Tourism has helped lift Maldives out of poverty but since the lockdown was imposed, tourist arrivals have fallen to almost zero.
Firms have been forced to lay off their workers or put them on leave with little or no pay, while small businesses have lost much of their incomes.
The World Bank is supporting the Government of Maldives’ efforts protect lives and livelihoods during the crisis and prepare for economic recovery.
Most people know Maldives as a remote archipelago of 1,000 tiny islands fringed with turquoise blue waters, basking in the sunshine of the Indian Ocean. The islands’ isolation and outstanding natural beauty have long been a great drawcard for tourists wanting to get away from it all.
Since 1972, when Maldives first welcomed paying guests to its shores, its resorts have commanded high prices in the luxury tourism market. The resulting revenues have not only lifted the country out of poverty, but also brought it to the threshold of high-income status; one in five Maldivians is directly employed in the tourism sector, and many more depend indirectly on the sector for their incomes.
From early March, however, when a lockdown was first imposed to control the spread of the coronavirus, tourist arrivals have fallen to almost zero. This has impacted many businesses and households, even beyond the resort sector. Firms have been forced to lay off their workers or put them on leave with little or no pay, while sole traders and small businesses have lost much of their regular income.
“The resort terminated my contract at the end of March,” said 34-year-old Ahmed Irshad, who has worked in tourism all his adult life. “There are no jobs. I don’t have much savings as I have two children, including one with special needs. I don’t know how we will survive.”
Irshad’s struggles are mirrored across the archipelago in the lives of the many thousands of vendors, suppliers and freelancers who serve the tourism sector. Fishermen who sell their catch to the resorts are scrambling to find alternative markets, while photographers, musicians, and artists sit idle. “My biggest worry is that I might not be able to pay my monthly rental,” said Ahmed Ikleel, a freelance photographer.
Protecting jobs and livelihoods
Given the impact of the COVID-19 crisis, the Government of Maldives has stepped in to protect jobs and livelihoods. It has provided emergency loans to businesses on the condition that they retain their local workforce. Workers who have lost their jobs or incomes will receive an Income Support Allowance of up to MVR 5,000 (approximately $320) per month, while those whose income has fallen below MVR 5,000 per month can receive a top-up. This support also extends to the self-employed and those in the informal sector.
The World Bank’s International Development Association (IDA) is providing financing for the Income Support Allowance program under a $12.8 million COVID-19 Emergency Income Support Project. This complements $7.3 million of emergency IDA financing for the health sector.
The Income Support Allowance has helped almost 5,000 Maldivians get by with monthly payments in April, May and June. Among these is Zahida, 30, who was put on no-pay leave from her job in the food and beverage services industry. “It helps me to pay my rent,” she said. “Without the allowance, I cannot afford to live in Male’ … and will have to return back to my island.”
Maldivians can apply for the Income Support Allowance through the government’s online platform, or by contacting their local island council service centre. Those who qualify will receive the cash transfers directly to their bank account within days. The government has assembled a large team of staff to process the applications and is working to further streamline the application and payment process.
The COVID-19 Emergency Income Support Project will also finance improvements to social safety nets so they can better protect Maldivians against future shocks. A new unemployment insurance program will be developed, improvements will be made to the Maldives Retirement Pension Scheme, and computer systems will be upgraded to help households on the most remote islands apply for government assistance more easily. The project is also financing the development of a new National Social Protection Framework to better coordinate social protection policy.
The World Bank will continue to support the Government of Maldives to respond to the crisis and prepare for economic recovery. With the country reopening its borders to foreign visitors, hopes are high that, with careful management and screening, the tourists will soon return, and people like Irshad, Ikleel and Zahida can get back to work. Until then, the Income Support Allowance will provide them a welcome lifeline.