Cover Image
close this bookThe Courier N 130 Nov - Dec 1991 - Dossier: Oil - Reports: Kenya - The Comoros (EC Courier, 1991, 96 p.)
close this folderCountry reports
close this folderThe Comoros - In dire economic straits
View the document(introduction...)
View the documentAn interview with President Said Mohamed Djohar
View the documentAn interview with former Production and Industry Minister, Ali Mroudjae
View the documentComoros-EEC cooperation
View the documentExternal aid to The Comoros

(introduction...)

Like Kartala, whose volcanic activity is being nervously monitored by scientists after threatening last July to erupt violently, the political landscape in the Indian Ocean islands of The Comoros has suffered a series of tremors in the past two years.

In November 1989, President Ahmed Abdallah Abderemane was assassinated in a coup attempt in which mercenaries were implicated, the same mercenaries who, 11 years earlier, had brought him back to power after having been ousted in a coup in 1975 by Ali Soilih. Abdallah was succeeded as Acting President by Said Mohamed Djohar, president of the National Assembly, in accordance with the constitution. He was required to call a presidential election within 40 days.

The dramatic change in government unleashed an unprecedented demand for multiparty democracy in the place of the one-party state which Abdallah had installed for over 11 years. Djohar yeilded and no less than 16 political parties came into existence, some of them with no more than a few hundred members.

In the presidential elections in March 1990, which was held over two rounds, it was difficult to distinguish the political ideologies of the candidates. There were eight candidates in all. Six were eliminated in the first round, and the second round pitted Acting President Djohar against Mohamed Taki Abdulkarim of the Union Nationale pour la Dcratie (UNDC). Although each received the backing of eight political parties. Djohar, won with 55. 1% of the votes for a six-year term as President. He proceeded to form a government with the eight political parties which supported his candidacy, giving ministerial positions to four parties and posts in the Office of the President to the other four. He soon realised, however, the difficulty of operating his personal office with four different parties. He carried out a reshuffle in which young men of his own choice were appointed to responsible posts bath in the Cabinet and in the President’s Office. That marked the beginning of President Djohar’s troubles, for he has, ever since, faced what observers have described as the ‘complicated and complex’ problem of forming a united and cohesive government and of keeping the country together, following threats by one of the islands in the group, Moheli, to secede.

UDZIMA, the President’s party and that of his predecessor, Abdallah, is determined to have all the key posts in the Cabinet as a condition for supporting the President. And it has made this known to President Djohar in no uncertain terms - clear evidence of the determination of the old guard to hold on to political power.

On the other side of the spectrum are ambitious young people, personified in the Minister of Finance, Mohamed Said Abdallah Mchangama, the President’s son-in-law, who is believed currently to be the Number Two in the regime, and who feels that the time has come for the old men who have governed The Comoros since independence to give way. There is considerable tension in Moroni between the various factions as the struggle for power continues.

Moheli’s problem is a difficult one. Neglected for long by the central government and deprived of basic social amenities and economic infrastructure, the general belief is that Moheli has indeed had a bad deal over the years in the Islamic Republic. The island had demanded and been refused greater autonomy from the Federal Government. Although the President has attempted to placate the island by appointing Mohelians to responsible positions, this has been rebuffed by the island’s leaders who have threatened, in the absence of what they call ‘dialogue with the Government’, to conduct a referendum on self-determination in Moheli. President Djohar has, however, vowed to maintain the territorial integrity of The Comoros. It should be noted that The Comoros still lays claim to the island of Mayotte, which voted in a referendum organised by the French in 1976 to secede and maintain its status as a French overseas territory. That vote has not been recognised by the United Nations and the Organisation of African Unity. The Mohelians, who call their plans for a referendum, the third and final phase of their attempt to resolve the dispute with the central government, have been buoyed by the secessionist movements in other parts of Africa. Demonstrations in Fomboni, the island’s main town, against the government have become a regular occurrence and appear to be widening the gulf between the two sides.

Attempted coup d’t

This crisis, which has inevitably led to several cabinet reshuffles, culminated in an attempted coup d’t by the Supreme Court in early August, which announced the dismissal of the President for, among other things, lack of ‘lucidity’ in the exercise of his duties and for endangering the nation’s unity and territorial integrity. Although the Supreme Court has the authority under the Constitution to dismiss the President, it can only do so on the recommendation of the Prime Minister - a post which does not exist but which is to be re-instated under the new Constitution. The draft of that Constitution was the subject of a round table conference in May attended by a number of the political parties. Not many changes were made to it and it has been sent to the President for submission to a national referendum.

