1. Functions and Fiscal Resources Objectives: The purpose of the report is to explore options for transferring responsibilities and fiscal resources from central govern- ment to elected local councils.

2. Functions and Fiscal Resources The report has three main parts: Responsibilities and functions of local government Fiscal resources for local government Phases in implementing decentralization Information in the report is based in part on a recently conducted survey of atolls and islands

3. Survey objectives The survey of atolls and islands had four main objectives:  To generate accurate current information to support discussion of options for decentralisation policy  To build a management information system to guide decisions on transferring responsibilities and allocating central government funds to local councils in the future  To provide data to determine criteria and formulae for calculating block grants  To gather baseline data to be used to monitor and evaluate the impact of legislation on decentralization

4. Returns DetailsNumber Total Number of inhabited islands in the country 196 Number of returns received from islands 109 Total usable returns 66 Infrastructure, facilities and services66 Utilities and Enterprises64 Local revenue52 Proposed new local revenue30 Shared revenue13 New shared revenue12 Sectoral Budgets and spending24

5. Functions and responsibilities Part One: Functions and responsibilities of local administrations for the delivery of public services

6. Functions and responsibilities Current and proposed activities of local administrations:  Infrastructure  Facilities  Services  Utilities  Public enterprises

7. Section A: Existing Public Infrastructure TABLE A1: INFRASTRUCTURE NorthSouthTotal Num ber% % % Roads paved 00%11%1 Roads unpaved 2841%1624%4465% Bridges 1624%1116%2740% Street lighting 4262%2131%6393% Storm water drains 34%00%34% Landing stage 11%00%11% Harbor 2638%1421%4059% Number of islands providing information 68

8. Section A: Existing Public Infrastructure TABLE A1: INFRASTRUCTURE NorthSouthTotal Number% % % Roads paved 00%11%1 Roads unpaved 2841%1624%4465% Bridges 1624%1116%2740% Street lighting 4262%2131%6393% Storm water drains 34%00%34% Landing stage 11%00%11% Harbor 2638%1421%4059% Number of islands providing information 68

9. Section A: Existing facilities TABLE A2: EXISTING FACILITIES NorthSouthTotal Number% % % Market place 57%11%69% Community center 812%69%1421% Meeting hall 34%00%34% Library 11%00%11% Mosque 4465%2131%6596% Recreation facility 1015%00%1015% Other (specify) 00%0 0 Number of islands providing information 68

10. Section A: Existing Services 68 Number of islands providing information 0%0 0 0 Other if mentioned often enough 21%1410%7 7 Loan schemes 16%119%67%5 Emergency support 1%10%01%1 Skill training 12%86%4 4 Literacy programs 22%1513%99%6 Pre-schools 76%5222%1554%37 Street cleaning %Number% % TotalSouthNorth TABLE A3: EXISTING SERVICES

11. Section A: New Public Infrastructure TABLE A4: NEW INFRASTRUCTURE NorthSouthTotal Number% % % New Roads paved 00%12%1 New Roads unpaved 00%0 0 New Bridges 00%0 0 New Street lighting 12%00%12% New Storm water drains 00%0 0 New Landing stage 23%00%23% New Harbor 46%35%711% New slipway 23%00%23% Number of islands providing information 66

12. Section A: New Facilities A5: New Facilities NorthSouthTotal Number% % % New Market place 23%34%57% New Community center 34%11%46% New Meeting hall 11%00%11% New Library 23%00%23% New Mosque 00%0 0 New Recreation facility 34%3 69% Other (specify) 11%00%11% Number of islands providing information 68

13. Section B: Existing Public Utilities 68 Number of islands providing information 21%143%218%12 Solid waste disposal 10%70%010%7 Solid waste collection 6%40%06%4 Sewerage 43%299%634%23 Water distribution 90%6131%2159%40 Electricity %Number% % TotalSouthNorth Source: MOAD Survey 2007 Functions – Public Utilities TABLE B1: PUBLIC UTILITIES

