Document o f The World Bank FOR OFFICIAL USE ONLY Report No. 53328-KM UNION OF THE COMOROS JOINT IDA-IMF STAFF ADVISORY NOTE ON THE POVERTY REDUCTION AND GROWTH STRATEGY PAPER March 11,2010 This document has a restricted distribution and may be used by recipients only in the performance o f their official duties. I t s contents may not otherwise be disclosed without World Bank authorization. FOR OFFICIAL USE ONLY INTERNATIONAL DEVELOPMENT ASSOCIATION AND INTERNATIONAL MONETARY FUND COMOROS Poverty Reduction and Growth Strategy Paper Joint Staff Advisory Note Prepared by the Staffs o f the International Development Association And the International Monetary Fund Approved by Obiageli K. Ezekwesili (IDA) and Roger Nord and Thomas Dorsey (IMF) March 11,2010 I. OVERVIEW 1. This first full Poverty Reduction Strategy Paper (Poverty Reduction and Growth Strategy Paper, PRGSP) prepared by the Government of Comoros was officially adopted on September 10,2009. It builds on the strategy laid out in the interim PRSP (I-PRSP), which was presented to the Boards o f the International Development Agency (IDA) and the International Monetary Fund (IMF) in May 2006. The full PRGSP adds useful building blocks, in particular (i) effort to cost the proposed poverty reduction programs, an including those aimed at facilitating the achievement o f the MDGs; and (ii) examination an o f cross-cutting issues, such as the quality o f statistics and information for policy design and monitoring, Information and Communication Technologies development, gender and human rights. This note provides comments and advice from the staffs o f the World Bank and IMF on the updated PRGSP with a focus on i t s implementation mechanisms; the note also puts forward options for strengthening Comoros' poverty reduction strategy going forward, through annual progress reports (APRs). 2. The PRGSP provides a good basis for the design and monitoring of growth and poverty reduction policies in Comoros. For a fragile state, where a rapid succession o f political upheavals has hampered policy formulation and implementation over so many years, completing a full PRGSP i s in and o f itself a noteworthy achievement. Since the early 2000s, the PRGSP framework has been instrumental in anchoring the national reconciliation process and guiding the authorities in the gradual formulation o f a development vision for the country. Beyond these intrinsic qualities, the updated document: (i) provides a comprehensive poverty diagnosis that underpins and motivates Comoros development program for the period 2010-14; (ii) articulates a development strategy for the country that i s reasonably focused; (iii) based on a cross cutting approach that l i n k s the macro framework is This document has a restricted distribution and may be used by recipients only in the performance o f their official duties. I t s contents may not be otherwise disclosed without World Bank authorization. 2 and sectoral interventions; and (iv) makes allowance for future revisions to be made as more and new data become available. 3. The PRGSP sets an ambitious policy agenda, with which staffs broadly concur, focused on achieving the following objectives: a. Stabilizing the economy and laying the foundations for sustained and equitable growth by strengthening public finance and improving infrastructure provision; b. Strengthening key sectors o f the economy with the highest growth and poverty reduction potential: tourism, agriculture and fishing; c. Improving governance and social cohesion; d. Improving human development outcomes, particularly in healthcare and education, through better social service delivery; and e. Promoting environmental sustainability and civilian security. Staffs especially welcome the emphasis on good governance as a sine qua non condition for long term development, as well as the integration o f gender and human rights issues among cross-cutting themes to be addressed in each priority sector o f intervention. 4. Both the I-PRSP and full PRGSP are the result of a thorough and inclusive participatory process. At the height o f the separatist crises, the PRGSP process remained one o f the last channels o f dialogue and national consensus. The process was managed by a steering committee and brought together numerous stakeholders-representatives o f civil society, traditional and religious leaders, NGOs and development partners-through sectoral working groups (chaired by the relevant Secretary General in each ministry) and a series o f participatory workshops held at regular intervals. An important feature o f the PRGSP preparation process, particularly in the context o f a conflict-prone environment, was the involvement o f insular authorities through local branches o f the Planning Directorate, maintained even during separatist crises. 5. Despite these qualities, the PRGSP has some significant weaknesses, which will need to be tackled in the context o f the APR. In particular, the proposed strategy may be overly ambitious, given the country's limited capacity and poor track record o f implementation o f the I-PRSP, and too costly given the levels o f funding that can likely be mobilized internally or externally. Consequently, the staffs recommend that the authorities identify a restricted number o f priority interventions and focus on their implementation. 6. The Joint Staff Advisory Note discusses the PRGSP in several key dimensions. These include the poverty diagnostics that underpin the proposed strategy (section I ) , I macro- economic scenarios and policies (section 1 1, structural policies (section IV), programs for 1) human development (section V), governance (section VI) and, finally, arrangements for implementation and monitoring o f progress over time (section VII). 3 DIAGNOSTICS 11. POVERTY 7. The PRGSP i s underpinned by a broadly adequate analysis o f the poverty situation in Comoros, based o n the results o f a comprehensive household expenditure survey (Enqugte Inte`gre`eauprBs des Me`nages)carried out in 2004, as well as a qualitative survey on perceptions o f well being, fielded in 2002. The earlier surveys point to pervasive poverty in the country, with a poverty incidence o f close to 45 percent at the national level'. This however masks significant regional and local disparities. The incidence o f poverty i s markedly higher o n the island o f Anjouan and in rural areas, which are home to 79 percent o f Comoros' poor households. In the absence o f more updated poverty indicators, the full PRGSP assumes the incidence o f poverty to have increased since 2004. A major quality o f the document i s the presentation o f the incidence o f monetary poverty across different socio- economic categories in the population. It shows a sharp contrast between "protected wage earners", who are at the top o f the ladder, and those at the bottom, including micro- entrepreneurs in the informal economy and fishermen. This distinction provides significant insights into what a poverty/vulnerability targeting policy could look like. Incidentally, it also suggests the need for a deeper discussion around issues o f informality, with important ramifications for, notably, fiscal policy and safety nets design and implementation. 8. The inclusion o f perceptions o f poverty i s particularly welcome. The analysis o f how people experience destitution-and obstacles to improving their socio-economic conditions-is an interesting complement to the purely monetary indicators o f poverty. The analysis shows, for instance, that food security and access to employment are recurrent concerns among Comoros' poor. Notwithstanding this, the PRGSP's analysis o f poverty perception would have benefitted greatly from providing a ranking o f people's perceptions of: (i)dimensions o f poverty; and (ii) bottlenecks to accessing social services, which are essential for shaping the authorities' policy priorities. 9. The assumption that poverty and inequality trends can be simply extrapolated from overall growth patterns appears somewhat simplistic. While the poor performance o f the economy as a whole would suggest a worsening o f poverty and inequality in recent years, the analysis would be enriched by a comprehensive review o f developments in other relevant factors. Especially noteworthy in this respect would be: (i) assessment o f the an poverty and inequality incidence o f growth based on past patterns; (ii)review o f specific a policies that may have influenced poverty outcomes in the last years; (iii) evaluation o f an the impact o f external shocks (particularly the recent food, fuel and financial crises); and (iv) an analysis o f the potential shifts in the sectoral composition o f growth in recent years. I The poverty line i s defined at approximately US%SOO per capita year. 4 10. The full P R G S P rightly points to persistent political instability as a major bottleneckto sustained economic development in Comoros. However, the document does not explain the underlying reasons for recurrent political conflicts in the country, making it difficult to determine whether these obstacles can be overcome in the medium term, and gauge the potential impact o f recent amendments to the constitution in this key area. This is particularly important since persistent political strife over the years i s deemed a main cause o f slow development and poor implementation o f the I-PRSP. 11. The document underscoresthe significant role played by diaspora remittances in supplementing household incomes and consumption, acting as an informal safety net. However, the paper could have usefully provided a more detailed analysis o f remittances' amounts and uses. Furthermore, it falls short o f considering emigration as a development strategy in i t s own right, looking for instance at the types o f skills demanded not only by the domestic labor market but also by receiving countries, or at the potential to leverage the expertise o f the Diaspora in a co-development framework. 1. SCENARIO 1 1 MACROECONOMIC AND POLICIES 12. Despite offering a more realistic macroeconomic outlook than the I-PRSP, the baseline scenario under the full P R G S P i s overly optimistic. It targets an average real GDP growth o f 4.3 percent for the period 20 10-20 14, against 3.1 percent under the authorities' program supported by the IMF under the Extended Credit Facility, and a historical five-year average o f 1.3 percent during 2003-08.2 The projected strong growth performance i s in stark contrast with the slow pace o f structural reforms spelled out in the PRGS' action plan, especially regarding the restructuring o f public utilities and the much needed improvements in the investment climate. As a result, the PRGSP scenario also features a relatively l o w growth dividend on investment. Staffs encourage the authorities to adjust the PRGSP baseline scenario during the first APR, ensuring that its growth and public investment targets are made more realistic. In the same vein, staffs underscore the need for, and reiterate the recommendation in the I-PRSP JSAN regarding the benefits from comprehensive alternative scenarios and appropriate contingencies for such risks as shortfalls in aid disbursements, delays in implementing reforms, or balance o f payments shocks. 13. The authorities estimate the cost o f the five-year strategy at 1.4 billion USD, nearly all to be funded with assistance from donors. This comes down to an annual average o f US$265 million (49 percent o f GDP), likely much beyond the country's implementation capacity. In comparison, annual average cost o f the I-PRSP programs amounted to US$lOO million (20 percent o f GDP). The high cost o f the full PRGSP reflects the updated strategy's all-encompassing embrace, underscoring the need for a better ranking and prioritization o f envisaged poverty reduction programs, which staffs urge the authorities * Under the I-PRSP, real GDP growth was projected to reach 7 percent by 2008. 5 to outline in the first APR. This would ensure implementation o f a small subset o f most promising initiatives. Effective project prioritization would also allow for quick adjustments in response to changing financing conditions. The first APR could also provide a more detailed discussion o f the potential sources for covering a resource gap estimated at 9 percent o f GDP under the PRGSP, before the potential impact o f HIPC Initiative debt relief. To prevent deterioration in debt sustainability, this gap will have to be filled mostly with grants or highly concessional loans. 14. The updated PRGSP's fiscal policy program i s broadly adequate, but needs to spell out the measures underpinningits budget consolidationobjectives. Staffs agree that fiscal consolidation, improved management o f public expenditures, comprehensive debt relief, and an ambitious streamlining o f the civil service personnel are key conditions for achieving lasting macroeconomic stability and strong pro-poor growth. Within this general framework, the full PRGSP calls for a gradual reduction in the primary deficit (albeit at a relatively slow pace), and an increase in the share o f pro-poor and pro-growth expenditures. The PRGS' action plan sets measurable targets pertaining to revenue mobilization, public expenditure, and fiscal coordination across the Union and the islands. However, beyond the general policy orientation it provides, the document falls short o f outlining specific policy measures and programs that would help Comoros achieve the projected fiscal objectives. This will have to be done in the first APR, drawing from medium-termP F M measures and policies that are either already indentified or under preparation in the country's ECF- supported program. In particular, staffs underscore the need for reforms aimed at (i) further enhancing the efficiency o f tax and customs administration; (ii) strengthening expenditure execution and tracking, including through computerization o f the civil service payment roster and adoption o f organic staffing frameworks that set ministerial personnel at levels compatible with medium-termbudget viability; and (iii) improving public procurement systems and practices. The PRGSP makes a strong case for redistributive policies, underscoring the need for tackling vulnerabilities in the weakest population groups, although the corollary o f such an ambition-a comprehensive pro-poor fiscal strategy-is not well articulated in the document. Staffs encourage the authorities to address this shortcoming in the period ahead by developing PRGSP-compatible medium-term expenditure frameworks with technical support from donors. 15. The PRGSP rightly notes the adverse impact o f real exchange rate appreciation on external viability. While the exchange rate peg under the Franc Zone arrangement provides an important anchor o f stability, sustained current appreciation in the recent past underscores the need for steadfast implementation o f structural reforms to contain competitiveness losses and related adverse growth repercussions. Areas o f focus include (i) the public utilities (Comores Telecoms, SociCtC Comorienne des Hydrocarbures, the Electricity Company---MAMWE), (ii) ii financial intermediation to support growth, and ( i ) weak governance. 6 IV. STRUCTURAL POLICIES 16. The PRGSP identifies three main sectors-agriculture, fisheries and tourism- that have the potential to generate sustained economic growth. It notably calls for improved farmers' access to agricultural inputs, the expansion o f storage facilities for the fishing industry, and a significant increase in the number o f hotel beds, so critical for sustained tourism development. While broadly sharing the government's analysis o f the potential growth-supporting poles, staffs urge the authorities to better articulate the respective roles o f the public and private sectors under the proposed strategy. Faced with severe capacity and financing limitations, the government can hardly get involved in merchant activities, but should focus on creating an enabling environment for enhanced private sector activity. In this perspective, the approval o f the new investment code and one-stop shop for business registration, that i s currently scheduled for 201 1 and 2013, respectively, ought to be expedited and considerably brought forward. Bold government action i s especially needed in these areas; given Comoros' l o w private investment rates and the very high cost o f opening a business in the country-twice the average for Sub-SaharanAfrica, according to the World Bank's 2010 Doing Business Survey. 17. The PRGSP seeks to overhaul Comoros' growth-supportinginfrastructure- energy, roads, telecommunications-with a combination of revamped regulatory frameworks, privatization o f utilities and increased public and private sector capital spending. In this context, key state-owned enterprises, MAMWE (energy generation and distribution), SCH (fuel import and storage) and Comoros Telecoms (telecommunications) are to be gradually privatized over the period 2010-12. The proposed action plan for regulatory reforms in these sectors will take longer, with key new laws and institutions projected to become fully operational only in 2013-2014. Staffs encourage the authorities to speed up reforms in these sectors, given their critical role in underpinning the country's ambitious growth objectives, including within well defined public-private partnership programs. These would notably provide clearer indications on the design and implementation mechanisms for envisaged infrastructure rehabilitation programs and projects-such as the proposed national energy management and efficiency program or the much needed increase in fuel storage capacities. v. HUMAN DEVELOPMENT 18. Staffs welcome the document's strong emphasis on investing in human capital development. The PRGSP's poverty diagnosis points to high rates o f return to education in Comoros, and underscores the very important role o f access to health and education in the population's perception o f poverty. Echoing these realities, the PRGSP outlines a remarkably integrated vision o f human capital development for which the authorities should be commended. The proposed human capital development framework spells out a long-term strategy with key targets and benchmarks. Staffs encourage the Government to draw from it, and develop a prioritized action plan with specific short-to-medium term reforms aimed at 7 addressing the weaknesses identified in the education and health sectors. In the short term, emphasis ought to be put o n delivery o f basic services with a view to addressing major issues o f access and quality. 19. I n the area o f education, the focus on primary and secondary education ought to be strengthened. The updated PRGSP's education strategy covers all teaching levels, and emphasizes the importance o f the tertiary phase, as well as o f expanding technical and vocational training. However, it does not articulate plans to match the training provided with the needs o f the labor market. Also, although significant progress has been made in recent years, enrollment rates at the primary and secondary levels continue to be low. Moreover, the quality o f education remains a significant challenge, as notably signaled by a very high rate o f illiteracy at the secondary level, and implied by a persistent deficit o f operating resources for schools. Given the severe budgetary constraints, the staffs call for greater emphasis on basic education as the principal priority, with the other education levels being gradually developed as additional resources become available. The authorities are to be commended for establishing a monitoring system for public sector education expenditures (under the first strategic axis "Stabilize the economy and lay the groundwork for strong and equitable growth"). However this could be improved further, notably with the addition o f indicators o f education expenditure composition. 20. The strategy correctly identifies efforts to improve reproductive health, combat s malaria and malnutrition a principal health-support programs. I t recognizes difficulties in accessing basic health services a a critical challenge for Comoros. The s staffs fully agree with this assessment, but also urge the authorities to better outline constraints and challenges facing the country's health system, in particular the lack o f qualified health personnel, important shortcomings o f the pharmaceutical sector resulting in l o w availability o f expensive medicines, and lack o f maintenance o f existing medical equipment. In general, the PRGSP's health sector targets are ambitious, with no clear indication o f either priority actions or sequencing o f needed reforms. In some cases, the health indicators are either not fully relevant or o f limited use (such as, the use o f prevalence o f malaria in a country where it is endemic). In addition, outcomes on many o f the indicators are likely to be influenced by a variety o f other factors largely independent o f performance in the health sector. Staffs urge the authorities to gradually address these issues in the annual progress reports for the updated PRGSP. 21. Finally, for both health and education, the document could have addressed the role-actual and potential-of the private sector in service provision. The document glosses quickly over the significant share o f services delivered by and received in the private sector. The importance o f the private sector is in part a reflection o f shortcomings o f public provision. But a forward looking strategy could also envisage ways in which public and private providers could complement their undertakings in the provision o f quality services to the population. 8 VI. GOVERNANCE SOCIAL COHESION AND 22. Reflecting the findings of the PRGSP-based participatory consultations as well as comments from development partners, the updated poverty reduction strategy includes a substantive discussion of governance issues and bottlenecks in Comoros. The authorities are especially to be commended for their candid discussion o f the reaches o f corruption in the country. Broad areas singled out for strengthening include: (i)the i) institutional framework for government and i t s importance for national reconciliation; ( ithe judiciary and national anti-corruption institutions; and (iii) fight against terrorism. the 23. The updated PRGSP identifies a critical link between the national institutional set up, its administrative organization, and Comoros' record in national reconciliation. I t emphasizes the role o f decentralization in promoting accountability in, and power-sharing for, local communities; all o f which would help relieve inter-entity tensions and facilitate progress toward national reconciliation. I t i s however unclear h o w coherent the proposed strategy is with recent efforts to re-centralize core state functions to ensure adequate policy design and implementation at the national level, including in the critical area o f public finance management. The document could usefully lay out a strategy or propose guiding principles aimed at steering the decentralization process and ensuring that national reconciliation i s not achieved at the expense o f administrative efficiency or financial responsibility. 24. The poverty reduction strategy paper tackles weaknesses in the judiciary and issues of corruption candidly. However, the document offers few perspectives-beyond training o f magistrates-on possible options and priorities for reform. I t could usefully draw from the many reform options available in this area, such as development o f community awareness campaigns and ombudsman institutions; detailed measures to improve expenditure tracking and transparency; and other initiatives aimed at enhancing investor confidence. 25. The authorities recognize that social protection has a fundamental role to play in ensuring social cohesion and stability. For that reason, the updated PRGSP takes up the issue o f social protection within its broader discussion on governance. However, the analysis does not fully consider the challenges associated with implementing efficient social protection programs in an environment o f tight budget constraints and high levels o f economic informality. In this respect a discussion o f social protection targeting strategies would be most useful, if only to ensure that the expansion o f social security does not benefit those who are already relatively well off, but focuses on the most vulnerable members o f society. VII. IMPLEMENTATION AND MONITORING 26. The PRGSP envisages a complex institutionalframework for PRGSP monitoring and evaluation. This includes four separate oversight organizations, a number o f sectoral technical groups (GTS) and island-level monitoring committees (COPSED). 9 Given Comoros's weak institutional capacity, staffs consider that the effective management o f such a multi-layer institutional arrangement may be difficult. Staffs therefore recommend that the monitoring and evaluation o f PRGSP activities be placed under the primary responsibility o f the Technical Steering Committee (PRGS-TSC). Operating from the National Planning Commission, the PRGS-TSC i s to be working with both the Technical Secretariat for PRGS Monitoring and Evaluation and the Ministry o f Finance's Economic and Financial Reform Monitoring Committee (CREF)-which i s already aggregating relevant macroeconomic data. 27. Monitoring o f the PRGS i s to be undertaken along three main areas o f focus: (i) monitoring of developments in selected performance and poverty indicators; (ii) monitoring of program execution; and (iii) evaluation o f policies and programs implemented.Efforts in the first area may be hampered by lack o f up-to-date poverty indicators, which precludes development o f a reliable baseline database against which future progress can be measured. Under the circumstances, staffs welcome the authorities' recognition o f the urgent need for Comoros to undertake a new household survey, and call on donors to provide financial and technical support. 28. The PRGS recognizes the failings o f the I-PRSP. Concurring with staffs' assessment, i t regrets the detrimental poverty impact o f Comoros' political instability in the last years. Going forward, assuming further consolidation o f recent gains in political stability, the success o f the new PRGSP will require better-quality statistics, enhanced human capacity and increased accountability across monitoring agencies. The document could benefit from a comprehensive discussion o f specific measures and resources required to achieve these improvements. FOR DISCUSSION VIII. CONCLUSION AND ISSUES 29. Comoros' development goals and reform agenda under the full PRGSP are ambitious. The challenge for the authorities will be to translate some o f the general policy orientations into specific reform measures; and overcome inter-agency and inter-island coordination and cooperation failures that in the past have limited the effectiveness o f the govenunent's poverty reduction strategy. As additional resources become available, including by debt relief, another major hurdle will be to ensure that public funds are effectively allocated toward pro-poor and pro-growth interventions and managed in a transparent and efficient way. Comoros expects its ,development partners to play a critical role in the strengthening o f public financial management and the effective monitoring and evaluation o f the updated PRGS. 30. While the full PRGSP offers a good policy frame o f reference, it could have also provided: 10 a. More details regarding the central role o f public sector reform in addressing development challenges beyond public finance, particularly in the areas o f governance, private sector development and social service delivery; b. A better assessment o f difficulties encountered in the implementation o f the I-PRSP. A comprehensive review o f these difficulties would have helped better gauge the country's implementation capacity, and facilitated a much needed prioritization o f proposed poverty-reducing initiatives. The analysis would also have permitted development o f more realistic estimates o f external assistance prospects. 3 1. T o enhance the effectiveness of the PRGS, staffs have singled out several key areas in need of adjustment in the context of the first APR. a. The cost o f the updated strategy i s well above and beyond financing levels Comoros can reasonably be expected to mobilize from domestic and external sources over the relevant reform period. This underscores the need to focus on a smaller number o f projects, giving priority to actions aimed at removing the most binding constraints to growth and poverty alleviation. b. In a number o f key areas-macroeconomic policies, structural reforms, healthcare- the strategy (and the accompanying action plan) outlines ambitious agendas with an array o f medium-term targets. Implementation will require the authorities identifying near-term specific underpinning reform actions, consistent with implementation capacity and mobilized financial resources. c. In the case o f structural and human development policies, the strategy should spell out more explicitly the role o f the private sector, and outline a policy agenda that best incentivizes the private sector to work towards achieving the sector objectives under the PRGS. d. Successful monitoring requires a streamlining o f the institutional arrangements for data collection and reporting, as well as speedy completion o f a new household survey to provide a reliable baseline data base. 32. I n considering the PRGSP and associated JSAN, Executive Directors' views are sought on whether they agree with the main areas identified by staffs as priorities for strengthening the PRGSP and its implementation. UNION OF THE COMOROS UNITY - DEVELOPMENT - SOLIDARITY ____________ PRESIDENCY OF THE UNION OF THE COMOROS _________________ OFFICE OF THE COMMISSIONER GENERAL FOR PLANNING POVERTY REDUCTION AND GROWTH STRATEGY PAPER (PRGSP) September 2009 PREFACE This paper presents the Poverty Reduction and Growth Strategy (PRGS) for the U n i o n o f the Comoros. I t outlines the country's development priorities for the next five years, that are supported by a l l Comorians. This vision reflects the hopes o f the population as well as the current socioeconomic situation; the medium-term macroeconomic outlook; the most recent findings f r o m quantitative and qualitative studies o f household l i v i n g conditions, poverty, and various forms o f inequality; and a review o f the performance, strengths, and weaknesses o f the country's key social and economic sectors. Based on this comprehensive diagnostic assessment, six core strategies and 32 p r i o r i t y programs were identified and addressed in several discussion and validation workshops, which confirmed the relevance and priority status o f these programs for the country's development. The Government o f the Union o f the Comoros intends to support these priority programs, as i t s resources allow, and to implement the institutional reforms required for true recovery o f growth and reduction o f poverty. Through the practical implementation o f this strategy, the government intends to spare n o effort to reach the Millennium Development Goals (MGDs). The Comorian people firmly believe that, with the support o f the international community, the many challenges impeding the country's development process can be addressed. This strategy i s the first step in setting the stage to restore the Comoros to the path o f robust economic growth and sustainable poverty reduction. The President o f the U n i o n o f the Comoros Moroni, September 2009 ACRONYMS AND ABBREVIATIONS AAIDA Arab Authority for Agricultural Development and Investment ACTIV Comorian Association o f Veterinary Technicians and Nurses AFD Agence Franqaise de DCveloppement AfDB African Development Bank AGOA African Growth and Opportunity Act AIEB Support for basic economic initiatives AIMPSI Moroni Prince Said Ibrahim International Airport AMIE Micro and small-scale enterprise support project (UNDP) ANPI National Investment Promotion Agency APSA Association o f Animal Health Professionals APSP Association for Private Sector Promotion ASC Anjouan Stevedoring Company ASECNA Air Navigation Safety Agency BADEA Arab Bank for Economic Development in Africa BCC Central Bank o f the Comoros BDC Banque de Developpernent des Comores BIC Banque pour 1'Industrie et l e Commerce des Comores c.i.f. Cost, insurance, and freight CCIA Chamber o f Commerce, Industry, and Agriculture CEN-SAD Community o f Sahel-Saharan States CF or KMF Comorian franc CGP Office o f the Commissioner General for Planning CHN National hospital center CHR Regional hospital center CIPR Regional Education Inspection District CNAD National Committee for Development Support CNDRS Center for documentation and scientific research CNE Caisse Nationale d'Epargne -11- National Committee to Fight HIViAIDS and Sexually-Transmitted CNLS Infections COI Indian Ocean Commission COMACO e Compagnie d Manutention des Comores COMESA Common Market for Eastern and Southern Africa e e Comites d Planification d Suivi-Evaluationdu Developpement COPSED [Committees for Development Planning, Monitoring, and Evaluation] CURE Emergency Loan for Economic Recovery Developpement des Cultures Vivrikres et Appui SCmencier [Development DECVAS o f Food Crops and Seed Support] DFI Decentralizedfinancial institutions DIJEC Comorian comprehensive early childhood development DOTS Directly-observedtreatment course (tuberculosis treatment strategy) EAP Environmentalaction plan EBC Budget and consumption survey EDF European Development Fund EDIC Diagnostic study on trade integration EDS Demographic and Health Survey EFA Education for All EIM Comprehensive household survey EPI Expanded Program on Immunization EU European Union EVF Education for family living EVIH , HIV/AIDS survey FADC Community development support fund FA0 Food and Agriculture Organization o f the United Nations FEE Water and electricity fund FER Road maintenance fund FP Family planning GAFTA Greater Arab Free Trade Area GDP Gross domestic product 11 ... -111- GFCF Gross Fixed Capital Formation GNP Gross national product GTS Sectoral Technical Group HDI Human Development Index HIPC Heavily Indebted Poor Countries Initiative HIV/AIDS Human immunodeficiency virus/Acquired immune deficiency syndrome HPI Human Poverty Index ICPD International Conference on Population and Development ICT Information and communication technologies IEC Information, Education, and Communication IFAD International Fund for Agricultural Development IGE Income-generating activities ILO International Labour Office IMCI Integrated Management o f Childhood Illness IMF International Monetary Fund IsDB Islamic Development Bank KAP Knowledge, attitude, and practice MA-MWE Comoros water and electricity company MDG Millennium Development Goals MECK Mutuelle d'Epargne et de CrCdit ya Komori MFI Microfinance institutions MICS Multiple Indicators Cluster Surve MIGA Multilateral Investment Guarantee Agency MTEF Medium-termexpenditure framework NAP-EFA National Action Plan - Education for All NEPAD New Partnership for Africa's Development NGO Non-governmental organization NITC New information and communication technologies NN National network ... 1 11 -1v- OCI Organization o f the Islamic Conference ODA Official development assistance OHADA Organization for the Harmonization o f Business L a w in Africa OPACO Comoros employers' organization PIP Public investment program PNAC National autonomous pharmacy o f the Comoros PNDRH National human resource development plan PNDS National health development plan PNE National program o n environment PNLP National program to fight malaria PNLS National program to fight A I D S PNS National health policy POP Persistent organic pollutants PRGF Poverty Reduction and Growth Facility PRGS Poverty Reduction and Growth Strategy PRGSP Poverty Reduction and G r o w t h Strategy Paper RF Road fund RGPH General population and housing census RH/FP Reproductive healtldfamily planning RNFD National network for women and development SIDS Small Island Developing States SME Small and medium-scale enteiprises SMEISMI Small and medium-scale enterprises and industries SNAC National U n i o n o f Comorian Farmers SNPSF National Postal and Financial Services Company SNPT National Postal and Telecommunication Company STI Sexually-transmitted infections UA African U n i o n UCCIOI U n i o n o f Chambers o f Commerce and Industry o f the Indian Ocean iv t -V- UN United Nations UNDAF United Nations Development Assistance Framework UNDP United Nations Development Programme UNFPA United Nations Fund for Population Activities UNICEF United Nations International Children's Emergency Fund UNS United Nations System VAT Value-added tax WB World Bank WHO World Health Organization WTO World Trade Organization V CONTENTS Preface 11 ... Acronyms and abbreviations 111 Table o f Contents vi CHAPTER ICONTEXT AND BACKGROUND TO THE . POVERTY REDUCTION AND GROWTH STRATEGY 1 1.O. Context o f the Union o f the Comoros 1 1.1. Background and foundation o f the PRGS 3 1.2. Contents o f the paper 5 CHAPTER 11. ANALYSIS OF LIVING CONDITIONS AND POVERTY 6 2.0. Introduction 7 2.1. Population's perception o f well-being and poverty 8 2.2. Scope o f monetary poverty 10 2.3. Effect o f inequalities 11 2.4. Determinants o f poverty 12 2.5. Non-monetary poverty 13 2.6. Impact o f unemployment and under-employment 15 2.7. Restoring growth and reducing poverty 17 CHAPTER 111. ANALYSIS OF SECTORAL PERFORMANCE AND CONSTRAINTS 18 3.0. Introduction 19 3.1. Agriculture, stockbreeding, and fishing 19 3.1.1, Agriculture subsector 19 3.1.2. Stockbreeding subsector 22 3.1.3. Fishing subsector 25 3.2. Tourism 27 3.3. Economic and communication infrastructure 31 3.3.1 Economic infrastructure 32 3.3.2 Port infrastructure 33 3.3.3 Airport infrastructure 35 3.3.4 Telecommunication infrastructure 36 -11- 3.4. Energy, water, and sanitation sector 38 3.4.1. Energy subsector 38 3.4.2. Drinking water sector 40 3.4.3. Sanitation subsector 42 3.5, Environment 44 3.6. Governance and social cohesion 47 3.7. Education 53 3.8. Health 60 3.9. Private sector and microfinance 65 3.9.1. Private subsector 65 3.9.2. Financial and microfinance subsector 68 CHAPTER IV. CORE STRATEGIES AND PRIORITY PROGRAMS 72 4.0. Introduction 73 4.1. PRGS Core strategies 76 4.2. Cross-cutting stakes 80 4.3. Priority programs by core strategy 83 . 4.3.1. Core strategy I Stabilize the economy and lay the groundwork for strong and equitable growth 83 4.3.2. Core strategy 11. Strengthen key sectors by focusing on institution- building and ensuring a broader role for the private sector 88 4.3.2.1. Strengtheningthe private sector 89 4.3.2.2 Restoring growth through key sectors 90 4.3.3. Core strategy 111. Strengthen governance and social cohesion 95 4.3.4. Core strategy IV. Improve the health status o f the general public 98 4.3.5. Core strategy V. Promote education and vocational training with the aim o f developing human capital 102 4.3.6 Core strategy VI. Promote environmental sustainability and civilian security 105 CHAPTER V. ECONOMIC ENVIRONMENT AND MACROECONOMIC FRAMEWORK 110 5.0. Introduction 111 5.1. Recent economic developments in the Comoros 111 5.2. Short-term economic outlook 115 5.3. Macroeconomic framework 117 5.3.1 PRGS scenario 117 5.3.2 MDG scenario 121 5.3.3 IMF scenario 126 11 -111- CHAPTER VI. ESTIMATED PRGS FINANCING REQUIREMENTS 129 6.0. Introduction 130 6.1. Core strategy I.Stabilize the economy and lay the groundwork for Strong and equitable growth 132 6.2. Core strategy 11. Strengthen key sectors by focusing o n institution building and ensuring a broader role for the private sector 133 6.3. Core strategy 111. Strengthen governance and social cohesion 134 6.4. Core strategy IV. Improve the health status o f the general public 135 6.5. Core strategy V. Promote education and vocational training with the aim o f developing human capital 136 6.6. Core strategy VI. Promote environmental sustainability and civilian security 136 CHAPTER VII. PRGS MONITORING AND EVALUATION FRAMEWORK 138 7.0. Context 139 7.1. Principles and objectives o f the monitoring and evaluation system 140 7.2. Institutional framework for monitoring and evaluation 141 7.3. Features o f the monitoring and evaluation system 146 7.4. Progress reports and output timetable 148 7.5. Implications for the national strategy on statistical development 148 7.6. Implications for capacity building 149 7.7. Implications for efficacy and harmonization o f official development assistance 149 CONCLUSION 151 ANNEXES 159 Annex 1. Performance indicators for PRGS monitoring 152 Annex 2. Survey o f programs and projects in progress supporting achievement o f the PRGS objectives 155 Annex 3. Financing available for each PRGS core strategy and Priority program 175 ... 