Tuesday, September 21, 2010

Our capital Male' - making the place livable

Osaka, Japan is on the top 6 of the most expensive places in the world, compiled by CNBC (http://www.cnbc.com/id/37996537?slide=6). In Osaka, a luxury two bedroom costs $2,218 as rent. In Male', Maldives, it is $1,400. Likewise, comparing few other things:

Osaka Male'
2 room apt rent 2,218.00 1,400.78

cup of coffee 6.10 2.72

gasoline liter 1.41 0.70

fast food meal 7.21 7.00
(In US Dollars)

Male' has become such an expensive city, as cost of living has increased dramatically over the last six years, and it is still on the rise. What led to the sudden transformation of Male'; migration of many from the atolls in search of jobs, better health care and better education. As the population increase, it creates a bigger market for the businesses, and hence, more jobs are being created. This led to attraction of more people to settle in Male'. So, it is a vicious cycle of increasing urbanisation. The 2004 tsunami was a shock that intensified the situation, after which the rent prices in Male' hiked alarmingly as there was a sudden flow of migrants from the atolls, thus, boosting demand.

It makes economic sense to have a large population, and there are many commercial benefits of it. However, not at the expense of the deteriorating social fabric of the society, and the low quality of life as more than hundred thousand people live on the small island of Male'. Large families live in small rooms, husband and wife do not get their privacy, children do not have enough space to study and run around, youth do not have enough entertainment opportunities, and the list goes on.

Another drawback is the extremely high rent prices in Male', eating up a high proportion of the income of many workers. Hence, teachers, doctors and other civil servants have no choice, but demand higher salaries. These huge salaries again lead to further increasing prices of goods and services, together with rent prices.

In order to prevent further migration, and to reduce the population of Male', other atolls, or other city centers with bigger land space need to be developed. Places like Hulhumale', and other big islands like those in the South. An immediate and urgent attention has to be given to this matter, and what's most important is the political will to do so. If housing units can be developed in Hulhumale', and attractive financing packages arranged, government can easily afford to reduce the salaries of the civil servants. If the teachers and other civil servants are given cheap accommodation, they should be willing to accept even a lower salary than their present one.

It is extremely important that government policies are geared in that direction rather than developing further infrastructure in Male'. However, the government has recently announced that 1,300 housing units will be built in Male', and has identified the location/sites for these developments. This will again lead to further inflow, and deteriorating the 'livability' in the island. We can easily divert these funds to Hulhumale' or any other atoll, so that social conditions in Male' will improve.

Thursday, September 16, 2010

Education and development - pathetic case of Maldives College of Higher Education

Long run growth, development, and prosperity is achieved through supply side factors like education and health. Better quality education and health services provide productive workers and responsible citizens, thereby leading to higher economic growth. Various empirical studies support this, and there are many examples like Singapore, Japan, and South Korea, where huge investments were made on education and research.

In our case, we have achieved universal primary and secondary education, and our literacy rate is relatively high compared to other developing nations. However, our tertiary education system has been very much neglected for a long time. The Institute for Teacher Education was established in 1984, and laid the foundation for producing quality teachers to teach in our primary and secondary schools. A few years later, in 1987, the School of Hotel and catering services was established, and provided the opportunity to train people for the tourism industry. In 1991, the Maldives Center for Management and Administration (MCMA) was established, and started providing valuable management and accounting courses. In 1998, the government formed the Maldives College of Higher Education (MCHE), and the previously mentioned institutions were changed into faculties and brought into the umbrella of the college.

Since then it has been 12 years. The academic standard of our college has not been improving year by year, rather it has been deteriorating. The college has not been able to create an intellectual environment, with academic debates and discussions, extremely vital for the developmental policies of this country. The country needs a strong academia with research, so that evidence-based decisions are made, and policies are formulated accordingly. The college has not been able to develop its standards so that it can achieve the University status. I remember back in 2004, the Faculty of Management and Computing (FMC), did not have a enough full time lecturers for microeconomics & macroeconomics (because I had to work as a part-time lecturer at that time). Six years on, even now the faculty is in the same situation. When I compare the overall standard now and back then, it has deteriorated alarmingly now. The situation is no better in the Faculty of Education.

Why has the College not performed to our expectations? What are the reasons for not having a strong pool of lecturers/professors after all these years? I dont know the exact answers for these questions. But, for a start, the admission criteria and procedures need to be reviewed in most of the college faculties, since the quality of graduating students can be maintained only if the college adheres to such criteria. Government needs to review the situation and find out the reasons why academic staff are not retained in the college, and implement measures to improve the situation. Government also needs to review the performance of the top management of the College, the College Council, and bring about necessary changes. Most of all, the government needs to acknowledge the importance of tertiary education, a strong academia, and credible research for the development of the country.

