Comoros ECONOMY
Village on Njazidja
Market on Mwali
Courtesy Mari G. Borstelmann
During the colonial period, the French and local
leading
citizens established plantations to grow cash crops for
export.
Even after independence, French companies, such as Société
Bambao
and Établissements Grimaldi--and other concerns, such as
Kalfane
and Company and later, President Abdallah's Établissements
Abdallah et Fils--dominated the Comoran economy. These
firms
diverted most of their profits overseas, investing little
in the
infrastructure of the islands beyond what was needed for
profitable management of the plantations, or what could benefit
these
businesses' associates or related concerns. A serious
consequence
of this approach has been the languishing of the food-crop
agricultural sector and the resultant dependence on
overseas food
imports, particularly rice. In 1993 Comoros remained
hostage to
fluctuating prices on the international market for such
crops as
vanilla, ylang-ylang, and cloves.
Comoros is one of the world's poorest countries; its
per
capita gross national product
(GNP--see Glossary) was
estimated
at US$400 in 1994, following the January devaluation of
the
Comoran franc. Although GNP increased in real terms at an
average
annual rate of 3.1 percent during the 1980s, rapid
population
growth effaced these gains and caused an average annual
decrease
in per capita GNP of 0.6 percent. Gross domestic product
(GDP-- see Glossary)
grew in real terms by 4.2 percent per year
from
1980 to 1985, 1.8 percent from 1985 to 1988, and 1.5
percent in
1990. In 1991, because of its balance of payments
difficulties,
Comoros became eligible for the IDA's Special Program of
Assistance for debt-distressed countries of sub-Saharan
Africa.
The economy is based on private ownership, frequently
by
foreign investors. Nationalization, even during the Soilih
years,
has been limited. Soilih did expropriate the facilities of
a
foreign oil company, but only after the government of
Madagascar
took over the company's plants in that country. The
Abdallah
government, despite its openness to foreign participation
in the
economy, nationalized the Société Bambao and another
Frenchcapitalized firm, the Comoran Meat Company (Société
Comorienne
des Viandes--Socovia), which specialized in sales of meat
and
other foods in the islands. The nationalization was
short-lived,
however, because Socovia and other government-held
enterprises
were either liquidated or privatized as part of economic
restructuring efforts in 1992.
Following the Abdallah regime's rapprochement with
France in
1978, the Comoran economy became increasingly dependent on
infusions of French aid, along with assistance from other
governments and international organizations. By 1990, the
year
Comoros concluded negotiations with the IMF for an
economic
restructuring program, the republic's total external
public debt
was US$162.4 million, an amount equal to about
three-quarters of
GNP. The government delayed implementing the structural
adjustment plan and was directed by the World Bank and the
IMF to
do so by September 1992. The plan recommendations entailed
discharging about 2,800 of 9,000 civil servants, among
other
unpopular measures. The IMF granted Comoros a new credit
for
US$1.9 million in March 1994 under the Structural
Adjustment
Facility. For the period 1994-96, Comoros sought an
economic
growth rate of 4 percent as well as an inflation rate of 4
percent for 1995-96. The growth rate for 1994, however,
was
estimated only at 0.7 percent and the inflation rate at 15
percent. Meanwhile, in a move designed to encourage
private
enterprise and reduce unemployment, in May 1993 the UN
Development Programme had given Comoros a credit of US$2
million
for programs in these areas. In January 1994, the European
Development Fund (EDF) granted 1.3 million European
Currency Units
(ECUs; for value, see Glossary)
to Comoros to
develop small
businesses. Comoros also received 5.7 million French
francs from
the French Aid and Cooperation Fund for agriculture and
rural
development.
The results of foreign aid to Comoros have been mixed
at
best. The purposes of the aid ranged from helping the
government
cover its payroll for such huge, seemingly endless
projects as
expanding the seaport at Moroni and developing a new port
at
Mutsamuda on Nzwani. Neither project had shown much
promise by
early 1994. Meanwhile, the islands have been unable to
develop
local resources or create the infrastructure needed for
economic
development. The few successes included the creation of
national
news media and limited improvements in public health,
education,
and telecommunications. Developmental assistance from the
United
States, which totaled US$700,000 in fiscal year
(FY--see Glossary)
1991, was administered by CARE, the
nongovernmental
organization, and focused primarily on reforestation, soil
conservation, and sustainable agriculture.
The overall effect of the republic's dependence on aid
has
been perennial trade deficits accompanied by chronic
budget
deficits. In 1992 total exports had a value of US$21
million, and
total imports were valued at US$50 million. In 1991
receipts
totaled about US$34.7 million (CF9.7 trillion; CF--Comoran
franc;
for value of the
Comoran franc--see Glossary)
whereas
expenditures totaled about US$93.8 million (CF26.2
trillion). The
shortfall, which equaled about 170 percent of receipts,
was
financed by international grants and loans, by draws upon
existing lines of credit, and by debt rescheduling.
In 1991 France received 55 percent of Comoran exports,
followed by the United States (19 percent) and Germany (16
percent). The main export products were vanilla,
ylang-ylang, and
cloves. The republic's primary suppliers were France (56
percent
of imports), the Belgium-Luxembourg economic union (11
percent),
and Japan (5 percent). Imports consisted of basic
foodstuffs
(rice and meat), petroleum, and construction materials.
Comoros has officially participated in the African
Franc Zone
(Communauté Financière Africaine--
CFA; see Glossary)
since
1979.
The CFA franc was devalued by 50 percent on January 12,
1994,
causing the exchange rate to become 100 CFA francs for one
French
franc. Subsequently, the Comoran franc was devalued so
that
instead of being directly aligned with the CFA franc,
seventyfive Comoran francs equaled one French franc.
The banking system consists of the Central Bank of
Comoros
(Banque Centrale des Comores) established in 1981; the
Bank for
Industry and Commerce (Banque pour l'Industrie et le
Commerce--
BIC), a commercial bank established in 1990 that had six
branches
in 1993 and was a subsidiary of the National Bank of
Paris--
International (Banque Nationale de Paris--Internationale);
BIC
Afribank, a BIC subsidiary; and the Development Bank of
Comoros
(Banque de Développement des Comores), established in
1982, which
provided support for small and midsize development
projects. Most
of the shares in the Development Bank of Comoros were held
by the
Comoran government and the central bank; the rest were
held by
the European Investment Bank and the Central Bank for
Economic
Cooperation (Caisse Centrale de Coopération
Économique--CCCE), a
development agency of the French government. All of these
banks
had headquarters in Moroni.
A national labor organization, the Union of Comoran
Workers
(Union des Travailleurs des Comores), also had
headquarters in
Moroni. Strikes and worker demonstrations often occurred
in
response to political crises, economic restructuring
mandated by
international financial organizations, and the failure of
the
government--occasionally for months at a time--to pay
civil
servants.
Data as of August 1994
|