In the past couple of weeks, we have seen several responses to the growing gang violence in the country with high level committees set up to look into the matter.
We also saw a national security seminar for the tourism industry in response to recurring raids on resorts which left a 19 year-old dead two weeks ago.
These are immediate and reactionary measures. We can only do so much to prosecute young criminals and fill up the already crowded jails. If we want real answers to these problems, we need to look at a bigger picture.
The same applies to the exchange rate situation. Beyond devaluation, there is much to do to fix the macro-economic situation. To me the key words are ‘long term’ and ‘priorities’. We need long term strategies and to identify the right priorities to solve our growing economic and social problems.
A long-term growth strategy
The economic section of the government’s manifesto ranges from pledges on cost of living, tourism, fisheries, agriculture, SMEs, water, sewerage, employment, environment and to date, implementation of these pledges appear to be ad-hoc and piecemeal. There is no overall direction to regain recovery and growth of the economy.
The government talks about diversification of the economy. The government also declared that Maldives is open for business and wants see increased investments and private sector role in as many sectors as possible. Fiscal adjustment measures have been initiated here and there and now there is a growing reference to market forces and a market based economy.
We need to look above all these plans and the long list of manifesto pledges and decide on what the economy should look like in the next 5 to 10 years, what the share of tourism would be, how growth can take off and what impact we want to see on incomes, on private sector and on job creation. Above everything we need a long-term economic growth strategy that is clear and consistent.
Setting the right priorities
The government’s manifesto and the five year development plan are overly ambitious with 5 key pledges and 20 odd other pledges. Many ministries are overwhelmed with new policies, projects and programmes everyday where there is only a limited pool of technical expertise and managerial staff to roll them out. In my opinion, political disillusionment and public frustrations are a result of too many promises. Investors, donors, private sector and the public are often confused, not knowing the real direction of the country’s economic and development agenda. To me, the priorities are simple and straightforward. We need to decide on growth sectors and growth hubs.
Growth sectors
We constantly talk about the high level of dependency on tourism and the vulnerability of the economy to external shocks. We are increasingly seeing a decline in fisheries and despite many efforts, share of agriculture is still negligible. The government often refers to plans to diversify tourism and fisheries. There are the long standing debates on our competitiveness in potential sectors such as ports services, off-shore financial services as in the Caribbean and Maldives specialising as a knowledge-based economy, as a hub for R&D on climate change, marine research and even to the extent of specialising on democratic and human rights research.
The reality is that as a small island nation we cannot do it all. We need to focus on one or two sectors and we need to prepare our labour force, our laws and institutions to specialise in these sectors and equip the private sector and gear donor assistance and foreign investments to develop these sectors.
Growth hubs
We have a tradition of not giving consideration to population and migration in development planning. The failure to predict and prepare for the explosion of school leaving population gave rise to joblessness and the related youth problems we see today. The failure to plan for an explosion of migration to Male’ from the atolls has caused over-crowding, harsh living conditions, congestion and pollution in Male’ which in turn causes crime and violence that keeps escalating. If we fail to plan for an ageing population in the next 15 years, the consequences could be worse.
The government insists on extending services to all islands and on increasing accessibility of services through connectivity and transport. The reality is that service provision even with ferries to 200 islands is unrealistic. It is costly to not only invest but to maintain high quality education, healthcare, social services, security, utilities, harbours and not to mention airports. We cannot afford it if the government wants to achieve a balanced budget. We cannot afford it even otherwise given the limited human capital. Attempts to expand tourism to all parts of the country have not had a major impact on reversing migration or on local economic growth. The resorts run on a parallel economy and have not opened up economic opportunities for islands except for remittances of employees.
Additional flats on the islands is definitely no solution. Those who move to Male’ are looking for better education, healthcare and better job prospects. The government cannot guarantee all three services to every single island in the country. Villingili and Hulhumale’ have not relieved housing pressures and living conditions in Male’. These satellites islands are simply getting filled up with migrant families everyday and this trend will accelerate when additional flats are built in Hulhumale’ or in Gulhifalhu. Housing pressures, living costs, overcrowding in schools and hospitals will only worsen.
The government needs to decide on one or two growth hubs in different parts of the country based on population needs and migration patterns. The dispersed 200 inhabited islands will never have scale for commercial development and economic growth. The government should leverage investments, people, infrastructure and direct services to the growth hubs. It is the only option for improving quality of life of people in Male’ and outside of Male’.
Economic and social transformation
The real solution to gang violence, drugs and crime and the exchange rate situation is therefore a long term growth strategy that prioritises sectors for economic diversification and hubs for population concentration.
Thirty-odd election pledges on 200 islands is simply impossible. I echo Imran’s conclusions in an earlier article that we need a ‘bold government that shows leadership’. We need to acknowledge the big picture, give up reactionary and ad-hoc approaches, and show consistency and vision. The government should stop jumping on big ideas and take the national institutions, investors, donors and the public towards a focused and realistic recovery and growth path.
Without thinking long-term and without setting priorities, I don’t see how we can really solve the growing problem of dollars, drugs, crimes, violence, social disillusionment and even political frustrations that we see everyday across all parts of the country.
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