The WB considered the conference to be a “good initial first information gathering” event for facilitating renewable energy investments and emphasized that it was working very closely with the Maldives government to develop the energy sector and national financial institutions, said WB Senior Energy Specialist Abdulaziz Faghi.

In an effort to boost investor confidence, the Environment Ministry emphasised the WB would guarantee any investments made in the Maldives.

“One of the issues facing the private sector investing in any sector is the payment guarantee and their concern with the return on investment,” State Minister for Environment and Energy Abdul Matheen Mohamed told Minivan News yesterday.

He explained that the government of Maldives has allocated US$5 million from the International Development Association (IDA) financing though the World Bank, which will be leveraged up to US$ 25 million.

“So basically the World Bank will be issuing a guarantee for this amount to give guarantees to the investors investing [funds] under the scaling-up renewable energy program (SREP) investment plan,” said Matheen.

He noted that conference participants concerns have “been resolved though the guarantee facilities introduced by the World Bank”.

Foreign investors lacking

Following the conference yesterday, Renewable Energy Maldives Managing Director Dr Ibrahim Nashid told Minivan News that he believed banks and foreign investors crucial to revitalising the national energy “didn’t turn up” at the event.

“The main idea was to bring investors here, but I don’t think that has happened,” said Nashid.

He explained that while Maldives-based institutional representatives from the WB, ADB, United Nations Development Programme (UNDP) and various other Maldivian institutions attended the conference, individuals with authority to authorize lending and/or donor funds were not present.

“Basically there wasn’t any financial institution that could give the finance or lend the money,” said Nashid. “No international banks came and what is very noticeable there wasn’t Indian investors. Not a single Indian company was represented.”

“ADB was saying they have earmarked funds for the Maldives, but their idea was also to leverage that with some other lending institution and that was not there,” he added.

Nashid noted that none of the Maldivian banks were present at the conference.

“The Islamic Development Bank (IDB) was there, but not the Islamic Bank in Male’, even the Bank of Maldives didn’t attend,” said Nashid.

“It shows the confidence that everybody has, [which is] the reason the World Bank is talking about giving a bank guarantee,” he continued.

Although Minister Shakeela was asked many times about what the government would do to guarantee investments “she skirted the question saying the ADB and WB is giving the guarantee,” according to Nashid.

“That was not the issue, the issue is what happens to our investments,” he said. “The GMR case is very very open and obvious to everyone. The issue of political instability was very much skirted, [but] everybody knew.”

Nashid claimed that most conference participants who discussed renewable energy investments said a decision would not happen until after the presidential election scheduled for September.

“We need political stability here, without political stability I don’t think any project is going to take off,” said Nashid.

“We can do the preparation of paperwork, etc. but money will not be put on the table. That’s the message we get from abroad,” he added.

These sentiments were echoed by conference participants representing various private sector businesses.

“It was a good start, but this is really just a beginning. There were not very many investors present,” an infrastructure company representative told Minivan News on condition of anonymity.

“The three things investors are looking for are credibility, stability, and return on the investment,” a telecommunications company representative told Minivan News on condition of anonymity.

The source explained that political instability was the main concern preventing investors from committing to renewable energy development. He also agreed with another conference participant’s observation that political instability in the Maldives was the ‘elephant in the room’ at the event.

“There were very few investors present, which is not surprising. No one is going to be eager to invest [in developing renewable energy] until after elections,” he added.

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Maldives to establish offshore finance center with ADB assistance

An offshore finance center (OFC) is being established with Asian Development Bank (ADB) assistance, the Ministry of Finance and Treasury has announced.

The ADB has offered its expertise to the Maldives for formulating the legal framework and building the necessary technical capacity to create the OFC, Finance Minister Abdulla Jihad told local media.

“As this is entirely new to the Maldives, we will need to build technical capacity and formulate the required strong legal framework,” Jihad explained to local media.

