“The Financial Sector Must Be an Active Driver of the Climate Transition,” Says MMA Governor

The Maldives’ financial sector must move beyond a passive role and actively drive the country’s climate and development agenda, Maldives Monetary Authority (MMA) Governor Ahmed Munawar said on Thursday, as the central bank rolled out a trio of reforms aimed at reshaping finance as a catalyst for inclusive, digital, and sustainable growth.

Speaking at a high-level ceremony inaugurating the National Financial Inclusion Strategy, Payment Maldives, and the National Sustainable Finance Roadmap, Governor Ahmed Munawar said the initiatives collectively mark a turning point in how the financial system serves the economy, households, and businesses. The event was inaugurated by Mohamed Muizzu and attended by senior government officials, financial institutions, and development partners.

Governor Munawar outlined an ambitious target to double the financial sector’s contribution to national GDP from 6 percent to 12 percent within five years, positioning finance as a driver of economic diversification rather than a supporting service. He said achieving this goal would require stronger financial intermediation, modernised infrastructure, and an enabling environment that promotes innovation while preserving stability.

At the centre of the reform agenda is the National Financial Inclusion Strategy, developed using findings from the 2022 National Financial Inclusion Survey. The survey highlighted persistent gaps, including higher levels of exclusion among women, limited use of insurance and risk-mitigation products, low adoption of digital banking among the elderly despite high internet penetration, and continued reliance on informal borrowing by the self-employed. Rising incidents of financial scams, particularly targeting older age groups, were also identified as a growing concern.

The strategy moves beyond access alone, focusing on strengthening financial capability, digital confidence, and consumer protection. Particular emphasis is placed on youth and the elderly to ensure that vulnerable groups are not left behind as the financial system modernises. The MMA said financial literacy initiatives have already reached thousands nationwide, with further plans to develop an annual national financial literacy plan in collaboration with government agencies and financial institutions.

A major pillar of the transformation is Payment Maldives Pvt Ltd, a newly established national payments entity designed to accelerate the shift toward a fully digital payments ecosystem. Governor Munawar noted a sharp decline in cheque usage over the past six years alongside a rapid increase in digital transfers, a trend further accelerated by the introduction of Favara. Transaction volumes and values processed through Favara have doubled, reflecting strong public demand for faster and more convenient payment solutions.

Payment Maldives is envisioned as a collaborative ecosystem bringing together banks, fintechs, and service providers to deliver instant, secure, and interoperable payments nationwide. Planned milestones include the rollout of a national QR-code payment system by April 2026 and the first cross-border integration of Favara with India’s UPI by July 2026. The MMA has invited all banks and payment service providers to participate in the venture as equity partners, following international models adopted in countries such as India, Malaysia, Jordan, and Türkiye.

Addressing climate finance, Governor Munawar said the Maldives faces urgent funding needs, with studies estimating more than USD 800 million required annually for mitigation alone. He stressed that public financing would be insufficient to meet these demands, making it essential for the financial sector to actively support the climate transition. The National Sustainable Finance Roadmap provides a framework to mobilise capital toward national priorities including climate adaptation, renewable energy, sustainable housing, green transport, and the blue economy, while supporting the country’s target of sourcing 33 percent of electricity from renewables by 2028.

To operationalise the roadmap, the MMA plans to introduce green, social, and sustainability-linked lending frameworks, develop enabling legislation for climate-aligned finance, and establish a national sustainable finance taxonomy aligned with international standards. The objective, the Governor said, is to align financial flows with national resilience goals and bridge economic security with climate security.

Governor Munawar emphasised that the three initiatives are deeply interconnected, with financial inclusion expanding access and usage, sustainable finance directing capital toward priority sectors, and Payment Maldives providing the digital backbone to support both. He underscored that the transformation cannot be achieved by the central bank alone, calling for sustained collaboration among financial institutions, government agencies, and development partners.

With the launch of the three initiatives, the Maldives Monetary Authority signalled a decisive shift toward a modern, inclusive, and climate-aligned financial system, positioning finance as a central pillar of the Maldives’ long-term development and resilience agenda.