111 CHAPTER I CONTEXT AND BACKGROUND TO THE POVERTY REDUCTION AND GROWTH STRATEGY e 1.0. Context o f the Union o f the Comoros The U n i o n o f the Comoros i s an archipelago comprised o f four m a i n islands at the northern entrance o f the Mozambique Channel, with a land area totaling 2,236 square kilometers. Despite the unanimous disapproval o f the international community and the protests o f the Comorian authorities, one o f the islands, Mahore (or Mayotte in Creole, 424 square kilometers), remained under administration o f France, the former colonial authority, when the territory became independent on July 6, 1975. Accordingly, the sovereignty o f the Republic o f the Comoros applies in practice to the other three islands, w h i c h are M w a l i ( M o h d i , 290 square kilometers), Ndzuwani (Anjouan, 374 square kilometers), and Ngazidja (Grunde Cornore, 1,148 square kilometers). The 2003 General Population and Housing Census (RGPH) registered a population o f 576,000 o n the three islands, with women accounting for slightly more than h a l f o f the total, and an average annual growth rate o f 2.1 percent. The population was estimated at 670,000 in 2009 and i s expected to reach 785,000 by 2015-runaway demographic growth exerting substantial pressure o n available land. Population densities have reached critical limits in Ndzuwani; and in the region o f NyumakClC, where they exceed 1,000 inhabitants per square kilometer o f arable land. Accordingly, the current major environmental conservation problems could worsen if the country does not take appropriate measures immediately to address this demographic trend. According to the RGPH, another feature o f the Comorian population i s that i t i s quite young (53 percent o f the population i s under 20 years o f age). Further, the average age o f the population i s 24.1 years. O f course, such an age structure will pose substantial challenges, primarily in providing young people with services in the areas o f education, health, nutrition, vocational training, employment, leisure activities, etc. The dependency ratio (children under 15 years o f age and aged persons over .64 as a share o f the population 15-64 years o f age) i s 198.5 percent and registers a clear gap between urban areas (169.3 percent) and rural areas (210.6 percent). These figures are s t i l l quite high if w e consider the l o w estimated gross activity rate (25.3 percent) o f the Comorian population. The RGPH registers gross births and overall fertility rates respectively o f 35.6 per thousand (33 per thousand in urban areas and 36.7 per thousand in rural areas) and 150.8 per thousand (128.1 per thousand in urban areas and 161 per thousand in rural areas). The country's synthetic fertility index i s 5.3 children per woman. This fertility rate i s m u c h higher in rural areas (5.6 children per woman) than in urban areas (4.5 children per woman). These socio-demographic variables register substantial growth as compared with the 1996 Demographic and Health Survey (EDS). Comorian children are s t i l l exposed t o substantial mortality risks. The data indicate that infant mortality levels are s t i l l substantial, despite a downward trend. In 2003, infant mortality was estimated at 79.3 per thousand, as against 86.2 per thousand in 1991 and 121.7 per thousand in 1980. M a n y Comorian women die as a result o f pregnancy or childbirth complications, attributed mainly to high fertility levels and the substantial prevalence in the Comoros o f home births, often without the assistance o f qualified personnel (3 8 percent according to the 2000 Multiple Indicator Cluster Survey-MICS). The maternal mortality rate i s estimated at 381 women per 100,000 l i v e births (RGPH 03). -2- Anthro-political research in the Comoros has shown a highly structured social organization deeply rooted in tradition, in which the individual blends into the community and can only be affirmed through the mechanisms imposed by society. The family i s the foundation o n which society i s organized and operates. M o r e generally speaking, the concept o f family, in practice, includes four levels: nuclear family, extended family, lineage, and clan. The supremacy o f the family i s confirnied through marriage, which expands and strengthens the family structure. Marriage also enables individuals to gain access to the social hierarchies. The introduction o f the Islamic religion in the Comoros i s thought t o date back t o the Thirteenth Century, and almost a l l o f the Comorian population i s Muslim. However, Islam in the Comoros s t i l l reflects a mixture o f social practices and beliefs influenced by customs and tradition. As a result o f these combined influences, traditional Islam resists militant Islam, as religious authority i s only ultimately acknowledged in combination with traditional power. Koranic school i s the Comorian child's first contact with the education system, and i t teaches the basic principles o f Islam and socio-cultural values, while introducing children t o reading the Koran and writing in Arabic. Koranic school therefore plays a fundamental role in forming the Comorian personality. Since the Comoros gained independence, the country has not experienced political stability conducive to socioeconomic development and the establishment o f a viable political and institutional framework consistent with the population's expectations. The public authorities did not officially acknowledge the existence o f political parties until the early 1990s. A series o f political crises culminated with the secession o f the Island o f Ndzuwani in 1997, which also led to an institutional crisis. This secession process plunged the country into a lengthy period o f political and institutional uncertainty w h i c h threatened the very existence o f the Comoros as a nation state. With the support o f the international community, a process o f national reconciliation was undertaken with the signing o f the Fomboni Agreements in February 200 1, which led to the December 2001 adoption by referendum o f a fundamental l a w instituting a new Comorian grouping k n o w n a the "Union o f the Comoros" within w h i c h each island had broad autonomy and i t s o w n constitution. Under the 200 1 Constitution, at the level o f the Union, executive power was vested in the President o f the U n i o n (assisted by t w o V i c e Presidents from each o f the t w o islands other than the President's, and a government appointed by the President) elected to a four-year t e r m by one round o f direct universal suffrage, o n a rotating basis between the islands. Legislative power l i e s with a unicameral parliament comprising deputies, some o f w h o m are elected by direct universal suffrage and some appointed by the island assemblies. At the island level, executive power i s vested in the President o f the Island (assisted by a government appointed by the President), elected to a five-year t e r m by direct universal suffrage in a two-round uninominal election. Legislative power i s vested in the Island Assembly, whose members are elected by direct universal suffrage. This complex institutional architecture has l e d t o multiple, recurrent conflicts o f authority between the executive powers o f the Islands and the Union, particularly as the Constitution only -3- specified the exclusive scope o f the central authority and gave the future Assembly o f the Union the task o f passing the organic laws defining the scope o f exclusive authority and prerogatives o f the Islands, and those shared by the Union and the Islands. These conflicts took a serious turn in 2007, when, after the failed election o f the chief executive o f Ndzuwani, the outgoing president proclaimedhimself re-electedand took power. This act would plunge the country back into a period o f acute political and institutional turbulence. I t would take almost a year and an intervention by the Comorian army supported by the African Union forces on the Island o f Ndzuwani for the three islands to be re-unified. The President o f the Union took the initiative o f presenting the population with a draft revision o f the 2001 Constitution for a referendum in 2009. Among other matters, the referendum law adopted on May 17, 2009 restricted the prerogatives o f the island powers and replacedthe terms "President o f the Island," Minister o f the Island," and "Deputy o f the Island" respectivelywith "Governor o f the Island," "Commissioner," and "Counselor." At the level of the Union, the principle o f a rotating presidency between the islands was maintained, and the President i s elected for a five-year term, with three Vice Presidents, one representing each island. 1.1 ORIGIN AND BASIS OF THE PRGSP The Comoros in 2003 established an Interim Poverty Reduction and Growth Strategy Paper. (IPRGSP) prepared in a highly participative, inclusive process with all national players and international development partners. Based on the lessons learned from the past in the area o f national development planning, and on the experiences o f other countries, the government decided the foundations and reference framework that guided the preparation of the interim poverty reduction and growth strategy. The adopted approach was based on the following four principles: A strategy devised with a participative approach designed to involve the public, key players in civil society, and the private sector in poverty reduction; A gradually developed strategy, starting with existing information and limiting the collection of new information to a strict minimum, focusing instead on dialog and exchange through regional and national workshops and roundtable discussions. The strategy will be improved and updated as the data on household living conditions are collected and the impact studies are conducted; A strategy targeting potential growth areas, and particularly the economic sectors comprising the vulnerable and poor groups, to achieve sustainable poverty reduction while being mindful of the essential social dimensions identified; A cross-cuttingstrategy to ensure that the macroeconomic environment and sectoral programs and policies are effectively integrated, to reflect more effectively the dimensions characterizing poverty, and to propose innovative operations to address the multiple factors impeding growth and poverty reduction. -4- This paper, which was positively received by a l l parties, including the Bretton Woods institutions, has since that time served as a benchmark for a l l development activities in the Comoros. I t was updated in 2005 and accompanied with an action plan covering the period 2006- 2009 to serve as a basic document for the December 2005 Comoros Donors' Conference. Despite the comprehensiveness of the paper, the country authorities decided to maintain i t s interim status pending conclusion o f a formal program with the IMF. When relations resumed between the Comoros and the LMF and with a view to the formal conclusion of a program with the Fund, the government decided in 2008 to start work on preparing the final version o f the PRGSP. In light of the completeness o f the interim poverty reduction and growth strategy paper, the government established the following key tasks in the preparationof the final version of the strategy: To update the sectoral diagnostic study and profile o f poverty and adjustment to reflect the core strategies, programs, and operations adopted; 0 To reflect more effectively the achievement o f the Millennium Development Goals; To integrate trade more accurately by taking into account the Diagnostic Study on Trade Integration (EDIC); 0 To take better account o f human rights and gender issues; 0 To reflect decentralizationmore effectively. Comprehensive studies were conducted on these topics, including an evaluation o f the costs o f the requirements to reach the MDGs so that they can be taken into account when the paper i s finalized. Similarly, drawing lessons from the weaknesses registered in connection with IPRGSP implementation, monitoring, and assessment, the government decided to focus on the institutional approach to be used in preparing the final paper to gain maximum support for the final version of the strategy from the government and the various sectors involved. I t was also decided to review and reconfigure the PRGS monitoring and evaluation framework by simplifying i t to make i t more operational, and harmonizing i t with the mechanism used to coordinate the aid the country has recently secured. Accordingly, the government has maintained and consolidatedthe highly participative process used in preparing the preliminary version o f the strategy. The institutional steering mechanism for the process was reinforced to further involve the islands, the various national and nongovernmental players in development, as well as the technical and financial partners. The sectoral working groups, the mainstays involved in preparing the strategy at the national level, are now chaired by the secretaries-general o f the ministerial departments involved, to ensure effective government support. The sectoral working groups were assembled with great care to ensure that a l l players were fully involved in the development of this final version o f the strategy. t -5- The basic insular structures o f the PRGSP process, the Committees for Development Planning, Monitoring, and Evaluation (COPSED), that replaced the steering committees, were broad contributors to the process. They participated in and facilitated the conduct o f preliminary studies, including the assessment o f requirements to achieve the Millennium Development Goals, and their representatives were involved in the w o r k o f the sectoral working groups. These COPSEDs are chaired by representatives f r o m c i v i l society and the private sector, and the Island Planning Directorates cover their technical secretariat functions. 1.2. CONTENTS OF THE PAPER This paper i s comprised o f seven chapters, including this one. Chapter T w o covers the qualitative and quantitative analysis o f living conditions and poverty in the Comoros. Chapter Three provides a diagnostic assessment o f the different sectors involved in the PRGS. Chapter Four describes the objectives, core strategies, and priority programs adopted in connection with the strategy. Chapter Five examines the macroeconomic environment o f the country and presents the macro-financial framework. Chapter Six presents the estimated costs o f the PRGS. The last chapter presents framework for monitoring and assessment o f the strategy. t -6- CHAPTER I 1 ANALYSIS OF LIVING CONDITIONS AND POVERTY -7- 2.0. Introduction The repeated political, institutional, and economic crises the U n i o n o f the Comoros has endured during the past 10 years have done little to improve the living conditions o f the population. O n the contrary, the situation has aggravated poverty and has led to deterioration in the social climate and relations with the international community. In fact, the resulting decline in development aid in times o f economic crisis has further exacerbated the country's vulnerability and poverty problems. M a n y households are n o w surviving, with difficulty, on transfers f r o m Comorian expatriates. The private sector i s being weakened increasingly as a result o f the persistent economic deterioration and the accumulation o f government arrears and household debt. Since the publication o f the IPRGSP in November 2005, there has been n o real positive change in the country's sociopolitical and economic situation. The U n i o n o f the Comoros once again experienced a period o f political instability in 2006-2007 with new secessionist attempts by the Island o f Nzwani. The easing o f political tensions marked by organizing the election o f the chief executive o f the Island o f Nzwani in June 2007 finally enabled the Comorian authorities to define and implement an economic program, to undertake efforts to rehabilitate the road system in the capital, and to renew ties with the international financial institutions. The government concluded a post-conflict program with the IMF in October 2008, and CF 1.8 b i l l i o n in much-needed financial support was finally released in December 2008. According to the data from the Office o f the General Commissioner for Planning, which are s t i l l provisional, the real GDP growth rate amounted t o approximately 0.2 percent in 2008 as against 0.8 percent in 2007 (10-year lows). This growth slowdown has led t o shortages o f certain commodities such as rice and petroleum products. The energy crisis that struck the country during the latter h a l f o f 2008 paralyzed the economic sectors and helped worsen an already severe economic crisis. The inflation rate reached 6.5 percent in 2008, as against 4.5 percent in 2007, directly affecting the population's already l o w purchasing power, with a substantial and growing dependency on imports. The fiscal situation has deteriorated even further. Despite improved domestic revenue, the increase in current expenditure has led to deterioration in the key budget balances and the overall deficit (not including grants). With this trend, the balance o f payments current account deficit also registered sharp deterioration in connection with the erosion o f the balance o f trade. This situation has exerted further pressure on the government's capacity to meet i t s domestic liabilities. Arrears to staff and enterprises are s t i l l substantial and are contributing to even further deterioration in the general economic climate and household living conditions. Despite the absence o f recent data to assess current household living conditions and poverty in the Comoros, information on the economic environment supports the assumption that the socioeconomic situation i s deteriorating and that poverty i s o n the rise. Household purchasing power i s n o w eroding as a result o f inflationary pressure. In 2008, we observed occasional shortages o f basic foodstuffs creating upward pressure o n prices. The crisis has also affected the Comorian expatriate community. W e can already anticipate a drop in the short to medium t e r m in transfers, leading to a decline in household income, particularly in Ngazidja. Rural areas have also been affected. The substantial decline in production and prices for key export products supports the assumption that living conditions have deteriorated and that, poverty has increased. Apart f r o m ylang-ylang production and prices, which seem t o have remained stable or to have improved slightly in 2008, the prices o f cloves and vanilla have declined substantially, as have the quantities produced and exported. Last, we should emphasize that financial commitments the international community made at the time o f the Mauritius Conference have yet to materialize. Very few new resources l i k e l y to generate renewed growth, or at least to stabilize the population's living conditions, have been injected into the economy in recent years. This chapter presents an analysis o f the living conditions o f the Comorian people based o n the available data, and places the scope o f poverty and inequalities that characterize the U n i o n o f the Comoros in perspective. I t i s important to bear in mind that the available information already date back several years, and that the most recent economic information tends to indicate that living conditions are probably less favorable than the analysis presented in this chapter w o u l d indicate. 2.1. POPULATION'S PERCEPTION OF WELL-BEING AND POVERTY The qualitative study conducted in 2002 o n perceptions o f well-being and poverty enabled Comorian men and women to express their opinions o n their living conditions and t o identify ways to reduce poverty. The survey shed light o n perceptions o f well-being and causes o f poverty. The results o f this study were confirmed by the results o f the 2004 comprehensive household survey (EIM). Unfortunately, n o recent data are available to establish a current profile. However, as indicated in the introduction, n o significant changes have occurred during recent years to imply that substantial differences or improvements might be present. To define well-being, the Comorian population refers primarily to the satisfaction o f basic requirements such as housing, education, clothing, food, health, hygiene, and sanitation. The same applies to the definition o f poverty, which i s characterized as the situation in w h i c h such requirements are not being met. The 2002 survey o n perceptions o f poverty revealed that i t i s difficult f o r many households to meet their food requirements. M a n y households in fact indicated that they did not eat sufficient quantities, while the majority indicated that they did not have a high quality diet. Products such as meat, fish, rice, bananas, chicken, and even cassava are not accessible to a substantial proportion o f the population. These perceptions confirm the quantitative indicators o n the fragile nutritional status o f several social groups, particularly young children and pregnant women in rural areas. The population also referred t o social problems such as theft and delinquency t o describe poverty O f course, some resurgence o f social problems i s inevitable with an increase in poverty. -9- Employment i s an indirect means for the population to meet i t s needs, while money i s a direct means to do so. Road infrastructure, commercial activities, and access to energy and telecommunications are mechanisms to improve the economic environment, and indirectly, to improve household living conditions. The deterioration in the energy supply in recent years has been one o f the m a i n obstacles to economic development and poverty reduction. Owning furniture, a radio or television, or having a grand wedding seem to be some o f the signs o f an improved quality o f life, to demonstrate social status, or t o improve one's social standing. There are few differences between the islands, environments, and socioeconomic groups in terms o f the perceptions o f well-being and poverty. For example: 0 In Ngazidja, road infrastructure and grand weddings are more important than in the two other islands; 0 In Ndzuwani, trade i s a more important factor in well-being than i t i s o n the other two islands. Poverty i s perceived as a consequence o f several factors, and specifically the insufficiency o f physical and human capital, insufficient performance o f institutional capital, influence o f external factors, and behavior o f individuals, households and communities. The main reasons cited by the population for not escaping poverty are laziness, lack o f education, unemployment, lack o f occupational training, and not being remunerated for work. The main strategies households use to escape poverty are self-employment, education, credit and savings, development o f income-generating activities, occupational training, trade, and investment. The populations perceive the following to be key factors to improve well-being: (i) access to quality health care; (2) access to drinking water in sufficient quality and quantities; (iii) education (important to 57 percent o f the population, and specifically occupational training); (iv) housing (55 percent); (v) religion (particularly in rural areas); (vi) employment; (vii) credit; (viii) capital goods; (ix) trade; (x) cash crops; (xi) electricity; (xii) telecommunications; and (xiii) roads. Problems in accessing basic social services are substantial, in both rural and urban areas. 1. T o improve access to health services, the people propose an increase in the number o f health workers, reduction in costs o f health care to a minimum or providing care free o f charge; j o b creation, reduction in the costs o f medicine and construction o f heath centers. 2. T o enhance access to primary education, the resources proposed include financial aid for education, free school supplies, child minding at school, better public education, and children's awareness o f the importance o f school. 3. The public believes that improved access t o drinking water requires implementation o f water systems, construction o f wells, and financial assistance. -10- 4. Improvement o f health infrastructure requires development o f waste disposal sites, waste incineration, technical assistance, construction o f water drainage conduits, and studies to identify landfill sites. The m a i n economic activities o f the Comorian population are listed as follows in order o f importance: (i) agriculture, (ii)fishing, (iii) small business, (iv) small-scale works, (v) stockbreeding, (vi) masonry, (vii) c i v i l service, (viii) artisanal industry, (ix) unskilled labor, and (x) domestic service. Stockbreeding was found to be more prevalent in M w a l i than the other islands. These activities, and particularly agriculture and fishing, are facing substantial difficulties that are impeding their development. Lack o f equipment, theft o f crops and animals, l o w prices for products, insufficient inputs, insufficient market outlets for agro-food products, crop destruction by slugs and snails, and poor yields are the main weaknesses identified in agricultural production. Substantial drought problems were emphasized in Ngazidja and M w a l i . In the fishing sector, the main concern i s insufficient fishing equipment, and particularly boats, lack o f safety at sea for fishermen, and l o w market prices for fish, particularly in Ndzuwani and Mwali. Last, problems related t o economic activities are insufficient training, wage payment delays for c i v i l servants, electricity and drinking water shortages, high taxes, transportation costs, insufficient pastures for animals, etc.. Access to production equipment i s a major problem in the development o f the key economic activities (agriculture and fishing). The means to improve access to equipment according to the population are, inter alia, technical assistance, financial aid, equipment grants, credits for purchase o f equipment, equipment loans, and employment. Access t o agricultural land appears to be an important problem, particularly in Ndzuwani, where overpopulation and geography restrict the available agricultural area. The mechanisms to improve access to agricultural land, according to the population, are land redistribution, upgrading o f land quality, and j o b creation for the purchase o f agricultural land. Access t o financial services i s quite limited, particularly in M w a l i . According to the population who participated in the survey, the resources to enhance the population's access t o financial services are easier credit terms, creation o f savings and loan associations, j o b creation, and lower interest rates. 2.2. SCOPE OF MONETARY POVERTY A poverty profile for the Comoros has been established based on the latest poverty data (EIM 2004). The data indicate that monetary poverty i s s t i l l widespread in the Comoros. For the overall country, the incidence o f poverty at the household level was estimated at 36.9 percent in 2004. On an individual basis, w e should therefore expect one out o f t w o individuals (44.8 percent) t o be classified as poor according to the monetary poverty index. -1 1- Monetary poverty on an individual basis was, apriori, higher in Ndzouani and M w a l i , as compared with Ngazidja (respectively 46.4 percent, 49.1 percent, and 42.7 percent). Poverty levels are clearly higher in rural areas, particularly in Ndzouani, which reportedly accounted for 78.8 percent o f the household poverty in the Comoros. Table 2.1. Poverty measurements by household, individual, and geographic location' - Comoros 2004 Parameter FGT~ Households Individuals Real per Incidence (a = 0) Intensity ( a = 1) Inequality ( a = 2) capita Islandarea Value - Contribution3 Value Contribution3 Value - Contribution' PO Consumption N4 -PO -P I P2 (000 FC) Ngazidja 0.353 0.46 0.12 0.449 0.058 0.452 0.427 661.3 1,433 Moroni 0.278 0.069 0.095 0.067 0.044 0.065 0.374 578.4 273 Secondary 0.195 0.021 0.054 0.017 0.021 0.013 0.279 897.6 118 urban Rural 0.391 0.37 0.134 0.365 0.066 0.373 0.454 656.2 1,042 Ndzouani 0.384 0.477 0.138 0.492 0.066 0.492 0.464 764.1 1,368 Urban 0.252 0.088 0.085 0.085 0.037 0.078 0.313 763.5 384 Rural 0.435 0.389 0.158 0.407 0.077 0.414 0.521 764.2 985 Mwali 0.378 0.064 0.123 0.059 0.056 0.056 0.491 502.5 185 Urban 0.375 0.035 0.126 0.034 0.057 0.032 0.481 552.7 102 Rural 0.383 0.029 0.119 0.026 0.055 0.025 0.502 441.1 83 Total 0.369 1 0.128 1 0.062 1 0.448 698.5 2,987 Sources: EIM2004. (1) Not all poverty measurements were multiplied by 100 and the standard deviations are given in parentheses. The poverty line i s CF 285,144 per capita, per annum. ( 2 ) Foster, Greer, and Thorbecke category indices. (3) Relative contribution C,,. (4) Weighted N. The EIM results point to four relatively distinct socioeconomic categories depending o n the poverty incidence: (i) households where the head i s a protected wage earner (poverty incidence: 25.5 percent); (ii) households headed by an unprotected wage earner, an independent worker in the informal sector, or a family assistant-apprentice (poverty incidence: 30-35 percent); (iii)subgroups headed by a subsistence farmer, commercial farmer, unemployed person, or inactive person (poverty incidence: 38-39 percent); (iv) households headed by a micro- entrepreneur, stockbreeder, or fisherman (poverty incidence: 46-54 percent). W e observe that three socioeconomic groups account for nearly two-thirds o f national poverty: farmers' households (30.2 percent), unprotected wage earners' households (15.8 percent), and households headed by an inactive person (19.6 percent). 2.3. EFFECT INEQUALITIES OF Per-capita expenditure inequality increased substantially at the national level during the period 1995-2004. All inequality indicators register a clear increase in disparities. The Gini index increased 25.7 percent (from 0.443 t o 0.557). W e note that per-capita expenditure inequality increased particularly in Ndzouani, and to a lesser extent in Ngazidja, while the reverse i s true for M w a l i . In this connection, the breakdown o f sources o f the level o f inequality highlights the role -12- o f household demography (particularly the number o f children 5-14 years o f age), education l e v e l o f the head o f household, proportion o f employees per household, and spatial location. We also observe that the existence o f external transfers leads to increased expenditure inequalities, particularly in Ngazidja. The determination o f elasticities o f poverty indices in respect o f real per-capita household expenditure and the Gini index in 2004 suggests several observations. First, in the overall economy, the absolute value o f inelasticities in respect o f per-capita expenditure i s substantially higher than 1 for all poverty measurements. A 1 percent increase in per-capita expenditure leads to a reduction in the poverty intensity ratio, respectively, by 1.64 percent and 1.87 percent. W e also observe an upward trend in expenditure elasticities during the period 1995-2004. Next, poverty tends to increase if expenditure inequality i s accentuated during the economic growth process. The results show greater social fragility in 2004 as compared with 1995, with regard to economic growth and the change in income inequality: the compensation in terms o f growth in expenditure to stabilize poverty, following an exacerbation o f inequality, i s higher in 2004 than in 1995. The breakdown o f the change in poverty during the period 1995-2004 shows that the decline in poverty between 1995 and 2004 would have been higher had the inequalities been less substantial. Although the available information does not permit u s to verify trends in the situation in terms o f inequality until 2009, l o w levels o f economic growth combined with substantial inflation imply accentuated inequalities with serious growth in poverty during recent years in the Comoros. 2.4. DETERMINANTSPOVERTY OF The analysis o f the determinants o f poverty and sensitivity analysis-an assessment o f the probabilities that households will be located in different segments o f the standard o f living distribution-is s t i l l valid and indicates'the following: 0 Households headed by stockbreeders (particularly in Ngazidja), fishermen (particularly in Ndzouani) or micro-entrepreneurs (particularly in M w a l i ) are more l i k e l y t o b e located in the poor rather than affluent segments; 0 The effect o f education o n the standard o f living i s clearly evident regardless o f geographic location. F o r example, at the national level, households headed by uneducated persons are at least twice as l i k e l y t o be in the poor segment as those managed by a person having a secondary education. However, i t i s important t o note that the effect o f access to primary and lower secondary education, in comparison with n o education, only moderately reduces the probability o f belonging to the poorest group; 0 The results highlight the impact o f demographic factors. F o r the poor segment, the age o f the head o f household to some extent i s directly related t o the higher probability that the household w i l l be located in this sector. Next, households managed by a woman are less likely to be exposed t o poverty-findings valid for all islands. Last, we will observe the influence the size o f the household, particularly in Ndzouani and M w a l i . At the national -13- level, one to two-person households are about four and one h a l f times less likely t o be poor than those comprising six to nine persons, and three and one h a l f times more likely to be affluent than the fonner; While increasing productive employment in each household i s one way to reduce poverty, the effect i s not linear. There are disparities between the islands: the effect i s fairly insignificant in Ndzouani, moderate in Ngazidja, and substantial in M w a l i ; Transfers have a substantial impact o n poverty. Households that receive external transfers are less likely to be poor than those receiving none. By contrast, the incidence o f transfers shows substantial disparities between the islands. The impact o f external transfers clearly reduces the probability o f poverty in Ngazidja (0.29 and 0.37 respectively, with and without fund transfers); and in M w a l i (0.24 et 0.39). The existence o f intra or inter-island transfers has n o impact in Ngazidja, while the effect i s to increase and decrease the probability o f poverty, respectively, in Ndzouani and M w a l i ; The spatial dimension o f poverty indicates that households are more likely to be poor when they are located in rural areas, particularly in Ndzouani. 2.5. NON-MONETARY POVERTY The intervention mechanisms likely to help reduce poverty can also be found through the analysis o f non-monetary poverty. The EIM data indicate that housing i s more informal in Ndzouani and Mwali, as compared with Ngazidja, if we consider that rammed clay or coconut p a l m leaves for walls, a r o o f made o f straw and leaves, and compacted earth floors are materials characteristic o f a highly informal dwelling in terms o f housing quality. Similarly, twice as many households use electricity as a source o f lighting in Ngazidja than in Ndzouani and M w a l i (53.6 percent, as against respectively 22.6 percent and 28.4 percent), as i s also true in affluent houses as compared to poor ones (respectively 48.9 percent and 27.0 percent). There has been n o indication in recent years that the electricity supply has improved, with devastating consequences for investment, enterprise profitability, and household well-being. W o o d i s s t i l l the main source o f energy for meal preparation. Approximately three fourths o f the households use this energy source. This observation calls for more attention to the environmental impact o f intensive firewood use. Access to education i s a highly important factor in development. Accordingly, analyses based o n estimated earnings functions show that investment in education, especially for girls, yields substantial returns. For example, women having access to an upper secondary education earn 89.6 percent more income than uneducated women. For men, the marginal rate o f return at this level o f education i s 52.1 percent. a -14- The disparities are even greater when we consider higher education: 403.5 percent and 13 1.9 percent, respectively, for women and for men. In this connection, we observe that annual education expenditure per child enrolled in school averages C F 44,000. Wealthy households spend four times more than poor ones per child enrolled in school (respectively C F 86,000 and CF 20,000 per year). Considering the level o f education o f employed persons seven years o f age and over, w e observe that nearly h a l f have n o education and that 29.4 percent have n o more than a primary education. Although the disparities according to the household living conditions and labor market status prevail, l o w education levels adversely affect the efficacy o f the production system. Further, the literacy rate in adults (15 years o f age and older) i s registered at 56.5 percent, a figure that seems t o reflect a substantial decline in literacy as compared with 1995. According to the EIM, the net literacy rates at the primary (6-1 1 years) and secondary (12- 18 years) levels are respectively 68.8 percent and 66.2 percent. W h i l e the overall percentages seem to reveal progress as compared with 199811999, they are slightly lower than the figures reported by the Ministry o f National Education (73.0 percent) in 2004. The data indicate that girls lag behind boys in terms o f school enrollment, and that this lag increases with the level o f education. W e observe that Comorian households s t i l l prefer t o send their children to the Koranic school first. If we consider the type o f institution attended, we observe that three fourths o f school children are enrolled in public institutions. Last, while less than 1 percent o f children drop out o f school before they complete the primary level, the drop-out rate increases at the secondary l e v e l (5.2 percent). Access to health care represents another element in human capital formation. The share o f the Comorian state budget devoted to health declined in relative value f r o m 5 percent to 3 percent between 2000 and 2003. Annual household expenditure on health, relative t o morbidity, child immunization, and pre and post-natal care amount to C F 27,300 (respectively C F 23,000 and CF 25,000 for poor and affluent households), equivalent to less than 1 percent o f total household resources. A number o f factors must be highlighted in terms o f the scope o f health access. First, i t was found that 17.6 percent o f the persons questioned had suffered f r o m a disease or injury during the 15 days prior to the survey. The proportion was slightly higher in poor households than in wealthy ones, as w e might expect. Personnel frequently consulted are physicians (65.3 percent), nurses (21 .O percent) and healers (6.0 percent). Further, we note that certain forms o f child malnutrition are s t i l l fairly prevalent and that relatively l i t t l e progress has been made during the past eight years. At the national level, the rate o f growth retardation, emaciation, and underweight prevalence are respectively 44 percent, 7.9 percent, and 24.9 percent. N o w , according t o the 1996 demographic and health survey, these three rates were estimated respectively at 33.8 percent, 8.3 percent, and 25.8 percent. W e note that the gender disparities in malnutrition are insignificant and indicate n o bias against girls. Further noteworthy access factors include (i) immunization coverage f o r children seven years o f age and under i s 8 1.3 percent, and w e observe some disparities between the islands; (ii) very few -15- (39 percent) children five years o f age and under have been taken to a medical facility for postnatal care, particularly in Ngazidja; (iii) substantial proportion o f women have had a pregnancies ending in s t i l l births (23.0 percent), particularly in rural areas (44.2 percent, as against 20 percent in urban areas), while 75 percent o f women have had access to prenatal care. In two thirds o f the cases, the consultations are with midwives; (iv) 72.0 percent o f households o w n a mosquito net, although there are disparities between the islands, and the use o f impregnated mosquito nets i s much less widespread, particularly in poor households (one fifth o f the population i s not aware that impregnated mosquito nets exist); (v) the majority o f the population (90 percent) i s aware o f H I V / A I D S and three fourths o f the population knows that there are ways to prevent contracting the virus. Last, there i s an inverse relationship between the household standard o f living and child malnutrition, except where growth retardation-a condition independent o f the child's gender-is involved. There are, however, substantial discrepancies in child malnutrition by island, being less prevalent in Ngazidja and more prevalent in Ndzouani. W e should emphasize that the ELM does not make the distinction between infant and infant-juvenile mortality, registering a mortality rate in children o f women 15-49 years o f age o f 70.7 per thousand live births, which o f course increases in direct proportion with the mother's age. 2.6. IMPACT OF UNEMPLOYMENT AND UNDER-EMPLOYMENT The capacity to optimize household assets i s o f major interest in the analysis o f household living conditions and poverty. In this connection, the EIM brought to light several factors. First, the average household size declined from 6.3 persons in 1995 to 5.8 persons in 2004. The dependency rate i s currently 3.4, which means that one active employed individual supports an average o f 3.4 inactive or unemployed persons. In addition, the differential in dependency rates by gender o f the head o f household, which i s biased against women, tends to be accentuated in poor households as compared with affluent ones. In this context, the activity rate for persons seven years o f age and older i s 37.5 percent (49.7 percent for persons 15-65 years o f age), a relatively l o w level as compared with the ratios registered in the M i d d l e East and N o r t h Africa. However, the descriptive analysis shows that the labor supply i s affected by several factors: (i)gender: 43.2 percent o f males seven or more years o f age are participating in the labor market, as against only 32.0 percent o f females; (ii) age: the labor supply increases with age and then decreases; (iii) education level: supply rates by level o f education move in a U-shaped curve; (iv) household living conditions: the labor supply rate for the poor i s only 32.7 percent as against 46.5 percent for the affluent. Second, the EIM shows a dualistic economic structure where an informal (essentially subsistence) agricultural and non-agricultural sector, and a developed tertiary sector are predominant. First, the agricultural sector, including fishing and stockbreeding, accounts for 57.4 percent o f the jobs if we include activities conducted in "urban" areas and workers classified as "apprentices" and "family helpers." Individuals employed in agriculture belong primarily to poor households, and the agricultural sector employs many women. In fact, the agricultural sector encompasses 66.9 percent o f jobs for women and 5 1.2 percent