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Country Brief

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Comoros: Country Brief

The Union of the Comoros is a small archipelago with an estimated population of 734.750 (2010) covering a territory of about 1,800 square kilometers. About 52% of the population lives on the largest island, Ngazidja (or Grande Comore), which is also home to the Union capital, Moroni, the seat of the Union government. The second largest island, Nzwani (Anjouan), has 42% of the population, and the smallest, Mwali (Mohéli), six percent. A fourth island, Mahoré (Mayotte), opted against independence from France, in a referendum held on all four islands in 1974. Comoros has a high population density of about 390 inhabitants per square kilometer and a population growth rate estimated at 2.4%. An estimated 53% of the population is younger than 20-years-old.

With a gross domestic product (GDP) estimated at US$540 million in 2010, Gross National Income (GNI) per capita is about US$750. Some 45% of the population lives below the poverty line, but poverty incidence varies significantly across the islands and is generally higher in rural areas and in Anjouan. Comoros ranked 163 out of 187 countries on the United Nations Human Development Index in 2011.

Comoros is a fragile state with a long history of political and institutional instability. There have been some 21 coups and coup attempts since it declared independence from France in July 1975. In 2001, a reconciliation agreement was signed in Fomboni, capital of Mohéli. In December 2001, a new constitution was adopted creating the Union of the Comoros with considerable autonomy accorded to each of the three islands. While these achievements have allowed the establishment of a more representative institutional structure and a more stable political environment, the resulting administrative structure has proven costly and cumbersome. Following a period of uncertainty in 2010, when President Saambi sought to extend his term in office beyond constitutional limits, Comoros’ main political parties agreed on transitional arrangements. In late 2010 Presidential and gubernatorial elections were held, which are considered to have been free and fair. In a smooth transfer of power, only the second time in Comoros’s history that power has been transferred in a democratic fashion, Dr. Ikililou Dhoinine assumed the Presidency on May 26, 2011. This election provides an opportunity to break the cycle of instability in this country.

Economy

The economy of Comoros is characterized by limited resource endowments, a small domestic market, weak institutional capacity and a narrow export base, which make it particularly vulnerable to external shocks. The economy is centered on the primary sector and retail services, which account respectively for about 51% and 18% GDP. The primary sector is geared towards the production of three high-value export crops: vanilla, cloves and ylang-ylang, which provide the bulk of export earnings (around 95%). Production of food crops, mostly bananas, copra, and tubers, as well as fishing for local consumption remains underdeveloped.

In past years Comoros’ economy has been trending up, on account mostly of high levels of remittances, increased external aid and improved financial intermediation and supply of credit to the private sector. Real GDP growth is estimated at 2.2% for 2011 which represents an increase over the 2008 to 2009 average of 1.4%, but remains insufficient to make a tangible dent in poverty given rapid concomitant population growth. High international oil and food prices continue to penalize this highly import-dependent economy. In the future, Comoros’ ability to sustain growth will depend on its ability to capitalize on a number of large foreign direct investment (FDI) projects including in the tourism sector and to gear the proceeds of debt relief toward growth supporting investments in human and physical capital.

Development Challenges

Comoros’ prolonged political conflicts, fragile political economy, institutions and environment, continue to undermine its development potential. Economic shocks, microeconomic imbalances and the debt burden have also had a negative impact on growth and poverty reduction. Under the enhanced Heavily Indebted Poor Countries Initiative (HIPC), Executive Directors of the World Bank considered a Decision Point Document, prepared by the staffs of the World Bank and International Monetary Fund (IMF), on June 29, 2010, and concluded that Comoros is eligible for assistance. The assessment is a step towards forgiveness of the majority of the country’s foreign debt, and could pave the way to achieving their HIPC completion Point as early as the end of 2012.

Such forgiveness, accompanied by stronger fiscal management, governance and other public sector reforms, are expected to improve Comoros’ prospects for economic growth and poverty reduction.

 

Poverty remains pervasive in Comoros. In 2004, the latest year for which data is available, about 45% of the population or 37% of households lived below the poverty line of about US$700 per capita per year. The incidence of poverty varies across islands. Poverty is higher in rural areas, where two-thirds of the population lives, at about 41%, than in urban areas, where it is about 27%.

