COMOROS: Unlocking Growth Opportunities Through Compliance as a Service Market Analysis
Introduction
The Comoros Islands have been facing a low-growth trap for over four decades, with an average annual growth rate of 2.6% between 1980 and 2022. This stagnation is reflected in the country’s poverty rate at 39.8%, as well as its limited foreign direct investment (FDI) inflows averaging just 0.6% of GDP between 2011 and 2020.
Key Pathways to Boost Growth
A recent Country Economic Memorandum has identified three key pathways to boost growth in Comoros:
- Unlocking private sector investment: This includes increasing foreign direct investment, improving fiscal space through enhanced domestic resource mobilization and public financial management, and boosting growth in under-exploited sectors such as tourism and fisheries.
- Strengthening foundational institutions: This involves improving infrastructure and connectivity, attracting FDI, stimulating domestic investment, increasing financial intermediation and inclusion, and improving labor skills.
- Enhancing economic resilience: This includes creating more room for maneuver by enhancing domestic revenue mobilization and improving public financial management.
The Importance of Compliance
Compliance with international standards and regulations is critical to unlocking growth opportunities in Comoros. The country’s limited institutional capacity and geographic remoteness have hindered its ability to attract foreign investment, while its small population and limited human capital have constrained private sector development.
Strategies for Growth
To increase private sector investment, the government should:
- Improve infrastructure and connectivity: This can be achieved through a combination of policy reforms, institutional strengthening, and regulatory improvements.
- Attract FDI: Comoros can create more room for maneuver by enhancing domestic revenue mobilization and improving public financial management.
- Stimulate domestic investment: The government should strengthen the capacity of customs and tax administrations, reduce tax expenditures, broaden the tax base, facilitate tax compliance, and improve citizen trust through enhanced fiscal transparency.
Tourism and Fisheries Sectors
The tourism sector presents a significant growth opportunity for Comoros, with potential to create direct and indirect jobs, stimulate economic activity, and increase revenue. However, the sector remains at an early stage of development and requires investment in infrastructure, human capital, and marketing to achieve its full potential.
Similarly, the fisheries sector has enormous potential for sustainable economic growth, but requires investment in physical market, transport, and renewable energy infrastructures to improve productivity and competitiveness.
Globalization and Regionalization
To reap the benefits of globalization and regionalization, Comoros should seek accession to the World Trade Organization (WTO) and participate in the African Continental Free Trade Area (AfCFTA). These initiatives will increase trade openness, lower trade costs, attract investment, and promote growth acceleration, particularly in the tourism and fisheries sectors.
Conclusion
In conclusion, compliance with international standards and regulations is critical to unlocking growth opportunities in Comoros. By implementing policy reforms, strengthening institutions, and improving regulatory frameworks, the government can create an enabling environment for private sector development, increase fiscal space, and boost growth in under-exploited sectors such as tourism and fisheries.