MORONI, October 17, 2023 - The first Country Economic Memorandum for Comoros, published today by the World Bank, notes that Comoros is at the crossroads to redefine its future and become an upper-middle income country by 2050, but this would require implementing an ambitious reform agenda that focuses on increasing productivity and private investment.
This publication assesses the country's economic performance and proposes priority reforms geared toward boosting growth and embracing new and greater opportunities. The report outlines pathways to unleash Comoros' growth potential and reverse its persistent slow economic growth trajectory and provides sectoral analyses to shed light on unexploited resources such as tourism and fisheries and international trade opportunities.
"Comoros has been on a low-growth path during the four past decades and has not achieved goals related to poverty reduction and inclusiveness. The effects of the COVID-19 pandemic and climate change have crystalized the need for significant policy change to accelerate inclusive growth in Comoros," explains Steve Loris Gui-Diby, Senior Country Economist and lead author of the report. "Under a policy framework of ambitious reforms that include measures to increase inclusiveness, Comoros could reach a GDP per capita of $3,934 and reduce the poverty rate to below 5% by 2050."
According to the report, Comoros' growth model has failed to deliver high growth and poverty reduction in the long term and needs to focus on private investment as the new growth engine. Deliberate and courageous reforms that support investment and productivity growth can put Comoros on a higher, inclusive, and resilient growth path, but outcomes are likely to be incremental and will need constant oversight. The country will achieve more inclusive and robust growth by adopting reforms that focus on promoting productivity growth (especially of labor and capital), including improving the macroeconomic environment and ensuring an effective and efficient fiscal policy. Provided that the business environment improves to ensure more protection for investors and the enforcement of the rule of law, the upcoming accession to the World Trade Organization (WTO) and membership in the African Continental Free Trade Area (AfCFTA) have the potential to make Comoros more attractive for foreign investors. Both the WTO and the AfCFTA could increase the country's potential market size and help lower costs for cross-border trade through trade integration and improved cross-border procedures, respectively. Specific reforms are required in the tourism and fisheries sectors, as both sectors have the potential to create jobs and contribute to poverty alleviation.
The report recommends three pathways to accelerate GDP growth from the historical average of 2.6% to 5.9% in 2023-2050: unlocking private sector investment, strengthening foundational institutions, and enhancing economic resilience. These would require the authorities to attract both foreign and national investors, address constraints related to infrastructure and connectivity as well as domestic and foreign investment; increase financial intermediation and inclusion; deepen the financial sector; address the potential negative externalities related to the presence of State-owned enterprises in commercial activities; improve labor skills; implement market development strategies; leverage trade agreements; increase integration of technology into sector-specific operations; promote environmental protection against degradation and sand mining; and ensure the sustainable use of resources.
"The goal of this Country Economic Memorandum is to guide the formulation of necessary reforms to unlock the country's potential for growth," says Boubacar Sidiki Walbani, World Bank Representative for Comoros. "This report offers a slate of concrete actions aimed at unlocking private sector investment and improving the governance framework for public assets and liabilities to achieve an inclusive and sustainable growth."
