This is a translation of an interview conducted by Fathimath Shana Mohamed of Mihaaru.
Upon stepping into his office on the 7th floor of the central bank MMA, he was already engaged in a discussion with a senior official. This environment is familiar to him, as he has spent much of his career within the central bank. The only difference now is the office he occupies.
In the last two weeks, the new governor, Ahmed Munawwar, has focused on observing all departments within MMA and shaping the institution to align with his goals.
Munawwar first joined MMA as an office trainee back in 1999. Fourteen years later, when he left the organization, he was serving as the senior manager and economist for the research and statistics division. Despite being offered a double promotion at that time, Munawwar was determined to expand his career elsewhere, leading him to join the Asian Development Bank as their national director.
Taking on the role of governor on July 31st, Munawwar has been reserved in sharing his plans for reforming MMA during his first media interview with Mihaaru. His views on the country’s economy and the steps he plans to take remain largely undisclosed.
Munawwar has stated that his primary objective is to double the financial sector in the Maldives. Currently, the financial sector accounts for 6.4 percent of GDP, and he has already begun efforts to increase this to 12 percent.
The former finance minister emphasized that expanding the financial sector will require prioritizing the growth of insurance companies and banks.
Maldivian tourism is globally renowned and serves as a model for many. Numerous prominent companies in the hospitality industry have established themselves in the Maldives. Munawwar believes that leveraging this success can help elevate the country's financial sector.
The Maldives currently has eight operational banks, most of which are smaller branches of international banks. One reason for the financial sector's recent underperformance is the lack of concessions provided by Maldivian banks to investors. Additionally, these banks lack the necessary capital to support multi-million-dollar businesses.
"I want MMA to lead the development of the financial sector. This is a top priority for me. Currently, the total assets of the financial sector amount to 6 billion. Of this, 4 billion dollars is in deposit. So the question is, what is happening to the 4 billion that's supposed to be circulating?" he said.
Governor Munawwar has yet to get an answer to this question. However, he noted that there is no proper system in place to retain revenue from the tourism sector. As a result, the Governor said MMA will prioritize facilitating the banking sector in Maldives to provide the necessary services for investors.
"When we have laws in place, they can mortgage assets, for example, but when problems arise, the court proceedings are so cumbersome that banks are reluctant to take the risk. They say it takes about eight years for asset recovery," he explained.
The new governor plans to address this issue and make it easier for banks, believing that this will also help grow the country’s financial sector.
Munawwar holds a degree in Islamic Finance, enabling him to identify opportunities within this sector.
It has long been Munawwar's ambition to make Islamic finance a profitable sector in the Maldives. During his tenure as finance minister, he established companies related to Islamic finance, but at that time, MMA was unable to fully support the development of this sector. Munawwar views this as "unfinished business."
He pointed out that Islamic finance in the Maldives has not developed as it should due to a lack of priority.
As a Muslim country, Munawwar believes that if the central bank prioritizes Islamic principles in banking, the sector could flourish.
"For example, there are issues like promoting equality and moving towards an equitable system for everyone. We have learned many lessons from Malaysia’s advancement in Islamic finance that could be applied to the Maldives," he said.
Munawwar mentioned that Islamic banking will be prioritized, with policies being developed to support its growth. He also expects that this focus will encourage more individuals to pursue studies in the field.
He added that the legal framework for this initiative will be finalized in the coming days.
"Financial innovations are being introduced globally at a pace faster than traditional banking systems can adapt.
Munawwar stated that instead of relying on established digital currencies, efforts have begun to create a unique digital currency for the Maldives. The main goal of this initiative is to ensure the currency is stable and secure.
"I will work very hard during this term [five years] to develop a digital currency model for the Maldives, in consultation with other central banks, particularly those in countries like Singapore," he said.
Munawwar also noted that the adoption of digital currency would significantly reduce the reliance on cash.
Beyond digital currency, he emphasized the importance of introducing other financial technologies to the Maldives.
"People want efficient services. Even for something as simple as a loan application, a digital banking setup is essential," he said.
Munawwar believes that the Maldives is well-suited to advance in digital banking, and he intends to push for the necessary legal changes to facilitate this.
The biggest challenge the Governor faces in advancing the financial sector is the limited number of banks serving the Maldivian population. Introducing new banks and providing more options to the public is one of Munawwar's top priorities in the near future. He plans to achieve this by incorporating the most modern services into the Maldivian banking system.
With his determination, it is clear that Munawwar's modern experience will play a crucial role in expanding and modernizing the financial sector.
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