He further stressed that establishing a OFC would assist with developing the banking and insurance sectors and majorly boost the financial sector in the Maldives, reports local media.

Jihad previously traveled to Mauritius to discuss their country’s OFC practices with bank officials.

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Environment Ministry signs MVR1 million waste management deal

The Ministry of Environment and Energy has today signed a MVR1 million deal to purchase waste management equipment, local media has reported.

The deal, made with Male’-based company Biz4Maldives, forms part of a collaboration with the Asian Development Bank (ADB) to oversee environmental management projects in the country, according to the Sun Online news service.

The lifespan of the agreement will reportedly be two months from the date of the signing.

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Women leading youth brain drain due to “stifling environment”

“There is a lot of brain drain here, that’s part of why I came back. I didn’t want to be a brain drainer. I wanted to fix it.”

Halifa* is a 25 year-old Maldivian woman, educated and living abroad, who returned to work in the Maldives for a one year contract in a highly specialised professional field.

For many young people, Halifa says, Maldivian culture is an obstacle to growth and employment.

“Many youth wish they weren’t even Maldivian, they don’t know why they had to get stuck here,” she says. “When I talk to one of my friends, she says she wants to get out and come back when it’s better. That attitude is actually quite common.”

The Maldives has an unemployment rate of 32 percent, with women accounting for 24 percent overall. Young people comprise 40 percent of the population of the capital Male’. Of these youth, few females hold diplomas and many are unemployed.

“Lots of girls quit school to get married, and before long they’re having kids and trying to raise a family aged 19 or 20,” Halifa says.

For those who do look for jobs, the options are few.

“Most bosses hire for looks,” says Halifa. “Girls are often hit on by bosses, and some give in. Maybe they think they can handle it if it will improve their CV. But after the relationship, most girls leave the job and maybe take up the burqa. The experience may be so bad that they won’t look for another job.”

Growing religious fundamentalism is causing ripples of concern over female employment – although the Constitution allows for equal rights, few stand up for them. Instead, women increasingly accept a “culture of timidity and submissiveness,” in the words of another Maldivian woman, who is pursuing her doctorate.

It is a significant time for the strengthening of Maldivian democracy following the introduction of multi-party elections and many new freedoms. But it seems that women are both dissuaded from and reluctant to participate in the job sector. Frustrated by social, political and religious obstacles, youth are looking to apply themselves elsewhere. Is the Maldives facing a female brain drain?

“The ultimate goal is to raise an educated housewife”

A 2007 UNICEF report found that girls were almost 10 percent more likely to pass from primary to secondary schooling than boys, and repeated primary school less often. But sources say fewer girls are fulfilling their potential.

A government official who spoke to Minivan News said that many women lose their motivation to pursue higher education at grade 11, choosing marriage instead. The official said things are changing, but opportunities remain scarce for both genders.

“I think what women lack really is higher education, and men as well. If we want to move ahead, we need to focus on providing higher education,” she says.

Cost and accessibility contribute to the low achievement rates. Higher education is expensive by Maldivian standards, and the wait for scholarships is demoralising, says Halifa. Students who study abroad are often from wealthy families, and therefore not selected for their intelligence or ambition.

Halifa adds that Maldivian culture does not justify the effort of getting a degree: “Education is valuable in the Maldives, everyone wants their kids to have degrees. But then what do they do? They still expect them to be at home.”

According to an Asian Development Bank (ADB) report dated 2007, Maldivian cultural standards make it difficult for girls to pursue professional degrees.

“Cultural expectations regarding young women living away from home impact upon the numbers of female students studying abroad and hence female attainment of tertiary qualifications. From 1995 to 2000 a total of 876 students were awarded government scholarships to study abroad, 42% of which went to girls. From 2001 to 2005, 39% of undergraduate scholarships went to girls, 38% of post-graduate scholarships and 22% of doctorate scholarships.”