14. Section B: Existing Public Business Enterprises 68 Number of islands providing information 7%53%24%3 Sea transport 32%2218%1215%10 Pharmacy 12%81%110%7 Café / restaurant 15%106%49%6 Guest house TotalSouthNorth Source: MOAD Survey 2007 Functions – Business enterprises TABLE B2: BUSINESS ENTERPRISES

15. Section B: New Public Utilities 68 Number of islands providing information 4%30%04%3 New Other (specify) 15%106%49%6 New Solid waste disposal 10%74%36%4 New Solid waste collection 37%2513%924%16 New Sewerage 26%1810%716%11 New Water distribution 13%91%112%8 New Electricity TotalSouthNorth Source: MOAD Survey 2007 Functions - New utilities TABLE B3: NEW PUBLIC UTILITIES

16. Section B: New Business Enterprises 68 Number of islands providing information 7%50%07%5 New fuel supply 16%116%410%7 New retail shops 28%196%422%15 New Sea transport 16%114%312%8 New Pharmacy 7%51%16%4 New Café / restaurant 38%2610%728%19 New Guest house TotalSouthNorth Source: MOAD Survey 2007 Proposals - New Business Enterprises TABLE B4: NEW BUSINESS ENTERPRISES

17. Section B: Profitability of Utilities and Enterprises TABLE B5: PROFITABILITY OF UTILITIES AND ENTERPRISES North South Total Public Utilities Number45 13 58 Profitable25 7 32 % profitable56% 54% 55% Business Enterprises Number12 4 16 Profitable9 1 10 % profitable75% 25% 63%

18. Part Two: Fiscal resources for local government to finance the delivery of public services Fiscal resources

19. Three main types of revenue:  Revenue generated from local sources  Revenue shared between central and local government  Revenue (grants) transferred from the centre to local government

20. Section C: Current revenue from local sources

21. Section D: Potential new revenue from local sources Revenue source BasisAssumptionsTax or Charge (Rf) Revenue per cap (Rf) Vari- ance Max (Rf) Min (Rf) User charges WaterLitres consumed Average 100 litres per day per property 0.016517%7654 Solid waste All properties Flat fee per month Rf 103137%4220 Market place Stall holders Weekly markets 101343%197 Harbor fee VesselsFlat fee per month Rf 1002564%419

22. Section D: Potential new revenue from local sources Table D2: Estimates of potential revenue to be derived from new sources Revenue source BasisAssumptionsTax or Charge (Rf) Revenue per cap (Rf) VarianceMax (Rf) Min (Rf) Sales taxShops sales Turnover per day: Rf 1000 1%8032%10655 Property fee All prop- erties Flat fee per month Rf 10030326%382223

23. Section E: Current revenue sharing with central government Table E1: Composition of central revenues shared with atolls Source of revenueRf% total Rent from unihabited islands386,7973% Industrial leases from inhabited islands4,806,54939% Male properties5,984,78449% Boat fees993,3258% Total 12,171,455100%

24. Table E2: Distribution of shared revenues among atolls Atoll Amount shared revenues 2006 (Rf)% TotalPopulation 2006Per capita ratio 11Vaavu atoll440,7904%1,5044.43 8Kaafu atoll1,722,38014%9,4752.75 14Dhaalu atoll425,0303%4,6711.37 20Seenu atoll1,580,98313%17,7621.34 9Alif alif atoll429,1184%4,8411.34 12Meemu atoll383,8103%4,6541.25 13Faafu atoll284,8192%3,6241.19 15Thaa atoll605,3975%8,5361.07 10Alif Dhaalu atoll459,8174%6,9061.01 6Baa atoll590,0455%8,8761.00 4Noonu atoll621,1225%10,0800.93 7Lhaviyani atoll474,0504%8,2260.87 3Shaviyani atoll659,9845%11,8140.84 18Gaafu dhaalu atoll609,9165%11,0230.84 17Gaafu alif atoll433,0664%7,9770.82 19Gnaviyani atoll341,6523%7,5280.69 5Raa atoll586,2995%14,6390.61 1Haa alif Atoll518,6034%13,2720.59 2Haa dhaalu atoll624,6725%16,4390.57 16Laamu atoll379,9013%12,0180.48 Total12,171,455100%183,8651.00