What we see are large, nice buildings that have been built with the loan assistance of international institutions, however, the quality of education, and the quality of the courses do not match up to the architectural quality of the buildings. We always tend to give too much emphasis on the physical infrastructure (hardware), rather than the quality of service or human resource (software). As a result, we've got modern physical infrastructure, but very weak software to operate this hardware.

Monday, September 13, 2010

Privatize Bank of Maldives

Bank of Maldives - as it appears in their latest Annual Report, is the Nation's Bank. The only domestic commercial bank in the country, with over 27 years of banking service with 260,000 deposit account holders. The bank has achieved many over the years, and has 25 branches and 37 ATMs, provides electronic banking, and works on the financial inclusion aspect through its branches and 'dhoni' service in the atolls.

However, last two years have not been such favourable years for the bank, and this was made worse by the negative publicity in the media about the health of the bank. Recently, with the publication of its 2009 Annual Report, we have been hearing more about the bank, especially when it was revealed that the bank's earnings and profits fell during last year.

Briefly looking at the financial statements, we see that although deposits have increased, lending of the bank has fallen by almost 17 percent. Earnings per share has fallen to Rf9.3 in 2009 from Rf50.2 in 2008 (an 82% reduction). The bank has increased its investments on government securities despite its low appetite on commercial lending. All these factors remind me of only one thing, once again; that our bank should not be owned by the government.

As at now, the government directly holds 51 percent of the bank, while the public holds only 29.3 percent. Which means, there are 8 directors nominated by the government, and 3 elected by the public shares holders, in the board of directors. The fact that the government has the control of the bank, has led to the bank doing many mistakes in the past, like engaging in 'connected-lending', where lending has been done to politically connected people. Some of these connected people have less probability of repaying their loans on time, as a result, the bank's profits will be affected. Another drawback of the government ownership is its influence on the bank regarding investments on government securities. Since, the Ministry of Finance is the owner of the bank, and the ministry is also the seller of government treasury bills, the Ministry is in a position to instruct the bank to invest on these securities, when the government is in need to finance its budget shortfalls. In this case, the bank is not acting in the best interest of its share holders and its core business, further, the private sector will be deprived of its borrowings.

For this reason, it is always advised that commercial banks are freed from government ownership; instead, they be better regulated, monitored and supervised by the state. I don't seem to understand why the government has been so keen to privatize places like Ghiyasuddin, or the Islamiyya School, when these places are public education schools, with relatively good standards of education. If the government genuinely believes that the role of a government should not be conducting businesses, privatization of Bank of Maldives should be on the top of their privatization list. With limited government ownership, and strong regulation by the MMA and CMDA, the bank can be strengthened, and be able to serve its purpose better and effectively.

Thursday, September 9, 2010

Why we need a United Maldives

Recently, during the Independence Day, I heard this famous song, "Minivan kamun alhuvethi kamah dhaanan hey? Nudhaanamey!", when translated it means something like: 'Will you go from independence to suppression (or colonialism), No, (I) won't go!'. The has many other such examples, mostly asking the question whether we'd choose a negative for something positive. Today, I've been asking myself and many others, similar type of questions.

From our very early childhood, we've been reading and hearing about the uniqueness of our country, Maldives. I've always been proud to say 'I'm from Maldives', whenever I get introduced to someone while abroad. We have been unique not only due to the geography or the natural beauty of our islands, lagoons and seas; but also due to the homogeneity of the population. We've been boasting about this 'one-ness' all the time, saying that we speak the same language, we are the same race, we have the same religion. And until recently, we always had the same President. So, we were 'unique', and that's the story of Maldives. That's not all, we've also been talking about the peacefulness of our islands, with no violence, no protests, and very less crimes; almost a 'Pleasant-ville' kinda place, where people have been kind, polite, obedient, and well-behaved. I can still remember those days., and I'm not that old.

But now? Do we still have that one-ness? I dont think so. Our society has been transformed in many ways, socially and economically. Every day we hear about an incident of either a gang fight, or a person being killed, or a person dead being over-dozed, or a political protest, or a mass demonstration, or tourist resort being shut-down because of a strike, or a Supreme Court being hi-jacked by the Police, or a cabinet submitting mass resignation, and the list goes on.

I agree that we've obtained many civil liberties that were non-existent earlier; we've now got freedom of expression, we've got a free media, we've got a separation of powers, and independent Judiciary, a Supreme Court, political parties, a human rights commission, a police integrity commission, and most of all, a brand new Constitution with many political and governance reforms. However, I still wonder, are we 'better-off'? Will you choose violence for peace and harmony? Will you choose polarization and political dividedness to national unity? Will you choose gang violence to the peacefulness we had in Maldives? I don't know about you, I surely dont want most of the reforms at the expense of the uniqueness and the one-ness that we had.

