The Democratic Republic of the Comoros : Economic Perspectives
The Comorian economy was already weakened by political uncertainty and the passage of Cyclone Kenneth when it was hit by the Covid-19 pandemic in 2020. With an estimated growth of 1.9% in 2019, the country’s GDP contracted by -0.5% in 2020 due to a drop in exports of cash crops and tourism (IMF).
Economic growth is expected to be 0 in 2021 before recovering to 3.6% in 2022, subject to the recovery of the post-pandemic global economic recovery and many others conditions such as :
- The reopening of the borders,
- The remittances remaining high,
- The recovery of the prices of the commodities export
- And the support from development partners
The main economic sectors of the country are :
- The Primary sector only accounts for 33.1% of the country’s GDP and employs about 34.4% of the workforce. The main crops are Cloves (more than 30% of exports) and Vanilla (around 10% of GDP)
- The Industrial Sector only contributes to 8.9% of GDP and barely employs 19% of the working population
- The Tertiary Sector contributes to 53.3% of GDP and employs about than 46% of the total working population.
With only about 870,000 inhabitants, the 51st most populous country in Africa, Comoros is the continent’s penultimate richest country with an estimated GDP of USD 1.22 Billion in 2020. 45% of the Comorian population live below the poverty line, the country being one of the poorest countries in the world. The unemployment rate in Comoros has risen to around 8.4%. The country is ranked 156/189 in the Human Development Index. The hard living conditions lead each year dozens of Comorians to die trying to navigate to the French department of Mayotte.
| Population (2020 UN) | 32.51 million inhabitants |
|---|---|
| GDP / Capita USD (2021, IMF) | USD 10.0 |
| HDI (2020, UNDP) | 79th over 190 |
| Doing Business (2020 World Bank rank) | 75th over 190 |
| Corruption Perceptions Index 2021 | 36h over 180 |
| Unemployment rate (FMI 2021) | 9.7% |
From a Demographic point of view, less than 30% of the population live in urban areas. 98% of the population are Sunni Muslim, the remaining 2% are Catholic. Density is high, it’s an island with 447 inhabitants per Km², and literacy rate barely reaches 60% of the population.
From a Political point of view, since its independence in 1975, the Union of the Comoros has experienced some 20 coup d’état and several separatist crises. On July 30, 2018, a new constitution was adopted by referendum : it changed the five-year rotating presidency calendar between the three islands of the Union. The presidential election took place on Sunday March 24th, 2019 and Azali Assoumani was re-elected with 59.05% of the votes against 15.7% for the opponent Ahmada Mahamoudou (JUWA party).
From an Economical point of view, Comoros has experienced two difficult years with the government deciding to close its borders and institute a curfew. Remittances slowed, tourism fell and liquidity pressures increased. Therefore, the IMF approved a USD 12 Million emergency aid to help the country cope with the pandemic, along with a debt service relief under the Disaster Control and Relief Trust Fund.
Budget deficit fell from 2.1% of GDP in 2019 to 3.6% of GDP in 2020 due to lower tax revenues and increased public spending. Public debt has also increased from an estimated GDP of 25.2% in 2019 to 26.8% of GDP in 2020, it is expected to reach 30% of GDP in 2021 and 31% of GDP in 2022 (IMF). However, the risk of indebtedness remains considered moderate.
Inflation fell from 3.7% in 2019 to 1.1% in 2020 and is expected to further to 0.3% in 2021 before rising to 1.2% in 2022 (IMF). Despite significant imports, inflation, which should have increased, is contained because the Comorian franc is pegged to the Euro. Confronted with ineffective structural reforms, Comoros hopes to benefit from possible offshore oil and gas reserves (about USD 7 Billion barrels located under the islands) which were approved for exploration in 2013.
| Economic Indicators | 2019 | 2020 | 2021e | 2022e | 2023e |
|---|---|---|---|---|---|
| GDP ($ Billion current price) | 230.87 | 205.46 | 225.86 | 231.69 | 246.72 |
| GDP growth (%) | 2.2 | -11.0 | 10.0 | 4.6 | 4.5 |
| Inflation rate (%) | 2.1 | 1.8 | 3.1 | 2.5 | 2.3 |
| Public debt (% GDP) | 27.1 | 35.1 | 35.0 | 36.9 | 38.5 |
| Current balance (% GDP) | -0.9 | 0.8 | 0.4 | 0.1 | -0.4 |
Focus on Exports and Imports
In 2019, Comoros was the number 176th economy in the world in terms of GDP (current US$), the 196th exporter in the world and 156th importer in the world. The country exported USD 76.9 Million and imported USD 344 Million, resulting in a negative trade balance of USD 267.1 Million.
The top exports of Comoros are Cloves ($25M), Essentials Oils ($18.3M), Vacuum Flask ($9.89M), Vanilla ($8.06M) and Scrap Vessels ($7.2M). Comoros exports mostly to France ($24.4M), India ($17.5M), Germany ($7.75M), Turkey ($6.84M), and Madagascar ($5.11M).
The top imports are Rice ($27.3M), Poultry Meat ($19.8M), Refined Petroleum ($14.6M), Cement ($14.5M) and Cars ($11.1M). It imports mostly from China ($75.5M), United Arab Emirates ($56.6M), France ($36.7M), Pakistan ($32.6M) and India ($21.5M).
Big Challenges of Comoros
Some of the biggest challenges for Comoros include :
- Weak institutional capacity,
- Lack of basic infrastructure,
- Heavy dependence on external aid,
- High exposure to threats related to overexploitation of natural resources (deforestation, land degradation, groundwater pollution and coastal erosion)
- Corruption
- Inefficient justice system vulnerable to political interference…