Meanwhile the opposition has called for the dissolution of the current Federal Assembly which they consider illegitimate, having been elected under the one-party system of President Abdallah, and for the formation of a government of national unity and the organisation of parliamentary elections. Only by taking these measures, they believe, will the political tensions be diffused.

One thing is certain, though - with its numerous political parties, The Comoros is in for a long period of instability unless a system can be found to rationalise the situation. Democracy is proving too big a price to pay for an archipelago as poor as The Comoros.

Indeed the crisis could not have come at a worse moment for the country which is facing dire economic difficulties. For five consecutive years, against a background of a heavy debt burden and continuing budget deficits, economic growth has fallen and the balance of payments deficit has widened.

No natural resources

Nature has certainly not been very kind to these islands. Isolated, with practically no natural resources, the country is one of the most densely populated in Africa. At 3.3% growth rate, the population, which is currently put at 460 000, is expected to double by the year 2010. It is made up mainly of young people (45% under 15 years and 57% under 20 years). Income per capita is put at less than $ 300, which makes The Comoros a least developed nation.

The spiralling population is a serious cause for concern. Birth-control is hardly practised. Although The Comoros is only moderately Islamic, religion appears to be a major factor, and the authorities have not shown much enthusiasm for birth-control either. Yet the country’s population has to be reduced given the meagre resources and the fact that the possibilities of emigration which Comorians had in the past are today practically nil.

Agriculture is the mainstay of the economy, accounting for 40% of GDP and 80% of employment. It is constrained, first and foremost, by lack of fertile land and by erosion caused by the increasing use of marginal land. Rudimentary farming techniques and low use of inputs like fertilisers, result in low yields of foodcrops.

The cash crops are vanilla, cloves and ylang-ylang (a flower used in the perfume industry). Exports have not earned much for The Comoros in recent years. This has as much to do with unfavourable world market conditions as to poor organisation of production and marketing. The sector is entirely in private hands. Farmers grow these crops in association with others and are easily influenced by domestic prices.

The Comoros, which has been growing vanilla for over 50 years, is the second largest producer in the world. Grown by about 9000 farmers in the islands of Grande Comore and Anjouan, production has fluctuated in the past five years between 930 tonnes and 1200 tonnes. The availability of synthetics and competition, especially with Indonesia, have led to a drop in price. Indonesia produces at a much lower cost than The Comoros, and as such can afford to sell at lower prices. The cost of Comorian vanilla, for example, in 1990 was 2500 Comorian francs (US $ 9.6) per kilo compared with its competitor’s cost of 1750-2000 Comorian francs.

Vanilla sales to France (which takes a third of total production) are much more secure than sales to the United States, the biggest importer, where Indonesia is making a strong showing. In 1986 The Comoros succeeded in selling vanilla directly to consumers in the United States and earned considerable sums- a one-off operation difficult to repeat because of the organisation of the market.

Cloves are cultivated mainly on the island of Anjouan and production is in the region of 1300 tonnes annually. Prices have fallen consistently in the last few years through competition with Madagascar, Zanzibar and Indonesia, although there was a slight recovery in 1990.

The Comoros is the world’s largest producer of ylang-ylang, prices of which have been good in recent years. But the country has been unable to take full advantage of the situation because of the age of plantations and poor distilling equipment. Production of essence, not surprisingly has fallen from 60 tonnes in 1986 to around 43 tonnes in 1990.

The shortfall in foreign exchange earnings resulting from the exports of vanilla cloves and ylang-ylang have been regularly made up with Stabex transfers under the Lomonvention. In the last transfers for 1989, for example, The Comoros received ECU 655 000 for cloves and ECU 808 000 for vanilla.

As the Government depends heavily on income generated from taxes on exports and imports, it has been particularly short of finance. Indeed, because of the fall in world market prices, taxation on export has been reduced from 20% to 10%. This has resulted in a worsening of the budget deficits which have always been made up with foreign subsidies, particularly from France (see article on Comoros external relations). Now The Comoros has been served notice by donors that this can no longer go on.

