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Comoros - Economy

One of the world's poorest countries, the Comoros is made up of three islands that are hampered by inadequate transportation links, a young and rapidly increasing population, and few natural resources. The strong demographic pressure on land has led to a significant decline in soil productivity. The low educational level of the labor force contributes to a subsistence level of economic activity and a heavy dependence on foreign grants and technical assistance. Agriculture, including fishing, hunting, and forestry, accounts for 50% of GDP, employs 80% of the labor force, and provides most of the exports.

Export income is heavily reliant on the three main crops of vanilla, cloves, and ylang ylang (perfume essence); and the Comoros' export earnings are easily disrupted by disasters such as fires and extreme weather. Despite agricultures importance to the economy, the country imports roughly 70% of its food; rice, the main staple, accounts for the bulk of imports. Remittances from about 300,000 Comorans contribute about 25% of the countrys GDP.

For the country as a whole, 37 percent of households or about 45 percent of the population live 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. The analysis also shows that inequalities in per capita expenditures increased substantially between 1995 and 2004, partly reflecting variances in inflows of remittances from the Diaspora.

Comorian agriculture suffers from the very low productivity of food crops and the duality of cash crops / subsistence crops which are inherently fragile. Poor land use results in the loss of the properties of rich volcanic soils and the denaturation of soils. Agriculture, involving more than 80% of the population and 40% of the gross domestic product, provides virtually all foreign exchange earnings. Services including tourism, construction, and commercial activities constitute the remainder of the GDP. Plantations engage a small proportion of the population, but produce the islands' major cash crops for export: vanilla, cloves, perfume essences, and copra (the dried meat of a coconut from which oil is extracted). Comoros is the world's leading producer of essence of ylang-ylang, used in manufacturing perfume. It also is the world's second-largest producer of vanilla, after neighboring Madagascar. Principal food crops are coconuts, bananas, and cassava. Foodstuffs constitute 32% of total imports.

Four different farming systems are found in the Comoros: the open field culture, traditional agroforestery, food production under natural forests and monoculture. Open field culture is used for annual crops with very little or no associated trees. Fields are farmed from year to year without any crop rotation, ploughing, and intake of organic matters, and are sensitive to erosion. This system is currently expanding in Moheli and Anjouan because of the pressure for food.

The traditional agroforestery system associates the production of food crop and fruit stocks in the same lot. It is a highly stable system that features a permanent vegetation cover of the soils and maximizes the use of space. The food production under a natural forest system is the typical encroachment of the forests by farming. In most cases, banana trees and a tuber crop such as yam are planted in a natural forest, under the tallest trees. The system first appears stable but soon, under demographic pressure, evolves towards the gradual deforestation of the area. Many species of trees, some of them endemic, are threatened by that system. Although less frequently found, the Comoros host a monoculture system used for the intensive culture of coconut grove, clove and ylang-ylang.

Comoros has an interesting potential in fisheries. While its continental shelf is narrow (900 km2), the countrys Economic Exclusive Zone (EEZ) covers 160 000 km2 and is very little exploited. The number of fishermen has been on the increase since 1993 when it was estimated to be 8000. Most fishing units are restricted to the coastal areas, hence providing for intense pressure on coastal pelagic species. Comoros has no offshore industrial tuna fishery.

Comoros faces an unsustainable external debt situation. The Comorian economy encountered difficulties in 2015 and the first half of 2016. Growth in 2016 is estimated at 1 percent in 2015, below the annual population growth rate of 2 percent. An ongoing crisis in the electricity sector and slower-than expected implementation of the public investment program have been the main factors behind the growth deceleration. Inflation remained well anchored at an annual rate of about 2 percent. Fiscal policy was challenging for most of 2015 as the impact of slowing economic growth was compounded by a deterioration of revenues, with the tax revenue-to-GDP ratio declining to 11.1 percent and continued to decline during the first months of 2016.

A new administration took office in mid-2016, recognizing that accelerated reforms and urgent action on the budget were needed to establish a basis for achieving sustainable growth. As a start to addressing the problems the government adopted a set of measures to improve revenue mobilization and reduce expenditures for the remainder of 2016, including cancellation of contract of recently hired government employees. Measures were also taken to improve the supply of electricity.

Comoros, with an estimated gross domestic product (GDP) per capita of about $820 (or, at purchasing power parity, about $1,000), is among the world's poorest and least developed nations. Although the quality of the land differs from island to island, much of the widespread lava-encrusted soil is unsuitable for agriculture. Comoros has only one deepwater port, and unreliable and sometimes nonexistent road connections, significantly limiting its ability to scale up its engagement in international trade. As a result, most of the inhabitants make their living from subsistence farming (where this is possible) and fishing.

The country lacks the infrastructure necessary for development. Some villages are not linked to the main road system or at best are connected by tracks usable only by four-wheel-drive vehicles. The islands' ports are rudimentary, although one deepwater facility functions in Anjouan. Only small vessels can approach the existing quays in Moroni on Grande Comore, despite improvements. Most long-distance, ocean-going ships must lie offshore and be unloaded by smaller boats; during the cyclone season, this procedure is dangerous, and ships are reluctant to call at the island. As a result, most freight is sent first to Mombasa, Kenya or the French island of Reunion and transshipped from there.

France, Comoros' largest trading partner, finances only small development projects. The United States receives a growing percentage of Comoros' exports but supplies only a negligible fraction of its imports (less than 1%). Comoros has an international airport at Hahaya on Grande Comore. Comoros has its own currency, the Comoran Franc, which is currently valued at approximately 360 CF = U.S. $1.00.

The new government, elected in mid-2016, will be challenged to provide basic services, upgrade education and technical training, privatize commercial and industrial enterprises, improve health services, diversify exports, promote tourism, and reduce the high population growth rate. Recurring political instability, sometimes initiated from outside the country, has inhibited growth. In late 2015, Saudi Arabia provided a large budget grant to the Comorian Government, allowing arrears to be cleared and resulting in an overall fiscal surplus for 2016. The government has moved to improve revenue mobilization, reduce expenditures, and improve electricity access.

Electricity demand and consumption per capita remain low. Production activity in the field of electricity is characterized by the multiplicity of power stations. Hydroelectric power generation had developed and could be further developed by the use of certain waterfalls in Anjouan and Moheli. The fall in the price of kerosene made it competitive with firewood for cooking in households. The current price of diesel fuel is well above the cost of coconut and vegetable biomass. Geothermal energy can be developed in Grande Comore . Solar energy seems to be the most promising.

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Page last modified: 24-07-2017 18:27:50 ZULU