DTIS, Volume I - Enhanced Integrated Framework (EIF)

Table 4.2: Poverty Gap Ratios per Region, 2004 (in pct.)
Central
Central
Poverty lines North North Central South South Male'
Rf. 7.5 2.2 1.5 1.6 0.6 0.5 0.3
Rf. 10 4.8 3.9 2.9 1.4 0.9 0.3
Rf. 15 13.1 12.3 7.5 4.7 3.5 0.5
Source: VPA-2
While in Male’ the poorest quintile recorded an increase from 6 to 7 per cent of income
in the period 1997 to 2004, regional atolls grew slightly more, in the range from 6 to 8
per cent, with an average of 7 per cent.
To estimate income inequality within and between regions and changes over time, the
VPA-2 analysis shows that at country level the poorest quintile had not progressed (its
share remained at 6 per cent. A similar result is found when using income deciles.
Using Lorenz curves, the VPA-2 reveals no visible change for the years 1997 to 2004 as
the curves overlap, implying a very similar overall household income inequality in the
Maldives. When looking at Lorenz curves for Male’ and atoll level respectively the result
confirms that inequality has shrunk over the period in both cases.
In order to track income inequality between Male’ and the atolls during the period 1997-
2004, Gini coefficient scores indicate that income inequality has increased significantly -
up from 0.12 to 0.18, that is a rate of 50 per cent. In other words, 25 per cent of the
population that lived in Male’ in 1997 earned 38 per cent of total household income. But
in 2004, 30 per cent of the population living in Male’ accounted for 48 per cent of total
household income. It can also be concluded that the overall income distribution in
Maldives is, and remains, relatively unequal compared to neighbouring countries. The
overall income distribution in Maldives, with a Gini coefficient of 0.41 is, and remains
relatively unequal compared to neighbouring countries such as Sri Lanka (0.34), India
(0.33), Pakistan (0.33) and Bangladesh (0.32). The Maldives Gini coefficient is close to
that of Singapore (0.43), Trinidad and Tobago (0.40) and Saint Lucia (0.43), all island
states where trade and/or tourism play an important role.
The dynamic nature of poverty and inequality was established by assessing what changes
in income levels were experienced by a large sample of households participating in both
VPAs. Only a little less than half of these families stayed in the same income group after
the seven years. About 40 per cent graduated to a higher income level and 13 per cent fell
back to a lower level. Twenty-seven per cent had an income lower than the Rf. 15 per
person per day poverty line in 2004. Of these 17 per cent was classified as chronically
poor because their income was also below the Rf.15 line in 1997, while 10 per cent who
were non-poor seven years earlier and had now fallen back into poverty over the period.
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