The Maldivian parliament has 77 members, only five of whom are female. MP for the ruling Maldivian Democratic Party (MDP), Eva Abdulla, said the lack of higher education affects a woman’s chances in the job sector.

“It is difficult for women to get the education necessary to compete with men of the same age for the same job. Statistics show that women are receiving less education than men after tenth grade, whereas up until secondary school they are on par.”

Abdul said the pressure to stay home and become a mother was significant. She also acknowledged that a woman’s path to employment is unclear.

“Equality in the work force and equal opportunities for women won’t happen naturally if we just improve education. We need to make some real changes to show an improvement in the ratio of men to women in the work force,” she said.

In some cases, however, employers see education as a threat instead of an asset. Halifa’s boss allegedly told her she was lucky to be hired with a degree. Since the boss only held a diploma, she preferred hiring employees whose qualifications did not jeopardise her own.

“Cover up and wear the burqa”

Halifa says her boss made unflattering assumptions about her personal life since she was over 20 and unmarried.

“I was guilty before I even knew I was being judged,” she says.

There is “not one single resource” for women who feel they are receiving unfair treatment at work, said Abdulla. “I don’t know if we have even made it comfortable for women to talk to each other here.”

Halifa adds that complaints of sexual harassment only provoke criticism of her religious practice: “They just tell me to cover up more and wear the burqa,” she says.

Although Maldivian law and society allow for equal rights between genders, speaking out is considered brash and unfeminine, and the cultural mindset of wearing the burqa means more girls are being married young without finishing their education. One woman called this shift in behavior “brain wastage: a deliberate refusal to apply the brains that one has – and this is the biggest problem that Maldivian women face today.”

Behind the pack

“Gender equality is an area in which the Maldives is lagging behind most countries in achieving the Millennium Development Goals (MDGs),” UNDP advisor Ferdinand von Habsburg-Lothringen observed at the Democracy Day ceremony earlier this month. “Democracy is dependent on not just 50 percent of the people. With only half of the eligible work force participating, growth will not flourish in the Maldives.”

According to Abdulla, women want to work but cannot find the domestic support necessary for them to work outside the home.

“I have not met many who say they would rather stay home,” she said. “But the pressure of managing a career and a home is serious. Women have two jobs: one paid, one unpaid.”

The stress on women is detrimental to economic growth.

ADB reports that almost half of Maldivian households are headed by women, while less than four percent of men contribute to household tasks. Approximately 25 percent of women-headed households depend on income from a husband who works away from home, and one sixth are run by widows or divorcees.

“Divorced women and their children are particularly economically vulnerable and [have] limited choices to improve their situation apart from remarrying: Maldivian women have on average four marriages by the time they reach 50 years of age,” states the report.

In 2007, ADB found that female-headed households accounted for 47 percent of the population, one of the highest rates worldwide. Only 21 percent of these households were economically active.

A government official familiar with the issue said “the middle market is the primary area of employment for women”, with few women advancing to the top. She added that she is often the only woman at a business meeting.

Most sources agreed that the recent rise in religious fundamentalism could have a long-term effect on women’s employment prospects.

In 2009, opposition Dhivehi Rayyithunge Party (DRP) MP Rozaina Adam introduced the Soft Loans Provision for Women to enable women to borrow small amounts of money and set up small businesses from home. She said the bill would particularly benefit island women who have fewer employment options.

The bill was stopped when it reached the Islamic Ministry, which declared interest haram.

“This is ridiculous, because our banks operate with interest,” Adam said. “But when interest involves women the Ministry calls it haram. And it’s only a tiny amount of interest, about six percent maximum.”

Adam said the loans provided by the bill would range from Rf5,000 to Rf300,000.

“Unless we do something about the growing religious fundamentalism in the Maldives, women will only stay at home and breed children in the coming years. That is not constructive for a growing country and economy. It would be a major economic setback,” said Adam.

“We are a country in transition so what happens during this time defines what happens next.”

