Comoros

Economic Overview

The Union of the Comoros is a small archipelago island nation in the Indian Ocean, facing a unique set of economic challenges and opportunities common to small island developing states (SIDS). Its economy is characterized by a heavy reliance on a few key agricultural commodities, remittances from a large diaspora, and a nascent tourism sector. The 2025-2026 outlook is one of continued modest growth, dependent on favorable weather for agriculture, stable remittance inflows, and progress in implementing structural reforms with the support of international partners.

GDP Size & Growth Trajectory

The Comorian economy is small and vulnerable to external shocks. Real GDP growth was estimated at 3.0% in 2023. The IMF forecasts growth to remain modest, at around 3.5% in 2025. This growth is supported by the agricultural sector and construction, but is constrained by poor infrastructure and a challenging business environment.

Sector Composition

• Agriculture: This is the most important sector, contributing around 40% of GDP and employing the majority of the workforce. The economy is highly dependent on the export of three key cash crops: vanilla, cloves, and ylang-ylang (a flower used for perfume essence). This makes export earnings highly vulnerable to price volatility and climate shocks.
• Services: The services sector accounts for roughly 50% of GDP, driven by retail trade, government services, and tourism.
• Industry: The industrial sector is very small, contributing about 10% of GDP, and is mainly focused on construction and the processing of agricultural products.

Inflation Trends

Inflation has been volatile, influenced by the high cost of imported food and fuel. As a member of the Franc Zone, the currency peg to the Euro provides a nominal anchor for price stability.

Fiscal & Monetary Policy Stance

• Monetary Policy: Monetary policy is managed by the Central Bank of the Comoros. The Comorian Franc (KMF) is pegged to the Euro, which limits the scope for independent monetary policy but ensures currency stability.
• Fiscal Policy: The government is heavily reliant on international aid and grants to finance its budget. Improving domestic revenue mobilization is a key priority. Remittances from the large Comorian diaspora, particularly in France, are a critical source of foreign exchange and household income, far exceeding official development assistance.

Debt Sustainability Indicators

Public debt levels are high, and the country is considered to be at a high risk of debt distress. Prudent debt management and fiscal discipline are essential.

Table 1: Key Macroeconomic Indicators (2023-2026F)

Market Size & Demand Potential

The domestic market is very small and constrained by low purchasing power and high unemployment.

Population Size and Demographics

With a population of less than 1 million people spread across three main islands (Grande Comore, Anjouan, and Mohéli), the domestic market is extremely limited.

Urbanization and Consumer Hubs

The capital city, Moroni (on Grande Comore), is the main urban and commercial center.

Business Environment

The business environment in Comoros is challenging, hampered by weak infrastructure, complex regulations, and political instability.

Ease of Doing Business & Regulatory Reforms

Comoros ranks near the bottom of global ease of doing business indices. The government, with support from international partners, is aware of these challenges and is working on reforms to improve the investment climate through the National Agency for the Promotion of Investments (ANPI).

Political Stability & Governance

Comoros has a long history of political instability, including numerous coups and secession attempts since its independence.

Political Environment

The country is a federal republic. While the political situation has seen periods of relative calm, the underlying environment remains fragile, which is a major deterrent to long-term investment.

Rule of Law & Investor Protection

The legal system is a blend of French civil law and Islamic law. The rule of law is weak, and contract enforcement is unreliable.

Infrastructure Readiness

Infrastructure is a major constraint on economic development.

Transport and Logistics

• Ports: Each island has a small port, but they lack modern container handling facilities, making shipping expensive and inefficient.
• Airports: Prince Said Ibrahim International Airport in Moroni is the main international gateway.

Energy Sector

Access to electricity is limited and unreliable, with the state-owned utility facing significant operational and financial challenges. The country is heavily reliant on imported diesel for power generation, which is expensive and environmentally unsustainable. There is significant untapped potential for renewable energy, particularly solar and potentially geothermal.

Sector-Specific Opportunities

Given the high-risk environment, investment opportunities are limited.

1. Tourism

This sector has the greatest potential. With its volcanic landscapes, pristine beaches, and unique marine biodiversity (including coelacanths), Comoros could be an attractive destination for eco-tourism and niche travel. However, this would require significant investment in hotels, transport infrastructure, and marketing.

2. Agriculture and Agro-processing

There are opportunities in modernizing the production and processing of the country's key cash crops—vanilla, cloves, and ylang-ylang—to improve quality and capture more value.

3. Renewable Energy

The high cost of electricity and abundant sunshine create a clear opportunity for investment in solar power projects, both for utility-scale and off-grid applications, to reduce reliance on imported diesel.