Maldives president Mr Ibrahim Mohamed Solih on Monday morning opened the first non-bank financial institution aimed specifically to fund micro, small and medium enterprises in the country.
The SME Financing and Development Corporation (SDFC) was opened officially at the National Art Gallery on Monday morning. The non-bank financing institution is included among the 100-day pledges of the incumbent administration.
The SDFC is a 100% state owned corporation with a capital of MVR150 million and will primarily focus on financing macro, small and medium enterprises of Maldives either operational or aiming to kick-start.
The financial institution’s managing director Ahmed Zeenaad stressed that while SDFC has started on the minimum required capital of MVR150 million, they will be introducing four products which will be disclosed later on the day.
Furthermore, SDFC was formed with a 5% share of Male’, Addu and Fuvahmulah City’s council authorities.
Loans for businesses will be issued once interested parties have presented their proposals to SDFC.
The SME Financing and Development Corporation will also act as the first non-bank financial institution working for the progress and expansion of MSME businesses in the country.
According to Maldives Ministry of Economic Development referring to Maldives Inland Revenue Authority (MIRA), businesses with an annual turnover less than MVR100 million and more than or equal to MVR60 million are classified as medium-sized businesses.
Businesses with an annual turnover of less than MVR60 million and more than or equal to MVR10 million are classified as small businesses whereas any business with an annual turnover less than MVR10 million are classified as micro businesses.
As of MIRA’s business profit tax filings for 2016, a total of 6633 SMEs are active in Maldives, which were 5,256 under micro, 897 under small and 480 under medium.
The ministry had earlier noted that the most challenging issue faced by local MSMEs was proper access to finance and the Maldives government was continuously working on an approach to improve the situation.
Moreover, Ministry of Economic Development launched several financing tools from 2014 onwards and by 2018 a total of 5 different financial tools were provided to local MSMEs.
These included Faseyha Madhadhu 2 valued at MVR74 million and Women Entrepreneurship Loan at MVR2 million with MVR40 million issued under GetSet and another MVR50 million under SME loan scheme.