There has been good progress on several of the Millennium Development Goals (MDGs). Comoros is on track to achieve the universal primary education goal (MDG2) and HIV/AIDS (MDG6), with progress on poverty (MDG1) and water access (MDG7). The country also made progress toward reducing child mortality (MDG4) and maternal health (MDG5), indicators that many other countries have found very difficult to achieve. One of the most challenging targets, especially in the wake of the food price crisis, will be to halve the proportion of people who suffer from hunger.

Comoros completed the final version of its Poverty Reduction Strategy Paper (PRSP) in 2009, which was prepared through a broad participatory process. It centers on the main objectives of sustained economic growth, improved human capital development and improved governance, and political stability. The PRSP was endorsed by the Executive Directors of the World Bank on April 8, 2010. Achieving the PRSP objectives will require unwavering efforts to improve public financial management as well as continuous Union-island cooperation. It will also require higher international financial aid in the form of immediate support to finance pressing social services, public investment and technical assistance needs, but also in the form of comprehensive debt relief.

The Bank’s new Interim Support Strategy (ISN), presented to the Board in May 2010 focuses on two objectives: reducing social vulnerability and strengthening state capacity and accountability.

The Bank supports the first objective of the ISN through an IDA-financed US$5.6 million Emergency Crises Response Project, which will provide a social safety net and restore access to basic social and economic services to segments of the population affected by the global economic crisis. An ongoing regional Southwest Indian Ocean Fisheries Project will continue to support fisheries and environmental sustainability, and a planned Coastal Resource Co-Management for Sustainable Livelihood Project will support fishing communities in resource use as well as fisheries management to promote sustainable livelihoods. To contribute to the second objective, the Bank’s Board approved in May 2010 a US$3 million Development Policy Operation to provide direct budget support to the government in support of key reforms in the areas of public financial management and public sector efficiency and accountability. This support is complemented by a technical assistance grant in the areas of public financial management and public administration reform, approved in January 2011. These operations are mainly supporting the attainment of HIPC Completion Point triggers by 2012-13. Comoros reached decision point in July 2010.

Since 2011, the Bank has tried to fill out the knowledge gap in Comoros by undertaking two pieces of work on political economy (the civil service reforms and the energy sector reforms), in addition, jointly with the government, the Bank is developing a series of sector policy notes on energy, telecom sector, agriculture, tourism, fishing, transport and connectivity and the intermediate sources of growth. Jointly with the African Development Bank (AfDB), the Bank will undertake a public expenditure review on public investment. The Bank is also providing technical assistance to strengthen debt management and, mainstream disaster risk management into national policy, and supports the development of the energy sector reform and the Strategic Roadmap for the Telecommunications Sector.

 

Through its technical assistance on Economic Governance Support project, the Bank has supported the recent reforms on public finance management and the strengthening of the public sector. As a result, the civil servant census is now finalized and several reforms on public finance management, including the reorganization of the Treasury, are being implemented. The Bank continues to support its community development project which is poverty reduction oriented in rural area through cash for work program and community development program. This has provided important interventions to disadvantaged communities and vulnerable groups, including women and youth. It has also increased access to basic schooling for Comoros children and enabled the people of Comoros to participate in the local development process.

The Bank is also engaged with the government and the people of Comoros, as well as with other development partners, in knowledge sharing and dialogue on critical issues such as debt forgiveness, public sector reforms and climate change to enable the country to develop foundations for sustainable development.

In an environment characterized by extreme capacity constraints, donor coordination is critical to minimize the government transactions and maximize development outcomes.

In an effort to move toward an integrated communal or local development mechanism, the Services Support Project is coordinating closely with the European Commission supporting the decentralization dialogue, strengthening democracy and good governance, and supporting local development initiatives. The French Development Agency (AFD) and the World Bank are providing capacity building to communities who are benefiting from small water projects financed by the AFD.

For the public sector and good governance reform agenda, the Bank is working closely with the European Commission (EC), France, the International Monetary Fund (IMF), and the United Nations Development Program (UNDP) as well as the African Development Bank (AfDB). The IMF is monitoring the macroeconomic framework with a special focus on the debt sustainability analysis and possible scenarios of debt relief.

The decision by the IMF to re-engage in Comoros after the conclusion of a three-year extended credit facility (ECF) arrangement in 2009 triggered renewed development partner involvement, including the European Union, AfDB but also increasingly ‘non-traditional’ donors such as China and Gulf States.

 

Last updated October 2012




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