o f jobs for men. In other words, 46.9 percent o f the agricultural jobs are held by women. -16- The non-agricultural informal sector i s another component o f the Comorian productive system. If we include independent workers and micro-entrepreneurs in the informal sector, the contribution o f this sector to national employment amounts to 16.2 percent. Further, the role o f women in the non-agricultural informal sector i s substantial as i t accounts for 19.5 percent o f female employment, particularly in marginal activities. A total o f 48.6 percent o f j o b s in the non- agricultural informal sector are held by women. Last, if w e consider that a l l wage earners are part of the modern productive system (a high-side assumption), the latter contributes to 26.3 percent o f national employment. However, unprotected wage earners are predominant in the m o d e m sector as they account for approximately two-thirds o f the jobs. Another characteristic o f the ' modem sector i s the small share o f employment for women: wage earners contribute only 13.7 percent o f women's jobs, 69.2 percent o f which are unprotected (71.4 percent for men). This modem sector wage earning structure explains why only 28.4 percent o f the individuals working in the sector are located in affluent households. Against this backdrop, if w e consider age and education levels, we can refine the foregoing configuration o f labor market integration. First, the mechanisms for integration into the labor market are different for young men and women: nearly 70 percent o f the activities for young girls 24 years o f age and under are inherent in agriculture and the informal sector, and wage earning occupies a very small place (9.2 percent). By contrast, access to the labor market for young m e n in the same age group i s more diversified and wage earning occupies a substantial place. In these conditions, girls have greater access to the market for "bad jobs" and these ports o f entry probably steer them more towards self-employed and often marginal activities. By contrast, young men have access to the labor market o f "good jobs," particularly wage earning, w h i c h plays an important (but not exclusive) role in their professional careers. Further, the location o f labor in certain labor market segments i s easily explained by l o w levels o f education. F o r example, 80.1 percent o f the women employed are uneducated, as against 63.9 percent o f men. Third, we observe that women's annual income i s much lower than men's: respectively CF 834,400 and C F 1,302,000, or a ratio o f 0.64. An income distribution by activity i s fairly uneven. The estimated earning function shows that (i) education i s a substantial determfnant o f income from the labor market, and marginal yields increase with the level o f education; (ii) being a man increases annual income by an average o f 116.3 percent; (iii) unprotected wage earners, farmers, and stockbreeders receive less income than protected wage earners; and (iv) the geographic location and environment play an important role in individual income determination. All workers in rural areas and urban areas in M w a l i earn less than those in Moroni. W h e n the father has a secondary education, this has positive effects o n income f r o m work. Fourth, household income i s derived f r o m three major sources: (i) earnings f r o m the m a i n activity (36.9 percent); (ii) consumption o f home-grown food (27.7 percent); and (iii) imputed housing value (23.9 percent). In fact, the average household income (CF 699,000) i s quite close t o current annual expenditure (CF 698,600), reflecting a l o w level o f savings. Further, there are significant differences depending o n the island and various parameters f o r the head o f household or group. In particular, if income f r o m domestic and external transfers represents 2.5 percent o f a l l household income, the amount o f funds transferred per capita to Ngazidja, compared with Ndzouani, should be emphasized (CF 95,400 as against only C F 3 1,100). Similarly, the IEM shows the scope o f household transfer resources managed by a woman in comparison with male households (CF 50,800 as compared with CF 88,600). -17- Although the l e v e l o f urban development in the Comoros i s not high, unemployment merits special attention. I t was found that 13.5 percent o f active persons 7 years o f age or more were unemployed in 2004- a slight increase as against 1995, albeit a random comparison. The survey shows that the unemployed population includes 47.6 percent o f persons w h o have never worked, i.e., most commonly young people. Further, unemployment rates are slightly higher in Ngazidja (14.9 percent) and in M w a l i (15.0 percent) than in Ndzouani (12.1 percent). In examining the characteristics o f unemployed persons, we observe the specificity o f unemployment where young people are concerned: (i) persons under 24 years o f age, for unemployment strikes one fourth to one third o f the active population; (ii) ratio o f the unemployment rates for persons 15-19 years o f age and 30-49 years o f age i s approximately five, and i t declines t o approximately four when w e consider the 20-24 year age bracket; (iii) 64.9 percent o f unemployed persons are between 7 and 29 years o f age, while 44.6 percent belong to the 15-24 year age group (42.4 percent boys and 46.1 percent girls); (iv) although the discrepancies tend to decline for the 25-29 year age group, the proportion o f young unemployed females as a share o f total unemployed girls i s nearly twice as high as i t i s for young boys. We fin-ther observe that unemployment also has a more pronounced effect o n young persons, regardless o f the education level. C h i l d labor analysis suggests a few parameters that influence school enrollment. Accordingly, the probability o f attending school for children aged 7-17 declines: (i) with poverty; (ii) when the head o f household i s a farmer compared with a protected wage earner; (iii) when the head o f household i s a man; (iv) when the household i s located in Ndzouani. Similarly, children are more likely to go to school when: (i) head o f household i s educated; (ii) head o f household i s o f the the a certain age; (iii) when households have numerous children, particularly aged 5-14, and adults over 60 years o f age; (iv) when the children belong to the head o f household. Further, the probability that girls will attend school i s lower than i t i s for boys, and the marginal effect i s fairly high. 2.7. RESTORING GROWTH AND REDUCING POVERTY The poverty profile shows that i t is an urgent matter to restore the growth process and wage a resolute war against the causes o f poverty in the Comoros. The results o f the EIM show the importance o f recovery in the private sector, particularly in the agro-food areas, to ensure robust economic growth and achieve a significant reduction in poverty. These dynamics, however, must extend to economic transactors in other growth sectors (tourism, trade, and works and construction) which are the only sectors capable o f making the necessary investments to restore growth, create jobs, and reduce the poverty in which many Comorian households live. By contrast, growth alone i s insufficient to guarantee a substantial reduction in poverty if the inequalities become accentuated, access to education and health fails to improve, and the environment deteriorates. The government has therefore made access to education, quality health care (particularly in the area o f reproductive health) and environmental conservation priorities likely t o improve the living conditions for the Comorian people in the context o f this PRGS. -18- CHAPTER 111 ANALYSIS OF SECTORAL PERFORMANCE AND CONSTRAINTS -19- 3.0. INTRODUCTION This chapter presents a diagnostic tissessment o f the key economic and social sectors impacting poverty reduction and growth. Nine sectoral studies were conducted in connection with PRGS preparation. Each study produced a sectoral diagnostic assessment, which i s presented in summary form in this chapter. Possible paths o f intervention in connection with the PRGS are identified for each sector. The sectoral diagnostics cover the following: (1) a presentation o f the sector to highlight i t s economic and social importance; (2) sector performance and strengths; (3) weaknesses and constraints; and (4) outlook for the sector. These analyses identified the endogenous and exogenous factors affecting sector performance. The specific features o f each island were mentioned when the data permitted. The following sectors and subsectors were analyzed: Agriculture, fishing, and stockbreeding; Tourism; Energy, drinking water, and sanitation; Economic and communication infrastructure; Environment and public security; Governance and social cohesion; Education; Health; Private and financial sector. 3.1. AGRICULTURE,STOCKBREEDING, AND FISHING The agrofood sector (agriculture, stockbreeding, and fishing) i s the foremost engine for the Comorian economy. This sector employs the majority o f the population, contributes significantly to household income, constitutes the leading source o f foreign exchange, and provides the bulk o f the products consumed by the population, although food imports are s t i l l substantial. 3.1.1. AGRICULTURE SUBSECTOR Agriculture i s a major contributor to the Comorian economy. This sector generates approximately 49 percent o f the country's GDP, 80 percent o f i t s jobs, and nearly 90 percent o f i t s export revenue. The agricultural sector i s generally characterized by the following crops: subsistence crops (bananas, taro, cassava, and coconut), commercial vegetable crops (tomatoes, lettuce, potatoes, and onions), export crops (vanilla, cloves, ylang-ylang, coffee, and pepper), orchard production (citrus fruit, avocados, mangoes, jackfruit, and guava), and forestry. Despite the country's diversified food production and agricultural potential, rice i s s t i l l the basic food staple in the Comorian diet, and i t i s essentially imported. Almost all food, fruit, and t -20- commercial vegetable production i s consumed locally. Storage and processing o f agricultural products, which are high value-added activities, are s t i l l limited. Vanilla i s s t i l l the m a i n agricultural export product and constitutes the main source o f foreign exchange in this sector. Over the years, the U n i o n o f the Comoros has become the world's leading producer o f ylang- ylang essence. Sector performance and strengths There are several objective factors indicating that the agricultural sector can contribute substantially to restored growth and poverty reduction in the Comoros, if special efforts are made for i t s restructuring. This effort primarily involves: In the area o f food and commercial vegetable crops, successful introduction o f high-yield and disease-resistant varieties, and an increasing number o f farmers who have mastered the technical production routes (itinbraires techniques de production); An established, operational supply network for agricultural inputs; The government's willingness t o resume investments in the agricultural sector through medium-term public investment programs (PIP); Establishment o f development funds (for development o f food crops, fishing, etc.); Existence o f growing domestic demand; Potential for diversification o f cash crops; Small-scale spice and fruit processing and preservation; Fine species (spices and perfume) combined with existing crops on the same p l o t o f land. Food crops represent 80 percent o f agricultural production and account for approximately 47 percent o f value added in the agricultural sector. They are grown o n small family farms and production substantially covers household food security. Fruit crops are highly diverse and are harvested year round. These exceptional conditions make i t possible to offer fresh fruit throughout the year. I t would be a simple matter t o increase fruit production t o supply inputs to a fresh fruit juice or concentrate processing enterprise. The contribution o f commercial vegetable crops to national consumption could be strengthened with (i)broad dissemination o f proven technical solutions; (ii)improved preservation methods; (iii)diversified forms o f consumption; and (vi) a more effective marketing structure t o limit distribution costs and irregular supplies. -21- An organization movement has emerged and taken over certain basic functions in agricultural development: (i) organizations responsible for the supply o f agricultural goods and services at the grassroots level: distribution o f agricultural inputs, advisory support, etc.; (ii) organizations responsible for promoting activities t o gain community support, education activities, and pooled development and management o f the community equipment at the village level; (iii) rural financial institutions: village banks and savings and loans; and (iv) organizations primarily devoted to representing producers and defending their interests with the outside world, a farmers' union and a fishermen's union. Sector weaknesses and constraints Efforts to develop the Comorian agricultural sector must address certain major constraints to be eliminated and a series o f problems to be corrected. The most important o f these issues are listed below: Food, commercial vegetable, and fruit crops: water management; property access and security; isolation o f production areas; insufficient marketing, processing, preservation, and supply structures; insufficient access to credit, and lack o f appropriate resources for extension units; Export crops: isolation and fragmentation leading t o high production and labor costs, which affect the competitiveness o f Comorian products on the international market; insufficient diversification and absence o f raw materials upgrading and marketing policies. In addition to these specific constraints, we should add problems in active population renewal (rural flight o f young people; absence o f attractive, immediate income; absence o f appropriate mechanization t o make the work less strenuous). Farmers' organizations are in the early development stages and lack the means and human resources to meet the rural community's needs in light o f the government's divestiture o f service, management, production, and marketing functions. Despite these constraints, the sector offers real potential t o grow and have a significant impact on poverty reduction, as the country's number one contributor to GDP and j o b creation. In this context, the following activities must be targeted as priorities: Definition and implementation o f an appropriate land reform; 0 Capacity building for farm and professional organizations; Intensification o f agricultural production (investments in irrigation, mechanization, secure supplies o f inputs, fertilizers, access to credit, extension, training, research, etc.); Promotion o f the agrofood industry; . -22- Development o f Comorian products through a Comoros brand; 0 Establishment o f an institutional framework to promote balanced development o f the agricultural sector; 0 Promotion o f an agricultural entrepreneur class 3.1.2. STOCKBREEDING SUBSECTOR Stockbreeding i s o f minor importance in the agrofood subsector as i t represented only 11 percent o f the sector value added in 2007, far behind agriculture (49 percent), fishing (3 1 percent), and forestry (9 percent) (National Accounts, 2008). In t e r m s o f i t s contribution to poverty reduction, this subsector represents an essential factor, as i t gives poor farmers a means o f saving (small ruminants and poultry) that can be quickly liquidated in case o f emergency. I t i s also a subsector that represents substantial development potential as shown by the progress registered during the past 20 years in the intensification o f cattle and goat dairy production. In the Comoros, the stockbreeding sector i s comprised primarily o f ruminants and poultry. Other species are only found in insignificant levels. Ruminant breeding The situation can be described as follows f o r ruminants: Number o f species: small numbers, in total and per capita terms, dominated by goats and cattle. The numbers are higher in N z w a n i than Ngazidja (there were substantial herd losses in 2003-2004 as a result o f the epizootic theileriosis); 0 Herds are highly dispersed to rearing practices, mainly stall breeding (to prevent crop destruction). The animals are owned by the farmers themselves and i t i s uncommon for them t o be supervised by herdsmen; 0 F e w pastures and those that do exist are poor in quality. Accordingly, feeding i s predominantly grass fodder and harvested tree leaves; fodder crop areas are small, except in Nioumakde; watering i s often n o t provided and i s difficult even when waterways exist, as the water must be transported to the animals; 0 Insufficient production o w i n g t o l o w productivity in local breeds, hence the deficit in meeting the population's requirements. The country must import approximately 80 percent o f i t s red meat requirements; The health situation has clearly been o n the decline for the past five years; imports o f cattle and goats o n the h o o f have introduced new tick-borne and viral diseases into the three islands, particularly Ngazidja; t -23- Rehabilitation o f the national livestock laboratory and two regional laboratories in Nzwani and M w a l i , and establishment o f a quarantine site in Moroni; Insufficient technical and health extension; only veterinary, animal production, and advisory NGOs are servicing this subsector; 0 Existence o f a dairy in Nzwani (a group o f livestock farmers affiliated with the National U n i o n o f Comorian Farmers-SNAC) although with operating difficulties; Trading in animals i s a one-way activity from M w a l i and Nzwani to Ngazidja; in both directions between Nzwani to M w a l i ; and curds are transported from N z w a n i to Ngazidja. Poultry breeding Poultry breeding i s characterized substantially by: Numbers and types o f stock: a l o w total number o f animals and number o f head per capita, dominated by village and semi-intensive poultry farming; the latter has declined substantially during the past 10 years as a result o f chick and fodder supply problems; Imported feed and chicks for semi-intensive poultry farming; L o w production levels as local breeds are an insufficiently productive and semi-intensive poultry farms are small. Accordingly, there i s a shortfall in meeting population demand, requiring the country to import approximately 80 percent o f i t s white meat consumption; 0 Health situation dominated only by losses owing t o Newcastle disease; 0 Insufficient technical and health extension; only veterinary, animal production, and advisory NGOs service this subsector; 0 , Farmers' groups present in Ngazidja (SNAC member) and Nzwani, although they are insufficiently organized. Subsector performance and strengths M u c h progress has been made during the past five years in ruminant and poultry farming. The stockbreeding subsector has certain strengths in development o f dairy production and attempts to produce livestock feed. Ruminant breeding Increase in cow's milk production per animal (from 2 liters to more than 10 liters per day) and in total production with crosses by natural covering and artificial insemination using highly productive foreign blood in Nzwani, and through the introduction o f purebred dairy cows (from Tanzania) in Ngazidja; -24- 0 Increase in goat meat production through crosses with Boer bucks in M w a l i and Nzwani; Development o f fodder crops in dairy production development centers; 0 Local breeds well adapted and responding well to genetic improvement; Farmers highly receptive to technical changes; 0 Attractive meat and milk market; 0 Existence of NGOs capable o f covering veterinary care, artificial insemination, and advisory services. Poultry breeding 0 Attempt to implement animal feed production in Nzwani; Attempt to establish a one-day-old chick production unit in Ngazidja; 0 Existence o f a nursery with highly motivated professional poultry farmers; 0 Attractive market for white meat. Subsector weaknesses and constraints The weaknesses in the stockbreeding subsector and the constraints i t faces are similar for both ruminants and poultry. Ruminant breeding 0 Insufficient health control at the borders; 0 There i s n o organized dairy marketing; 0 Insufficient production credit; 0 Insufficient extension activities; 0 Insufficient support for veterinary inputs, and in particular, vaccines are not subsidized b y the state (theileriosis and R i f t Valley fever). 0 Very high production costs in light o f competition from ruminants imported from neighboring countries such as Tanzania or Madagascar. -25- Poultry breeding Chick and feed supply problems; Insufficient production credit; Insufficient extension activities; Very high production costs owing to competition f r o m imported chicken wings and thighs. Stockbreeding sector outlook Intensification o f milk cow breeding by natural covering and artificial insemination with highly productive, easily adaptable blood; Intensification o f goat breeding for meat through natural covering and artificial insemination with highly productive and adaptable blood; Support for semi-industrial pou1t.y farming; Enhanced health controls at the borders and strengthened legislation governing imports o f live animals; Support for players in the livestock subsector; Human resource capacity building. 3.1.3. FISHING SUBSECTOR Despite the importance o f sea products as a source o f animal protein for the population and as a potential source o f income, including through exports, fishing in the Comoros remained purely traditional until 1985, characterized primarily by boats that were archaic and highly risky. In the framework o f fishing agreements with Japan and the European Union, efforts were made to improve the fleet, fishing techniques, to develop the fishing school, implement conservation units, etc. The country's fishing territory encompasses an estimated maritime zone o f more than 160,000 square kilometers, covering 900 square kilometers o f continental shelf and 427 kilometers o f coastline. This area i s packed with potential resources estimated at 33,000 tons per annum, 64 percent o f which i s n o w exploited. This sector employs 6 percent o f the population (equivalent to 8,500 direct jobs and 24,000 indirect jobs) and accounted for 12 percent o f G D P in 2008 and 5 percent o f foreign exchange revenue through exports. t -26- Subsector performance and strengths Existence o f professional artisan fishing operations; Extensive'motorization (30 percent o f a f l e e t o f 5,000 boats); More or less functional support and advisory agencies; Possibility o f increasing catches by expanding the fishing zone; Strong demand for fishing products on the national, regional, and international markets; An international context for fishing characterized by full exploitation o f existing fish reserves; Existence o f unexploited niches (octopuses and squids [cephalopods], lobster, and shrimp); Existence o f fishing development strategies (Food and Agriculture Organization o f the United Nations-FAO, Arab Authority for Agricultural Development and Investment- AAIDA, European Union-EU). Although these resources are under-exploited, we observe an increase in national fish production from 6,000 tons in 1985 to 16,200 tons in 2004, leading to a discontinuation o f fish imports for normal consumption. Subsector weaknesses and constraints The discontinuation o f support programs in recent years has revealed human, technical, material, and commercial weaknesses: Weak support services and management and planning skills in the sector; Lack o f data and information on resources; L o w private participation in fishing activities; Lack o f access to credit; Absence o f a maritime safety system; Production capacity constraints; Overfishing o f f the coast; Absence o f unloading facilities; -27- Lack o f electricity and water at fishery sites; Absence o f an organized marketing system; Failure to upgrade fishing products destined for external markets. Outlook for the subsector The fishing subsector in the Comoros can contribute much to economic growth and poverty reduction through an improved technical and economic environment (improved port infrastructure, land processing, subsidies, and other similar facilities) and through the implementation o f fishing development plans. The objective i s to increase the current level of production by more than 50 percent, to create more than 5,000 new jobs, and to achieve a substantial increase in the sector's contribution to GDP (approximately 16 percent) by 2014. 3.2. TOURISM SECTOR The tourism sector i s acknowledged to have substantial economic growth and employment potential. As a sector that i s closely correlated with the key areas o f development, i t has an impact o n sectors directly related to i t s activities, such as transportation, hotels, and relevant agencies, but also o n trade, building and public works enterprises, energy, agriculture, fishing, artisanal industry, telecommunications, and cultural events. The hotel supply n o w consists o f approximately 472 beds, which i s far short o f the supply in other countries o f the region: more than 14,000 beds in Mauritius and approximately 4,600 beds in the Seychelles. The quality o f the lodging supply i s also not the same, varying between international hospitality standards and basic comfort found in the majority o f establishments managed by nonprofessionals, with untrained staff. An estimated 490 persons are employed in the tourism sector. While the Comoros has n o hotel training facilities, the Indian Ocean Commission (COI)/EU regional tourism program has given more than 100 hotel sector employees the opportunity to attend specialized seminars in this sector. At the national level, the Tourism Directorate supported training for 150 young persons during the last four years o f secondary school. Prior to 1989, tourism visits primarily involved business tourism, missions, and visits by Comorian expatriates living in France. Pleasure tourism came o f age in 1989 with the opening o f Galawa, leading to a rapid increase in hotel visits. A substantial decline in incoming tourism began in 2000, with visits falling f r o m 27,474 in 1998 t o approximately 18,900 in 2003. This decline i s largely attributable to the closing of Galawa in 2000. The hotel clientele came primarily f r o m South Africa, France, Germany, and England. The increase was attributed to the reliability o f Emirates airline that provided service between the Comoros and South Africa and between the Comoros and Europe; as well as t o the Galawa t -28- complex's marketing and promotion efforts. Further, the regional C O I tourism program financed by the EU contributed by enabling the Comoros to participate in various international tourism events. The sudden discontinuation o f Emirates service, the closure o f Galawa, and political instability led to a decline in arrivals. Accordingly, revenue declined f r o m more than C F 5 b i l l i o n in 2000 to less than C F 3 billion in 2003. While the tourism sector o f the Union o f the Comoros has several strengths, i t suffers from many weaknesses, some o f which are inherent in the sector, while others are more cross-cutting and structural. Sector strengths The natural and cultural resources, substantial potential for adventure and sports activities, and village activities are part o f the very attractive tourism fare the national territory offers. A m o n g the strengths, we observe: Forty-five sites o f tourism interest already surveyed; Abundant natural species; Flora including more than one hundred species o f orchids; Remarkable marine fauna species (coelacanths, sea turtles, and dugongs); Rich, varied historical resources: archeological sites, religious buildings, ancient sultans' buildings, fortifications and tombs; R i c h and developing craft-industries-primarily w o o d carving, traditional jewelry, and above all, substantial skilled labor potential in cabinet making, wicker work, and embroidery; Cultural wealth extending to other areas such as grand wedding ceremonies, songs, dances, Comorian cuisine, the National Center for Documentation and Scientific Research (CNDRS) museum in Moroni, traditional medicine, games, and village activities; Sport activities highlighting the natural environment: diving, deep-sea fishing, and mountain hiking; An attractive investment code. -29- Sector weaknesses and constraints Several constraints are impeding the development o f tourism activities: 0 Insufficient basic infrastructure (roads, ports, airports, energy supplies, etc.); Insufficient city and village sanitation; Insufficient regional and international air service and very high ticket prices; Prohibitive rates for water, energy, and telecommunications, interest rates, and deficient air, sea, and land transportation; 0 Insufficient hotel capacities; Insufficient national and international investments; Insufficient port and airport accommodation facilities; Virtually nonexistent legal framework to protect investments; Lack o f transparency in granting national heritage concessions to the private sector; Very high cost o f visas to enter the country; Insufficient promotion o f Comorian crafts; Insufficient hotel, restaurant, and guide training; Absence o f a tourism office; No marketing or promotion o f the Comoros as a destination. Sector performance The Comoros has had good tourism periods: tourism arrivals amounted to 22,838 in 1995 and peaked at 27,474 in 1998. Today, after the closure o f Galawa and a number o f political crises, the country registers 14,000 arrivals, equivalent to 45 percent o f the residual hotel capacity. Tourism revenue varied during the same period f r o m CF 5 billion (4.1 percent o f GDP) in 2000 to C F 3 billion in 2005. Jobs declined f r o m 960 to the present level o f 490. -30- Outlook for the tourism sector Based on these strengths, the government adopted a sector development strategy in 2005 that was updated in 2008. The strategy aims to preserve the country's natural and cultural resources, t o engage the local populations, and to reduce poverty. This f o r m o f tourism i s commonly k n o w n as ecotourism. The strategy, which requires support f r o m donors and lenders and the interest o f domestic and international investors, will be reflected by the: Creation o f ecotourism relays and heritage centers o f tourism interest; M a r k i n g o f hiking paths; Upgrading of maritime links between the islands; Improvement in basic infrastructure; Human resource training; Promotion and marketing o f tourism products; Creation o f a tourism data observatory; Development o f combined regional systems. In cooperation with sector players, the government decided to revitalize the tourism sector and to designate i t as one o f the key growth sectors in the coming years. In fact, the sector could contribute substantially to: 1. Improve the population's living conditions through: Direct local j o b creation (lodging, restaurants, and guides); Indirect local j o b creation (transportation, crafts, agriculture, and fishing); Development and diversification o f training in the trades; Creation o f a market t o stimulate local production such as commercial vegetable growing, stockbreeding, fishing, and crafts; Increased passenger and commercial connections between the islands through the establishment of reliable, rapid, and frequent connections; M a k i n g the national tourism area accessible; Access for the Comorian public to tourism accommodations and leisure activities. -31- 2. Activities respectful o f the natural and cultural environment through: 0 Preservation and development o f natural sites; 0 Organization o f cultural activities such as: (1) restoration and development o f the country's cultural and historical resources; (2) development o f traditional shows; and (3) development o f craft activities. The Comoros i s endowed with rich cultural and natural resources. These resources can constitute a powerful factor in the development o f ecotourism. It i s important for the government that i t s development partners support the restoration o f the tourism sector in connection with the PRGS. Accordingly, village organization movements, local receiving agencies, hotel and restaurant operators, diving clubs, craftspersons, rural communities, fishermen, and natural essence distillers w i l l be the main beneficiaries o f tourism development. With new investment projects to increase the hotel capacity to 2,000 beds by 2014, tourism can make a significant contribution to improve national GDP with the intention o f creating 2,500 direct jobs. 3.3. ECONOMIC COMMUNICATIONS INFRASTRUCTURE AND Economic and communications infrastructure i s a determinant factor in the process o f economic development. Economic infrastructure includes roads, telecommunications, ports, and airports. The lack o f economic infrastructure i s one o f the main obstacles to private sector recovery and poverty reduction. 3.3.1. ECONOMIC INFRASTRUCTURE Road infrastructure Road infrastructure clearly contributes to economic growth and poverty reduction by facilitating the circulation o f goods and persons, and by promoting the creation o f n e w economic activities. The national and regional road system in the Comoros includes a total o f 849 km, 665 km o f which are asphalted and 184 km are unpaved. The system i s distributed as follows: 58.3 percent in Ngazidja (495 km), 33.2 percent in Ndzouani (256 km) and 11.5 percent in M w a l i (98 km). The road system i s n o w characterized by the following: Deterioration as a result o f insufficient maintenance; 0 Uncontrolled increases in heavy truck traffic, primarily in Ngazidja; An insufficient structure to accommodate use; \ 0 A need to make the agricultural and fishing production areas more accessible; -32- 0 Unpaved roads that cannot be used for substantial periods during the year; 0 Absence o f signing. f Performance and strengths o the road infrastructure subsector The country can rely on the following to promote road infrastructure: 0 Programmed implementation o f a toll to support the road fund to replace the fee now charged under the current law; 0 Resources generated under the convention on economic citizenship; 0 Recent establishment o f new road companies; 0 Technical studies and documentation on past consultations carried out involving the construction and/or rehabilitation o f priority road sections. Financing has already been obtained for some o f these works. f Weaknesses and constraints o the road infrastructure The main constraint to the development o f the subsector i s clearly insufficient national capacity to manage and control road maintenance, implementation o f which i s fundamental. We also observe: 0 Delays in implementing coordination o f new administrative structures (governorates- Union); 0 Lack o f maintenance in the road system; 0 Failure to comply with road legislation; 0 Ongoing deterioration in roads as a result o f ageing, uncontrolled traffic, and insufficient drainage; 0 Lack o f load controls on the road per axle; 0 Lack o f a road'database; 0 Lack of appropriate logistics for the execution o f maintenance works. Outlook for the road infrastructure subsector Road construction and maintenance represent a substantial source o f job creation, particularly for the least favored sectors, if labor intensive technologies, which should be emphasized whenever possible, are used. -33- Improved access and reduction o f transportation costs will impact production costs and prices of consumer goods, as these factors tend to increase the circulation o f goods and persons and intensify economic activity. In addition, a well-maintained road system enhances the population's access to government services, health centers, schools, etc., and promotes the development o f industries such as tourism. The public authorities of the Comoros intend to undertake the improvement, expansion, and upgrading o f platforms and roadways compatible with traffic and safety, as well as village bypasses. Rehabilitationand extension of the national road system should promote: 0 Improved circulation o f goods and persons; Enhanced tourism development; Reduced maintenance costs for the current fleet o f automobiles; 0 Improved safety conditions; Access to the markets for agricultural and food products; Job creation 3.3.2. PORT INFRASTRUCTURE Port infrastructure facilitates foreign trade and commerce between the islands. Occupation rate for berths and docks are substantial if we consider the time spent at the dock by ships coming 'from the islands and the substantial increase in inter-island traffic. The country i s now under- equipped with port infrastructure. The situation can be described as follows: Ngazidja i s the focus of 80 percent of the country's commercial activities, but has only one deepwater port. Similarly, processing o f sea products i s the core issue in private sector rehabilitation. The Union o f the Comoros signed fishing agreements with the European Union approximately 12 years ago. The absence of an adequate port structure and a stable energy supply are preventingthe country from benefiting from the advantages providedunder this agreement. In Ndzuwani, the deepwater port o f Mutsamudu, built in 1982, i s used as a transshipment port. I t s activities have increased in recent years despite the problem of silting up that C -34- occurs as the river empties into the port basin. Port traffic could be developed if these port facilities were improved. 0 In Mwali, a maritime access was established in 1999-2001 in Bwangoma in connection w i t h the Sixth, Seventh, and Eighth European Development Fund (EDF). The project failed to reach i t s specific objective. Transferring o f passengers by canoe i s dangerous in rough seas. Maritime access use varies in the range o f 50-70 percent during the year. Corrective measures to optimize use o f this access would involve protecting the works with a seawall in deep water. The port facilities are n o w operated by private handling companies such as G o l f Com (Port o f Moroni) and A S C (Port o f Mutsamudu). f Weaknesses and constraints o the port infrastructure subsector The main weaknesses and constraints o f the subsector are: 0 Insufficient organization o f the harbormaster's office for the Port o f M w a l i ; 0 Lack o f marking for all ports in the country; 0 Insufficient draft in the Port o f Moroni, which requires anchorage for most international coastal navigation; 0 Silting o f the Port o f Mutsamudu with sediment carried by the river emptying into the basin; 0 Lack o f protection for the M w a l i maritime access dock; 0 Absence o f offloading and lifting equipment in Mwali; 0 Flooding o f docks and platforms; 0 Inability o f ports to supply high-quality services to reduce lags in providing the country with supplies o f inputs, spare parts, and raw materials for various economic sectors; 0 Numerous breakdowns in the maritime traffic system between the islands, including the absence o f designated secondary ports; 0 Security problems for goods stored in warehouses; 0 Deficient the maritime security system. e -35- Outlook for port infrastructure The government plans to re-examine the role o f the various participants to encourage a l l o f them to honor their contractual commitments, which will reduce the cost o f port services. Further, in light o f the growing volume o f commercial activities in Ngazidja and the loss o f time at anchorage for large ships to offload merchandise, the government o f the U n i o n o f the Comoros intends to equip Ngazidja with a deepwater port comprising: A commercial dock; 0 A transshipment dock for fish, including appropriate refrigeration facilities. In Ndzuwani, to enable the Port o f Mutsamudu t o effectively serve as a port o f entry and transshipment, the public authorities should carry out the following works: Construction o f a dam upstream f r o m the city o f Mutsamudu to retain most o f the sediments and materials carried by the river; Dredging to restore the original drafts; The bypass o f the Mutsamudu river f r o m a point upstream from the south platform access dock to the outside o f the basin. In M w a l i , to ensure that maritime access i s profitable and to enhance access conditions t o meet the appropriate safety standards as provided for maritime navigation, the government intends t o make maritime access similar to port access and t o reduce swells that would make approaches difficult. This would involve protecting the breakwater f r o m swells exceeding 0.5 meter and as much as 6 meters or more reaching the bay delta. 3.3.3. AIRPORT INFRASTRUCTURE Infrastructure in this area comprises o f the M o r o n i Prince Said Ibrahim Airport (AIMPSI) located in Hahaya, Ngazidja, and the secondary airports Ouani in Ndzuani and Bandar-Salama in M w a l i . These airports service international and inter-island air links. Traffic, however, i s fairly limited. The secondary airport infrastructure i s characterized by deteriorated runways, absence o f safety (fire and rescue) equipment and lack o f fences in a l l three airports. These problems compromise the security o f inter-island air transport. Performance and strengths o the airport infrastructure subsector f 0 The Comoros's membership in the Air Navigation Safety Agency (ASECNA) makes i t possible to improve air safety and navigation; -36- The construction o f a new A I M P S I air terminal, rehabilitation o f the runway and extension o f gates. f Weaknesses and constraints o the airport infrastructure subsector 0 The ageing landing strip at the international airport can compromise air safety for large aircraft; Limited space in the passenger arrival hall; Insufficient organizational system; 0 Secondary airports are characterized by the following weaknesses: - Limited accommodation capacity for planes and passengers; - Insufficient air navigation equipment (weather and radio communication); - Absence o f runway markings; - Insufficient fences to protect the runways and hangar; - Absence o f a.fire safety system. Outlook for the airport infrastructure subsector The outlook for air transportation in the context o f a country such as the Comoros no longer remains to be proven. Efficient, secure airports are required for the tourism sector to offer attractive growth prospects. The same applies for air freight development. 