From an economic and developmental point of view; why do you think most of the African countries are still lagging behind on economic development? According to two famous economists Easterly and Levine, ethnic fragmentation has been a big impediment to economic growth in Africa. Many other factors like corruption, mis-trust to the institutions, the judicial system, and higher authority, are all impediments to growth and development. Today, we see similar characteristics in our society. The country is becoming fragmented and polarized. There people of different political parties, with different opinions or personal grudges. There are people following different sects of the religion, or having their own 'group' of friends with their own style of dressing. There are many expatriates, with their own set of beliefs and culture. There are 'gangs' with their rival other 'gangs'. There are many independent and autonomous institutions or commissions working 'on their own', without any regard to others. With all these, I dont see many possibilities of our country moving forward with further economic growth and development, unless somebody somewhere does something to unite us all once again.

Tuesday, September 7, 2010

Local Councils - can we afford these governance reforms?

The Parliament has passed a Bill on Decentralization, and formation of Atoll Councils, Island Councils, and a Local Government Authority. According to this Act, there will be an Atoll Council in every atoll to replace the existing Atoll Offices, and a minimum of 6 (six) Atoll Councilors will be elected to run the Affairs of the Atoll, and a Chairperson from these Councilors will be nominated as the head of the Atoll. As we are moving towards to decentralisation and empowering the local communities, these Atoll Councils are separate legal entities, and Councilors are elected by the people. An estimated Rf4 million per month will be incurred only to the salaries of the Atoll Councilors.

We are also getting Island Councils to replace the Island Offices, and each Island Council is to be run by Island Councilors. A minimum of 5 (five) Councilors will be there in each Island, some islands having 7 (seven) depending on their population size. So we would expect a minimum total of one thousand Island Councilors to be elected in the whole country. With a salary of Rf15,000 each, it would come to Rf15 million per month in salaries for only Island Councilors.

In total we will be spending about Rf19 million per month only on the salaries of these Atoll and Island Councilors. On top of that, there will be a new institution, the Local Government Authority, with a new set of staff and other expenditure.

End result? The Island Councilors will be from different political parties, even the Atoll Councilors will be from different political parties. The Local Government Authority will have members from different parties, and in the end, just like our Parliament, there will be minimal productive work done in all these institutions. The politicians in the Councils will get monthly fat salaries, and they will argue, fight, conspire, and promote their party policies. We would have a textbook model of democracy, local government, or decentralization, however, in practical terms, I don't envisage a situation where things would run as smoothly as they are outlined in the Act. Main reason is that we dont have enough people who are sincere, competent and with the will to govern, and make things better. Most of all, I don't think our country can afford it economically.

Monday, September 6, 2010

You wanna be a Parliamentarian?

Do you know that our Parliamentarians or Majlis members are required to work only eight (8) months per year! According to the Majlis Qawaid (which the members themselves have formulated of course), the first term of Majlis is from March 1st to April end - meaning they get May off. The second term is from June through August - hence September off. The third term from October through December - so January and February off again!! Can you believe this? Four months of holidays per year. That's not all, they can take leave even during those eight months, on top of the four months holiday. They get to choose how many days they gonna work. They get to choose how much salary they gonna get. They get to choose their own code of conduct.

That's not all. They get to choose the Supreme Court Judges, Civil Service Commission, Human Rights Commission, and all the other Commissions, plus the Broadcasting Corporation board directors. They can question the Ministers, well, almost anybody in this country. And they get Rf 62,000 per month as a salary with many other benefits like health insurance, sick leave. What more can you ask for?

The Parliament is considered as one of the three 'powers' according to the Constitution. The President doesn't get four months holiday, and the Judges dont get four months holiday. The Majlis is supposed to supervise, and oversee the work of the government, independent commissions, and the judiciary, yet, the Majlis is on leave most of the year?

Thursday, September 2, 2010

Can you believe it? People gather at President's Residence to protest about 'Baibalaa'

It seems that more than a 150 people gathered at the President's Residence, Mulee-aage' on Tuesday. These people were protesting, bringing to the attention of the President that they need to play 'Bai-balaa' during Eid I guess. It seems that the Police is cautious about the implications of the this game, as competition or rivalry between gangs has lead to violence in the past.

So, considering all the various social and economic problems facing today, I just couldn't believe that priorities could become Bai-balaa all of a sudden. Apparently the President came out and met the crowd, assured that he will look into the matter. (http://www.sunfmlive.mv/beta/?page=details&id=2161)