Women face many challenges to employment: complicated social expectations, unclear motives for education, an increasingly strict Islamic code, and scrutinising work environments. If current social trends continue, there will be little room and few incentives for the next generation to contribute to the country’s growth.

“Educated Maldivians find themselves intellectually stifled in the current climate, especially with the astonishing gains that ultra-religious conservatives have made in Maldivian society in the last decade,” observed one source.

At this year’s 55th session of the Commission on the Status of Women, Abdulla said gender stereotyping and violence “threaten[ed] to erode our gains and erect obstacles to future progress.” She warned that unless key institutions such as Parliament include more women in their decision-making processes, “policies will continue to lack the multifaceted approaches required to address the complex social, political and economic needs of our country.”

Recent initiatives such as the Domestic Violence Bill and the National University Act are positive steps. But Abdulla said evidence suggests more families are removing girls from education systems and keeping them in the domestic circuit. “We believe that religious extremism that shapes negative attitudes towards women and girls forms the genesis of this devolution towards female education and empowerment,” Abdulla said at the session.

One woman warned that if religious and social trends continue, “in ten years women would be lucky to leave the house, let alone the country.”

Although most sources agreed that religious fundamentalism challenges the thinking, working woman, some say it is not actively preventing women from going to work or improving their lot.

Halifa is optimistic about her generation, but said success depends on key changes. “I think when our generation is in charge they will be people who have gotten out, who have seen other cultures, who are more familiar with the power of women. The religious guys are still an issue for development,” she says.

One government source added that compared to Mexicans, Maldivians do not have a strong urge to cross a border.

Adam cautioned that the Maldives should be aware of the outside world’s appeal to youth. “If we can’t offer challenging jobs and salaries that are competitive with what other countries are offering, we have a hard time keeping our educated youth involved at home,” she said.

Abdulla says she believes that there would be significant opportunities for youth in the government and private sectors in the next five years, but felt that more needed to be done to improve the working environment.

“Equality in the work force and equal opportunities for women won’t happen naturally if we just improve education,” she said. “We need to make some real changes to show an improvement in the ratio of men to women in the work force.”

*Name changed according to request

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Parliament called to arbitrate civil servant pay dispute

The ministry of finance has asked parliament and the Maldives Monetary Authority (MMA) to arbitrate a dispute between the ministry and the Civil Service Commission (CSC) over the restoration of civil servants’ salaries.

Parliament has been asked to act as a mediator as the ministry “does not believe a satisfactory solution can be found through discussions with the commission”.

Until the dispute is resolved, “employees will receive the salary that was reduced due to the economic circumstances,” the finance ministry’s statement said.

The CSC meanwhile criticised the ministry for a lack of communication and unwillingness to meet for discussions.

“They could ask us to sit down and discuss this tomorrow morning and we would be there,” said CSC member Mohamed Fahmy Hassan.

“We’ve sent many letters and made many requests for them to submit information but they have not submitted it to us,” he said.

The CSC was not opposed to the involvement of third parties such as the MMA, he said, but having another government institution like the MMA acting as a go-between “sounds a bit odd.”

“We can discuss the issue with MMA or the People’s Majlis, but there’s going to be no decision made without the involvement of the finance ministry.”

Parliament broke for recess in December and will begin its first session of the year in March.

Waiting game

On 30 December, the CSC issued a circular announcing that civil servants’ salaries and allowances had been restored to their former levels.

Since it was agreed that the pay cuts will be rescinded once government revenue exceeds Rf7 billion, the CSC argued, the salaries would have been “automatically reversed” when parliament approved this year’s budget with a revenue of over Rf7 billion.

However the finance ministry’s statement criticised the commission for the announcement as it came after the ministry had declared that the economic circumstances had not changed.

“And while it did not consult with the ministry, the fact that the Civil Service Commission did not seek the advice and counsel of the Maldives Monetary Authority, the most appropriate independent institution to approach before making such a decision, is regrettable,” it said.

