President Ibrahim Mohamed Solih on Monday launched the services of the first bank dedicated to small and medium-sized enterprises in the Maldives.
The bank will allocate a portion of lending for youth entrepreneurs, women, and persons with disabilities, whose “participation in national development have so far been marginalised,” Solih said at the launching ceremony.
“Therefore, SME loans will help more than two-thirds of people in the country,” he added.
Noting the high representation of women in farming, Solih expressed hope that the bank’s agriculture loan scheme would help increase local produce and improve quality.
The SME Development Finance Corporation was established as a 100 percent government-owned entity. The city councils of Malé, Addu City and Fuvahmulah each holds a five percent stake in the bank.
Six business centres set up across the country will provide assistance in developing business proposals needed to apply for loans, the president pledged. Applicants would also be offered expert advice on maintaining business records.
About 93 percent of businesses in the Maldives are SMEs, he noted, calling them “the main pillar of the national economy.”
SMEs create more employment opportunities but the Maldivian economy has long been structured for the benefit of big businesses, he observed.
Opening an SME bank was a campaign pledge and a target of the first 100-day action plan of the new administration.
The bank is located on the ground floor of Henveiru Sakeena Manzil in the capital Malé.
Ahmed Zeenad, SDFC’s managing director, told the press after the opening ceremony that the bank is offering four main products:
- asset loans of between MVR100,000 (US$6,485) to MVR300,000 to help purchase machinery, equipment and vehicles
- agriculture loans of up to MVR500,000 for individuals and MVR2 million for cooperatives and companies
- short-term business loans of up to MVR500,000 at 9.5 percent interest and two-year repayment plans
- Rashufathuru loans of up to MVR5 million for guesthouses and related businesses such as dive centres and water sports.
The average interest rate of the loans is six percent. Most loans have a one-year grace period and repayment periods of seven years.
The president said the government would work toward lowering the interest rates in the future.
In his remarks, Solih noted the goal of building capacity at island councils to assist in setting up new businesses. As part of the decentralisation policy, efforts to appoint economic officers at island councils will begin soon, he added.
The president also announced plans to lease space at the Velana International Airport’s duty-free area to sell local products. He thanked the board of the state-owned Maldives Airport Company for approving the plan.
Arrangements would be overseen by the Business Centre Corporation created by the economic development ministry, he said.
Solih also announced the introduction of an SME award to encourage innovation, productivity and the creation of new Maldivian products.