3.3.4. Telecommunicationinfrastructure Telecommunications in the Comoros became diversified in 2004. The national post and telecommunication company (SNPT) established a mobile telephone network to supplement the longstanding fixed system. In 2005, as a result o f the split o f the SNPT into Comores TClCcom and SociCtC Nationale des Postes et des Services Financiers (SNPSF), other services (networks) were created: C D M A , ADSL, and the extension o f the GSM network. ' f Performance and Strengths o the telecommunication subsector The main strengths o f the subsector are rapid growth in installed lines owing to demand from new customers; Installation o f telephone booths in rural areas; -37- Gradual improvement in telephone coverage with the installation o f micro-centers in the islands; 0 Improvement and reinforcement o f the institutional framework; Existence o f a sectoral information and communication technology (ICT) policy. Weaknesses and constraints in telecommunications 0 Accidented relief, making telephone coverage difficult in certain regions; An obsolete wiring system; Inefficient telecommunication services at costs deemed to be quite high; An institutional and legal framework for the subsector that i s not observed; Nonconformity with public contracting regulations; Excessive maintenance intervention time (faults). Outlook for the subsector Development o f this sector requires rehabilitation o f the existing fixed telephone system to enhance access to telecommunication services. The government intends to focus i t s efforts o n increasing the capacity o f the networks to ensure: Greater access to services at reasonable prices for all islands; M o r e fluid connections with the rest o f the w o r l d to gain access to economic opportunities; Effective promotion o f the tourism sector, enabling operators to advertise through websites; Easier communications within the Comoros and with the Comorian expatriate community; Liberalization o f the telecommunication sector. -38- 3.4. ENERGY, WATER, AND SANITATION SECTOR 3.4.1 ENERGY SUBSECTOR Energy plays a particularly important role in socioeconomic development. I t i s a determinant in the operation o f enterprises and makes i t possible to improve household living conditions. The Comoros's energy balance shows wood as the main energy source (78 percent o f energy requirements) followed by hydrocarbons (20 percent). Other energy sources (electricity, butane gas, etc.) occupy a negligible share (approximately 2 percent) o f Comorian household consumption. Expansion o f the existing electricity network in the Comoros and improved management and service quality could have a significant impact o n growth and contribute t o household well-being with a reduction in the harvesting o f wood materials. The energy subsector is characterized by: L o w levels o f energy consumption in general (122 ktep in 2001, equivalent to 0.2 tep per capita), and conventional energy, particularly indicative o f a l o w level o f economic development; / Substantial dependence o n w o o d fuels, and exploitation o f this resource i s negatively impacting the environment (massive deforestation, erosion, etc.); A substantial increase in petroleum product consumption (gasoline, diesel oil, kerosene, and lubricants) all o f which are imported, partially explaining the high cost o f energy; Limited use o f butane gas, essentially in urban centers. A reduction in import duty m a y lead to increased consumption; Insufficient use o f n e w and renewable energy sources despite real potential (hydroelectricity in Ndzuani and M w a l i , geothermal power in Ngazidja; and biomass, solar, wind, and tidal sources o n a l l three islands); Electricity production based essentially o n the operation o f thermal power plants having a total installed power o f 24 MW; Production stock requiring adequate maintenance to ensure sustainable and effective energy production; Low overall efficiency in the electrical system o f less than 45 percent for the overall country; Electricity production capacity losses o f approximately 55 percent attributable to fraud, illegal hook-ups, technical network deficiencies, and l o w recovery rates. e -39- Energy sector performance and strengths Community participation in the completion o f village electrification projects; The government's policy makes the energy sector a national priority; Substantial demand for electricity in rural and urban areas; 0 A willingness o f the strategic partners to accompany the Comoros in development o f the energy sector; Execution of studies to expand capacities to store petroleum products, development studies for the electrical network, and preliminary production studies for hydroelectric, thermal, and geothermal energy; Real potential in the area o f renewable energy, and specifically hydroelectric, solar, biomass, wind, and geothermal sources are unexplored. Main weaknesses and constraints o the energy sector f Absence o f a sectoral energy policy and strategy; Failure to clarify the institutional and regulatory framework for the energy sector; Absence o f a sectoral master plan for energy; The narrowness o f the energy market limits economies of scale; L a c k o f financing to increase production capacity and rehabilitate power plants; 0 Difficulties experienced by state companies in public service; Ongoing recovery problems; 0 L o w levels of energy autonomy: supply problems and insufficient storage capacities for hydrocarbons; 0 V e r y high costs per kilowatt hour as compared with current rates; 0 The most recent rate study dates back more than 20 years; 0 Inability to meet energy demand (the available power o f 7 MW falls short of the balance o f 15 MW); V e r y high consumer prices; -40- 0 Failure to exploit new and renewable energy sources; 0 Insufficient capacity building for human resources and technology transfer; 0 Lack of energy response in emergency situations; 0 Disorganized biomass exploitation (wood - energy). Outlook for the energy sector 0 Devise an energy sector policy and strategy for the country; 0 Clarify the institutional and regulatory framework for the energy sector; 0 Prepare a master plan for the energy sector; 0 Establish an energy control program (control consumption o f wood fuels for environmental conservation); 0 Strengthen and secure energy production and distribution (increase electricity access rates by extension); 0 Update existing studies; 0 Promote substitute energy sources. In the near future, the upgrading o f renewable energy sources should lead to an increase from less than 1 percent to approximately 20 percent o f produced energy or installed power. The goal i s to: 0 U s e energy resources other than diesel h e l ; 0 Build human capacities and strengthen technology transfers. 3.4.2. DRINKING WATER SUBSECTOR Access to water i s essential for the proper operation o f the social sectors, economic activity, and individual well-being. In the Comoros, there are essentially three water sources: (1) surface water; (2) groundwater; and (3) rainwater collection. The source varies depending o n the island and location. In general, Nzwani and M w a l i depend on surface flows from springs or rivers, while the population o f Ngazidja obtains i t s supply primarily from the collection o f rainwater and groundwater. The first water systems were established in N z w a n i and M w a l i during the 1960s. I t would take another 15 years for Ngazidja t o have i t s first water system in Moroni from a well located six -41- kilometers south o f the capital. During the 1980s, a U N D P project equipped the island with 22 exploitable wells on the island belt. The government, with the support o f i t s partners (UNICEF and the W o r l d Bank, in particular), non-governmental organizations, and above all, community participation, established several water supply systems drawing f r o m these wells. According to the 2004 comprehensive survey o n household living conditions in the Comoros, households most commonly use the following drinking water sources: public standpipes (30.6 percent), and collection o f rainwater in cisterns (24.2 percent). Only 15 percent o f households have home hook-ups. M o r e than h a l f o f the households in Ngazidja use rainwater collected in cisterns. This option i s quite vulnerable in terms o f quality and quantity. The country does not have a national water quality policy. Sources are often unhealthy and constitute a potential health risk for those who consume the water. This situation i s reflected primarily in the prevalence o f waterborne diseases such as diarrhea and typhoid. f Performance and strengths o the water subsector The main advantages for the development o f the subsector are: Existence o f wells f r o m the UNDP project o n the coast o f Ngazidja, that can be used to increase the population's access to water; Rainfall levels are s t i l l favorable for the country as a whole; Existence o f permanent rivers and waterways in N z w a n i and M w a l i ; Willingness o f the communities to help finance and materially support the execution o f their projects in this area; Availability o f technical expertise at the national water and electricity company to accompany implementation o f water projects; Existence o f studies o n the expansion o f water networks countrywide; Beneficiary communities are prepared or made aware o f the issues involved, to take charge o f their water systems gradually; Availability o f development partners and NGOs to support progress in the water sector. Weaknesses and constraints o the water suppIy sector f Absence o f a sect\oralwater policy and strategy; Failure t o clarify the institutional and regulatory framework for the water sector; -42- Absence o f a sectoral master plan for water; Lack o f databases on water access; High costs o f groundwater projects requiring substantial modem technologies; Lack o f coordination and communication between the different players involved in sector promotion and development; Insufficient technical capacities in management o f water systems; Lack o f equipment and support mechanisms for water systems; Water from different networks i s not systematically treated; Lack o f adequate maintenance for water systems; Water i s free and water system operating costs are not recovered. Outlook for the water subsector Water access for the Comoros i s a basic objective for economic and social development. The main challenges in this area are: 0 Preparing a master plan for water should be made an absolute priority for the recovery o f the subsector; 0 Redefining the institutional and regulatory framework for the water subsector; 0 Institutionalizing the sectoral approach to water in the Comoros; 0 Promoting human resource capacity building and technology transfer; 0 Regulating water treatment and making i t compulsory in the Comoros; 0 Strengthening water production, transportation, and distribution infrastructure; 0 Upgrading existing sources; 0 M a k i n g water users increasingly aware o f the issues and warning them that water system operating costs must be recovered; 3.4.3. SANITATION SUBSECTOR With accelerated demographic growth and urban development, we observe a significant increase in production o f household waste (approximately 1 cubic meter per person), an increase in -43- untreated hospital waste, and an increase in waste related t o transportation activities (drained motor oil, vehicle bodies, etc). Waste production i s currently not covered by any appropriate organized collection or treatment system. In general, the absence o f a waste management and sanitation system i s a major public health problem. Wastewater and rain management was found to be a major concern in both urban and rural areas. The problem i s s t i l l unsolved in most cities, which have n o t been able to devote the necessary resources to address the problems resulting f r o m this type o f pollution. In the city centers, rubbish piles are also a f o r m o f visual pollution, and produce fetid odors extremely unpleasant for the local residents. f Performance and strengths o the sanitation subsector We observe substantial community involvement in rehabilitation works for wastewater drainage pipes and gutters. These efforts show the importance the communities associate with sanitation problems and their determination to improve the standard o f living. f Weaknesses and constraints o the sanitation subsector The m a i n weaknesses and constraints impeding the development o f the subsector are: Uncontrolled growth o f conurbations and proliferation o f informal dwellings; Absence o f an urban development plan and urban planning scheme; Absence o f a regulatory framework f o r solid and liquid waste management; L a c k o f latrines in community areas; L a c k o f waste management and available landfill sites; Absence o f sanitation policy and tools; Increasing production o f natural and human waste materials; Intense degradation o f ecosystems; Nonexistence o f waste management systems. OutIook for the sanitation subsector The stakes consist in improving the quality o f l i f e and hygiene in urban areas and ending the runaway development o f conurbations. The a i m will be to develop technical, material, and organizational capacities required to implement a waste collection and disposal system. Meeting the basic requirements o f urban populations i s a social stake highly dependent on urban planning. The establishment o f a planning policy in conurbations should ensure pleasant, stable living -44- conditions for present and future generations. These concerns in fact consist in promoting and implementing tools for the sustainable planning o f conurbations while protecting resources and limiting environmental pollution (contamination, household waste, health hazards, neighborhood conflicts, etc.). Mobilization o f resources and means i s essential for the implementation o f the national policy on environment and the environmental action plan. This approach will subsequently make the following activities possible: 0 To complete the master plan for development o f urban areas; 0 To provide effective sanitation in residential areas; 0 T o implement a system t o improve waste management; 0 To assign priority to the establishment o f landfill sites for solid waste materials; 0 To plan construction o f appropriate latrines in community and urban areas. 3.5. ENVIRONMENT In the Comoros perhaps more than anywhere else, the environment emerges as the focus o f key economic sectors for the production o f commercial goods and services. Recent studies have found that resumed growth in the Comoros relies heavily o n the development o f tourism, while the country's tourism potential i s contingent on the quality o f l i f e and the natural environment. The environment i s an issue that must gain the support o f all development players. During recent years, we have unfortunately observed intensified environmental degradation overall, which affects all natural resources and undermines the production base. This can be observed in the form o f land degradation (57 percent o f agricultural land), deforestation (500 hectares per year), and poor natural resource management. The country also lacks suitable management tools for urban areas and coastal zones, and integrated policies to reflect the cross- cutting dimension o f environmental issues. The observed erosion o f biological diversity in marine and coastal areas, as w e l l as in the forests, seriously reduces the natural self-renewal capacities o f the land and water ecosystems. This situation affects vital ecological processes such as the water cycle, fighting pollution f r o m the silting up o f coastal and marine areas, as well as the dynamics o f buffer zones to protect against natural disasters. In terms o f the effects related to climate irregularities, potential impacts involve accelerated losses o f coastal land strips, reduction o f agricultural and fish production, contamination o f coastal water tables with seawater, and displacement o f more than 10 percent o f the coastal population. We should also note that most environmental constraints are similar to those identified for Small Island Developing States (SLDS) under Agenda 21 and the Barbados Plan o f Action: ecological and economic fragility, substantial vulnerability to climate change and natural disasters, insufficient response and management capacity, narrow resource base, and high energy costs. -45- Environmental deterioration also risks intensifying competition and the risks o f conflicts over access to shared resources such as fish and groundwater. These challenges are inevitably linked to broader issues o f governance and economic and social vulnerability-hence the scope and complexity o f the challenge. Environmental issues have become an intense topic as a result o f the multiple challenges they entail, as well as the substantial opportunities intrinsically related to environmental management and sustainable development in the Comoros. M a i n strengths and opportunities in the environmental sector The archipelago o f the Comoros and i t s territorial waters house ecosystems o f remarkable scientific and esthetic value. In particular, we observe high levels o f endemism within different groups o f flora and fauna and the presence o f emblematic or charismatic species. Further, the Comoros ranks high o n the priority l i s t for biodiversity conservation o n a w o r l d scale. The country i s also classified as a "Hot Spot" for world diversity. The country also has substantial genetic resources in the f o r m o f medicinal, aromatic, fodder, and farming species. The genotypic characteristics o f the varieties present in the Comoros have been preserved, particularly as a result o f plant reproduction practices used for vanilla and the absence o f programs to introduce new varieties o f these species. The conservation and sustainable use o f the species and varieties cultivated in the Comoros therefore provide substantial benefits at the regional and w o r l d scale by ensuring the perpetuity o f genotype material unique to the country or t o the subregion and the preservation o f the potential t o adapt cash crops at the regional scale. This context makes the country eligible for international and regional fair trade networks as a mechanism to ensure a level o f income for the farmers, w h o have suffered tremendously from export price deterioration. Traditional agroforestry practices in the Comoros are also a source o f numerous strengths in terms o f conservation (soil, water, habitat for species o f flora and fauna), and production (food, fodder, and w o o d for working and for energy). This stable system provides permanent soil cover, reducing erosion, promoting surface water supplies, and optimizing the use o f space through the staggering o f production cycles. This system also helps sustain biodiversity through the wide variety o f plant species i t harbors, and the habitats i t provides that are conducive to productivity in numerous plant and animal species. These factors position the Comoros effectively as a major player in regional and international scientific research programs. The Comoros provides opportunities in the area o f eco-services as a result i f i t s abundant rainfall, renewable energy source potential, and the availability o f fertile, unpolluted land in certain areas. The country's classification as a Carbon Sink also opens interestingavenues to access sustainable financing sources under global environmental and sustainable development financing facilities. In addition to these strengths, the Karthala Volcano offers geothermal and ecotourism potential. These natural resources offer vast opportunities to diversify the sources o f national wealth and credible income alternatives t o benefit a substantial sector o f the population, whose survival depends o n the exploitation o f natural resources. Sustainable management o f environmental `. -46- resources i s therefore s t i l l an essential lever for sustainable growth and poverty reduction, in light o f i t s potential for development, in connection with natural resources, the quality o f the atmosphere, and rich biodiversity. Key challenges and obstacles in the environinental sector The Comoros i s n o w facing a number o f environmental challenges, specifically in t e r m s o f adaptation to climate change; preservation o f biodiversity; biological security; integrated coastal management; access t o basic sanitation and urban environmental management services; sustainable natural resource management; and preparation, prevention, and response t o disaster risks. The challenges related to the ecosystems (marine, coastal, lake, and land) reflect insufficient practical action to promote efficient management. These constraints involve (i) clearing or deforestation; (ii) o f land regulation and security policies and mechanisms; (iii) lack absence of mechanisms to update and implement the regulatory texts o n management o f ecosystems; (iv) ongoing confusion o f responsibilities as the terms o f reference and missions o f the institutions responsible for environmental management are not clearly specified; (v) extraction o f coastal resources (sand, pebbles, coral, and mangroves); (vi) inappropriate occupation o f arable land; (vii) use o f unsustainable fishing practices (dynamite, small mesh nets, coral-based fishing, toxic and/or chemical substances); and (viii) absence o f sanitation and integrated waste management systems. I t was also found that tensions created by overexploitation and poor management o f natural resources are the results, above all, o f the failure t o define clear natural resource ownership rights and to assess ecological services properly. Challenges related to climate disturbances I t i s also clear that climate disturbances are accentuating the pressure and tensions already affecting the natural resources such as soils, forests, and other ecosystems, particularly in the coastal and sea environments. Similarly, these manifestations (elevated sea levels, floods, storms, tidal waves, and accentuated seasonal phenomena) can be expected to make the water supply less secure and increase the vulnerability o f agricultural resources and risks o f disaster. Climate disturbances lead to (i) coastal erosion, w h i c h in turn destroys socioeconomic infrastructure (roads, seawalls, coastal habitats, loss o f land); (ii) reduced agricultural and fishing production; (iii) contamination o f coastal water tables with seawater; (iv) increased risks o f pandemics (malaria, cholera, typhoid, etc.); and (v) displacement o f 10 percent o f the coastal population. Challenges related to disasters The U n i o n o f the Comoros i s part o f the group o f poor, vulnerable countries subject t o m a n y risks, including cyclones, drought, epidemics, tornadoes, brush fires, tidal waves, floods, major accidents, landslides, volcano eruptions, and risks related t o the presence o f an active volcano (earthquakes). This vulnerability might be aggravated by an insufficient capacity t o prepare for, prevent, and respond appropriately to risks and disasters. -47- Key stakes With regard to the challenges and opportunities underlying promotion o f the environment in the Comoros, w e observe three general stakes: . T o include environmental protection measures in the scope o f adaptive, regulated development, emphasizing the necessary symbiosis between economy and ecology; 9 T o use environmental solutions to contribute t o poverty reduction by finding sustainable solutions to the problems caused by inappropriate development that are affecting the public well-being; . TOconfirm the cross-cutting, multidimensional nature o f environmental problems in a context where the dominant view i s highly sectoral. The environmental promotion outlook i s guided by the aim o f providing the country with essential capacities to design and implement, w i t h relative autonomy, a policy, strategies, and practical initiatives for environmental management to help meet the challenges o f sustainable development existing in the Comoros. Premises for action The design o f priority action programs and the relevant activities are guided by the following principles: 0 To reconcile poverty reduction and respect for the environment; T o support the rational u s e o f natural resources and development o f alternative solutions; 0 T o promote sustainable management and reconstitution o f forest resources and degraded land; 0 T o promote decentralized management o f natural resources and voluntary community involvement. 3.6. GOVERNANCE AND SOCIAL COHESION Governance i s the system o f values, policies, and institutions through which a society manages i t s economic, political, and social affairs through interactions within the government, c i v i l society, and the private sector, and between these entities. The political instability observed since the country gained independence has not supported good governance, social dialog, or the reinforcement o f the r u l e o f law. This situation has led to weakened government authority, dysfunctional institutions and administrations, undermined national cohesion, nonobservance o f the legal and regulatory texts, and the entrenchment o f poverty. -48- Recurrent political unrest leading to a weakening o f the state has created a difficult economic situation, particularly for the poorest sectors o f the population, specifically women and children. The negative effects induced by successive economic policies and failed social programs have had serious consequences for the well-being o f individuals and households. Substantial segments o f the population live below the poverty line and do not have access to basic social services. To compensate for these government failings, the public relies o n the principle o f solidarity and being part o f a village, region, or island, rather than o n being a member o f the Union. This feeling i s also strengthened by the perception that the state's scarce resources are unevenly distributed, decentralization i s incomplete, political and social dialog mechanisms are insufficient, and young people are offered f e w opportunities. As one o f the many weaknesses o f public institutions, the social security system i s virtually nonexistent. Collective provident schemes, w h i c h enable the most vulnerable individuals or households to cope with social risks, are rudimentary. A report by the International Labour Office' (ILO) indicates that in 2003 there were less than 5,000 beneficiaries, representing under 1 percent o f the country's total population. Further, there has been little change in the legal framework for social security, w h i c h dates back to the colonial era. There are several types o f problems: the scope o f actual application o f social security i s limited and government employees and their lawful claimants have n o coverage against occupational risks, illness, disability, death, or family support. Systems providing health insurance and indemnification in case o f illness are undeveloped. The scope in terms o f personnel i s also quite limited and little revenue i s distributed. Last, management agencies are experiencing tremendous organizational problems. The job.market i s s t i l l dominated by the informal sector. The informal agricultural economy (essentially subsistence) i s predominant; and the non-agricultural informal economy accounts for appraximately 16.2 percent o f national employment ( E M 2004). Employment and under- employment l e v e l s are also substantial as a result o f insufficient economic growth in recent years (the unemployment rate increased f r o m 10.4 percent in 1995 to 13.5 percent in 2004). Unemployment i s widespread and there i s essentially n o difference between urban unemployment (14.7 percent) and rural unemployment (13.1 percent). Unemployment, however, m o r e acutely affects young people (with 44.6 percent unemployment for workers 15-24 years o f age) and women, for which the unemployment rate i s twice as high as it i s for men, regardless o f the education level (19.2 percent, as against 9.2 percent for men). The j o b supply i s limited and the Coniorian government i s s t i l l the country's leading employer. However, this administration faces many problems: a bloated w o r k force and delays in wage and professional service payments, leading to reduced purchasing power for c i v i l servants, and thus absenteeism, permissiveness, corruption, saturation o f the c i v i l service, and abusive recruitment in flagrant violation o f the texts governing the c i v i l service. Owing to the wage bill, w h i c h absorbs more than 7 0 percent o f real revenue (85 percent according to the IMF mission estimates), the state i s unable t o cover most o f its expenses, and can address only the most urgent ones. In addition, the Comorian government i s highly centralized in the capital, meaning that i t i s ' ILO, No t e au Gouvernement sur l a situation de la protection sociale (Memorandum to the Government on the status o f t h e Social Security System), J. Audibert, 2001. -49- far f r o m most users or beneficiaries. This centralization penalizes people w h o l i v e in the peripheral areas and regions o f the country, thus the importance o f completing the process o f decentralization initiated by the Constitution o f December 23, 2001. In fact, in 2001 the country adopted a new institutional framework that generalizes the principle o f subsidiarity and provides four levels o f power: federal, island, regional, and local. In operational terms, this approach should lead to new institutional management mechanisms, particularly at the local and regional levels. While these local development dynamics have focused o n development o f the municipalities, the latter do not exercise all o f their prerogatives, specifically in vital statistics management. The vital statistics system in the Comoros i s characterized by insufficient use o f vital statistics services, incomplete and unsatisfactory data, insufficient recording o f data o n vital statistics events, and i s overshadowed with suspected fraud. Last, there i s virtually n o information o n Comorian expatriate communities throughout the w o r l d registered in the vital statistics system. These problems characterizing the Comorian vital statistics system are derived in part f r o m the substantial prevalence o f poverty, leading to survival strategies at the individual and community levels, supported with fraudulent vital statistics documents and poor governance. Moreover, the national statistics system cannot adequately reflect vital statistics as a source o f core data for development and poverty reduction. In terms o f the substance o f the law, the Comorian system i s a combination o f several legal systems in which a French legal system coexists with ancestral customs and Islamic law. This combination o f legal origins leads t o juridical uncertainties that may be the source o f the numerous legal contradictions observed. In addition, Comorian law does not always observe the numerous conventions the country has ratified. The National Assembly undertook the tasks t o reform and modernize Comorian legislation to comply with the country's international commitments. However, this institution cannot operate effectively owing to insufficient material and human resources. . The judicial system today i s characterized by multiple dysfunctions that make it a difficult matter to access justice services and that seriously impede i t s internal operations. Problems include insufficient institutional organization; a substantial shortage o f qualified, specialized, and experienced human resources; and a lack o f operating resources. The judiciary organization process i s s t i l l incomplete. The basic courts, primarily the local Islamic courts (Cadi Courts), labor courts, trade courts, administrative courts, juvenile courts for minors, and the Supreme Court, which includes three sections (judiciary, administrative, and an accounting section) are not in place. The judiciary lacks both magistrates and associate personnel (justice assistants and administrative support staff). Clerks, bailiffs and judicial police officers are often inefficiently supervised and lack motivation o w i n g to insufficient resources and management procedures. The attorney function, albeit a professional activity, i s also the subject o f major concern. There are few attorneys and the legislation governing them i s out o f date. Execution o f court decisions i s a source o f problems to the extent that there i s currently n o executive body to perform this function. Whether the government or individuals are involved, this situation will inevitably result in cases o f impunity weakening the enforceability o f court I -50- decisions, the authority o f the judicial officers who made them, ultimately undermining the overall judiciary institution. Problems related to the execution o f court decisions also shed light o n the penitentiary system as the country lacks penitentiaries worthy o f the name. Existing remand homes are in a particularly difficult situation, in an advanced state o f disrepair, and do not comply with international human rights legislation. Outdated and run-down buildings, inhumane detention conditions, and degrading treatment o f prisoners encourage escapes. There are no separate quarters for women and juveniles. Penitentiary staff are in short supply, untrained, and ill-equipped. Prisoners' families must provide food and medical care. These conditions are at odds with the principles o f basic human rights. In fact, human rights issues are not high o n the agenda in the Comoros, despite the existence o f legislation acknowledging the key international instruments.There i s in fact a real gap between the legislation and day-to-day reality. M a n y human rights violations are perpetrated by those who are supposed to uphold them. Children's and women's rights are not always respected. Juveniles are often subject to sexual exploitation, physical violence, neglect, and mistreatment. Such violence i s committed within the family, at home, in the schools, in the street, and in the workplace. The country has few schemes providing care, accompaniment, or psychological/psychosocial support for victims of violence. Further, although the legal age for marriage was established at 18 years o f age for boys and girls under the n e w family code, early marriages are s t i l l common. There i s little participation o f women in making decisions concerning the management o f public affairs. W h i l e women participate actively in economic development and poverty reduction, they are victims o f inequalities in terms o f workload and limited access t o knowledge and production factors. As a result o f these inequalities, women are concentrated in the informal sectors o f the economy (17 percent in trade and 49.9 percent in agriculture), they are insufficiently represented in certain "masculine" trades, and accordingly they enjoy little decision-making power in household and community circles. T o address this situation, the government drafted a number o f documents to improve living conditions for women and children and to enhance the gender equity. These strategic documents specifically entail ratification o f the k e y international instruments, adoption o f the Family Code, the national policy o n gender equity and equality, and the national strategy to protect the most, vulnerable children. Further, national and island organizations have been established to promote and defend human rights. A l a w establishing the national commission o n human rights and liberties was passed in 2006, but has yet to be promulgated. Free, transparent elections are regularly organized. An electoral l a w defining precise rules designed to govern all operations and modalities specifically for each election was adopted and amended in January 2007. This l a w establishes an ad hoc b o d y k n o w n as the Independent Electoral Commission o f the Comoros (CENI), Island Election Commissions (CIE) assisted by standing administrative secretariats (SAP) and at the union level (SNAP) and at the island level (SIN). -51- Despite substantial progress registered in the organization o f elections, these structures have insufficient technical capacities and lack financial, material, and logistic resources. Moreover, the electors have an insufficient knowledge o f their rights and obligations. The various elections that have been held since 2004 have been overseen by the Constitutional Court established in 2004. The latter judges the constitutionality o f the laws o f the U n i o n and the Islands and oversees the regularity o f electoral operations at the island and U n i o n levels, . including referendums. I t oversees the distribution o f power between the U n i o n and the Islands. I t judges electoral disputes and guarantees fundamental human rights and c i v i l liberties. Respect for c i v i l liberties, safety o f goods and persons, and measures against terrorism and transnational crime are inevitable global stakes for all countries. The events o f September 11,2001 in fact changed the global perspective o f peace and security. Security Council Resolution 1373 (September 28,2001) denotes the linkage between international terrorism and organized crime, weapons and drug trafficking, money laundering, and smuggling o f hazardous materials. Resolution 1373 i s binding on all countries and has profound implications on the legal system, control o f financial flows, and administration o f justice. Although the Comoros i s a relatively secure country, we observe an increase in criminal activity and a need to strengthen national security. Performance and strengths in the area o governance and social cohesion f Introduction by the Constitutions o f the U n i o n and the Islands o f direct universal suffrage as the only means to accede to political power at a l l levels, making i t possible for the public to choose i t s o w n leaders; Establishment o f the Constitutional Court i s a substantial contribution to the observance and enforcement o f the Constitution, as well as to the operation o f the existing institutions; Ratification o f several international conventions o n human rights and business law; Adoption o f national laws and acts in respect o f social security, decent work, gender, family, vulnerable children, judiciary organization, national statistics system, and emergency preparation and response; Compilation o f legislative and regulatory texts o n c i v i l rights and business law; Compilation o f national and international texts in respect o f the protection o f women and children; Availability of a vital statistics rehabilitation project, a national statistics development strategy; a paper o n the demographic and health survey project; a national policy o n gender equity and equality and the relevant action plan; and a national disaster preparation and response plan; -52- 0 Existence and involvement o f public agencies and non-governmental organizations in the defense and promotion o f human rights under development programs. Subsector weaknesses and constraints 0 Political instability preventing the preparation and adoption o f relevant legislative and regulatory texts to enhance governance, justice, and security; 0 Conflicts o f authority impeding the proper functioning o f the existing institutions; 0 Execution o f certain revenue and expenditure outside o f all budget and control procedures; 0 Abuses in overbilling, acquisition o f assets at high prices, and transfers o f assets at nominal prices; 0 Absence o f parliamentary control o f budget execution ( a posteriori control); 0 The state's inability to honor i t s commitments (irregular payment o f wages to government employees, and o f debts w i t h the private sector); 0 Inappropriate civil service recruitment which i s a burden o n the wage bill; 0 Failure to complete decentralization processes; 0 AII inefficient vital statistics system; 0 A dysfunctional national statistics system; 0 Endemic corruption; 0 Rudimentary social security mechanisms; 0 A very limited supply o f jobs; 0 A dysfunctional judiciary system; 0 Failure to take into account the higher interests o f the child in policies and programs; 0 Discrimination against women; 0 Insufficient emergency preparation and response mechanisms; 0 Failure to enforce judgments and orders o f the tribunals and courts; -53- Insufficient human and material resources for the tribunals and courts; Difficulty in accessing the legislative and regulatory texts; 0 Failure to comply with the current texts; 0 Failure to promulgate the l a w o n the national human rights and liberties commission. Outlook Several prior conditions must be met to enable governance and social coherence to play effective roles in the PRGS. Putting an end to poverty requires resolute action to strengthen social cohesion, consolidate peace, establish social security, fight corruption, respect human rights, and establish a sound justice system to preserve peace and social stability. The process o f decentralization should also become a reality. The process should be completed and the government should be brought closer to the people. Justice and security are in fact the k e y instruments to ensure the fundamental liberties that go hand in hand with development, to enhance the public well-being and reduce poverty. The government should therefore protect, promote, and guarantee individual rights and security. A necessary part o f anticomption measures i s the establishment o f a transparent system at different levels and the comprehensive application o f the l a w and regulations (independent audits, involvement