No deal

The pay cuts of up to 20 per cent for civil servants were made necessary due to a fall in government income and an increase in expenditure, the ministry claimed.

In August, the government introduced a raft of austerity measures – including cutting back on travel, controlling capital items purchases, halting renovation and repairs unless necessary and pay cuts of 20 per cent for political appointees ranked higher than deputy minister to alleviate the inherited budget deficit.

Recurrent expenditure on salaries and allowances for government employees was 34 per cent of total expenditure in 2008, a 62 per cent increase from the previous year.

The International Monetary Fund [IMF] has noted that this puts the Maldives in first place among small island nations for the highest expenditure on government employees as a percentage of GDP.

Pay cuts for civil servants were enforced in October following protracted negotiations with the CSC.

The commission exercised clause 43[c] of its Act, which authorise it to alter salaries based on “special economic circumstances” subject to a review in three months.

“The measure proposed by this ministry to determine the special circumstances was the state’s income and expenditure,” the ministry’s statement read. “It was therefore agreed that the economic circumstances would be considered to have passed once the state’s annual income exceeds Rf7 billion, while it was also agreed that the state’s total income does not include foreign aid once-off revenue.”

It further added that the pay cuts were not made for a three-month period, but would be subject to a review to determine if the economic circumstances had changed.

The inclusion of foreign aid in the government’s budget is a particular point of contention, as it pushes the total revenue over Rf7 billion. Actual government revenue excluding foreign aid and once-off revenue was projected to be Rf6.8 billion in the budget.

“We understood it was the total revenue of the government. The ministry’s press release on 25 September said they were not going to exclude anything. This issue needs to be resolved,” said Fahmy.

Special circumstances would be considered to have improved when the state’s “recurring income” reaches Rf7 billion, the ministry said, and “not when it is estimated that Rf7 billion will be received in income.”

Scaring off donors

The opposition-dominated committee selected to review the budget made a recommendation to inject Rf617 million to restore civil servants’ salaries as the proposed budget had Rf7.05 billion in revenue.

While the original budget submitted to parliament had a deficit of 14.8 per cent and was acceptable to the IMF, the alternations made by parliament increased it to 18.8 per cent.

The ministry now estimates the deficit by the end of the year will exceed 18.8 per cent as the government will lose Rf150 million in revenue due to parliament’s failure to pass taxation legislation.

Increasing expenditure at the beginning of the year based on projected revenue was “not sensible at all”, the ministry insisted.

There were four ways the government could plug the deficit – printing money, financial assistance from international monetary organizations, obtaining commercial loans and devaluing the rufiyaa – all of which would have adverse effects of the economy.

Printing money would lead to inflation and a dollar shortage, taking commercial loans would make it harder for the private sector to secure loans and devaluing the currency would increase inflation and the price of imports.

Instead, the ministry reached agreements with the IMF, World Bank and the Asian Development Bank to obtain loans to plug the deficit.

However hiking salaries for government employees without increasing the revenue base was not “a sustainable fiscal or monetary policy”, and these international organisations have since informed the government that they are reconsidering the loans, the ministry’s statement said.

If the Maldives does not have an economic framework that is acceptable to the IMF, it continues, it would not be possible to obtain assistance or loans from other financial institutions.

Apart from potentially losing Rf755 million in assistance from the World Bank and ADB, the donor forum organised by the World Bank and scheduled for March could be canceled.

“Therefore, the ministry believes reducing expenditure is the wisest and most economically sensible way,” it said, adding that expenditure on wages had to be kept low until the economy rebounds.

Fahmy said the CSC was willing to negotiate and wished to meet the finance ministry “to hear their views on the economic circumstances.”

“We have always said that if there is a national crisis we will put the national interest above the interest of civil servants,” he said.

“But it is difficult to justify that to 29,000 civil servants if the government is spending on all the other items in the budget.”

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