International Trade in the Comoros

News Related to International Trade in the Comoros

Business outline for the Comoros

Economic Overview

The Comoran economy is in crisis, due to the country's political instability, bad public finances management and its natural handicaps. After experiencing a growth of 1.8% in 2009, the country's economy was stagnating at 2.1% in 2010 and the previsions for the coming years are hardly more optimistic.

Under the agreement with the IMF under the Extended Credit Facility framework, the program implemented by the authorities focuses on the promotion of FDI towards tourism and transportation between islands, increased spending on education and health care, fiscal consolidation, acceleration of measures promoting payroll control and improving the efficiency of public utilities. Improving the business climate is also a priority.

Comoros is one of the poorest countries in the world, with general under-employment and a literacy rate of 68%.

FDI in Figures

The current FDI inflows remain low despite tax concessions and benefits offered by the government.

The potential of FDI on a national level undergoes a setback due to the poor quality of its infrastructures (outdated ports, transportation roads in mediocre condition), permanent political instability and the limited scale of the domestic market, as well as frequent water and electricity shortages, limited natural resources and unskilled workforce. In 2006, the political crisis of Anjouan perturbed the process of the renewal of international aid which had begun with the sponsorship conference at the end of 2005, and it provoked the limitation of domestic credit granted by the only commercial bank of the country, this explains the fragile economic situation of FDI in Comoros. 

The sectors of agriculture and fishing receive the majority of foreign investment. The main investing countries are France, the United States and South Africa.

Foreign Trade Overview

The country is open to foreign trade, which represents almost 50% of the GDP. The government encourages privatization and wants to diversify exports and trade. Nevertheless, to continue receiving  foreign aid is equally important. Regarding trade agreements and the insertion of the country into the international trade, Comoros is a member of the Indian Ocean Commission (IOC) and COMESA, which gathers 19 countries of Eastern and Southern Africa. Comoros joined in May of 2006 the Free Trade Area (FTA) of COMESA. 

The Comoran government has completely reformed the customs duties system in 1996 by establishing a more simple system. There are only two types of taxes instead of five. The average rate is 20% instead of what it used to be 45%. However, the poor quality of its infrastructures (mainly its roads and transportation) and the low level of education are the main barriers that affect the development of trade. 

In these recent years, the volume of trade is clearly progressing. Comoros imports much more than what it exports, due to an increase in rice and oil imports and a rise in the price of oil, which has created an incontestable trade deficit, a trend which should continue in the coming years.

The main trade partners of Comoros are Turkey, the European Union and the Gulf Cooperation Council.