2020: Maldives Transformation to a Digital Economy?

Whenever there is a Black Swan event like the financial depressions, wars or pandemics — the global economy crashes and recessions hit us hard bringing a halt to progression. The setbacks takes us few years but interestingly its the same time period, which has curated the innovation we see today amid the hardship that grows and necessities that follow through.

COVID19 could be the next wave of innovation, just like how the 2008 financial crises paved way for some of the notable innovations you see today, like AirBnB, Uber etc. Microsoft was known to have seized the opportunity during the 1980s recessions.

Black Swan events by itself could be taken as an advantage and rather used as a proper filtering mechanism for the startups or in general how a country reposition itself in the high demanding markets. With such events we see changes in consumer behaviour, how business adopt to the sudden shock, which necessitates innovation. Often times, this is when the policy makers try to look away from the traditional opportunities to more cutting edge changes or risks, as there is nothing more to risk further in order to bounce back the economy.

This pandemic has opened a new pandoras box for businesses or even the much needed time for governments to restrategise and rethink on Business Continuity Plans (BCP), which until January 2020 was just a mere requirement and never something that was considered important. What is to grow out of this pandemic is Remote Working — irrespective of the type of business or organisation, as the entire world is in a practical lockdown and restricting citizen movement, it necessitated this to be the next norm for BCP. Remote Working is now called ZOOM! because they seized the opportunity, they adopted and they moved ahead of times to get it right (still struggling) — whereas SKYPE or GOOGLE HANGOUT has always been there. But Zoom innovated and hence now nobody says remote working or lets meet, they say — LETS ZOOM!

Most of the changes that world is applying today might change once the containment is achieved & when citizens are allowed to move — but this timeframe gives space for digital disruption and to digitalise our economy, reshaping how we are going to do business from here-forth. Making the citizen get used to such upcoming bureaucracies.

Countries are moving towards digital economy and thereby mainstreaming a world filled with digital bureaucracies, which is timely and which is more efficient. But question is, are we ready for this or are we going to stick to traditional business means.

Maldives is evolving faster than what we had anticipated, as over the last 4 weeks, we adopted to changes, which we never thought we would have over a decade and is spinning quicker actions than before and taking everything online.

Those quaratined and those in isolation or Staying HOME! are getting Psychosocial support via online mechansim (or telephone) and we are slowly moving towards accepting that mental health support could be given digitally. Interestingly over the last two years, we had tons of such projects ideated by teams participating in Hackathons organised by Sparkhub — but nothing materialised, perhaps this is the right time as people are accepting these. The time for trust to be created and instilled.

Remote Education or Distance Learning or Online Education, thats the next step towards Education — some countries have moved towards this during the last decade and today we should be glad that a startup from Maldives based on remote education “Hologo” was featured by APPLE among the top apps from Apple Store for Remote Education during the covid times. With the shutdown of school and colleges, Maldives adopted this faster than any other and worked towards giving that online apart from using the local channels for taking various classes.

COVID Times is going to be a filtering mechansim for many businesses, where the survival of the fittest would be the last one standing. And the key to this is — Pivot, mobilise, adapt and survive. This is the time, when you can reassess your business, your product, discard or reposition yourself.

Whether we like it or not, we are going into the economic recession and this time its impacting us far worse than what the last financial crises did. And the most vulnerable among them on the business forefronts are startups.

In Maldives the startup runway last for 4 to 8 months mostly. The two business which I am currently managing (Sparkhub and Encreare) has a runway for 6–8 Months, while the global startup runway, which ranges from 8 to 12 months before the next funding cycle. So, most of the startups are either going to collapse before October 2020, which is still within the COVID TIMES — FRAME or they are going to survive this wave as they innovate and evolve. Again these are just mere assumptions, nothing could be said concretely as the time and the mindsets differs.

The funding is going to dry up (as investors are becoming more careful) and the market is going to be very slow, conversion are rather slower and this time unlike all the other depressions or recession, the world has come to standstill. So the impact is much bigger and huge to even comprehend. But you need to learn how you overcome the #COVIDTIMES. Most Startups are going to crunch their numbers and Conserve their energy (Cash), revisit their business plan as revenue is going to be cut short, find opportunities to untapped areas — innovate — as there is nothing more loose and downsize or resize their Salary Structure!

The next big thing happening in Maldives right now, people are starting to value or rather say trust out of necessity on E-Commerce and its picking up and so does delivery business without a proper fintech industry to cater to this growing demands. We have grocery stores utlising their staff and coming with delivery service, we have cafe’s now diving straight head into delivery using their staffs, who were earlier waiters or barista. The trust that was needed for the delivery or ecommerce industry is slowly been created during the last 2 months but unfortunately the pockets are getting empty and so does the purchasing power.

But most importantly, the government needs to adopt and move ahead of time to be in the race as there is going to be more layoff and tons of talented entrepreneurs with ambitous mindset who might just kick-off the next big startup revolution in Maldives. But are we ready?

If the government wants to seize the opportunity and to make the country ready for the next wave, here are things that they might need to debate and bring in at the most earliest instead of wasting time on arguing unwanted things at the current juncture.

Considering that we are one among the first to do an virtual sitting of a parliament, we have gone far ahead. But are we really?

A better Legislative Agenda for a Digital Economy and maybe a few more to enable the Startup Ecosystem.

1. Introducing Competition Bill (Anti Trust law), which introduces new rules to prevent the development of monopolies and anti-competitive practices, making it easier for startups or any newly established business to disrupt existing markets.
2. Introducing Privacy and Data protection law, which promotes the efficient and secure processing of big data and helping to ensure a sustainable future for the digital economy, safeguarding consumers while allowing entrepreneurs to realise the opportunities created. This countries biggest problem is the lack of availablity of data and every single ministry or any institution who has data sits on it like Gollum from Lord of the Rings!! MY PRECIOUS!!!!
3. Introducing Angel Investors Tax Deduction programme, which would encourage angel investors to invest on startups in Maldives.
4. Investment Incentives for any investors who are interested in investing on a local startup. Open the Maldives economy for investment in any area and move away from packaging the country as a tourism investment only. Move faster on the economic diversification than just talking about.
5. Creating or amending necessary laws to give space for Venture Capital Fund management and crowdfunding.
6. Establish co-working space, incubators and accelerators as we move out from the Covid Confinement. We at Sparkhub attempted this, but unfortunately we dont have the financial resources to do so and at any country of our level, it needs government to subsidise and run this.

But if Maldives is not going to seize this opportunity to give avenue for the rise of Fintech in Maldives, the digital economy would be confined to just ZOOM!

INTRODUCE REGULATED SANDBOX

Maldives Monetary Authority needs to establish a regulated sandbox, as a testing ground. The relevance of having proper sandbox, targeting fintech industry, helps in growing need to develop regulatory frameworks for emerging business models. The government need to understand that a regulatory sandbox — allowing tech startups to test innovative products without being obstructed by restrictive regulations, before introducing their ideas to the wider market helps in taking the economy further without hurdles.

In a digital economy, fintech is the means of conversion — not saying, hey look at PAYTM or WECHAT! But please do give a look

Maldives is learning, Maldives is adopting but will we do the right thing, this time around — while we can! one has to just wait and see.