25. Section F: Potential changes and additions to revenue shared with central government

26. Capital Investment Main sources of funds for investment:  From locally generated resources (contributions)  Through MOAD for local administrations  From the PSIP through MOAD (zero for all islands since at least 2001)  From donor projects  Potentially through block grants for investment puposes

27. Section G: Capital Investment Table G1: Investment from MOAD budget 2004 - 2007 Department/section2004200520062007 Ministry of Atolls Development 9.13 Roads and Ports, Water and Sanitation systems27,796,28799,999,55913,723,9701,012,498 Island Development Expenditures 9.13 Roads and Ports, Water and Sanitation systems1,065,824 130,300,000 Total 9.13 Roads, Ports, Water, salination28,862,11199,999,559144,023,9701,012,498 11.02 Equity capital to public enterprises 11.04 Capital contribution to profit oriented public agencies 11.09 Other economic development

28. Section G: Capital Investment Table G2: Recurrent and Capital Expenditure 2006 ItemRecurrentCapitalTotal Amount Rf171,595,0766,332,007177,927,083 Percent total96%4%100%

29. Section G: Capital Investment Table G3: Breakdown of Capital Expenditures 2006 Item 9.019.039.129.13 Total FurnitureEquipmentCommunicationsInfrastructure Amount (Rf)1,260,3273,794,3421,080,56906,135,238 Percent21%62%18%0%100%

30. Block Grants for investment purposes Main issues in determining block grants:  What is the scope of investment activities to be funded?  What resources are available?  Are they sufficient to provide funds for every island every year?  Should central government allocate block grants to atolls or islands?  What criteria should be considered in allocating block grants?  What formula should be applied?

31. Block grants Table X1: Block grants CriteriaVariableSource 1Population Statistics Office 2Land areaLand area (hectares)Statistics Office 3AccessibilityDistance to MaleCompute from maps 4Level of developmentComposite Human Vulner­ability Index VPA2, Table 15, col 6: Equal weights 2004 5Fiscal capacityShared revenuesInland Revenue

32. Table X2: Summary of indicators for atolls Indicator Popu- lati on 200 7 Land Are a Distance to Mal e (hrs ) Human Vul ner- abil ity Fiscal cap acit y Unit% total Index% totalIndex% totalIndex% total Atoll 1Haa alif Atoll7%12%1.380.073.15.0%1.697.8% 2Haa dhaalu atoll9%15%1.240.062.94.7%1.748.0% 3Shaviyani atoll6%7%0.990.053.86.1%1.185.4% 4Noonu atoll5%7%0.800.043.45.5%1.074.9% 5Raa atoll8%5%0.780.043.86.1%1.657.6% 6Baa atoll5%3%0.510.033.25.1%1.004.6% 7Lhaviyani atoll4%1%0.640.033.15.0%1.155.3% 8Kaafu atoll5%4%0.120.013.04.8%0.361.7% 9Alif alif atoll3%2%0.260.013.35.3%0.753.4% 10Alif Dhaalu atoll4%2%0.350.023.25.1%0.994.6% 11Vaavu atoll1%0%0.360.023.04.8%0.231.0% 12Meemu atoll3%2%0.640.033.15.0%0.803.7% 13Faafu atoll2%1%0.650.033.45.5%0.843.9% 14Dhaalu atoll3%1%0.820.043.45.5%0.733.3% 15Thaa atoll5%3%1.030.053.25.1%0.934.3% 16Laamu atoll7%12%1.180.063.55.6%2.099.6% 17Gaafu alif atoll4% 1.730.093.35.3%1.225.6% 18Gaafu dhaalu atoll6%5%1.850.092.74.3%1.205.5% 19Gnaviyani atoll4% 2.240.111.62.6%1.466.7% 20Seenu atoll10%9%2.420.122.33.7%0.743.4% Total100% 20.001.0062.3100%21.84100%

35. Thank You