Isolation, a heavy burden

Despite the huge investment The Comoros has made on transport and communications since independence, the country remains relatively isolated with little international shipping calling at its port, a few international ‘flights per week and difficult telephone links with the outside world. The same goes for communication between the three islands that make up the group - Grande Comore, Anjouan and Moheli. These facts weigh heavily on the entire economy. With manufacturing consisting of a few processing activities (4% of GDP), The Comoros imports virtually everything and prices not surprisingly are high. Its main source of imports is South Africa whose goods are omnipresent in Moroni. Luckily the vast majority of the people - 77% - live on subsistence agriculture.

As this sector is constrained by lack of fertile soil and water, the European Community has been involved in a wide range of projects, from transport and telecommunications through to agriculture with particular emphasis on self-sufficiency in food.

Under LomII, 60% of the ECU 19 million earmarked in the Indicative Programme was devoted to agriculture. In this respect, an integrated rural development project is being carried out in the north of Grande Comore - an area with some agricultural potential. Hilly, with no streams or rivers, well-digging in this part of the island is very expensive. The EC is thus financing the construction of water catchments to provide water for human consumption and for irrigation. An important component of the project is seed multiplication (mainly maize and potatoes) and the construction of roads to improve transportation and facilitate the evacuation of agricultural produce. The results obtained so far from parts of the project already completed and operational have been very encouraging. Farmers in these areas are now producing greater quantitities of maize and potatoes, although the price of the latter at the market level is considered too high - a situation that will almost certainly improve when the whole project is operational and farmers begin to produce more. A similar project financed by the EC is taking place in the north-eastern region of Anjouan.

Overall the production of such food crops as yam, cassava, rice and bananas is up. So also are livestock production and the quantity of fish landed by local fishermen - 85000 tonnes in 1990. There is certainly no threat of famine in the country, although, according to some reports, there is evidence of malnutrition.

Communications infrastructure

The European Community has also been very active in providing The Comoros with infrastructure designed to reduce its isolation. A deep-water port in Mutsamudu, whose construction was financed partly by the EDF, was commissioned in 1985. The port, which enables vessels of up to 15000-25000 tonnes to berth, was deemed vital for the entire transport and communications network of the archipelago. To be effective, however, it was known that the port capacity of Moroni, the capital, had to be increased as well as improving a landing site for flat-bottom boats at the island of Moheli. The EC has taken on the reconstruction of the Moroni port at a cost of ECU 7 880000. This involves the extension of the quay, the construction of the police and customs offices, a park for containers and an oil terminal. The EC does not rule out doing the Moheli site for flat-bottom boats as well.

There is a plan within the framework of regional cooperation and the Indian Ocean Commission to which The Comoros belongs, to establish an Earth Satellite Station on the island. This, if realised, will give a tremendous boost to telephone and telex links between The Comoros and the outside world and will improve regional cooperation on which the country has placed a high premium for its survival. Currently, telephone links with neighbouring countries and the African continent take hours and have to go through Paris.

EC development impact

The impact of these EC-financed projects on the Comorian economy cannot be underestimated. Apart from bringing the islands closer to one another, the transport and communications infrastructure will help reduce the high cost of freight and insurance that The Comoros is currently subjected to, and this will in turn have a favourable influence on the balance of payments. They will help boost tourism which is beginning gradually to develop, thanks mainly to the opening recently of the high-class Galawa Beach Hotel in Grande Comore. The number of South African tourists arriving in The Comoros in recent months has increased significantly and this will show when figures for this year are released. But there are doubts in some quarters as to what impact Galawa will have, particularly in terms of income for the islanders and foreign exchange earnings. Although the Government is said to have a 35% stake in it and there are local employees, the hotel is self-contained and is closeted in the north of the island - in a world of its own. Access is barred to the ordinary Comorian. Indeed this was what sparked off disturbances in the area early this year.

Receipts from tourism in 1988 totalled CF 0.8 billion or 8% of exports of goods and services. Although there are plans to build hotels in Anjouan and Moheli, the industry is handicapped by inadequate international night connections, especially with Europe. South African visitors are currently coming in by charter nights in organised tours to Galawa. The other hotels in Moroni are virtually deserted and losing money.