o f c i v i l society, the media, and the competent jurisdictions). The government should integrate the promotion o f human rights into the process of implementing all development and poverty reduction programs. This strategy should rely o n corporate, political, and legal tools, and the establishment o f a National Commission o n H u m a n Rights and Liberties. The PRGS should be based o n the knowledge gained f r o m positive developments in the new institutional framework o f the U n i o n o f the Comoros, to propose adequate mechanisms to restore good governance. These mechanisms will make i t possible to strengthen the political, economic, and social dimensions that characterize governance and social cohesion with the objective o f restoring economic growth and reducing poverty. ' 3.7. EDUCATION SECTOR Education has a direct impact o n the future well-being o f individuals. I t i s essential for the socioeconomic development o f a country because i t helps improve the living conditions of individuals by giving them access t o more economic opportunities. At the macro level, a w e l l educated and informed population i s more productive and capable o f mastering m o d e m productive technology. I t can generate value-added and considerable income. At the micro level, education greatly increases the chances o f a person finding a j o b and, in a context of -54- globalization, makes individuals more competitive and attractive to employers, therefore placing them in a better position to take advantage of the available opportunities. The Comorian education sector comprises a formal and an informal education system. The formal education system includes the following levels: Preschool education; 0 Elementary education; Secondary education; 0 Technical education and occupational training; 0 Higher education and research. The informal education system includes: Education for young people and adults; 0, Trade apprenticeship and literacy. We should emphasize that the fundamental difference between these two systems i s now based on sector organization and financing. In the formal sector, the government largely covers the supply o f services; while, in the informal system, the resources do not necessary derive from sector policy. The education system must now envisage new approaches to enable the range o f education service providers to contribute effectively to produce a high-quality education and reduce poverty. f Presentation o tlze education sector The formal education system i s structured by the national scholastic charter, and i s divided into 18 regional academic inspection districts (CIPR) distributed as follows: two in Mwali, five in Ndzouani, and 10 in Ngazidja. Each CIPR i s managed by a primary school education inspector assisted by a number o f academic advisors (the number depends on the size o f the district). At the elementary level, the Union o f the Comoros has a total o f 308 public elementary schools (24 in Mwali, 111 in Ndzouani, and 183 in Ngazidja) and 85 private elementary schools. At the lower secondary level, the country has 53 public colleges (including six Islamic colleges), including six in Mwali, 14 in Ndzouani, and 27 in Ngazidja, plus 89 private colleges distributed as follows: four in Mwali, 27 in Ndzouani, and 58 in Ngazidja. At the upper secondary level, there are 10 public secondary schools (including one in Mwali, five in Ndzouani, and four in Ngazidja); and 62 private institutions, including two in Mwali, 17 in Ndzouani, and 43 in -55- Ngazidja). Last, since the start o f the 2006-2007 academic year, following the merger o f the existing higher education institutions (the Patsy School o f Higher Education-EESP-in Ndzouani was incorporated into the University o f the Comoros in 2008), higher education has been provided by the University o f the Comoros through the following constituent Faculties, Institutes, and Schools: 0 Faculty o f Arts and Humanities; 0 Faculty o f L a w and Economics; Faculty o f Science and Technology; I m a m Chafiou Faculty; 0 Teacher Training and Education Research Institute (IFERE); University Institute o f Technology (IUT); School o f Medicine and Public Health (EMSP). A number o f private higher education establishments and institutes are beginning to develop throughout the country. Analysis o performance in education f For the 2006-2007 school and university year, the population enrolled in all public and private higher education institutions was estimated at 15 1,335 students, up 0.9 percent f r o m 2003. The distribution by l e v e l i s provided in the table below. Distribution o f school enrollment by level 2003 2007 Education level Persons % Persons % Increase Pre-elementary education (community and private) (I) 1,618 1.1 2,720 1.8 13.9 Elementary education, public and private 104,274 71.4 104,418 69.0 0.0 Lower secondary education, public and private 25 ,689 17.6 27,256 18.0 1.5 Upper secondary education, public and private 11,962 8.2 13,862 9.2 3.8 Higher and technical education, public 2,426 1.7 3,079 2.0 6.1 Total 145,969 100 151,335 100.0 0.9 Source: Ministry o f National Education, Management Indicators 2002/2003, 2004, and 200612007. (1) The latest school census conducted in 1999 registered 2,500 Koranic schools (Palashio) comprising 96,752 students, a l l ages combined. At the preschool level, the large number o f Koranic schools in the Comoros i s a major advantage, particularly as each locality has at least one such school. In addition to a few mostly essentially -56- private nursery schools mostly located in urban areas, early childhood education i s covered largely by traditional schools. The Ministry o f National Education undertook a restructuring policy for t h i s type o f education in 2003 in 12 pilot schools in rural areas and one reference school. As a result o f this pilot experiment, the schools were integrated into the formal education system in M a y 2009. This led to an increase in school enrollment from 1,618 children in 2003 to 2,720 children in 2007, equivalent to an average increase o f 13.9 percent per annum. The share o f school enrollment in community schools in recent years i s 53.2 percent. At the elementary level, during 2003-2007, the number of children enrolled in primary school (public and private) held steady at approximately 104,000. Enrollment for girls increased slightly from 46,225 to 48,582, equivalent to an increase of 1.3 percent at the national level. The proportion o f girls in the system followed this trend, increasing from 44 percent in 2003 to 47 percent in 2007. This expansion in enrollment continued at approximately the same rate as demographic growth, Le., approximately 2.4 percent per annum during the period. The share o f the private sector in compulsory free primary education remained stable at 10 percent. The gross school enrollment rate registered a decline of approximately 6.7 points between 2003 and 2007 (94.8 percent in 2007, as compared with 101.5 percent in 2003) at the national level. School enrollment for girls, however, evolved more quickly than for boys, with an average respective growth rate o f 1.3 percent per annum, leading to an increase in the enrollment rate from 66.4 percent in 2003 to 70.9 percent in 2007. Recently we have observed, particularly in Ndzuani, a trend toward equal gross admission rates between boys and girls. The elimination o f school enrollment fees for both girls and boys therefore seems to be yielding results. The gap between the primary school enrollment rate for boys and girls declined substantially at the national level, from 13.24 to 4.07 points during the aforementioned period. The gap remained wide in Ngazidja and Mwali but narrowed in Ndzuani. The differences are more pronounced in rural areas and in poor households. During the 2002-2003 school year, the primary subsector acquired new textbooks (one textbook for each student) covering the three core disciplines (French, mathematics, and science). However, the textbooks were not managed in such a way that the initiative could be continued. The policy for renting textbooks at an affordable price led to the following consequences: - Payment problems leading to dropouts; - Poor management by the school board o f funds collected, leading to operating problems in certain schools. In terms o f supervision, all CIPRs have educational advisors and inspectors. The purpose o f this system i s to help improve training and continuing education for teachers, with the knock-on effect o f improving the quality o f education and learning. While coverage has been maintained, the teacher trainers rehired did not have the proper profiles. The sector subsequently encountered resource problems (shortages o f teaching materials and logistical resources). During the same period, enrollment in lower and upper secondary schools increased rapidly, from a total o f 37,65 1 to 4 1,118 students, equivalent to a 2.2 percent increase per year, with 45 percent -57- girls. We should note, however, that upper secondary school registered a slight increase in the proportion o f girls (46.7 percent in 2007, as compared with 44.1 percent in 2003). By contrast, the share o f the private sector in secondary education declined slightly from 41.1 percent to 36.8 percent during the period. The gross admission rate observed in 2007 was 34.9 percent, as against 40.5 percent in 2003. M o s t institutions, particularly at the secondary level, are in an advanced state o f disrepair. Accommodation capacities are quite limited and some schools, particularly at the primary and secondary levels, are forced to turn enrollment-aged children away. Nearly 78 percent o f the 1,735 existing classrooms are used in double shifts. This situation has led to an increasing number o f children, particularly from poor households and less favored areas, w h o are deprived o f education and w h o are increasingly populating the category o f dropouts or children not, or n o longer, enrolled in school. Technical education and vocational training remain the least attended subsectors owing to insufficient facilities. This area benefits from little investment, despite i t s clear importance in the country's economic development, i t s evident role in integrating young people into the labor market, and in reducing unemployment and poverty. At all levels o f general education, substantial efforts have been made to recruit teachers t o supplement the existing work force. At the primary level, the number o f teachers increased f r o m 2,488 to 3,069 between 2003 and 2007, equivalent to an increase o f 5.4 percent. At the secondary level, the number o f teachers in public schools increased substantially, by approximately 6.0 percent per year (equivalent to 1,184 in 2007, as compared with 938 in 2003). This increase made i t possible to cover the chronic deficits that were impeding operations during the school year, and to reduce the teacher-student ratio. During the period 2003-2007, the ratio o f students per teacher decreased f r o m 37.7 to 30.2 at the primary level and f r o m 23.6 t o 21.9 at the secondary level, a l l levels combined. W e should also highlight the problem o f insufficient motivation for supervisors (status), insufficient training time (particularly at the primary level), limited access to textbooks for students, and the lack o f educational and didactic support for teachers. These are some o f the factors explaining the poor performance o f the education system, and particularly explaining low- quality education and training. The internal rate o f return i s also quite low. Promotion rates between the various levels o f education are very low, and the repeater and dropout rates are still'quite high at a l l levels. At the primary level, for example, the repeater rate varies between 22 percent and 29 percent between the islands, while the dropout rate i s in the range o f 2-15 percent. M a n y children leave primary school without acquiring essential knowledge and s k i l l s for day-to-day life. At the structural level, the country faces substantial demand for education while the available resources are clearly insufficient. Despite the financial efforts the government has made t o develop the education system, the results s t i l l f a l l short o f expectations. While the budget allocated to education occupies a substantial share o f the state budget, i t does not meet the requirements o f the system, as more than 80 percent o f this budget i s devoted to wages. Management and administration o f education services register insufficient human, technical, and -58- financial resources. These problems are compounded by school management in the context o f decentralization since 2002. In the informal system, education for young people who have dropped out or not attended school, and adults (with an estimated total illiteracy rate o f 40.9 percent per the M I C S 2000/GCP 2001) i s an area o f the education sector that has been neglected in the past. There i s n o policy and very few programs targeting these groups. In addition, there are truly n o literacy and training centers. Last, the country lacks suitable teaching and educational materials and competent instructors. The economic crisis that has affected the country in recent years and the resulting fiscal difficulties have dealt a hard b l o w to the education sector, particularly the subsectors targeting young people who have dropped our or not attended school, as w e l l as adults, technical education, and vocational training. The institutions s t i l l in operation are facing multiple problems including very limited facilities, inappropriate school environments, obsolete infrastructure and equipment, insufficient qualified teaching staff, and inadequate employment training. Weaknesses and constraints in the education sector The m a i n constraints the education system i s facing are described below: 0 There i s a mismatch between demand for enrollment and the public supply o f education. The accommodation capacities are in fact quite limited, forcing some schools to turn away enrollment age children, particularly in rural areas. This i s a common situation in elementary education, despite the introduction o f double (and even triple) shifts; 0 A school environment that i s not motivating for teachers and unattractive for students, and thus not conducive to child school enrollment, particularly for girls. M a n y schools, particularly in rural areas, are dilapidated (sometimes in an advanced state o f decay), which can pose a health and security threat to the children. M o s t schools have n o water or latrines, and this situation does not encourage children to attend.schoo1, nor does i t provide incentives for girls t o stay in school; 0 The formal education system has n o organizations to cover and protect early childhood education. Koranic schools that accommodate most children three t o five years o f age operate at the margin o f the education system and are not subject to any administrative or educational control. Private nursery schools n o w only serve a small proportion o f children in this age group; 0 M o s t teaching staff, especially at the primary level, do not have the required qualifications or educational training for effective education o f young children; 0 Insufficient knowledge o f the teaching languages, and particularly French, which i s the first language o f teaching in the education system, o n the part o f teachers and students at a l l levels, constitutes a true quality impediment in the education system; -59- e The absence o f initial training, as well as continuing education for secondary level teachers means that students are not receiving efficient instruction; e Teachers do not receive effective initial or ongoing training as a result o f weaknesses in the training institutions; e Insufficient current resources for education at the primary l e v e l (despite the training o f new education supervisors), and virtually n o inspections at the secondary level: the few educational inspectors trained at this l e v e l are employed in education administrations or are seconded to other sectors; e In recent years, w e observe an increase in private institutions, particularly at the secondary and higher education levels, without accompaniment or supervision measures; e The absence o f an active, adequate technical education and occupational training network capable o f offering young people new opportunities or o f producing labor required for the country's economic development; e Persistent enrollment disparities between boys and girls, urban and rural areas, and wealthy and poor households; e Non-diversified higher education in which the supply and quality are limited; e Nonexistence o f an appropriate structure and policy to cover education for youth dropouts, persons not enrolled, and for illiterate adults; e Insufficient steering o f the education system, at the central and decentralized levels, in t e r m s o f design, planning, and management, monitoring and assessment, and resource mobilization and management; e The school charter i s not observed, leading to an imbalance between school supply and demand, and inefficient use o f resources; e The absence o f specialized child school health monitoring services i s a factor in frequent absenteeism and dropping out; e A decline in the annual time schedule as a result o f frequent strikes; e Insufficient coverage o f education in emergency situations. Outlook f o r the education system For better coverage o f early childhood education, an appropriate environment must be created t o foster i t s development. This approach would involve restructuring the subsector, and harmonizing the programs and methods for teacher training and education. The a i m i s to generalize the introduction o f discovery and play activities and to promote active learning -60- mechanisms in all Koranic schools, reflecting the lessons learned during the pilot phase initiated by the Ministry o f National Education in collaboration with U N I C E F . Against this backdrop, the subsector will become integrated into the formal education system. This approach w i l l draw from the national strategy for comprehensive early childhood development (DIJEC). Efforts must, in any case, be intensified to maintain these trends and, in the long term, to reach the Education for All (EFA) objectives at the horizon 2015, in accordance with the National Education for All Plan (NAP/EFA), and particularly envisaging to: Develop and innovate in early childhood education and protection; Ensure free, universal, compulsory school enrollment, providing quality education, at the primary level; Eliminate a l l forms o f inequalities in primary and secondary school enrollment, particularly strengthening education for girls; Strengthen access to and quality o f secondary education and diversify the education supply to give all young people equal opportunities to succeed; Promote technical education and occupational training for young people and offer them the opportunity to acquire the skills they need for day-to-day life, and for more effective socio-professional integration; Improve the literacy level o f young people and adults to enable them to acquire the knowledge and skills they require to improve their living conditions; Develop, diversify, and strengthen quality higher education at the University o f the Comoros to meet demand to educate the young generations and to meet the country's development requirements. Last, i t i s essential to strengthen capacities in planning, administration, and management o f the education system and to establish an efficient strategy to optimize and rationalize the use and allocation o f human, material, and financial resources. 3.8. HEALTH SECTOR The health status o f individuals i s a k e y indicator o f both the population's well-being and poverty. Substandard health and sanitation conditions, particularly for the poor, derive from the complex relationship between health and poverty. Poverty i s reflected in this sector through: (i)insufficient access t o quality health services; (ii) prevalence o f certain priority diseases; (iii)insufficient infrastructure for health, hygiene, sanitation, etc.; and (iv) a resurgence o f malnutrition and a poor quality diet. N o t o n l y does poverty lead to poor health o w i n g t o a lack o f adequate health care; a poor state o f health also perpetuates poverty. Under the National Health Plan (PNS), the National Health Development Plan (PNDS) - 2015 Outlook i s the benchmark for the country in the area o f health development. I t emphasizes -61- community participation as an ongoing strategy to ensure health for all, and considers health n districts to be the cornerstone o f health development. I light o f the institutional changes, PNS implementatioii should be accompanied by legal clarification. Heath system reform in fact introduced a pyramid structure to the sector with three levels o f organizational competence (central, intermediary, and peripheral). The central level (Union level) Minister's Cabinet; (ii) i s comprised o f the following institutions: (i) Secretariat General; General Heath Inspectorate; (iii) National Health Directorate; (iv) central directorates and units responsible for program coordination; (v) National Reference Hospital; and (vi) National Autonomous Pharmacy o f the Comoros (PNAC). At the island level, w e observe the health administration and Regional Hospital Centers (CHR). The final level i s comprised o f the Health Districts (seven in Ngazidja, seven in Ndzouani, and three in Mwali), covered by t w o medical- surgical centers in Ngazidja and Ndzouani and three urban medical centers for the three islands. These three levels are supplemented with a network o f clinics (Armed Forces, Catholic agency for overseas aid and development-CARITAS, private sector, and 49 peripheral community health units). This framework should enable effective implementation o f national health policy. While i t can be receptive to change, the framework should reflect P N D S standards as w e l l as the current health charter. The fundamental law o f the Union o f the Comoros stipulates that the system must a i m for a broad, dense network o f basic health units (geographic accessibility to a health center in a 5- kilometer radius i s estimated at 63 percent). M a j o r efforts should be made in the areas o f staff training, rehabilitation, and re-equipment o f certain health units, and the low-cost availability o f essential medicines. These efforts should lead to higher levels o f use. Despite the efforts that have been made, particularly in training and capital expenditure, the quality and quantity o f health services have deteriorated during recent years as a result of: (i)insufficient technology level, obsolete biomedical and medical technology equipment, and inadequate equipment maintenance; (ii) inadequate performance o f the pharmaceutical sector; (iii)shortage o f qualified personnel; (iv) weakness o f the partnership with NGOs and c i v i l society; (v) poor management and lack o f motivation in health personnel; (vi) disorganized construction o f health infrastructure by the communities, and facilities not operating to the required quality standards; (vii) insufficient quality o f health services and care; and (viii) partial application o f the health development plan and insufficient coordination and steering o f activities In addition, there i s the factor o f the population's increasing impoverishment, insufficient public awareness o f health problems, high costs o f health services, inadequate accommodation in health units, shortage or even absence o f doctors in health centers, and unavailability o f medical technicians and other types o f health workers. In addition, the absence o f appropriate regulations and anarchic development o f the private sector have undermined the quality and accessibility o f care and have contributed to high-cost, inconsistent health services. These well-known problems, combined with poor hygiene and sanitation conditions and the population's insufficient access to drinking water and a healthy environment, explain m u c h o f ` the persistence o f certain diseases such as malaria (the number one cause o f morbidity and mortality in children under five years o f age), intestinal parasites, lymphatic filariasis, acute -62- respiratory infections, and diarrhea. They are also the source o f certain potentially epidemic diseases such as arboviroses (dengue fever and Chikungunya virosis). M o r b i d i t y and mortality related to certain noncommunicable diseases, and in particular, mental illness, blindness, cancer, sugar diabetes, cardiovascular disease, and hypertension continue t o be concerns. The data o n these diseases are to a l l intents and purposes nonexistent. Immunization coverage for the six preventable illnesses in the Expanded Program o n Immunization (EPI) declined f r o m 90 percent during the 1990s to less than 70 percent in 2004. This decline places the Comoros below the subregional average. By contrast, the l i f e expectancy at birth increased from 55 years o f age in 1991 to 63 in 2002. An examination o f certain monitoring objectives for the Millennium Development Goals in the area o f mother and child health, as indicated in the table below, clearly shows the insufficient performance o f the Comorian health system, particularly as w e know that improved mother and child health, by reducing mother and child mortality rates, i s the focus o f concerns among the public authorities as indicated in the national health plan. This still-high maternal mortality rate (381 per 100,000 l i v e births) i s explained by poor quality care and services, lack o f pregnancy care, and absence o f appropriate responses to obstetric and neo-natal emergencies, and, despite the efforts that have been made, late referrals to health units, home births, poverty, ignorance, and illiteracy. Table o f reproductive health monitoring indicators in connection with the Millennium Development Goals Indicator 1991 1996 2000 2003 Mortality rate o f children less than f i v e years o l d 130 104 74 (per 1,000 live births) Infant mortality rate 86.3 77.3 59 79.3 (per 1,000 live births) One year-old children effectively immunized against measles (percent) (--) 48 56.3 71.08 Maternal mortality rate 570 (--) 517 381 (per 100,000 live births) Proportion o f births assisted by qualified personnel (Dercent) \I (-1 52 62 Source: Ministry o f Health. AIDS has become a great concern, in the area o f public health as well as development. Even if the prevalence rate for HIV infection in 2003 was s t i l l l o w (0.025 percent), an explosion i s possible and preparations must be made n o w . Surveys show l i t t l e knowledge o f h o w HIV i s transmitted and appropriate preventative methods, which makes certain groups particularly vulnerable. Moreover, we observe that the frequency o f other sexually-transmitted infections (STIs) in symptomatic men and sex workers might contribute to the spread o f HIV, under certain circumstances. -63- Despite the substantial progress that has been made, the country must intensify i t s efforts to perpetuate the activities to fight this disease, particularly b y identifying more partners, such as the World Fund, Indian Ocean Commission (COI), the Joint United Nations Programme on HIV/AIDS (UNAIDS), the World Health Organization (WHO), the United Nations Population Fund (UNFPA), the United Nations Children's Fund (UNICEF), the United Nations Development Programme (UNDP), etc. The health system registers poor facilities and services in public sector health units. Development in the private sector i s anarchic, and services are costly and can be questionable. As a result o f this situation, combined with other sociocultural factors inherent in the health system, people must make often costly journeys to obtain medical care, in the private sector or abroad. The poor have insufficient incomes to access quality health care commensurate with their health situation. They often resort to traditional methods that can be harmhl. There i s no national policy to care for indigents. By contrast, a network o f mutual health associations i s being developed in the islands. Performance and strengths o the health system f The main strengths o f the health system are: There i s a national health program (PNS); A national plan to develop the health information system (PNDSIS) i s being prepared; Decision-making agencies have been established for health development (CNS, CTNS, CCM, National Committee against HIV/AIDS and STIs-CNLS, etc.); An Office o f the Inspector General for Health has been established; A new health code has been adobted; The authorities have expressed their willingness to harmonize state institutions under the new Fundamental Law o f M a y 17,2009; Primary and secondary health facilities are geographically accessible; The community i s involved in health activities; A Master Plan for the Health Information Sector has been adopted; Capacity building i s in progress for health workers in connection with PNDRH program implementation; A National Order o f Physicians, Pharmacists, and Medical Biologists exists; An essential drug purchasing center (PNAC) exists; -64- Development partners show clear interest and willingness t o collaborate; Associative dynamics and community solidarity are present; Comorians expatriates are involved in health financing. Weaknesses and constraints o the health system f The development o f the health system faces the following weaknesses and constraints: b Absence o f clarification in the official texts defining the functional relations between the central government and the autonomous islands following the adoption of the new fimdamental law o f M a y 17,2009; b An insufficient financial contribution from the state, which i s below the recommended 15 percent; b Absence o f innovative mechanisms in the health system; b Insufficient technical level from all standpoints, despite the efforts that have been made; b Qualitative and quantitative shortage o f health personnel; b Absence o f care for indigents; b N o generalized social security policy for the whole population and particularly for indigents; b Human resource problems related to the lack o f career plans; 0 Limited number o f managers for certain personnel categories, poor distribution, high degree o f mobility, and l o w level o f motivation; b Insufficient health information system; b Inadequate use o f health services by the population; b Frequent conflicts between the community management bodies and health personnel; b Insufficient dissemination and application o f current regulatory texts; b Frequent depletion o f essential drug supplies; b High cost o f medicines; -65- The failure o f the National Order o f Physicians, Pharmacists, and Medical Biologists to function as i t should; 0 District pharmacies are not operational; The brain drain has increased; Personnel are insufficiently motivated owing to irregular wage payments and poor working conditions. 3.9. PRIVATE SECTOR AND MICROFINANCE 3.9.1. PRIVATE SUBSECTOR The Comorian private sector i s comprised o f different sized enterprises, although predominantly micro and small-scale enterprises. Businesses are generally labor-intensive, generating revenue with a substantial number o f personnel. The economic fabric, however, remains thin and i s dominated at the top by four large parastatal enterprises. Based o n the available documentation and expert opinions, there are an estimated 49,000 private enterprises in the Comoros, including the formal and informal sectors. M o r e than 93 percent o f these are microenterprises, approximately 6 percent small and medium-scale enterprises, and less than 1 percent are large enterprises. The agrofood sector represents 63 percent o f the number o f private enterprises, fishing accounts for 18 percent, and trade 1 1 percent. By contrast, industry represents only 0.1 percent and tourism 0.4 percent o f the total number o f private enterprises. The increasing share o f trade activity (distribution, which i s n o w tending to inflate the tertiary sector in the Comoros)' i s noteworthy. By contrast, there are few small-scale enterprises and industries (SME-SMI) in the manufacturing sector and processing and industry. There are more o f such enterprises in the informal sector, particularly in the grocery trade. The modem, organized private sector employs approximately 8,000 persons, according to the best estimates, equivalent to 30 percent fewer persons than the public sector. The private sector has historically been largely dominated by a few cash crop processing and import-export companies. I t was not until the 1980s that we observed a new generation o f modem enterprises keen to make locally-produced goods available o n the market to substitute for imports. Accordingly, the Comorian private sector i s s t i l l unstructured, despite some recent progress in foreign direct investment and the re-opening o f Banque de Developpement des Comores (BDC), which enabled some entrepreneurs to resume production activities or to expand existing commercial concerns. F r o m the standpoint o f i t s structuring, the private sector has been attempting to become organized for a number o f years. In 2007, The Comoros Employers' Organization (OPACO) undertook a -66- reorganization with more professional management and by offering more services to i t s members. The transfer o f the Chamber o f Commerce to private transactors also gives the private sector a new outlook. New organizations aiming to participate in private sector development (the Comorian private sector federation and the national federation o f Comorian farmers, in particular) have also emerged. Last, in 2009, there are plans for the Chamber o f Commerce, Industry, and Agriculture o f Ngazidja to implement the Professional Organizations House with support from the trade services capacity building program. While the private sector i s gradually becoming organized, the dialog with the public sector i s s t i l l insufficient. The public sector i s engaged in activities that are not always compatible with private sector promotion and development. The clear absence o f a cooperation framework to define a true economic strategy, and the suspicion targeting the private sector are factors that limit the willingness and capacities o f Comorian enterprises to invest and p e r f o m . The public-private partnerships, that were a source o f great hope, did not materialize. By contrast, recent experiences o f the National Agency for Investment (ANPI) show some encouraging signs. For example, Comorian private enterprises could form joint ventures with major international groups to carry out major works and property investments. Sector performance and strengths The main strengths for private sector promotion are: 0 The Comoros' membership in the euro/franc area ensures that the Comorian currency i s relatively stable; 0 Membership in a number o f subregional groups (Indian Ocean Commission-COI, Common Market for Eastern and Southern Africa-COMESA, Community of Sahel- Saharan States-CEN-SAD, Greater Arab Free Trade Area-GAFTA, Organization o f the Islamic Conference-OCI, Islamic Development Bank-IsDB, Union o f Chambers o f Commerce and Industry o f the Indian Ocean-UCCIOI) entails trade development advantages; 0 The future economic partnership agreement between the EU and COMESA, under the Cotonou agreements binding the Comoros with the European Union, will offer opportunities in terms o f access to the European market and the free trade area (ZLE); The African Growth and Opportunity Framework (AGOA), the Uniform Acts o f OHADA, the Multilateral Investment Guarantee Agency (MIGA) Convention; SID and SIASE (IsDB investment insurance), the Integrated Framework; 0 The Comoros's membership in the League o f Arab Nations i s providing, inter alia, an opportunity to gain access to the Arab market and to make the Comoros a platform to access the Gulf States; 0 Membership has been undertaken in the World Traded Organization; -67- Enlargement o f Sai'd Ibrahim International Airport and i t s alignment with international standards; Integration into the world globalization and liberalization process (liberalization and opening o f the telecommunication market); Implementation o f the submarine fiber optics cable in connection with the East Africa Submarine Cable System (EASSY) Project; The government's commitment to implement a framework favorable to private sector expansion through the state's divestiture f r o m the trade sector to concentrate on customary public service activities; Strengthening o f employment and social security policies; Existence o f a new, modern, and attractive investment code based o n performance- oriented incentives and the operation o f the ANPI; The program to strengthen trade services and the existence o f sectoral studies (vanilla, ylang ylang, and other spices). Private sector weaknesses and constraints Private sector development faces the following weaknesses and constraints: The absence o f follow-up on commitments undertaken reduces investor visibility; An inflated tertiary sector dominated by the informal sector; A virtually nonexistent secondary sector limited t o a few small and medium-scale enterprises; 0 Limited opportunities for bank financing; 0 Absence o f foreign trade promotion structures; Insufficient commercial representative offices abroad; 0 Absence o f a clear policy o n enterprises; The legal system does not provide effective support to the private sector in rapid processing o f litigation and the elimination o f arbitrary practices in certain tax services; Insufficient skilled labor; a -68- 0 Absence o f corporate and management culture. Outlook for the private sector Since the 1980s, successive governments have become aware o f the role the private sector must play as a partner in the country's development. Private sector support programs should promote the development o f entrepreneurial capacities and make financing available for productive investment. Moreover, enterprise creation procedures must be streamlined and certain incentives established t o promote investment. The government should take steps t o enable the private sector to progress and to play a more important role in development programs. 