Opinion Editorial by Mr. Hector Gomez Ang, the International Finance Corporation's (IFC) Regional Director for South Asia, and Alejandro Alvarez de la Campa, IFC's Country Manager for the Maldives and Sri Lanka.
Twenty-six years ago, when telecom company, Dhiraagu, launched internet services in the Maldives, only 1 percent of the population had access to the web. Today, with over 373,481 internet subscribers and over 700,000 mobile connections, the country has one of the highest internet penetration rates.
Despite the impressive progress, it’s clear the telecommunications industry in Maldives needs more investments and upgrades to infrastructure to offer better service, reliability, and affordability for the country’s people. Among South Asian countries, Maldives has one of the most expensive mobile services, especially for data. In terms of internet affordability, the country was also ranked last in the region, according to the International Telecommunication Union (ITU).
So, what has been the problem? It’s a simple matter of connectivity. Maldives has limited direct access to international submarine cable systems. Consequently, the country relies on its neighbors for international connectivity, leading to bandwidth constraints, higher costs, and low reliability in terms of connections. In recent times, with a growing demand for data, Maldives’ international digital infrastructure has proven to be inadequate.
For Maldives, digital vulnerability is a major impediment. A services-led economy that survives predominantly by relying on tourism, it undoubtedly needs good, affordable network coverage. Also, given Maldives’ small size—half a million people—diversifying its digital economy is a priority in line with the government’s National Resilience and Recovery Plan 2019-2023. Most importantly, since Maldives is geographically dispersed, people living across its 187 inhabited islands need affordable and quality digital connectivity tools to stay connected and to access services.
In response, the government has been focusing on digitization of key government services. Expanding access to affordable and quality internet services to strengthen e-commerce and help small and medium enterprises (SMEs) grow is another top priority.
The plan is commendable, but it’s not without challenges. There is significant funding gap, which needs to be bridged – and that means more private investment, including foreign direct investments (FDI).
The International Finance Corporation (IFC), part of the World Bank Group and the largest global development organization working with the private sector in emerging markets, has been working to help expand connectivity in Maldives.
We know connectivity is not a luxury, but a necessity for all. And access to digital connectivity is fundamental to economic and social activity. The economic benefits were illustrated in a recent report by ITU which suggested that an increase of 10 percent in fixed broadband penetration in countries would yield an increase in 1.9 percent in GDP per capita. And one of the clear lessons of the COVID-19 pandemic has been that digital connectivity is a must to not only help people stay connected at a time of crisis, but also to ensure businesses can continue to operate.
That’s why we are ramping up our support in Maldives, alongside the Asian Development Bank (ADB), by extending $35 million to Dhiraagu, the country’s largest and oldest telecom provider. It is funding that will help the Dhiraagu add to its existing submarine cable systems and roll out the country's first directly connected and owned international submarine cable system. It will also enable the company to be part of the South-East Asia-Middle East-West Europe (SMW6) submarine cable consortium.
It's a move that opens a range of opportunities. Improving digital connectivity in the atolls means more people will have access to remote work. It’s a move that could help boost the number of women in the workforce. According to World Bank data, in 2021, Maldives saw the participation of about 43. percent women (15 years and above) in its labor force, surpassing its South Asian peers by about 23 percent. However, most Maldivian women are involved in the informal sector. Closing the gender gap is therefore crucial and will help the country’s economy. As part of our partnership with Dhiraagu, we’re also working with the company to adopt a stronger gender lens in its operations.
And just imagine the possibilities too when a child living on one of the atolls is able to access education services or a family is able to access tele-medicine. Digital delivery of healthcare and education services will help Maldivians become more resilient in the face of adverse climatic or other shocks.
Maldives already leads the region in digital connectivity with 63 percent of the population using the internet in 2019, according to the World Bank. With the adequate investments Maldives has the potential to be a leader in South Asia in all digital parameters while transforming the way public services are delivered.
From very limited internet access to an emerging digital economy, Maldives is poised for more.