Political Background Last updated September 2007 
Comoros is a small, fragile state with a long history of political and institutional instability. In 1997 the island of Anjouan attempted to break away from the other two Comorian islands Grande Comore and Moheli. This led to a major crisis from which the country is still recovering. The reconciliation process, initiated in 2001 with the adoption of a new Constitution, is grounded on the recognition of extended autonomy for each island. Key milestones of the reconciliation included the holding of parliamentary elections (April 2004); the installation of the National Assembly (June 2004); the establishment of the Constitutional Court (October 2004); and the election of a Union President (June 2006) in accordance with the rotation rule provided for by the Constitution. While these achievements have allowed the establishment of a more representative institutional structure and a more stable political environment, the process suffered a significant setback in June 2007 with the resurgence of political tensions between the Union and Anjouanese authorities in the wake of the “unofficial” reelection of the President of Anjouan - Colonel Mohamed Bacar. The Union government and the African Union have not recognized the ballot and have called for the holding of fresh free and democratic elections under the supervision of the African Union as soon as possible. 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 percent of 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 percent). Production of food crops, mostly bananas, cocoa, and tubers, as well as fishing for local consumption remains underdeveloped. Economic development in the past two decades has been hindered by a combination of recurrent political crises, macro-economic imbalances, and external shocks. This has resulted in a progressive decline in real GDP per capita at an average annual rate of about one percent since mid-1990s. GNI per capita in 2006 was estimated at some US$630. Lackluster economic performance has also undermined Comoros’ capacity to service its high external debt. Against this backdrop, remittances from the Comorian Diaspora have sustained domestic consumption and provided a buffer against adverse terms of trade shocks. Participation in the franc zone –where the Comorian franc is pegged to the Euro–has also been critical in helping maintain macro-economic stability. Comoros has carried an unsustainable external debt burden for over two decades and is in debt distress. At the end of 2006, Comoros’ public external debt was estimated at some $280 million (over 70 percent of GDP). Multilateral creditors accounted for 82 percent of this; the two largest creditors being IDA (with US$118 million in debt outstanding and disbursed at end-2006 or 41 percent of the debt stock) and the African Development Bank (AfDB). Comoros would remain in debt distress under unchanged policies but could achieve sustainable debt indicators in an adjustment scenario with higher growth and arrears clearance, and debt relief from HIPC and Multilateral Debt Relief Initiative (MDRI). Poverty Reduction Strategy Poverty remains pervasive in Comoros, with 37 percent of households – or about 45 percent of the population – living below the poverty line (estimated at about 285,000 Comorian Francs or about $700 per capita per year). The incidence of poverty varies across islands and is generally higher in rural areas. Comparison of 1995 and 2004 data shows that the overall situation seems to have improved (from 47 to 37 percent), albeit inequalities in per capita expenditures also increased substantially, owing mostly on variances in inflows of remittances from the Diaspora. Comoros completed its Interim Poverty Reduction Strategy Paper (I-PRSP) in October 2005. The I-PRSP – endorsed by the Board of Directors of the World Bank on May 16, 2006 - is the first comprehensive economic and social strategy document prepared through a wide participatory process. The PRSP consultation process was able to remain on track despite political tensions and contributed to bringing the Union and the three island authorities and stakeholders together to discuss common issues. The I-PRSP centers around three main objectives: (i) sustained economic growth; (ii) improved human capital development; and (iii) improved governance and political stability. To achieve these objectives the I-PRSP sets seven core strategic axes, defined into 35 programs over the period of 2006-2009: (i) Establishing supportive conditions for sustainable economic development by strengthening public finances and developing the country’s infrastructure; (ii) Promoting private sector growth, with a particular emphasis on tourism, agriculture, and fishing; (iii) Strengthening the justice system and promoting good governance; (iv) Improving health conditions, with a particular focus on combating priority diseases, improving maternal health, and improving health system management; (v) Promoting education and vocational training; (vi) Promoting a healthy and sustainable environment; and (vii) Strengthening security and combating crime. The new authorities have endorsed the I-PRSP, recognizing it provides a valid long-term vision of sustainable economic growth and poverty reduction, which combines private-sector driven economic growth, improved governance and better provision of public services. Achieving the PRS objectives will require unwavering efforts to improve public financial management as well as continuous inter-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. World Bank assistance to Comoros The Bank’s current Interim Support Strategy (ISN), presented to the Board in December 2006 focuses on two objectives: (i) providing basic services to the most disadvantaged communities; and (ii) consolidating the national reconciliation through building state capacity and increasing accountability. The first objective of the ISN is supported through a community-based Services Support Project (SSP) of US$13.3 million, effective since 2004, for which a supplemental financing of US$5 million was approved in December 2006. To contribute to the second objective, an Economic Governance Technical Assistance Project for $1.8 million is being prepared. The project will focus on the most basic administrative systems and priority actions needed to continue improvement in state performance and prevent failure of key functions. Its overarching objective will be to support the strengthening of government core personnel and financial management systems and improving the transparency and accountability of government operations. The Bank also continues to support the formulation and implementation of Comoros' Poverty Reduction Strategy. Supported activities include (i) strengthening the poverty analysis and monitoring capabilities through the development of the knowledge base on poverty and demography in Comoros and the establishment and implementation of monitoring and evaluation systems for the PRSP; (ii) supporting the move towards a full PRSP by contributing to sharpening the analysis in selected areas to allow better prioritization of policy actions and finalizing and disseminating the full PRSP; and (iii) strengthening the participatory process through training and capacity building activities for the civil society. A small grant is also supporting the preparation of a National Strategy for Statistical Development. Donor coordination In an environment characterized by extreme capacity constraints in the administration, donor coordination is critical to minimize the burden for the Comorian administration and maximize development outcomes. Fortunately, most donors active in Comoros recognize the importance of adopting a coordinated approach. The Bank is working closely with partners in a variety of ways and sectors. In an effort to move toward an integrated communal or local development mechanism, the Services Support Project (SSP) is coordinating closely with the European Commission on its Decentralized Cooperation Program, which will support the decentralization dialogue, strengthen democracy and good governance, and support local development initiatives. The SSP project will also provide capacity building for school management committees that the EU project is supporting. Finally, the French Development Agency (AFD) and the Bank are providing capacity building to communities who are benefiting from small water projects financed by the AFD. In the public sector and good governance reform agenda, the Bank is working closely with the European Commission, France, the IMF, and the United Nations Development Program. Complementary interventions are being prepared, including support to the justice reform ( France) and capacity building activities with respect to the formulation, management and monitoring of development policies (UNDP). The IMF is monitoring the macroeconomic framework with a special focus on the debt sustainability analysis and possible scenarios of debt relief. Contacts Mr. Colin Bruce
Country Director
Hill Park Building, Upper Hill, Nairobi, Kenya
Tel (254-20) 3226-441
Fax (254-20) 3226 382 Mr. Javier Suarez
Economist
1818 H Street NW, Washington DC 20433
Tel (202) 458-2630 Mr. Fabrizio Zarcone
Partnership Officer
1818 H Street NW, Washington DC 20433
Tel. (202) 473-2338
Fax (202) 473-5453 |
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