3.9.2. FINANCIAL AND MICROFINANCE SUBSECTOR The Comorian financial sector has registered substantial growth during the past five years. In 2007, the banking system had only one commercial bank. Today, the banking landscape has changed with the opening o f new banks and microfinance institutions. The financial sector comprises: 0 Banque pour l'hdustrie et l e Commerce (BIC), w h i c h accounts for more than 6 0 percent o f the savings and credit market; 0 Banque de DCveloppement des Comores (BDC), w h i c h serves a limited number o f small and medium-scale entrepreneurs o w i n g to substantial transaction procedures and costs, w h i c h constitute a barrier t o access for this type o f service. I t does not take deposits, but draws borrowing resources f r o m foreign institutions. When the B D C resumed operations in 2008, it began to focus o n microfinance activities. N e w enterprise financing activities were suspended to strengthen existing enterprises, and to finance their development; 0 The National Postal and Financial Services Company (SNPSF), established in 2005, developed a n e w service with the introduction o f postal checks in 2006; 0 The t w o microfinance institution networks (Sanduk and Meck) are developing quickly. M e c k was.licensed by the B C C in November 2005; 0 In 2009, w e observe the establishment o f t w o n e w commercial banks. E x i m Bank, which n o w operates as a representative office, and Banque FCdirale du Commerce; and two offices o f the postal services were opened in France t o facilitate transfers f r o m Comorian expatriates throughout the world; 0 The Western U n i o n monopoly o n fund transfers i s n o w facing competition with the , establishment o f Travelex, and M o n e y Gram since 2008. Where nonbanking services are concerned, the U N D P micro and small-scale enterprise support project (AMIE) works directly with those w h o have project ideas by helping them formalize their projects and providing access t o microcredit in the range o f CF 50,000-500,000. Financing i s -69- based on a credit facility provided initially by U N D P . AMIE i s n o w an independent association that works closely with the Mecks network. The formal financial sector i s characterized by ineffective financial intermediation where some savings are reinjected into the economy through loans and productive investments, which register a sharply declining trend. Formal financial institutions in fact mainly finance commercial activities and seasonal cash crop activities, which are short-term operations. The financial system has long been in a position o f excess liquidity, although the economic cycle has led to a tightening o f credit. However, the financial system i s n o w facing a liquidity shortage. Savings must therefore b e stimulated to ensure that c i v i l service wages can be paid. In general, banks are no longer investing in the productive sector. This situation can be explained by several factors, including the perception o f substantial risks in investment projects and the fairly pessimistic outlook for enterprise profitability in the current economic and political climate. T o offset this lack o f access by the poor t o formal financial services, microfinance institutions (MFIs) appeared during the late 1990s: Caisses Sanduk (a network o f 55 banks covering all o f the islands) and Mutuelle d'Epargne et de Credit des K o m o r (Meck), which has 13 branches located in the three islands, although i t s operations are more dense than Sanduk's Established in 1993 with support form the Agence fianqaise de diveloppement (AFD), the Sanduk bank network aims to give rural people access to grassroots banking services. M e c k was established in 1996 with support from the International Fund for Agricultural Development (IFAD) and the Comorian government. While these decentralized financial institutions (DFIs) grant loans to the less affluent population, they apply credit policies similar to banks, providing financing for vanilla production .and trade activities. These two networks have gained popularity and their market share i s constantly growing, indicating that they meet an existing requirement. The share o f savings increased f r o m 15 percent in 2001 to 27 percent in 2004, and the share o f credit f r o m 12 percent in 2001 t o 28 percent in 2004. These developments are promoted through an estimated C F 35 b i l l i o n in transfers f r o m the Comorian emigrant community, which are used for savings and repayment o f loans arranged by the households involved. AFD i s n o w financing programs to support the Sanduk and M e c k networks with a view to rehabilitating the institutions and consolidating the system. f Performance and strengths o thefinancial and microfinance sector The Comoros's membership in the euro area i s a factor in the stability o f the financial system and in investor security. This membership protects against risks o f tight credit policy, despite the unfortunate presence o f excessively prudent commercial bank policies, which are impeding credit development. During recent years, we observe substantial growth in DFI activities, as reflected by an increase in outstanding deposits, loans, and membership numbers: -70- 0 At December 3 1, 2004, the Meck network registered 25,351 members, as against 19,105 in December 2003, outstanding savings o f more than CF 5 billion, up 13 percent; and outstanding loans o f CF 2.5 billion, as against CF 1.7 billion in December 2003; 0 Sanduk network activity, with three autonomous regional unions, grew slightly in 2004, with 22,070 members, as compared with 20,355 in December 2003; while deposits increased from F C 2 billion to CF 2.4 billion and outstanding credit from CF 1.2 billion to CF 1.4 billion during the same period. The existence o f a regulatory framework governing the DFIs, enabling the central bank to exercise i t s supervision authority, i s a positive factor that can be expected to support the sustainability o f the system. f Weaknesses and constraints o thefinancial and microfinance sector The financial and microfinance sector faces the following major weaknesses and constraints: 0 A lack o f real competition in the credit market; 0 An absence o f diversification in microfinance products and agencies; 0 Substantial dependence on credit from donors and lenders; Insufficient follow-up o f credit cases in certain institutions; Difficulty in effectively channeling savings from Comorian expatriates; 0 L o w level o f remuneration on savings; 0 The judiciary system i s not efficient or organized enough to provide valid support for the financial sector; 0 Confbsion o f supervision and financing roles; 0 The supply o f financial services i s not adapted to the specific features o f certain activities; DFI management lacks sufficient professional standing, which can have severe consequences for some organizations; 0 There are insufficient financial instruments that would permit more effective risk management; Interest rates are often deemed to be excessive as compared with returns on investments; 0 Microfinance institutions reach an insufficient proportion o f the population in rural areas. -71- Outlook for the financial and microfinance sector Initiatives are in progress for Banque de l'Habitat, an investment a bank, and a bank for emigrants. With the celebration o f the international year for microfinance, Comorian DFIs have become aware o f the preponderant role they must play in local economic development and efforts and to fight instability in their communities. Support t o enhance the professional standing o f DFIs i s essential. The changes we observe in the composition o f the Comorian expatriate community could lead to a drastic reduction in transfers in the medium term. -72- CHAPTER I V CORE STRATEGIES AND PRIORITY PROGRAMS a -73- 4.0. INTRODUCTION The poverty reduction and growth strategy was developed according to three basic principles. The stakeholders are convinced that poverty can be reduced substantially in the Comoros with (i)robust economic growth; (ii) human and institutional capacity building; and (iii) strengthened governance and public management, with, inter alia, a clarification o f roles, responsibilities, and scope o f authority between the U n i o n and the islands, combined with a reorganization o f the c i v i l service. Robust economic growth is essential for poverty reduction The experience o f the Comoros and many developing countries shows that economic growth i s a necessary condition for sustainable poverty reduction. T o improve the population's living conditions, production and productivity must be increased, jobs created, and revenue generated. The scope o f the impact depends o n sector performance, the political and institutional environment, macroeconomic and sectoral policies, and the level o f inequality prevailing between the socioeconomic categories and environments. Numerous studies also show that economic growth can be accompanied with an increase or reduction in inequalities depending o n the sector in which the growth i s concentrated. When w e observe a substantial concentration o f poor households in a given sector, we can expect substantial growth in the sector t o have a more substantial impact on poverty reduction than if growth were induced in a sector encompassing fewer poor households'. By contrast, growth deriving f r o m a sector where f e w poor people are concentrated can also contribute indirectly to reduce poverty and inequalities, provided that the government establishes effective redistribution policies. There are therefore t w o major options in terms o f sectoral priorities to reduce poverty through growth: promote growth in the most promising growth sectors where the country has comparative advantages, and ensure that some benefits o f this growth are redistributed through redistribution policies; or adopt a "pro-poor policy" aiming to boost the income o f the poor in the sectors where they are concentrated, which will also lead to an increase in GDP. The government o f the Comoros intends to use a combined approach, by targeting the sectors where the poor are concentrated, to directly and quickly increase their income, and by stimulating medium-term development o f new growth sectors, the benefits o f which can be redistributed through taxation and through equitable, incentive-based public expenditure policies. In a short- term framework, there was a special focus o n the micro and small-scale enterprise sector and the .agro-food sector (agriculture, fishing, and stockbreeding) in general, as these sectors typically register a significant proportion o f households, a poverty .incidence exceeding the national average, and therefore individuals likely to respond quickly to incentives (EM, 2004). Comorian agriculture has lost substantial domestic market share during recent years. Increasing amounts o f fruit, vegetables, and food products are imported f r o m the African continent. As a result o f substantial increases in sea transportation costs, and international rice prices, which doubled in one year, local products are n o w more competitive and offer opportunities to regain market share, provided that the trade circuits in the marketing scheme are organized to reduce production and transaction costs, to support farmers, ensure that inputs are available, and promote -74- consumption o f local products. The authorities are convinced that promoting growth in the agriculture and fishing sectors w i l l contribute directly to j o b creation in the poorest sectors. In the framework o f a medium and long-term outlook for the agricultural sector, the government intends to promote private sector development in the Comoros in certain targeted export-oriented niches o f the agrofood sector. The aim i s to stabilize, and if possible to improve current production o f the traditional cash crops o f vanilla, cloves, and ylang ylang, while developing new crops and positioning the country in export niches. Potential candidates would include tropical f r u i t s such as lychees, algae growing, lobster and shrimp farming, cultured pearl production, etc. Tourism development, however, w i l l be the country's medium-termeconomic engine. This option i s the centerpiece o f a government development strategy. T o date, despite the country's evident tourism potential, the Comoros has not been able to develop this sector as other islands o f the Indian Ocean. This situation could change, however, in the coming years. Financing agreements have been signed for over US$250 m i l l i o n with international tourism groups t o develop high-end seaside beach complexes. Work has also begun on the o l d Galawa hotel site. Tourism i s a particularly interesting sector in poverty reduction as it i s job-intensive and can create knock-on effects in a number o f economic sectors. In addition, most o f the skilled jobs created in the sector w i l l require a relatively short training period (from a few months to a few years). Further, if effectively managed, this sector represents a sustainable source o f income and can contribute to environmental conservation. The challenge for the Comoros i s to optimize revenue and benefits from growth in tourism by developing multiple services related to this n sector, including the supply o f fishing, stockbreeding, and agricultural products. I the least favorable scenario, these products w i l l all be imported, which will reduce the knock-on effects throughout the economy. By contrast, if the Comoros follows the examples o f the Seychelles and Mauritius, there will be numerous, dynamic linkages between tourism and other economic sectors. The government i s aware o f both the problems and the opportunities involved. T o ensure coherent synergies between the sectors, the concepts o f tourism development and public private partnership (PPP) poles will be implemented.The conditions for a win-win situation must be defined in which Comorians will gradually gain the skills required and invest alongside international investors. In addition to questions related to the type o f sector to be given priority in poverty reduction and growth, the type o f growth will also affect poverty reduction. Unskilled labor-intensive growth will be much more effective in poverty reduction than capital-intensive growth. Accordingly, labor-intensive technologies, primarily those requiring unskilled labor such as road construction and maintenance, construction, agrofood, etc. should be given priority. Whether this effort involves identifying growth niches in the agrofood or tourism sector, serious studies should be conducted to assess technical feasibility, market potential, the comparative advantages o f the Comoros, and possible strategic niche market positioning. Similarly, studies must be conducted to identify labor-intensive technologies to be promoted in different sectors to ensure product quality, returns o n economic activities, and the competitiveness o f Comorian goods and services. a -75- Improving human capital is at the core o the development and poverty reduction process f Poverty i s not only a result o f l o w income. I t i s also caused by insufficient access to different forms o f capital, and particularly human capital. The government intends for a l l Comorians to be healthy, well educated, and able to reach their personal and professional potential. T o that end, individuals must be able to take the economic opportunities made available to them to earn their living and ensure the well-being o f their families. The education sector plays a strategic role in this connection as i t i s the best mechanism to convey social values and develop skills to enable individuals to find the means and motivation to build a country where the quality o f l i f e i s good. Against this backdrop, the PRGS places special emphasis o n vocational training activities in addition to those directly targeting the formal education sector. I t i s an important matter to allocate resources to occupational training and functional literacy for young persons and adults. These are effective mechanisms to promote their occupational integration, particularly in key employment sectors. The a i m will be to promote short-term training activities, such as agrofood technology institutes and hotel and tourism schools, t o provide specialized labor required to develop these identified growth niches. Strong demographic growth i s a constraint for the country's development. The demographic growth rate was approximately 2.1 percent according to the 2003 RGPH, and there i s n o reason t o believe i t has declined in recent years. Clearly, this growth rate should be reduced in order to reduce poverty significantly. Demographic growth in fact accentuates demand for basic social services, while available financial and human resources are quite limited. The government intends to attack this problem directly through strengthened family planning programs. The introduction o f relevant training modules into training curricula, in the public and private sectors, i s a priority. Last, we k n o w that broad education i s required to reduce the demographic growth rate, with a focus on education for girls and adult literacy. Activities in these t w o areas will receive special attention. f Sharing o responsibilities through responsible governance ensures sustainable development Good governance i s a necessary condition for poverty reduction in the Comoros. The government o f the U n i o n o f the Comoros intends to continue the process o f national reconciliation, democratization, and decentralization so that the Islands can be more autonomous and to enable c i v i l society organizations gain increasing responsibility and involvement in the development management process. Insufficient governance and political instability have been factors in increasing poverty and blocking the economic and social development process. The danger o f secessionism will be present as long as the power sharing between the Union and the islands i s not anchored in democratic practices. The basic texts must be understood by all citizens and for c i v i l society and citizens' organizations to ensure such understanding through the daily exercise o f power at the community level and through institutions at the island level. This change in attitude will be supported by the schools, which will begin at the primary l e v e l to provide civic training in the principles o f democracy. In this connection, public communications and media development should receive more attention. A well-informed society i s generally more democratic and better -76- positioned to understand the stakes and difficult choices that must be made, and will contribute more effectively to the development process. At the same time, rapid progress i s also essential on the issue o f sharing authority between the different levels o f government at the sectoral and inter-sectoral levels. The Constitution o f 2001 and the promulgation o f the Organic Laws o f 2005 clearly established a constitutional framework. Now, the responsibilities o f the different parties must be clarified and the appropriate instruments established for each o f them to exercise their rights. Too often, in recent years, Union and island government activities have been blocked b y a lack o f clarity and consensus on the each participant's prerogatives. Issues that are initially technical rapidly to take on political undertones, making problem solving a difficult matter. I t i s therefore quite normal for good governance to be at the center o f the concerns in the poverty reduction strategy. The government o f the Union intends to attack this issue in partnership with the island governments as quickly as possible so that all Comorians can meet the challenges o f poverty reduction. Rapid progress in improving living conditions will be sought, as in the past, the great poverty that s t i l l affects many Comorians has been a factor in vulnerability to unproductive distractions. Good economic governance i s also a central issue in the national reorganization effort. N o t only will the authorities aim at sound management o f fiscal resources, but they will ensure that the markets operate efficiently and that distortions and sources o f illegal enrichment-factors o f public discouragement-will be removed. 4.1. PRGS CORE STRATEGIES According to the adopted principles and orientations, the 2010-2014 PRGS adopted six core strategies and 32 priority programs to be implemented during the next five years (Table 1). Core strategy Priority program Core strategy 1: Stabilize Program 1.1. Enhance government and fiscal operations the economy and lay the Program 1.2. Integrate and facilitate domestic and 1 international trade I Core strategy 2: Strengthen IStrengtheningthe private sector . key sectors by focusing on Program 2.1. Support private sector organization institution building and Program 2.2. Financial intermediation and microcredit ensuring a broader role for 11. Restore growth through key sectors the private sector 0 Agriculture and stockbreeding subsector Proeram 2.3. Enhance securitv o f DroDertv resources Program 2.4. Support the creation o f a favorable environment for agriculture sector development Program 2.5. Restore agricultural and agrofood production -77- Core strategy Priority program Program 2.6. Protect livestock against exotic infectious diseases and intensifv the animal oroduction sector I Fishing subsector Program 2.7. Create an environment favorable to the balanced develooment o f the sector I Program 2.8. Develop a conservation, processing, and marketing system for fish products 0 Tourism subsector Program 2.9. Support tourism development Core strategy 3: Strengthen Program 3.1. Promote good governance, social cohesion, governance and social solidarity, and consolidation o f peace cohesion Program 3.2. Improve the legal framework, promote anticorruption measures, and strengthen transparency in fiscal management Program 3.3. Strengthen the capacities o f the judiciary institution Program: 3.4. Fight terrorism and transnational crime, and strengthen c i v i l securitv Core strategy 4: Improve Program 4.1. Fight malaria and Drioritv diseases I the health status o the f Program 4.2. Integrated sexual and reproductive health I general public development Program 4.3. Fight H I V / A I D S and sexually transmissible infections Program 4.4. Strengthen the efficacy o f a l l aspects o f the health system Core strategy 5: Promote Program 5.1. Develop education, technical instruction, and education and vocational occupational training, t o reflect the requirements o f the j o b training with the aim of market developing human capital Program 5.2. Improve access t o and quality o f basic (preschool and elementary) and secondary education Program 5.3. Develop competent human resources and the sectoral (SWAP) approach in education Program 5.4. Promote literacy, sports, and cultural activities Core strategy 6: Promote Program 6.1. Conserve biodiversity and equitably share i t s environmental advantages sustainability Program 6.2. Conserve and uDnrade agro-biodiversitv I and civilian security Program 6.3. Adapt to climate change Program 6.4. Fiscal rehabilitation with an ecological focus Program 6.5. Capacity building for multisector environmental management and coordination Program 6.6. Establish prevention and management mechanisms for risks related t o natural and climate disasters -78- Core Strategy 1: Stabilize the economy and lay the groundwork for strong and equitable growth This strategy involves conducting major fiscal reforms, reorganizing the administration, adopting incentive commercial policies to promote the integration o f the Comoros into the regional and world economies; implementing measures to make the Comorian economy more competitive, particularly in the key sectors o f agrofood and tourism; executing reforms and investments to guarantee a regular energy supply at a reasonable costs; and building and improving basic economic infrastructure (roads, ports, airports, and telecommunications) to support external trade as well as t o enable Comorian economic players and producers to take optimal advantage o f the opportunities available to them on the domestic market. Last, this core strategy involves access to drinking wafer and sanitation services. Core strategy 2. Strengthen key sectors by focusing on institution building and ensuring a broader role for the private sector This core strategy involves implementation o f priority programs aiming to develop and increase productivity in key economic growth sectors and to help achieve a sustainable reduction in poverty. This strategy primarily involves agriculture, stockbreeding, fishing, and tourism. While the traditional components o f the agrofood sector are better known, and their contribution to economic development and food security no longer remain to be proven, the tourism sector offers great potential that has never truly been tapped. The measures under this strategy aim at institutional support and the regulatory framework governing growth sectors; support for the intensification, improved productivity, strengthened competitiveness, and capacity building for commercial activities and marketing circuits. This strategy also covers accompanying measures to strengthen the financial intermediation system and access to microcredit facilities, support for nonfinancial services to promote private sector development, and an improved business climate. These activities constitute essential measures for the country and the underprivileged sectors to become integrated into the modem economy and to consolidate the development o f micro and small-scale enterprises, which are often highly vulnerable to economic shocks. Core strategy 3: Strengthen governance and social cohesion This strategy aims to consolidate good governance and social cohesion by constructing the democratic and administrative institutions o f the U n i o n and the islands. I t aims primarily to strengthen the regulatory framework by clarifying the responsibilities, roles, and scope o f authority o f the national institutions with a view to a renewed, constructive social dialog. Through implementation o f the adopted priority programs, this strategy will make it possible to improve governance and the efficacy o f public institutions, to implementa true decentralization policy at the rural community and municipality levels, to renew a constructive social dialog to provide citizens w i t h greater peace and security, to give all citizens access to transparent, equitable justice, and to fight transnational crime and strengthen civilian security. -79- Core strategy 4. Improve the health status o the general public f Core strategy 4 aims to give the public better access to quality health service, targeting the most vulnerable groups and rural populations, and to give priority to the measures t o reduce anemic diseases and to improve all areas o f the health system. In this connection, the government will focus i t s efforts on implementation o f programs aimed at reducing malaria and priority diseases, improving mother and child health, preventing HIV/AIDS, improving health system management with a view to more efficient, effective health services, and improving the hospital environment. Core strategy 5. Promote education and vocational training with the aim o developing human f capital The education sector in the Comoros should produce a socially-responsible, educated population capable o f taking advantage o f economic opportunities. I t i s a powerful vehicle for change in behaviors that must also help citizens reach goals and give them better governance and improved health. The government intends to focus i t s efforts and to direct those o f i t s partners t o meet these major challenges. Core strategy 5 emphasizes better access to quality education at all levels, a shift of the ministry's efforts to technical and vocational training, and further support for informal training through literacy activities targeting young people and adults. Core strategy 6. Promote environmental sustainability and civilian security We note that most o f the environmental constraints the Comoros faces are similar to those fond in Small Island Developing States ( S D S ) under Agenda 21 and the Barbados Plan o f Action: ecological and economic fragility, substantial vulnerability t o climate change and natural disasters, insufficient response and management capacity, narrow resource base, and high energy costs. In the Comoros, perhaps more than anywhere else, the environment i s the focal point o f the key economic sectors to produce commercial goods and services. Recent studies have shown that growth in the Comoros i s s t i l l highly contingent o n development in the agrofood and tourism sectors, both o f which are highly dependent o n the natural surroundings, the quality o f the environment, and i t s conservation. The government therefore chose to make the environment a central issue in the PRGS. Several ambitious priority programs will be implemented to protect the environment and ensure i t s regeneration, conservation, and rational, sustainable exploitation, while being mindful o f the well-being o f current and future generations. The U n i o n o f the Comoros i s a poor, vulnerable country with many risks, including cyclones, droughts, epidemics, tornadoes, brush fires, tidal waves, floods, major accidents, landslides, volcanic eruptions, and risks related to the presence o f an active volcano (earthquakes). This vulnerability might be aggravated by an insufficient capacity to prepare, prevent, and respond appropriately to risks and disasters. The government takes this issue very seriously as i t intends to t -80- establish risk and disaster prevention and management mechanisms in connection w i t h global warming. 4.2. CROSS-CUTTING STAKES T o supplement the core strategies described above, the government also believes i t i s important for the following cross-cutting issues to be considered in the formulation o f a l l priority programs and in the conduct o f reforms involving public sector institutions. Improved production and access to statistical information deemed to be essential in the f preparation and monitoring o development programs Problems in the area o f statistical information and the requirement to improve socioeconomic databases are a cross-cutting concern that we find in all the core strategies. A national statistical development strategy (SNDS) was validated in 2007. This ambitious strategy calls for substantial resources. I t s implementation i s a priority, particularly in terms o f the computerized public expenditure system and a more powerful information system linking the central and island levels in the strategic sectors o f the economy. This information i s essential for PRGS monitoring and evaluation, as well as for the strategies deriving from it. In fact, i t was learned in the preparatory work for the PRGS that i t i s important to strengthen the formulation and steering of sectoral policies. As i s true in the sectors where the work i s already in progress, such as road infrastructure policy, for which the validation workshop was held in July 2008, a systematic effort must be undertaken during the implementation o f this PRGS to ensure that the sectors have the planning tools, competence, and information required to prepare valid sectoral strategies.' While the sectoral strategies are derived from the Union, they must also be prepared in cooperation with the autonomous islands. Now, t h e mechanisms for this coordination pose problems as the islands, rightly or wrongly, tend to consider that their needs are not sufficiently taken into account. In this connection, the absence o f disaggregated data by island poses a problem. The information system i s imprecise, and sometimes nonexistent, between the central level and the islands. The required clarification therefore involves relations between the Union and the islands within each sector. In the same capacity as planning, monitoring o f public program execution and evaluation requires access to reliable statistical information and data. These functions should be reinforced in the context o f modernized, results-based public management. Implementation o f a coordinated monitoring and evaluation system requires a profound change o f attitudes and the adoption o f new public management practices. Institutional capacity building (at the Union and island levels) will be required to implement more effective, efficient fiscal management. f Development o and access to new production and communication technologies is a major challenge to make the Comoros more attractive, productive, and competitive at the regional and world levels. -81- Economic growth and improved living conditions for the population in the Comoros are based, as in the rest o f the world, o n the use o f new technologies available in all sectors. The government, private sector, producers in the primary sector, and players in c i v i l society must have access to modem technologies to increase their productivity and develop new economic activities that can meet the needs o f the population and external demand. Access to such technologies i s particularly important in the agrofood sector, where the majority o f the poor are concentrated. I t i s a sector where technological innovations are required t o increase productivity, to maintain the country's w o r l d market share, and to develop new income- generating business sectors. I t i s essential for Comorian higher education and research institutions t o j o i n forces with the relevant government and private sector institutions in this effort. Moreover, better access to new information technologies i s essential t o place the Comoros in a better position o n the tourism market, which i s a substantial growth market, and the highly dynamic business process outsourcing (BPO) sector. Progress under way in the area o f connectivity must be pursued and operating costs reduced. I t i s a favorable si.@ that investors in the region recently contacted the authorities for more information o n B P O opportunities in the Comoros. The government intends to develop a rigorous institutional incentive framework for investment in this sector. The National Investment Promotion Agency (ANPI) which i s being established will study the conditions for successful B P O activities based primarily on the experiences o f Madagascar and Mauritius, will i n f o r m national operators o n existing opportunities, and identify external partners. I t is aprioriiy to incorporategender and human rights issues into the implementation o all f programs, to ensure peace and security and to promote a renewed, constructive social dialog. The contribution o f women to the development process has long been underestimated in the Comoros, despite their essential contributions to food production, marketing o f agriculture and fishing products, income generation, home management, and child education. Gender equity studies were conducted in 2007 and substantial recommendations were subsequently validated at a national workshop. The government intends t o restore women to their rightful place in the decision-making and development processes. Women and girls will be the priority target groups for access to social services (education, health, and family planning), economic services (financial services and microenterprise development), and justice. Strengthening o f the woman's place at senior levels o f the public sector and in decentralized decision-making centers will be encouraged. The government would like to enrich and expand the country's development strategy through an approach that reflects human rights. T w o consultations were held in 2007 t o prepare to incorporate human rights into the PRGS. Recommendations were adopted during a validation workshop, primarily involving the: (i) identification o f vulnerable groups; (ii) need for capacity building in c i v i l society so that i t can serve as a countervailing power and influence the implementation o f a human rights-based approach in PRGS implementation; (iii) expansion o f the participative approach (principle o f inclusion) by involving vulnerable persons in the -82- planning authorities and defining objectively verifiable indicators; (iv) adoption o f legislation respectful o f vulnerable persons; (v) capacity building for lawful claimants to enable them to assert their rights and capacity building for obligated parties to respond to justified claims made against them by such claimants; (vi) adoption o f legislative texts to establish an obligatory accountability mechanism. Integration o trade into the PRGS is a necessary condition for growth, wealth creation, and f socioeconomic development in the Comoros. Within the framework o f i t s membership in the Integrated Framework (CI), the Comoros in 2007 prepared i t s diagnostic study on integration o f trade into development and poverty reduction policies. This study laid the groundwork for a cross-cutting approach to international trade, which highlighted (i) organizational weaknesses in the private sector and deficiencies in the business the and investment climate; (ii) need to strengthen the country's competitiveness, including tax the reforms, improvement o f basic infrastructure, and production o f energy to reduce excessive factor costs; (iii) strengthening o f the r u l e o f law and the legal system; (iv) strengtheningo f trade and investment institutions; (v) improved operation o f domestic markets (adoption o f implementing decrees for the public contracting code, establishment o f legislation on competition, and creation o f a contracting surveillance agency); (vi) reforms required to participate in the Common Market for Eastern and Southern Africa (COMESA) agreements and to align the country's institutions and enterprises with a view to the Economic Partnership Agreement (EPA) and entry into the WTO; and (vii) targeted actions to remove the bottlenecks in the productive sectors. This study also highlightedthe importance o f reducing inter-island transportation costs. A matrix o f priority actions to remove the bottlenecks and strengthen the institutions responsible for trade and investment was prepared and validated. The trade diagnostics and i t s priority action matrix were endorsed by the Council o f Ministers in January 2008 and a project implementation unit has recently been established. Operations to reach the Millennium Development Goals (MDG) must receive priority as u n i h i n g stakes to improve the socioeconomic situation o the general public. f In 2006, the government requested support to study the country's status in respect o f the MDGs. Although the Comoros registered social indicators higher than those in most African countries, i t would seem that without massive support from the international community, i t will be impossible to reach the goals established for 2015. Substantial efforts, however, have been made and we observe a budget reallocation to benefit the social sectors. I t i s also very important to be aware the issue i s deficient policies, which can be addressed. Through greater attention, the authorities have reduced both mother and child mortality; small girls are attending school, even if there are s t i l l differences in favor o f boys; the school enrollment rate for girls has increased and their retention rate in the school system has improved. The cost o f reaching the MDGs by 2015 was estimated in June 2008. The total cost i s approximately U S 2 9 billion during an eight-year period, more than half o f which i s earmarked for improved access to energy, infrastructure construction, and transportation. 4.3 PRIORITY PROGRAMS BY CORE STRATEGY -83- The PRGS adopted a total o f 32 priority programs. These programs are organized according to the six core strategies o f the PRGS. This section presents the context o f each program. More detailed plans will be presented in an action plan covering the period 2010-2014. Implementation o f priority programs and reforms will essentially follow a sectoral approach subject to coordination and oversight by the relevant ministerial departments. By contrast, some programs should be implementedwith an inter-sectoral approach as they involve a number o f different sectors. . 