The 100 000 or so Comorians living abroad are an important source of foreign exchange for the Government. No one has been able to quantify how much they bring in but signs of their impact can be seen around Moroni in the numerous new buildings going up. Their remittances obviously can be better channelled into development if the Government knew how. Minister of Finance Said Abdallah Mchangarna told The Courier he was planning a campaign, particularly in France where the majority are, to inform them of investment opportunities available to them at home. He would personally be organising meetings, he said.

Development options

Apart from the fish resources of its territorial waters which remain largely unexploited, The Comoros has very few options for a realistic economic development. Analyses of its soil have revealed that it is most suitable for fruit trees. Indeed mangoes already grow well but wildly on the islands. These can be better harnessed. There are possibilities for lychees, avocados, passion fruit, etc. Fruit tree cultivation makes sense, because of the need to combat erosion.

The Comoros is nursing the ambition to boost manufacturing through the establishment of Export Processing Zones (EPZs). Like Kenya, where the idea is being put into practice, The Comoros too hopes that quota-hungry enterprises already established in other Indian Ocean countries will come over to the islands. This dream is somewhat dampened by the country’s inadequate infrastructure, lack of skilled manpower and the high cost of the factors of production. The Comoros, for example, has the highest cost per unit of electricity in the world, fuel being imported at enormous expense. Former deputy-director of planning and now Presidential Adviser on structural adjustment, Abdallah Msa, says that despite the generous incentives contained in the 1984 Investment Code, ‘investors are not coming’ to the country, because of fears that their products might not be competitive in the world. It is important first of all to try as much as possible to reduce the cost of the factors of production and then provide incentives that would match or surpass any available in the region. ‘Madagascar, which used to call itself socialist, has turned 180 degrees as far as investments are concerned to provide the most liberal Investment Code in the Indian Ocean. We could do likewise or even more’, he said.

Reforms

Like most of the African countries, The Comoros has embarked on a structural adjustment programme which has the blessing of its major donors, the UN. France and the EC. A financial package of nearly $135 million has been granted for a three-year programme of reform (1991-1993). The World Bank has agreed to provide $ 6 million while the IMF has pledged three loans worth $ 4.16 million as a structural adjustment facility. It has indeed already released $1.2 million.

In return The Comoros has pledged to diversify exports, promote export-oriented industries, privatise government enterprises, tackle environmental problems and above all to mobilise national revenue and cut government expenditure.

Given the constraints just analysed, it is clear the Government has little room for manoeuvre in terms of diversifying exports and creating export-oriented industries. And there is considerable doubt also as to its ability or even willingness to carry out privatisation. At the time of The Courier’s visit in September, there were no signs of any move in any direction. This should, however, not come as a surprise, given the political crisis which is taking up too much of the governments time.

On public expenditure, which has doubled in the past three years, from CF 3.2 billion to CF 6 billion, the government is tackling the issue in two ways. The first consists of redoubling its efforts to recover money due to government through taxation. It has been known to be lax over this. Indeed two years ago when it was obliged by donors to be more stringent, although more money had to be spent on collection. the government earned a windfall. Mr Msa indicates greater efforts would have to be made now to mobilise internal resources. The second and no doubt one that is more likely to be effective is the rationalisation of the civil service. This does not necessarily mean redundancies. It rather means bringing to an end the great irregularities and abuse that exist in the civil service - an abuse that came to the government’s attention recently following a census carried out in the civil service last year. The census was sponsored by the French Ministry of Cooperation. According to Mr Msa, personnel management has been so lax that people can leave and continue to receive their salaries, people can die and continue to be paid, people can figure in different payrolls. People without being promoted can, with the complicity of the accountant, receive an increase in salary’. Mr Msa says that these are elements which have to be taken into consideration before the government can resort to redundancies. ‘We have to restore order to the civil service first. We will only lay people off when we: have no other alternative. At the moment there are sectors in the service that are understaffed and others that are overstaffed. So it is a question of rationalisation’.

The picture that emerges is an unnecessarily bloated civil service, which swal-lows 60-70% of government revenues. Mr Msa indicates that if that expenditure can be reduced to less than 50% of revenue at the end- of the rationalisation exercise, The Comoros would be well on the way to economic recovery.

Augustine OYOWE