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World Bank Systematic Country Diagnostic (SCD) : Main Conclusions to Inform New Strategy for Comoros

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STORY HIGHLIGHTS

  • Comoros archipelago comprises of four islands with limited means of transport in between them, and weak electricity coverage impedes economic activities
  • Renewable energy has the potential to expand the electricity network and alleviate some of the private sector’s constraints
  • Improving governance, while fostering an enabling business environment for the private sector to thrive and create employment opportunities especially for the youth, is a priority for Comoros  

In September 2017, the World Bank initiated the preparation of its first Systematic Country Diagnostic (SCD) for Comoros.  It is due for completion by June 2018. The SCD will provide an evidence-based diagnostic to help identify the country’s key constraints and priorities in accelerating sustainable progress towards growth, the reduction of poverty and promoting shared prosperity.

The country sets out its ambitious target of becoming an emerging economy by 2030 in its development strategy, “Emergence 2030”. 

A World Bank delegation led by Carolin Geginat, Program Leader Equitable Growth, Finance and Institutions met with representatives of national and local governments, the private sector, and other development stakeholders in a series of consultation meetings in Moroni, the capital city of Comoros.

The meeting kick-started an extensive consultation process that included an on-line consultation forum as well as social media platforms, deemed instrumental in gathering views from Comorians in the diaspora.

“There are numerous obstacles to the development of Comoros,” said one of the many Facebook contributors, adding that there is a chronic lack of opportunities for new graduates, and pointing to inadequate infrastructure, but also governance among the main challenges facing the country. His suggestion, one of 118 contributions received on Facebook, is to support agriculture and tourism, the most promising sectors for economic development in the Comoros.

 Key issues raised during the consultation:

  • Isolation and fragmentation: The isolated situation of Comoros’ geography coupled with limited means of transport between the islands coupled with inadequate electricity coverage makes living in Comoros very expensive and constrains economic activities.
  • The country’s import dependence is one of the highest in the world (60% of GDP in 2014). Government revenues originate predominantly from import taxes, placing a high cost on local businesses.
  • Private sector participation: Access to credit, lack of long-term financing and high electricity costs are most important constraints to private sector development. Several participants also cited the adverse effects of a weak contract enforcement environment on economic activity.
  • Governance: Inefficiencies in the legal framework and justice system affect local as well as foreign investors negatively and dampen entrepreneurial activity in the country. Much remains to be done in the fight against corruption, and in the area of access to land, currently diminished by an unreliable system governing property rights.
  • Jobs, skills and the gender dimension: High levels of informality and unemployment – especially among the youth - are important preoccupations for the Comoros, with its rapid population growth and an age dependency ratio of 70% (2016) (The ratio of younger dependents--people younger than 15--to the working-age population--those ages 15-64). Participants voiced concerns over a skills mismatch that marks the labor market. Despite improved educational attainments, many young people do not have the relevant competencies for the labor market. Girls are particularly affected in both education and employment. Participation rates in the labor market, for example are significantly lower for female: 35.5% in 2016 compared to 79.4% for men. How to harness the country’s demographic dividend – making sure women are included in this process - will be an important development priority for the coming years. 

Additional issues raised by participants in the social media consultation:

  • Reforms to customs procedures and efficiency are needed to reduce the burden on the private sector and to align the country with regional integration in SADC and COMESA government objectives as well as WTO requirements.
  • Investing in renewable energy could expand the electricity network coverage and alleviate some of the private sector constraints.
  • Expanded public investments in basic social services is key to addressing critical constraints.
  • Comoros must focus its efforts on combating hunger and malnutrition. In 2012, almost 32 percent of children under the age of five, particularly in rural areas, suffered from chronic malnutrition and stunted growth.
  •    Given the important role of agriculture in the Comorian economy, measures to stimulate agricultural activities and rural development are particularly important to improving the living conditions of the poorest segments of the population, most of whom live in rural areas.
  • A better analysis of the phenomenon of diaspora is necessary as the significant levels of remittances back home serve as social safety nets and are used for consumption purposes, rather than for productive investment.

“The government, stakeholders and citizens in Comoros were deeply involved in the process of the systematic country diagnosis and showed willingness to raise the country to an emerging economy by 2030. Many challenges lie ahead, as the Comoros aspires to a more competitive economy, increase productivity, and expand opportunities for all Comorians,” said Rasit Pertev, World Bank Representative in Comoros. “The World Bank Group will support Comoros’s efforts to boost economic growth and reduce poverty.”

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