4.3.1. CORE STRATEGY 1 STABILIZE THE ECONOMY AND LAY THE GROUNDWORK FOR STRONG AND EQUITABLE GROWTH Four priority programs were identified to set the stage for sustainable economic development. Their priority aim i s to improve macroeconomic management, to implement structural reforms, and to enhance the competitiveness o f the Comorian economy by reducing factor costs and through investment in basic infrastructure and communications. The following programs were adopted: Program 1.1 Enhance government and fiscal operations; Program 1.2 Integrate and facilitate domestic and international trade; Program 1.3 Improve the energy supply at a l o w cost; Program 1.4 Improve basic economic infrastructure and communication services; Program 1.5 Increase access to drinking water, sanitation, and sustainable resource management. Programme 1.1: Improve government and fiscal operations The past few years have been particularly difficult ones for the government, as i t has had had to face a threefold challenge: (1) an unprecedented economic crisis at the world and national levels; (2) alarming fiscal and public sector deterioration; and (3) the persistent political and institutional crisis. The Public Expenditure and Financial Accountability (PEFA) report prepared in 2008 entailed a comprehensive fiscal analysis. The report brought to light a number o f weaknesses, insufficiencies, and dysfunctions characterizing fiscal management. During recent years, the fiscal deterioration has accelerated and the distortions in good governance and public management have multiplied. As a result, the government now faces a major fiscal crisis and a disorganized, unmotivated administration. The time has therefore come for reconstruction and return to budget orthodoxy. -84- In this particularly difficult context, the international community once again showed i t s support to the government through the IMF'S October 2008 approval o f EPCA2. Subject to effective economic and financial management, the country could become eligible in 2009 for the Heavily- Indebted Poor Country (HIPC) Initiative and ultimately for the MDRL3While these objectives are within reach, they w i l l require substantial budget discipline in the short term, as well as a reorganization o f general government in the medium term. Improved financial and budget management will be facilitated through the adoption o f new instruments. The government intends to promote a results-based public management approach and to introduce tools under the medium-term expenditure framework (MTEF) and program budgets. Along with the adoption o f these reforms and new instruments, i t w i l l be essential to strengthen the capacities o f the government and to review the national system for planning, management, and monitoring and evaluation o f public programs. I t will also be essential to strengthen information flows between the U n i o n and the islands, and the quality and regularity o f statistics. Without these efforts to build capacities and strengthen the information system, i t will be a difficult matter for the authorities to steer macroeconomic and sectoral policies. Fiscal recovery goes hand in hand w i t h institutional improvement. The deterioration in government operating conditions, as i t s size far exceeds the country's financing capacities, i s not only a source o f negative motivation for the existing c i v i l servants, i t also leads to a flight o f the best trained and most dynamic personnel. Moreover, the financial crisis has led to the pure and simple disappearance o f operating resources and to deterioration in capital goods. The absence o f any consistent capital management system (annual inventories, equipment maintenance contracts, etc.) leads to substantial waste. The shortage o f operating resources and equipment leads t o further lethargy and dependency on development partners. In addition to the government's efficacy and sound fiscal management, the question o f privatization o f state enterprises and companies i s a focus for the government's concern and must be continued. The state's gradual divestiture from the productive sectors and commercial activities to benefit the private sector i s vital. This divestiture will be pursued through voluntary policy based o n comprehensive structural reform measures. The need for these reforms i s strengthened through the establishment o f the Comoros in COMESA, which requires implementation o f customs and fiscal reforms to ensure that administrative practices and regulations are more broadly harmonized. While the government i s aware o f structural and recurrent problems, i t i s also aware o f the difficult decisions that must be made to correct the fiscal and overall administrative situation. I t intends to meet these challenges in the context o f PRGS implementation. Fiscal rehabilitation, improved government operation, and the reorganization o f the c i v i l service are conditions for restoring the macroeconomic fundamentals to equilibrium, which i s required for robust economic growth sufficient to reduce poverty. The objectives during the period are to contain public deficits, reduce the size o f government, ensure a better allocation o f public resources t o the priority sectors and programs to reduce *Emergency Post Conflict Assistance. Multilateral Debt Relief Initiative. a -85- poverty, and to review the role o f government in the context o f a liberalized economy that recognizes the place and importance o f the private sector in the process o f growth, j o b creation, improved household living conditions, and poverty reduction. Program 1.2. Integrate and facilitate domestic and international trade Commercial policy based on the multilateral trade framework and the process o f regional economic integration adopted by the government will help give new impetus to the economy while reducing rent-seeking behaviors, reducing factor costs, facilitating trade, and improving the business and investment climate. The multilateral trade system and agreements with C O M E S A will help stabilize commercial policy through firm anchoring in a market economy. One o f these goals includes an accelerated growth rate and reduced poverty. Accompanying measures (training, strengthened professional organizations and associations, and access t o information and financing), however, are required to enable the most disadvantaged t o profit f r o m this growth and to enjoy i t s benefits. At the same time, the government intends to stimulate domestic trade in local goods to provide a better supply for the general public. Reforms will be undertaken to remove the barriers that impede the circulation o f goods and increase their prices, which are h a r m h l t o the least favored sectors. These measures should promote inter-island trade flows and guarantee more regular supplies. Program 1.3. Improve the energy supply at a low cost Access to energy i s a key factor in economic recovery. The energy problems the country has been experiencing for a decade require a strategic medium and long-term outlook. The energy sector diagnostics brought to light the need for rational biomass management, greater autonomy in terms o f imported petroleum products, more effective production and distribution systems, diversification o f the.energy supply w i t h new energy sources such as solar, hydraulic, aeolian, and geothermal energy. Owing to the narrowness o f the market, high electricity production costs explained by high petroleum prices are leading t o major problems in the country's development. These problems are accentuated by the absence o f a sectoral strategy, an unclear institutional framework, and insufficient human resources to ensure effective management o f the sector. To meet these challenges, the PRGS has adopted a priority program whose objectives are to (i)clarify and strengthen the institutional and organizational framework and provide the country with a national strategy to improve energy management; (ii) strengthen energy storage, production, and distribution infrastructure; and (iii)reduce technical and non-technical losses related to production, distribution, and marketing o f energy through a national energy management and efficiency program. , This approach should lead to lower energy costs and improve accessibility o f energy services. This program will also aim to promote the substitution o f firewood by introducing new cooking technologies, and particularly, improved heating facilities and the use o f m o d e m fuels. Last, diversification o f energy sources will be stressed to improve the country's energy autonomy and promote clean energy sources to preserve the environment. The expected impact o f these -86- measures will be to meet human requirements for access to energy, to effect social improvements, and to facilitate economic activities, particularly for women. Program 1.4. Improve basic economic infrastructure and communication services The cost o f production factors in the Comoros i s high-much higher than observed in other countries in the region. Insularity and the small size o f the market, aggravated by the division o f the territory into several islands, partially explain why the costs o f energy, water, and transportation are higher than the average in neighboring countries. However, there are other factors explaining the situation. In addition to the tensions and disputes that have prevented normal operation o f the administration's technical services during the past 10 years, we observe that most infrastructure built approximately 20 years ago has not been upgraded, and that they are inadequate to cope with the increase in domestic demand and the introduction o f new marketing and production processes. Significant investments are necessary to create the conditions for restored growth. The insufficiency, poor quality, and deficient management o f infrastructure (such as roads, ports, and airports) has led to increased costs o f trade between the islands and have buoyed up the cost o f imported inputs, making enterprises less competitive. This situation leads to higher costs o f imported consumer goods and reduces household purchasing power, particularly for the most disadvantaged. Roads. A study to establish a sectoral road transportation policy at the horizon 2030 was conducted in 2007 and validated in July 2008. The study was financed by the European Commission, one o f the main sources o f financing for the implementation o f the adopted program. This program provides for maintenance, repairs, and expansion o f national roads. Works on secondary roads to make production centers more accessible are also programmed. Training will be provided to enhance management and oversight o f the works. Moreover, the 2007 Budget L a w created a special public treasury account known as the Road Maintenance Fund (FER). This account will receive 15 percent o f the proceeds from the single tax on petroleum products [taxe unique sur Zes produits pdtroliers-TUPP]. A road maintenance fund existed in the past and should have been funded directly from a f e e levied on f u e l use. This mechanism, however, became ineffective in 2004 as a result o f tensions between the islands, and payments to the fund were discontinued. The government's challenge w i l l be to ensure that FER resources are effectively transferred and used only for road system maintenance and repairs. Ports. There are plans to dredge the port o f Mutsamudu and to build a floating pier at the Port o f Moroni as an interim solution pending a decision on the location o f a deepwater port. In the context o f the PRGS, an appropriate site will be identified and a preliminary feasibility study will be conducted. The container storage area in M o r o n i should also be expanded. Development work on the Port o f M w a l i i s also programmed and i t s management should be improved. Merchandise shipped to M w a l i first arrives in Ngazidja or Nzwani and i s then dispatched to Mwali, entailing a sequence o f transshipments leading to higher prices for all imports. The option o f a transportation price subsidy might be considered. -87- The construction o f small fishing ports with minimum cold chain and storage facilities on the three islands will continue in connection with PRGS implementation. This effort will reduce transportation costs from fishing areas to the urban centers and will initiate the organization o f the fish trade. These activities should lead to a more regular supply o f fish products and can also be expected to reduce prices. Measures will also be implemented to improve port management (computer equipment), strengthen security (port entry markings, communication equipment, and radar) and will facilitate use o f the facilities (removal o f irreparable equipment from the docks, maintenance o f water and power outlets, drainage channels, etc.). The government will strengthen the functions and missions o f the Comoros Port Authority, which n o w only operates in the Port o f Moroni. Airports. Substantial work has been carried out in recent years: construction o f a new terminal in M o r o n i and improved airport security. The airport's partial fence must be converted into a full one and the airport must be equipped with a freight scanner, as international airlines refuse t o load merchandise that has not been scanned. The M w a l i and Nzwani airports have similar requirements: runways must be resurfaced, minimum markers must be installed, terminals must be built or existing ones developed, and fire protection equipment must be installed. In the area.of management and coordination o f various airport services, much remains t o be done and the government wishes to rationalize and enhance coordination between the services. There are also plans to improve coordination between the road, port, and airport infrastructure and t o build gangways for fast, easy freight and passenger transfers between the different means o f transportation. Telecommunications. In recent years, the Comoros has entered into the mobile telephone era. In less than five years, the number o f mobile telephones has surpassed the number o f fixed units. At the same time, appreciable market shares have been gained through the introduction o f the Internet, and more recently, high-speed A D S L connections. Access to information and fluid communications have become substantially easier, even in rural areas. Each village n o w in fact has at least one telephone booth, which has provided greater access to information technologies. O f course, the price o f communications i s s t i l l high compared with rates in Madagascar. The recent decision to liberalize the sector and open i t up to a second mobile telephone operator will introduce competition, and will probably reduce prices per communication unit. The government i s determined to pursue its efforts t o enhance the accessibility and quality o f communication services. Program 1.5. Increase access to drinking water, sanitation, and sustainable resource management Access to high-quality drinking water i s a fundamental requirement that must be m e t as a priority. This factor i s identified in the MDGs and i s included in the PRGS priorities. The relationship between drinking water and public health i s w e l l known. In general, the least favored groups are more vulnerable to diseases related to poor water quality. The risks o f waterborne -88- diseases and pollution are quite high in the Comoros, particularly because there i s n o protection for wells or pumping facilities, nor are there any water quality monitoring or control mechanisms. Only a few salinity analyses are performed on an ad hoc, partial basis. Health hazards are observed primarily through the prevalence o f water-borne diseases such as diarrhea and typhoid. Studies have shown that the use o f poor quality water for consumption i s a source o f infectious and parasitic diseases that are s t i l l the number one cause o f mortality and morbidity in the Comoros today. Similarly, individuals' quality o f l i f e and health depends directly on the environment in which they live. A healthy, improved environment i s a determinant factor in the health o f individuals, and particularly children, who are much more vulnerable to diseases related to an unhealthy environment. W i t h accelerating demographic growth and urban development, we observe a significant increase in production o f household waste and wastewater, untreated hospital waste, and waste related to transportation activities (motor o i l drainage, automobile bodies, etc.). The absence o f a system to manage household waste, wastewater, and sanitation i s a major public health problem. Wastewater and rainwater management i s a major concern in both urban and rural areas. In the Comoros, access to high-quality water i s s t i l l a luxury for the majority o f the population. Less than 15 percent o f the population reportedly has access to drinking water according to accepted standards. Moreover, the country has virtually no sanitation system. Wastewater and solid waste are discharged into the sea in the population's immediate living environment. The country has n o national water strategy or master plan. Activities in the water and sanitation sector are conducted essentially in the absence o f any institutional or regulatory framework, which reduces the efficacy and performance. 4.3.2 CORE STRATEGY 11. STRENGTHEN KEY SECTORS BY FOCUSING ON INSTITUTION BUILDING AND ENSURING A BROADER ROLE FOR THE PRIVATE SECTOR 1 A total o f nine priority programs were identified under Core Strategy 1 . They are included in two major subgroups: (i) strengthening the private sector (two programs); and (ii) restoring growth through key sectors (seven programs). IStrengthening the private sector . Program 2.1. Support private sector organization Program 2.2. Financial intermediation and microcredit. 11. Restoring growth through key sectors Key sectors involve agriculture and stockbreeding, fishing, and tourism. Priority programs are organized in the following three subcategories: 0 Agriculture and stockbreeding subsector Program 2.3. Enhance security o f property resources; -89- Program 2.4. Support the creation o f a favorable environment for agriculture sector development; Program 2.5. Restore agricultural and agrofood production; Program 2.6. Protedt livestock against exotic infectious diseases and intensify animal production sectors. 0 Fishing sector Program 2.7. Establish an environment favorable t o the balanced development o f the sector; Program 2.8. Develop the system for conservation, processing, and marketing o f fish products. Tourism sector Program 2.9. Support tourism development. 4.3.2.1. Strengthen the private sector The private sector i s poorly organized. The Chambers o f Commerce, Industry, and Agriculture have recently come through a lengthy crisis resulting f r o m disputes with the government, which decided to place them under i t s supervision. In September 2007, consular elections were held and a new leadership team for the U n i o n o f Chambers o f Commerce was elected by the members. Professional organizations do little for their members. Aside f r o m the structured sector comprised essentially o f small and medium-scale enterprises, there i s a substantial informal sector that engages in unfair competition. Enterprises require skills in areas not directly within their field o f expertise, but that are essential for their development. Such services include legal counsel, accounting, management, quality control, information technology services, market research, marketing, selection o f production technologies, processing, marketing, packaging, storage, information management, after-sale services, etc. The consulting sector i s undeveloped and i s based o n a few projects involving assistance in enterprise creation, involving a few new enterprises with limited resources that sell their services to existing enterprises. T o implement a sustainable, competitive supply, i t i s important to strengthen private consulting firms, thereby contributing to the gradual establishment o f the entrepreneurial fabric essential for private sector development. The Comorian private sector also includes the financial service sector. Until last year, there was only one general private bank, BIC, plus two decentralized financial institutions (1FD)-the M e c k and Sanduck networks. In 2008, two new banks, Eximbank o f Tanzania and a K u w a i t i bank, were licensed by the central bank to open branches in the Comoros. Banque de Developpement des Comores was also recapitalized and has recently returned to the market. I t has opened a microfinance window and emerged as a competitor for M e c k and Sanduck. Although the system registers excess liquidity, credit i s s t i l l costly and does not meet the requirements o f a developing country. We can, however, expect new banks to introduce more competition, leading to the introduction o f new financial instruments (venture capital companies, for example), and a gradual decline in interest rates. -90- Two priority programs were defined to meet the challenge o f strengthening the private sector Program 2.1. Support private sector organization Targeted actions will be taken to strengthen the human and institutional capacities o f the Chambers o f Commerce and professional associations so that they can provide useful services to their members. These actions will be included in a program o f operations designed to improve the investment climate, make enterprises more competitive, reduce rent-seeking economies and taxes, primarily for large enterprises, strengthen the judiciary institutions with magistrates specialized in financial and commercial matters, establish the Supreme Court, and implement the Organization for the Harmonization o f Business L a w in Africa (OHADA) chart o f accounts, which the Comoros adopted a few years ago. There are also plans to develop arbitration assistance for disputes that could be filed with the Chamber o f Commerce. Last, the adoption o f implementing decrees for the new investment code and the 2008 establishment o f "Invest in n Comores", the national investment promotion agency completed this scheme. I connection with this program, there are plans for this autonomous public institution to pursue i t s work to harmonize and simplify the administrative procedures for creating enterprises, and to strengthen cooperation with the external partners to stimulate foreign investment. Program 2.2. Financial intermediation and microcredit There are plans to implement organizations for elected officials and employees o f decentralized financial institutions (DFIs), and to build the internal audit and supervision capacities o f the institutions involved. Efforts will be made to obtain a license from the central bank for the Union regionale des Sanduck de Moheli et de Ngazidja. In terms o f developing new financial instruments, consultations will take place with the public and transactors to better define the desired targets and instruments. Strengthened prudential measures w i l l be adopted and a compulsory savings insurance scheme will be implementedfor decentralized financial institutions. Women already constitute more than 50 percent o f DFI clients, and efforts will be made to increase this rate as many poor women would like to arrange small loans to support their trading activities. There are currently no financial instruments that meet this need. Efforts will be made to develop specific activities targeting this population group. 4.3.2.2. Restore growth through key sectors Restored growth and sustainable poverty reduction require development o f and expansion in key growth sectors likely to create income and wealth. In the Comoros, these sectors are found where a significant proportion o f the population i s located, and have traditionally been the driving sectors o f the Comorian economy (agriculture, stockbreeding, and fishing), or a largely underdeveloped sector that nonetheless offers substantial indirect growth potential through i t s potential knock-on effects on the rest o f the economy (tourism). The seven priority programs in this subgroup o f Core Strategy 2 are therefore presented according to the four growth sectors. -91- Agriculture and stockbreeding sector In the Comoros, agriculture and stockbreeding are traditionally combined within the same farm. Farms are small and the livestock (cows, sheep, and goats) are tethered. Stockbreeding aims primarily to cover the household meat and milk requirements, and to provide fertilizer for the farmland. I t also provides supplementary income and serves as a savings mechanism. Four priority programs have been identified to meet the challenges in the agricultural and stockbreeding sector. Program 2.3. Enhance security o property resources f The property problem i s both physical, in terms o f access to land; and legal, in terms o f ownership rights. These t w o dimensions are interdependent. In physical terms, the property problem i s basically one o f village land management, and planning to maintain i t and restore i t s fertility; the size o f farms as a result o f the extreme demographic density, and parceling, to the extent that the land i s divided into very small plots. Legal issues include the absence o f laws or the failure to apply poorly defined, unknown property law. In 2007, a financing arrangement was executed with AFD to establish a property registry. W o r k i s in progress and will continue during PRGSP program implementation. The government will concurrently take steps t o encourage property registration. The cost o f registration, which i s n o w quite high, will be reduced drastically to enable the more modest sectors to register their properties. The l a w o n land ownership, sharecropping, and the rights and obligations o f the different parties involved must also b e clarified. This effort will provide greater security and transparency, and in the l o n g term w i l l make i t possible to organize the real property market. Program 2.4. Support the creation o a favorable environment for agriculture sector f development In the context o f shared responsibilities between the state and c i v i l society, organizations for farmers, professionals, and private transactors must intensify their role in the rural economic development process. They must help in the definition o f strategic guidelines, their implementation, and the monitoring and evaluation o f the activities undertaken. Insufficient performance in the agricultural sector i s explained by an insufficient involvement o f economic transactors in the decision-making mechanisms, planning o f activities, and ownership o f key rural development functions. T o restore growth in the agricultural sector, participative, community development must be reinforced, placing special emphasis on productive activities and organizational factors related to the technical, administrative, and financial management o f farmers' organizations, and the coordination o f a l l parties involved. Program 2.5. Restore agricultural and agrofood production Food and local consumption goods. The Comorian population i s essentially rural (70 percent) and earns i t s living from agriculture. Food and commercial vegetable production have been -92- subject to several pilot projects during the past 10 years. Technical itineraries are effectively in use to intensify production. Disease tolerant high-yield varieties have been identified and tested with success in rural areas, although their generalized use has n o t truly begun. Local production in fact i s s t i l l insufficient to cover domestic market demand. In addition to being an importer o f exotic food products (rice, wheat flour, oil, sugar, milk, and powdered milk), the country'buys large quantities o f food and commercial vegetables f r o m neighboring countries (Madagascar, Tanzania, and South Africa). These imports hurt the Comoros as they tend to replace local production, where certain products and regions are concerned. Insufficient national agricultural production i s explained by a number o f factors, including: (i)small family farms th,at focus primarily o n household food security rather than commercial production; (ii) insufficient investments t o increase output; (iii)food and commercial vegetable circuits insufficiently organized to market the products; (iv) l o w productivity; and (v) an exchange rate making imports more attractive than local products. Cash crops have traditionally played an important role in the economic development o f the Comoros. These sectors n o w face substantial price fluctuations o n the w o r l d market with a particularly strong Comorian franc against the currencies o f countries in the subregion and the , US. dollar. Moreover, the lack o f investment has led to a decline in crop quality and productivity. Despite these difficulties, the fact remains that these crops offer substantial potential. They might help significantly increase revenue o f producers, processers, and the government. This program aims to support the intensification and improvement o f agricultural productivity through better access t o inputs and production technologies, organization and structuring o f the sectors, and investments designed to facilitate agricultural product marketing and exporting. Program 2.6. Protect Iivestock against exotic infectious diseases and intensijj animal production sectors Poverty reduction in rural areas also involves development o f stockbreeding, and small-scale stockbreeding in particular, t o meet the basic food requirements o f vulnerable populations, as w e l l as t o generate additional monetary income. As pasture land i s limited, productivity must be increased in animal production, through diversification and support for small-scale stockbreeding, which i s easier to control and w h i c h requires less space and fewer resources. Small-scale stockbreeding i s also a major income generating activity for women. In recent years, problems with imports o f diseased animals (primarily cattle) have l e d to epidemics that decimated the herd. Actions will be taken t o promote more effective health inspections o f imported animals. There are also plans t o establish an advisory service t o support small-scale producers, and specifically women w h o engage in small-scale stockbreeding. Fishing sector The Comoros has considerable fishery potential, w h i c h could contribute substantially to growth, poverty reduction, and provide higher-quality f o o d for p o s t o f the population. However, the -93- scope o f the resource i s not fully understood and i s based o n estimates that date back approximately 30 years. The top priority i s therefore to establish a solid knowledge base on growth in resources that can be exploited under renewable conditions. T w o priority programs have been identified to meet the challenges in the fishing sector. Program 2.7. Create an environment favorable to the development o the sector f Development o f the fishing sector i s based o n the establishment o f an incentive environment conducive to increasing catches while respecting ecological balance and resource renewal. The government would l i k e to encourage organization o f the sector, to learn about exploitable resources, and.promote responsible management o f fish resources to optimize economic efficiency in the sector. The structure o f the sector requires strengthening o f professional and fishermen's organizations, as well as support organizations and services. Program 2.8. Develop a conservation, processing, and marketing system for fish products During the past 20 years, the Comoros has succeeded in transforming traditional fishing into artisanal fishing using fiber glass boats with small motors. Fishing techniques have also developed. The result today i s that artisanal fishing meets demand in the Comoros fairly well. This i s a clear success story. Future development o f Comorian fishing requires the modernization o f artisanal fishing, which calls for (i) introduction o f new fishing techniques; (ii) o f larger boats capable o f navigating use in high seas; (iv) extension o f fish preservation techniques; (v) development o f the cold chain; and (vi) organization o f marketing activities. Some Comorian operators are n o w interested in m o v i n g forward. The modernization o f artisanal fishing will n o t only help to. meet the requirements o f the domestic market, but will also promote the gradual integration o f Comorian fishing into the export markets. With the participation o f the sector players, the government intends to support efforts to upgrade and promote fishing products to increase j o b creation and income. Expanded preservation and processing capacity for fish products will reduce losses, thus constituting an essential condition for development o f the sector. The government intends t o promote the expansion o f preservation and processing capacities. Efforts must also be made to find new, more lucrative outlets to absorb increased catch volumes and develop new products. Modernization o f the fishing industry will require investments to develop small fishing ports, build storage facilities and cold chambers, and develop roads t o access the national highway system for rapid transportation to consumer centers. Tourism sector W h i l e the Comoros has a clear comparative advantage in tourism, i t has not been exploited in the same w a y as in the Indian Ocean islands, for w h i c h tourism has been a powerful engine for development. In 2007, Mauritius and the Seychelles respectively welcomed 906,000 and 161,000 -94- incoming tourists, as compared with just over 20,000 in the Comoros. The World Tourism Organization projected a growth rate o f 6.3 percent per year in this sector for the period 1995- 2020 in the Indian Ocean Region. The main constraint for the Comoros i s the lack o f hotels. In 2005, the three islands in the archipelago had an accommodation capacity o f 238 rooms, or 472 beds. The geographic distribution was very uneven, with 83 percent o f the rooms in Ngazidja, 9 percent in Mwali, and 8 percent in Ndzouani. The level o f comfort and amenities varied substantially, with only one third o f the accommodations being situated at the three-star level. None o f these establishments offers seaside tourism. The absence o f international level tourism establishments ties in closely with the country's political problems that began in 1997. high The Comoros faces cross-cutting handicaps including (i) costs o f air transportation between the Comoros and source countries and between the islands o f the archipelago. There are very few direct connections, which lengthens transportation time; (ii) high costs o f credit and the amount o f investment required to build hotel infrastructure. In 2007, two major financing agreements were signed to develop the northern part o f the island o f Ngazidja; one with Dubai World involving the creation o f a new tourism complex on the site o f the old Galawa hotel, and the other with Comores Gulf Corporation to build a tourism village near the Lac Sal6 and the renovation o f the Itsandra Hotel in Moroni. A tourism development policy would thus seem to be possible today, and the knock-on effects on the economy and i t s diversification might be evident by 2010. The scope and quality o f the effects across the economy will, however, vary substantially depending on i t s capacity to provide local products such as fruit and vegetables, meat and seafood, construction materials, services (from microenterprises), and employment. Noteworthy in the framework o f poverty reduction . policy are the scope o f direct and indirect job creation, the potential to create many jobs requiring short or even on-the-job training periods, and the substantial percentage o f jobs for women. The target group i s middle to upper middle class tourists. Seaside tourism essentially would be marketed, highlightingthe country's magnificent beaches, with an ecotourism content focusing on the unique features the Comoros offers, l i k e no other place in the world, such as hiking trails to the Karthala Volcano; discovery o f the largest known fruit bat living in the virgin forest; celacanthe, a fish dating back several million years thought to have been extinct; and the extraordinary site o f the M w a l i national sea park where the whales come to breed. The relationship between seaside tourism and ecotourism i s often perceived as antagonistic. This view i s inaccurate and i s disproven by many examples throughout the world. The two forms o f tourism are in fact complementary in many ways, rather than conflicting. For example, seaside tourism provides the critical mass to reduce transportation costs and improve the frequency and quality o f international and national connections. This cost reduction will promote the development o f ecotourism which in turn will provide opportunities for unique experiences to those who choose this type o f seaside tourism. The Comoros w i l l therefore opt for controlled seaside development highlighting the cultural and ecological opportunities the country offers. One priority program was identified to meet the challenge o f developing the tourism sector. a -95- Program 2.9. Support tourism development The government will continue i t s current policy to l o o k for international investors to implement large-scale tourism projects meeting international standards. The future projects should be located on the islands o f M w a l i and Nzwani to balance development between the islands. The current policy will be adapted to create tourism development centers that w i l l include (i)l a n d a improvement plan; (ii) actions to improve airports, ports, roads, and access to electricity; (iii)liberalization o f the skies to introduce airline competition; (iv) execution o f supply contracts between hotels and the rural communities; (v) support for the development o f microenterprises and income-generating activities. T o ensure m a x i m u m synergies, PPPs will be developed with ' economic transactors and local communities. Development o f the business hotel trade in the cities will also be encouraged, along with micro-hospitality units in rural areas. Comorian tourism will be promoted as a product o n the Internet (with the creation o f an interactive website); a CD-ROM, brochures, and prospectuses will be produced, and representatives f r o m the hotel industry will participate in targeted tourism fairs. Where eco- tourism developments are concerned, hiking paths will be developed and marked, monuments and historical sites will be rehabilitated, and traditional and artisanal production will be encouraged. Plant and animal wildlife preserves w i l l be created on the three islands and additional resources will be provided to maintain the M w a l i sea park and to stop poaching. Substantial efforts will also be made to improve professional training in the hotel and restaurant trades. W h i l e the local training capacities are geared up, training will be organized in nearby countries t o recycle existing hotel staff and t o train young people. Language training, particularly Arabic and English, should also be provided. T o implement this ambitious program, the Tourism Directorate, which might ultimately become a ministry, must be reinforced. The authorities plan to establish a Tourism Office in the medium term. During the next t w o to three years, however, i t s functions can be covered with existing capacities until 20 10/2011, when tourism effectively becomes operational, with the opening o f t w o major tourism complexes n o w under construction in northern Ngazidja. Priority in the immediate future should be given t o the establishment o f a coordination mechanism encompassing the ministries involved, economic transactors, and municipalities. 4.3.3. CORE STRATEGY 111. STRENGTHEN GOVERNANCE AND SOCIAL COHESION The political instability that has preyailed in the Comoros since the country gained independence i s not conducive to good governance, social dialog, or to strengtheningthe rule o f law. This situation leads to weakened government authority, inefficient institutions and government, weakened national cohesion, and noncompliance with the legal and regulatory texts-all factors leading to increased poverty. Good governance and social cohesion are therefore necessary conditions for poverty reduction in the Comoros. The government o f the U n i o n would l i k e to consolidate the process o f national reconciliation, social dialog, and democratization, and to implement the process o f -96- decentralization to ensure that the islands and civil society organizations gain increasing responsibility for and commitment to the development and management process. Relations between the Union and the islands are difficult, and can be severely impeded by unclear coordination o f responsibilities between the administrations. Institutions face ambiguities that make matters difficult and that lead to conflicts. A substantial need for clarification at all levels i s registered among technical personnel. Progress has, however, been observed in some sectors such as education, which should be emulated in other areas. The government i s aware o f the problems and has decided to address them. A t the same time, program and policy implementation should systematically involve the island political and technical authorities, and the communities, so that more detailed programming can be prepared, reaching the municipal and community levels. This approach should be introduced gradually as disaggregated statistical information i s collected and analyzed, and as capacities to implement these arrangements are developed in the municipalities and grassroots professional organizations. A participative approach in this area i s essential at the community level. Its implementation will require substantial training and supervision efforts over several years focusing o n local professionals. Justice i s another key element in the r u l e o f law. I t protects public peace by resolving conflicts among individuals. The "law" i s considered to replace private vengeance w i t h legal penalties, reducing social unrest as a result o f crime through its decisions, and protecting individual liberties. The government intends to use this core strategy to build individual and institutional capacities for democratic governance to consolidate social cohesion, provide a coherent legal framework, and c i v i l and social security mechanisms based on the promotion o f human rights and transparent management o f public affairs. The four priority programs listed below were identified to implement Core Strategy 3: Program 3.1. Promote good governance, social cohesion, solidarity, and the consolidation o f peace; Program 3.2. Improve the legal framework, promote anticorruption measures, and strengthen transparency in the management o f public affairs; Program 3.3. Build the capacity o f judicial institutions; Program 3.4. Fight terrorism and transnational crime, and strengthen c i v i l security. Program 3.1. Promote good governance, social cohesion, solidarity, and the consolidation of peace The political situation in the Comoros during recent years has been detrimental to national unity. In a context o f national reconciliation, a new constitution was adopted to define an institutional framework. Owing to the complexity o f this framework, special attention i s required in implementing the relevant democratic institutions. This institutional framework gives more autonomy and responsibility to the islands, but represents a challenge in its implementation and -97- practical operation. Decentralization will help ensure political stability required to restore development and poverty reduction. I t i s also a proven way to bring citizens and governments closer together. This approach will ensure m o r e effective development management and higher quality public services, primarily through the involvement o f the relevant populations. Decentralization w i l l also b e pursued at the municipal level. Institutions will be established along with municipal structures to inform the public o f i t s rights and duties. Assistance in this area i s in place f r o m the European Union. Another important project under this program i s the c i v i l service reform, which will include containment o f the work force and clarification o f relations between the islands to reduce . duplications, reorganize the ministries t o reflect the tasks to be accomplished, training opportunities for c i v i l servants t o enhance the level o f skill and services to the public, and procurement o f operating resources and equipment. Large-scale computerization will enhance productivity while helping to disseminate good governance practices. Last, measures are also planned t o strengthen c i v i l society organizations so that they can serve as countervailing powers in a democratic setting. . Program 3.2. Improve the legal framework, promote anticorruption measures, and strengthen transparency in the management ofpublic affairs The state plays a central role in the development process, among other matters, by providing public goods and services and by coordinating development activities. Transparency and accountability in public management will ensure that all development players support the adopted priorities. I t i s generally believed that corruption i s widespread in the Comoros. This assertion i s confirmed by audits o n domestic debt and public enterprises. Such corruption has had adverse consequences o n the country's development. It undermines the competitiveness o f the national economy and makes investment less attractive owing to cost overruns and the uncertainty i t engenders for economic transactors. I t leads to higher costs o f goods and services for consumers, particularly for the poor, who have few alternatives. Corruption also affects the incentive system by distorting the social advancement mechanism. In this connection, action against corruption i s a major challenge that the country has decided to tackle. Program 3.3. Strengthen the capacity o judicial institutions f Justice faces tremendous structural and functional problems in the Comoros, preventing i t s effective operation and damping i t s performance as defender o f rights and liberties, particularly for the vulnerable populations. The sector registers limited access to justice owing t o i t s distance f r o m those under i t s jurisdiction, high costs o f proceedings, legal assistance shortages, and ignorance o f the law. Accordingly, some persons and communities apply parallel rules that do not necessarily guarantee social peace or support the principles o f the law. The sources o f Comorian l a w have produced a legal system where Islamic law, texts passed by the Comorian legislator, and traditional l a w are superposed. I t would be wise for this legislation -98- to be adapted to the pacts, treaties, and conventions the Comoros has ratified at the regional and international levels, as the authorities have done with the implementation o f the Convention on the Rights o f the Child and the harmonization o f business law with the texts o f the Organization for the Harmonization o f Business L a w in Africa (OHADA). The envisaged activities will make it possible to finalize the architecture o f the judiciary system by taking the necessary steps to implement the approved laws, but that have yet to be implemented, such as the establishment o f the Supreme Court, training and specialization o f judges, capacity building for the entire judicial system (lawyers, clerks, judiciary police officers, etc.), promotion and dissemination o f OHADA commercial law, and ratification o f international conventions. Arbitration and conciliation instances are planned to accelerate procedures and help relieve the backlog in the courts. An effort will also be made to improve prison conditions. Program 3.4. Fight terrorism and transnational crime, and strengthen civil security The security o f goods and persons and the fight against transnational crime and terrorism are essential global stakes for all countries. The events o f September 11, 2001 in fact changed the global outlook on peace and security. Security Council Resolution 1373 (September 28,2001) acknowledges the linkages between international terrorism and organized crime, weapons and drug trafficking, money laundering, and smuggling o f hazardous materials. Resolution 1373 i s binding on all countries and has profound implications on the legal system, control o f financial flows, and administration o f justice. Although the Comoros i s a relatively secure country, we observe an increase in crime and a need to strengthen national security. Like many countries, the Union o f the Comoros i s vulnerable to potential terrorist activities on i t s territory. The country's geographic features, with an exclusive maritime area o f 240,000 square kilometers, and i t s insufficient technological capacities make i t vulnerable to many security problems. Specifically, there are plans to equip the airports with merchandise scanners and to provide the customs and police departments with two speedboats and communication equipment to cover security for the country's territorial waters. 