The European Union has pledged EUR 2 million as grant aid for a project to support the recovery of small and medium enterprises operating in the Maldivian tourism sector.
The agreement for the project - EU Support for a Resilient Recovery of SME Tourism Industry in the Maldives – was signed by the EU Ambassador to Maldives Denis Chaibi and Maldives Fund Management Corporation’s Managing Director Hassan Manik during an event to launch the project on Tuesday afternoon.
The event was also attended by Economic Minister Fayyaz Ismail and Tourism Minister Dr. Abdulla Mausoom.
According to the Economic Ministry, the overall object of the project is to enable Maldives to create a more resilient and diversified economy by enabling micro, small and medium enterprises operating in the tourism sector to recover from the COVID-19 crisis.
In addition to a EUR 1,400,000 direct transfer component, the project will also provide EUR 600,000 towards technical assistance which will be directed to training programs for beneficiaries aimed at high impact areas such as improving business operations, financial management, sustainable waste management and creating access to international markets.
The technical assistance component will also support set-up of an OTA system which will act as a strategically important tool that is expected to play a crucial role in retaining value created by the sector and promoting growth of tourism related micro, small and medium enterprises.
The EU-funded project is designed to assist micro, small and medium enterprises involved in the tourism sector – most specifically guesthouses and safari vessels with less than 40 beds.
Economic Ministry said the project is expected to benefit more than 600 tourism establishments.
All micro, small and medium enterprises operating in the tourism sector with a valid operating license at the start of the COVID-19 crisis (December 2019, January 2020 or February 2020) are eligible to apply for the assistance.
Speaking at the event, Chaibi noted that the Maldivian tourism sector was hard hit by the travel restrictions imposed by the COVID-19 pandemic. He said that while some segments of the tourism sector have recovered from the pandemic, others have been less resilient.
"This is why we are focusing our efforts on guesthouses and safari vessels, so that our funds will have a direct impact on local communities and in particular on women-led businesses. These operations are often more sustainable, with a focus on the environment, and offer opportunities for tourists to discover the unique and rich culture of the Maldives,” he said.
Fayyaz expressed appreciation for EU’s assistance, and noted that the EU has been a key contributor to the Maldives economy over the years.
“The direct grant scheme under the project will be an important and timely support package to MSMEs recovery efforts. In addition, the proposed OTA system has been a much-awaited initiative and is expected to significantly benefit existing and future entrants to the sector,” he said.
Hassan Manik also expressed his appreciation.
“It is with great pleasure that we accept this generous donation from the EU to the Maldives, and we would like to thank the member states and their people for this contribution which gives the Maldives Tourism MSMEs an opportunity to get back on their feet following tough times amid the COVID-19 pandemic,” he said.
The project is part of wider assistance provided by the EU to Maldives in response to the COVID-19 outbreak, which includes EUR 1 million to support the health sector and an EUR 20 million loan provided by the European Investment Bank for long-term economic recovery.