4.3.4. CORE STRATEGY Iv.IMPROVE THE HEALTH STATUS OF THE GENERAL PUBLIC Health i s an essential component o f public well-being and an important factor in labor productivity. Unacceptable health conditions for the poor are the result o f the complex relationship between health and poverty. Poverty i s reflected in the health sector through: (i)insufficient access to quality health care and services; (ii) insufficient health, hygiene, and sanitation infrastructure; and (iii) resurgence o f malnutrition and poor quality food. Not only a does poverty lead to poor health owing to inadequate care, but poor health i s a contributing factor to ongoing poverty. The General Assembly on Health o f 2001 took stock o f the implementation o f the National Health Development Plan (PNDS) and health system reform. Resolutions were adopted to prepare a national policy reflecting the new political and administrative configuration o f the Union o f the Comoros and the country's priority public health problems. This policy was adopted -99- o n April 8, 2005. The health administration i s receiving support f r o m the W o r l d Health Organization in conducting the PNDS update. The following four priority programs were identified t o implement Core Strategy 4: Program 4.1. Fight malaria and priority diseases Program 4.2. Integrated sexual and reproductive health development Program 4.3. Fight H I V / A I D S and sexually transmissible infections Program 4.4. Strengthen the efficacy and efficiency o f all aspects o f the health system. Program 4.I.Fight malaria and priority diseases Malaria i s s t i l l one o f the country's major public health problems. Despite encouraging results registered during the past three years, this disease i s s t i l l the major reason for visits to and hospitalizations in medical facilities and i s a factor in high absenteeism at school and at work. Although the disease affects people o f all ages, children under five years o f age and pregnant women are the most vulnerable groups. Malaria i s more prevalent in rural than in urban areas, primarily as insecticide-impregnated mosquito nets are not as commonly used in rural areas. Other diseases such as tuberculosis, leprosy, nematal tetanus, filariasis, and poliomyelitis affect the population, and particularly the poor. Malaria. As in countries with endemic malarial disease in the African region, the Comorian government has included the reduction o f malaria as one o f i t s health objectives. The country has joined the "Roll Back Malaria" partnership in support o f this effort. As a result o f this commitment, the country developed the first strategic plan to fight malaria for 2001-2006, followed by a revised plan for the period 2007-2012. This plan reflects the objectives o f the Abuja Declaration and the MDGs. The plan aims to reduce malaria prevalence, mortality, and morbidity by at least 50 percent by 20 12. The main activities are prevention through large-scale use o f long-lasting insecticide impregnated bed nets, targeted use o f intradomicile insecticide sprays (PID), intermittent preventive treatment (TPI) for pregnant women, artimisinin-based combination therapy (ACT) for malaria, and promotion o f antilarval measures with larvivorous fish. Development o f national programs to fight noncommunicable diseases. The degradation in hygiene and sanitation conditions, deficiencies in the national epidemiological surveillance system, characterized by the absence o f a national health laboratory and the absence o f health inspection and control services also expose the country to outbreaks o f vector-borne diseases such as arbovirus infection and yellow fever. Other illnesses such as tuberculosis, leprosy, neonatal tetanus, filariasis, and poliomyelitis affect the population, and particularly the poor. Programs are in progress to fight these diseases or to eliminate or eradicate them. These programs will b e supported and reinforced to target the poor more specifically. Actions such as (i) early detection and treatment o f leprosy and tuberculosis; (ii)mass preventive treatment campaign for lymphatic filariasis; (iii) expanded program on the immunization for prevention o f poliomyelitis, tetanus, and other diseases that can be controlled e -100- through immunization; and (iv) epidemic surveillance and alert services will be strengthened. The authorities also plan to adopt specific measures to address acute malnutrition. Noncommunicable diseases, particularly sugar diabetes, cardiovascular disease, hypertension, cancer, blindness, and mental psychoses are concerns for health professionals as increasingly frequent source o f deaths in the country. The relevant data are t o a l l intents and purposes nonexistent. Research i s therefore urgently needed t o assess the prevalence o f these diseases in the community and to develop appropriate programs. Steps will be taken to treat noncommunicable diseases. Program 4.2. Integrated sexual and reproductive health development The disadvantaged rural populations, in particular, do n o t have access t o quality sexual and reproductive health (SRH) services, w h i c h partially explains the high rates o f f e r t i l i t y (5.1 children per woman), maternal mortality (381 per 100,000 l i v e births), and child mortality (74 per 1,000). The unavailability o f S R H services i s explained, inter alia, by operational insufficiencies in peripheral units which are understaffed with qualified personnel (almost exclusively staffed by nurses and medical assistants), run d o w n buildings, and a shortage o f adequate equipment. As a result, people are forced t o travel t o more distant health centers, which also do not provide quality services t o meet the needs o f these populations. This entails additional costs, limiting health care access for the poor. In addition t o the insufficiencies o n the supply side, the insufficient use o f reproductive health and family planning services i s explained by the lack o f interest shown by rural and disadvantaged households in these services. These people are generally not convinced that such services are important, particularly as the cost represents a major obstacle for low-income women with repeated pregnancies. T o address this situation, the government has decided t o focus o n improving reproductive health services in peripheral health units. Staff training, equipment, and supplies o f consumables will be reinforced. The services w i l l be equipped with transportation means for obstetric emergencies. There are plans t o rehabilitate 49 health units and 15 district health centers. Social communication activities will be subcontracted with rural radio services and NGOs to sensitize the populations, particularly young people. Program 4.3. Fight HIV/AIDS and sexually transmissible infections W h i l e HIV prevalence in the Comoros i s s t i l l low, the risk o f an explosion i s possible o w i n g t o poverty as a contributing factor to AIDS, infrequent use o f condoms, increasing prostitution (particularly clandestine activities), rapidly increasing exchange w i t h countries heavily affected by this pandemic, massive returns o f very young Comorian expatriates, and the substantial prevalence o f sexually-transmitted infections. The public i s also vulnerable to this problem owing t o insufficient knowledge o f HIV transmission mechanisms and appropriate preventive measures. -101- Even if the rate o f HIV positive prevalence was estimated at 0.09 in 1999 and 0.025 in 2003 with confirmed predominance in women and adults 15- 49 years o f age (0.13 percent), an explosion i s possible and preventative steps must be taken now. Factors to promote the spread o f the epidemic are present: (i) sexually transmissible infections are highly prevalent; (ii) general public has insufficient knowledge o f HIV transmission and the prevention mechanisms; (iii) condoms are n o t frequently used in casual sexual relations; and (iv) persons living with H I V / A I D S are subject t o discrimination. This program aims to control the spread o f H I V / A I D S and to reduce the incidence o f STIs. The following measures are envisaged for that purpose: construction o f two new diagnostic centers; construction and equipment o f a national b l o o d transfusion center; public awareness targeting young people and high-risk groups; and distribution o f condoms. Clinics will also be supplied with anti-retroviral drugs and staff will be appropriately trained. Public communication activities will be launched in the schools to sensitize young people, who w i l l be organized into mutual support groups. There are also plans to conduct a national survey to assess developments in the spread o f the pandemic. Program 4.4. Strengthen the efficacy o all aspects o the health system f f Health care management directly affects the quality o f health care services in the health facilities in general. I t impacts the accessibility o f care and containment o f health expenditure through a more effective use o f available financial, human, and material resources. Mindful o f this pillar o f the PRGSP, the February 2005 National Health Policy provided seven points for implementation. These points are s t i l l valid, as l i t t l e progress has been made since 2005. The actions described below were undertaken in connection with the present PRGS: - The state's political commitment to increase the share o f health in the national budget to 15 percent; - U s e o f the "simulated participation" technique consisting in negotiating with the communities to make individuals aware o f the advantage o f contributing t o health service management and financing. Health service users should be considered true partners; - Equality and equity in heath facilities, leading to better, more effective and efficient management, more rigorous exercise o f responsibilities to the public, more effective services, and higher-quality care; - Training activities for health professionals, review o f the human resource development plan, and establishment o f a computerized system will be undertaken t o make health services more efficient; - Creation and management o f an environment t o promote good health: access to drinking water and sanitation, a healthy and safe environment, appropriate diets, and healthy lifestyles; -102- - Contractual approach f o r health care workers, without the state's divestiture f r o m health finance; - Diversification o f health finance mechanisms, specifically through: (i) reinforcement o f the mutual system; (ii) creation o f a health insurance system that w o u l d initially cover state-owned companies, large private companies, and c i v i l servants (the systems should b e improved as some companies such as SNPT, MAMWE, etc. have already begun t o provide some staff health care coverage); and (iii) gradual implementation o f insurance in the communities that w o u l d rely o n M e c k networks in urban centers and Sanduk networks in the villages. 4.3.5. CORE STRATEGY v. PROMOTE EDUCATION AND VOCATIONAL TRAINING WITH THE AIM OF DEVELOPING HUMAN CAPITAL Poverty i s not only the result .of insufficient income. I t i s also the result o f insufficient access t o different forms o f capital, and specifically human capital. The education sector plays a strategic role in this connection as i t i s the best way to transmit social values and to develop skills t o enable individuals t o find the means and motivation to build a country that offers a good quality o f life. Human resource training i s essential in economic development, as in an increasingly integrated market economy, the competitiveness o f the enterprises and the country's attractiveness to potential foreign investors depend largely o n whether sufficient quantities o f skilled labor are available in the appropriate areas. Specifically, there i s substantial excess demand for technical and occupational education graduates. The Ministry o f National Education, Higher Education, and Research in 2005 established a master plan on education and training covering the five-year period 2005-2009. This plan derives primarily f r o m the National Education for All p l a n and the Interim PRGSP. The share o f education in total state expenditure increased f r o m 19.6 percent in 2004 to 39 percent in 2007, according to the 2008 report by the Indian Ocean Child Rights Observatory (ODEROI). A substantial share o f the state budget i s therefore devoted to education, which i s considered a high- priority sector. Total public education expenditure represented 3.1 percent o f GDP in 2004. This level i s insufficient as compared with the internationally-recommendedtarget o f 6 percent o f GDP. In addition, wage payment delays o f several months are underminingmorale among teaching staff. Although some progress has been made during the past 10 years, the Comorian education system s t i l l registers major shortcomings. These problems and their underlying causes were analyzed and acknowledged in the interim PRGSP, and the analyses are s t i l l valid. Under the 2010-2014 PRGS, the budget and personnel allocations to the highest priority sectors must be reviewed. The quality and efficacy o f education must also be increased, w h i c h will involve supplementing and improving teacher training, a monitoring system f o r teachers, and gradual elimination o f double- shift schemes. Moreover, technical and occupational education are s t i l l the least attended subsectors owing to insufficient facilities. This sector receives very l i t t l e investment, despite its clear importance in the country's economic development, i t s obvious role in incorporating young people into the labor market, and in reducing unemployment and poverty. This sector will receive -103- special attention, along with higher education, to train professionals and managers to meet labor market requirements. The following four priority programs were adopted under Core Strategy 5: Program 5.1. Develop education, technical instruction, and occupational training, to reflect the requirements o f the j o b market Program 5.2. Improve access to and quality o f basic (preschool and elementary) and secondary education Program 5.3. Develop competent human resources and the sectoral (SWAP) approach in education Program 5.4. Promote literacy, sports, and cultural activities. Program 5.1. Develop education, technical instruction, and occupational training, to reject the requirements o the j o b market f In the context o f poverty reduction, technical education and occupational training are major tools in support o f human capital development. Training o f human resources, and primarily skilled, competent labor, i s essential in the country's sustainable development and therefore in economic growth. I t gives the beneficiaries a j o b to improve the living conditions o f their households in a context o f globalization where enterprises are becoming increasingly competitive; and helps attract potential foreign investors that require skilled labor in sufficient quantities. Technical education should be promoted in lower secondary school and a voluntary occupational training program should be developed for young drop-outs, those who never attended school, and uneducated adults, w h o constitute a substantial proportion. o f the active population, to integrate them more effectively into the country's socioprofessional circles. Technical and occupational training priorities will be t o reorganize the subsector, rehabilitate the existing schools, build and adequately equip n e w facilities, diversify the available training, and train instructors. This option must reflect the country's development requirements. In the context o f national reconciliation, the university i s an essential instrument in social cohesion and consolidation o f national unity. In this connection, i t must play a fundamental role in strengthening the national identity and promoting a new spirit o f citizenship. To that end, the university requires an appropriate, attractive environment, and sufficient facilities to meet training demand for mid-level and senior managers in areas deemed to be priorities for the country's development. The university must offer more diverse training with the twofold objective o f meeting the expectations o f young people, responding to their demand for training, while reflecting the stakes deriving from modernization. -104- Program 5.2. Improve access to and quality o basic (`preschool and elementary) and secondary f edzication Preschool education does not exist in the Comorian formal education system. Early childhood coverage and education are provided by the Koranic school (a well-established secular institution present throughout the Comoros), and with the recent introduction o f western nurseries located primarily in urban areas serving only a fraction o f the 3-5 year age bracket. Studies confirm, however, that a satisfactory early childhood education, within the family as well as within more structured programs, has a positive impact on child development and learning capacities. This program aims to build capacities to accommodate and educate children. T o reach the aim o f providing quality education for all at the horizon 20 15, the government must rehabilitate, build, and equip classrooms, update education programs and methods, strengthen scientific disciplines and teaching languages (particularly French), provide initial and ongoing training for education inspectors and teachers at the elementary and secondary levels, build capacities in training institutions, and facilitate availability and accessibility o f textbooks to students and educational and didactic materials to teachers, to ensure effective learning and enhance the performance o f the education system. Accompanying, accreditation, and control measures should make i t possible to build a solid, constructive public-private sector partnership. This program aims to improve the supply and quality o f academic training in the primary and secondary schools. Program 5.3. Develop competent human resources and the sectoral (SWAP) approach in education Building the capacities o f professionals involved in the education sector in the area o f planning, management, and monitoring and evaluation will streamline the use o f resources allocated to the sector. Insufficient performance in the sector i s now explained in part by a lack o f capacity in the administrative structures and in monitoring and coordination units. I t i s an important matter to ensure that teachers are properly trained at a l l levels, beginning w i t h trainer training. Another negative factor i s the absence o f operating mechanisms and irregular wage payments for teachers, leading to frequent teacher strikes. The institutional strengthening o f the education sector should be included in the broader framework o f budget reform and improved fiscal management. Program 5.4. Promote literacy, sports, and cultural activities Illiteracy i s one o f the main obstacles to the country's social and economic development. Illiteracy i s a major challenge to be met w i t h the aim o f achieving education for all at the horizon 2015 and to reach the Millennium Development Goals. To date, the Comoros has not had an education policy for young people not enrolled in school, or who have fallen back into illiteracy. Women, in particular, are most severely affected by illiteracy. The total illiteracy rate i s still quite high in the Comoros. I t i s estimated at 40.9 percent according to the M I C S 2000 survey, and pertains especially to economically productive populations. This situation i s at once an impediment to economic growth and a factor in vulnerability and -105- impoverishment. Appropriate action should be taken in connection with poverty reduction t o enable this important sector o f the active population to acquire the knowledge and skills required to improve their living conditions and to participate effectively in the j o i n t effort t o reconstruct the national economy and thereby to improve the individual and collective standard o f living. 4.3.6. CORE STRATEGY VI. PROMOTE ENVIRONMENTAL SUSTAINABILITY AND CIVILIAN SECURITY The constraints affecting the Comoros are similar to those identified for SIDS under Agenda 2 1 and the Barbados Plan o f Action: ecological and economic instability; substantial vulnerability to climate change and natural disasters,' insufficient response and management capacity, and a narrow base o f energy resources at high costs. The national policy and action plan for the environment, which constitute the reference documents, revealed substantial, alarming environmental trends and threats. These include degradation o f land and deforestation, absence o f or poor natural resource management, deterioration o f the environment, lack o f appropriate management tools for urban and coastal areas, and an absence o f integrated policies reflecting the cross-cutting dimension o f the environment. The political, economic, legal, and regulatory framework i s not appropriate for the current context and must be revised or supplemented to reflect the autonomy that has been granted to the islands: (i) organic framework as promulgated does not define the sharing between the U n i o n the and the Islands o f authority for environmental management and protection; (ii) many implementing texts for the Framework L a w in respect o f the environment have yet to be drafted; , (iii) national legal framework has not been revised to constitute a framework to allow the implementation o f the conventions the Comoros has ratified; (iv) there i s n o institution responsible for drafting, revision, and harmonization o f legal texts deriving f r o m various sectors; (v) there i s a mismatch between the human resources provided in the organic frameworks and the . requirements for the institutions to meet the responsibilities incumbent o n them. The financial resources required to equip and implement the directorates are to all intents and purposes nonexistent. As a result, these institutions are not capable o f discharging their missions, particularly in the area o f planning, coordination, promotion, management, and awareness. Six priority programs were identified to meet these challenges. Program 6.1. Conserve biodiversity and equitably share i t s strengths Program 6.2. Conserve and upgrade agro-biodiversity Program 6.3. Adapt to climate change Program 6.4. Fiscal rehabilitation with an ecological focus Program 6.5. Capacity building for multisector environmental management and coordination Program 6.6. Establish prevention and management mechanisms for risks related to natural and climate disasters Program 6.1. Conserve biodiversity and equitably share its strengths In the Comoros, virtually a l l o f the population's subsistence activities are based o n the direct exploitation o f natural resources. Such resources are therefore the m a i n source o f income for the sectors o f the population hardest h i t by the drama o f human and monetary poverty. Now, these -106- related resources and ecosystems are threatened by uncontrolled exploitation activities, at the risk of permanently compromising their essential economic potential. The important issue i s that the conservation o f biodiversity contributes to the country's sustainable socioeconomic development, particularly for local communities, constituting the majority o f the population that i s dependent o n natural resources for survival. Sustainable exploitation and upgrading o f natural resources are clearly essential levers to reverse the current trends marked by impoverishment and increasing marginalization of the people, and n to improve their living conditions. I this connection, establishment and implementation o f a network o f protected areas, co-managed with the village communities, i s considered an appropriate approach. Beyond the dimensions o f environmental conservation and sustainable natural resource management in the areas to be protected, these areas will primarily b e used as tools t o attract interest and highlight the exceptional latent eco-tourism potential the Comoros has never managed to exploit, and t o derive all the benefits the country can expect in support o f i t s economic development and social progress. Program 6.2: Conserve and upgrade agro-biodiversity There i s a type o f ago-forestry practiced in the Comoros that has many advantages in t e r m s o f environmental conservation (soil, water, and habitat for flora and fauna species), and in terms o f production (food, and w o o d f o r working and energy). This traditional growing method in the Comoros i s very stable and provides permanent soil cover, reducing erosion, promoting distribution o f surface water, and optimizing the use o f parceled areas through the staggering o f production cycles. There are several types o f traditional agro-forestry systems depending o n the ecological condition o f the sites, their exposure, soils, and drainage. The special features o f Comorian products derive f r o m traditional production methods consistent with the requirements o f agro-biological crops, and f r o m the presence o f endemic varieties in the Comoros that are rare at the regional scale. The genotype features o f the varieties present in the Comoros have been preserved, primarily as a result o f the plant reproduction techniques used f o r vanilla and the absence o f programs t o introduce new varieties o f these species. Conservation and sustainable use o f the species and varieties cultivated in the Comoros have substantial benefits at the regional and w o r l d scale, conserving genotype material peculiar t o the country or subregion, and preserving the potential t o adapt these cash crops at the regional scale. Improved productivity in and stabilization o f this system should make i t possible to limit deforestation and the extension o f cultivated lands at the expense o f the natural forests, supporting agro-biodiversity and conservation o f the biological diversity in the forest ecosystems. The aim at this level i s therefore t o preserve and upgrade agriculturally important varieties and species and traditional agro-forestry systems specific to the Comoros, and t o promote their exploitation. Program 6.3. Adapt to climate change As in most fragile tropical environments, the Comoros islands are highly vulnerable and sensitive to climate change. The k n o w n effects o f climate changes o n ecosystems, and thus o n productive -107- resources, plant and animal species, and the marine environment are great concerns for a small island country such as the Comoros. In addition to natural disasters, climate change can lead to permanent changes in the way o f life and in production methods used by the population, and have the potential to compromise already unstable living conditions in many communities. The effects o f climate change include accelerated losses o f coastal strips o f land, reduced agricultural and fish production, contamination o f coastal water tables with seawater, and displacement o f more than 10 percent o f the coastal population. As i s true for the SIDS,4 the Comoros supports the objectives to reduce greenhouse gas emissions and the principle o f anticipating and preparing for events related to climate change. Energy sources should be diversified to move towards energy autonomy and limit natural forest deforestation by developing pilot projects focusing on alternative sources o f energy such as wind and solar energy, hydroelectricity, and community reforestation parcels for firewood. Climate change will therefore have substantial impacts o n health, food security, economic activity, water resources, and physical infrastructure. These impacts can be disruptive in this archipelago, whose economy and l i f e are largely dependent o n agriculture, tourism, and fishing, and where most the population lives o n the coast. There i s a risk, in particular, that climate change will eliminate the development efforts that have been made in connection with specific food security and poverty reduction strategies. Accordingly, climate change adds new difficulties to the progression towards sustainable development. The new challenge today i s to address the current and future impacts o f climate change and take the necessary steps to reduce their impacts. Program 6.4. Fiscal consolidation with an ecological focus Integration o f the ecological dimension into the fiscal area and into the financing o f economic activity i s a completely new approach in the Comoros. The Comorian fiscal system does n o t reflect the conventional concerns o f fighting pollution and conserving natural resources and ecosystems. The same applies to initiatives aimed at promoting positive activities for the environment. The public contracting code does not require environmental clauses to be incorporated into public tenders. The decree instituting impact studies has not been applied in practice owing to the absence o f practical implementation provisions and a complete lack o f understanding o f the relevant legislative provisions. The nascent network o f decentralized financial institutions in the Comoros i s not, at least in practice, designed to address the stakes underlying ethical finance, aside f r o m the grassroots credit institution dimension. They use essentially the same conditions for operations and for extending credit as conventional financial institutions. To date, there are n o institutional j o i n t guarantee mechanisms or partnership structures to support and sustain ecologically and socially responsible loans. The AMIE' project i s n o w testing t w o initiatives, with the establishment o f a joint guarantee system through women's associations in connection with specialized loans for disadvantaged women, and through M e c k 6 M o r o n i by granting j o i n t loans in the agricultural 4Small Island Developing Countries. 'Micro and small-scale enterprise support project. 6Mutuelle d'Epargne et de CrCdit ya Komor. -1 08- sector, in partnership with the SNAC.7 The concept o f ethical finance and the corresponding ' implementation tools, including socially and ecologically responsible investment and credit instruments constitute a new area for local players. A UNDP-supported study conducted by the International U n i o n for Conservation o f Nature (IUCN) determined that i t would be relevant to establish a trust fund for biodiversity conservation. Development o f such a financial tool w i l l involve alternative, innovative financing mechanisms, including external debt conversion mechanisms, through debt-for-nature swaps. The a i m w o u l d be to integrate sustainability criteria into fiscal management instruments, and to develop financing mechanisms reflecting the essential need to preserve the country's natural resources and social equity. Program 6.5. Capacity building for multisector environmental management and coordination All o f these mechanisms acknowledge that sustainable development in the Comoros i s largely dependent on the capacity o f the government and the public to ensure sustainable management o f natural resources arid ecosystems. The lack o f capacity observed at a l l levels, however, i s preventing effective implementation o f environmental management, planning instruments and policies. Accordingly, systemic, institutional strengthening o f environmental management structures at the island and national levels should be considered a priority. Regional sustainable development planning should also be introduced t o optimize the actions identified under each component. This approach i s increasingly relevant in the current context in which the country i s establishing a new institutional and administrative framework. These activities are intended t o give the country environmental knowledge and management tools, to establish a legislative and regulatory framework, and effective public services and institutions. Specialists must also be trained and the public must be informed in order t o become more effective participants in environmental management. T o achieve the goals described at this level, national and local capacities must be developed to incorporate the environment into development plans and programs, as w e l l as their cross management. Program 6.6. Establish prevention and management mechanisms for risks related to natural and climate disasters. The major natural risks to which the Comoros islands are normally exposed include tropical cyclones, floods, tidal waves, and for Ngazidja, eruption o f the Karthala Volcano, as w e l l as other risks inherent in the presence o f an active volcano. Where climate change i s concerned, the national report confirms that the populations in the coastal areas are exposed to exceptional events such as cyclones and violent winds potentially resulting in tidal waves. Abundant precipitation could cause landslides and fallen earth. These events could destroy strategic infrastructure and impede inter-island communications. 'National Comorian Famers' Union. a -1 09- The key issues in this case are the control and prevention o f risks and natural and climate disasters. The underlyingconcerns focus on disaster risk preparation, response, and management schemes. -1 10- CHAPTER V ECONOMIC E N V I R O N M E N T AND MACROECONOMIC FRAMEWORK 2010 - 2014 -111- 5.0. INTRODUCTION The government's economic policies have substantial impacts on economic growth and poverty reduction. They either directly or indirectly affect the conditions under w h i c h enterprises and households make their decisions in t e r m s o f resource allocation, creation o f value added, distribution o f income from production, processing, marketing, and consumption o f goods and services. At the aggregate level, they affect the major macroeconomic equilibria, price levels, and economic growth rates. The government acknowledges that a stable macroeconomic environment i s a necessary condition for economic growth and poverty reduction. This environment directly affects enterprise performance, individual purchasing power, and the government's capacity to offer essential public goods such as an accessible, quality basic education and primary health care for everyone. The government's macroeconomic objective in connection with the PRGS involve observance o f major economic equilibria, particularly the level o f state expenditure and the public deficit, balance o f payments, and general price level; and on the other hand, establishment of an environment conducive t o robust, sustainable growth through promotion o f the private sector and particularly growth sectors such as tourism, agriculture, fishing, and stockbreeding. Economic policies that will make i t possible to create these conditions involve budget and fiscal policies, trade policy, monetary policy, and legal and institutional reform. This chapter first presents recent developments in the economic environment in the Comoros and . the short-term economic and financial outlook. Secondly, i t provides the macroeconomic and financial framework prepared with three scenarios: (1) a "PRGS" scenario that involves moderate to robust growth levels, compliance with major macroeconomic equilibria and a substantial commitment from the technical and financial partners to support PRGS implementation; (2) an "MDG" scenario o f accelerated growth accompanied with a major investment program f r o m the technical and financial partners with a v i e w t o achieving the MDGs by 2015; and (3) an "IMF" scenario based on the International Monetary Fund's projections. The PRGS implementation strategy i s based o n the first scenario. 5.1. RECENT DEVELOPMENTS IN THE ECONOMIC ENVIRONMENT IN THE COMOROS According to the provisional data f r o m the Office o f the General Commissioner for Planning, the country registered a real GDP growth rate o f 0.8 percent in 2007, and approximately 0.2 percent i s projected in 2008-the lowest levels in 10 years. This slowdown i s considered t o be attributed primarily to the restriction in the banking sector's supply o f credit t o public enterprises, which has led to a shortage o f certain commodities such as rice and petroleum products, and the energy crisis that has afflicted the Comoros since the latter h a l f o f 2008, bringing a l l economic sectors to a standstill. In the fiscal area, despite the increase in domestic revenue, and primarily f r o m taxes (up 9.7 percent as compared with 2007), the increase in current expenditure (up 22 percent) has led to a deterioration in the key budget balances, leading to a basic budget deficit o f approximately 3.5 percent o f G D P in 2008 as against approximately 2.9 percent in 2007. `. -1 12- Cash tensions have led to accumulated wage payment arrears, increased domestic debt, primarily with private enterprises, and the failure to make matured external debt payments. The overall deficit (not including grants) widened to more than 13 percent o f GDP, as against 10 percent in 2007, while the overall deficit improved slightly at -2.5 percent o f GDP, as against -3.2 percent in 2007. In nominal value, the basic budget deficit widened from C F 4.7 billion in 2007 to CF 6.1 billion in 2008. The provisional data from the Directorate General o f Budget (DGB) indicate tax revenue o f CF 18.3 billion in December 2008, as against CF 16.7 billion in December 2007. This improvement i s explained in particular by substantial growth in customs revenue, which essentially doubled during the period. Non-tax revenue increased by 13.6 percent to CF 5.1 billion from CF 4.5 billion in 2007 owing to the difficult financial situation o f the state- owned companies. Table 5.1. Government budget revenue Government budget revenue (in millions o f CF) 2006 2007* 2008* Tax revenue 17,260 16,678 18,288 O f which: Tax on revenue and profits 3,804 4,555 4,159 Countervailing charge (TC) and similar taxes 980 2,592 2,63 1 International trade 8,533 5,984 9,169 Non-tax revenue 4,296 4,482 5,091 Of which: Service revenue 1,678 Total revenue 21,556 21,160 23,379 Sources: k i n i s t r y o Finance, IMF. f *Provisional figures. Total expenditure and net lending increased by 22 percent to represent 26 percent o f GDP in 2008. These developments are considered to be linked to the increase in current expenditure and the increase in capital expenditure o n road rehabilitation in the capital mainly (an increase o f 55 percent). Table 5.2. Current government budget expenditure Government budget expenditure (in millions o f CF) 2006 2007 2008* Wages and salaries 13,205 15,392 15,690 Goods and services 5,568 5,122 8,122 Transfers 3,392 3,382 2,678 Debt interest 1,144 778 1,217 Other current expenditure 2,457 2,624 2,092 Total expenditure 25,766 27,298 29,799 Soiirces: Ministry o Finance, IMF. f *Provisional figures. t -1 13- The public debt situation has improved substantially with the settlement o f the AfDB arrears following the Paris Donors' Conference in December 2007. In December 2008, the government signed a post-conflict program with the IMF that has led to CF 1.8 billion (US$5.5 million) in disbursements, helping to reduce domestic arrears and thereby to consolidate the central bank's external position. At end-2008, outstanding debt reportedly represented 68.5 percent o f GDP, as compared with 65.7 percent in 2007. The situation has become so critical that the key development partners o f the Comoros were forced to accept the postponing o f the maturities o f the government's main debt service obligations. Revenue and expenditure projections by main budget item are provided below. State budget projections for 2009 register CF 24.4 billion in revenue and C F 25.9 billion in expenditure, yielding a current deficit o f CF 1.5 billion. Projected public debt for 2009 i s CF 4.4 billion. Table 5.3. General government budget General budget (in millions o f CF) 2009 Tax revenue 18,145 Non-tax revenue 6,239 Exceptional revenue External revenue 11,426 Total revenue 29,571 Current expenditure 30,069 Staff remuneration 17,125 Goods and services 6,308 Transfers 3,512 Debt interest 758 Current expenditure, external financing 2,366 Capital expenditure 11,007 Own financing 1,006 External financing 9,465 Financed with counterpart funds 536 Total expenditure 41,076 Primary balance 3,566 Sources: 2009 Budget Law The energy crisis and restricted access to bank credit in 2009 dominated the economic situation in the Comoros. S t i l l today, activity i s interrupted by blackouts, diminishing the signs o f economic recovery. The key productive sectors, including transportation and trade, also registered a decline in 2008 as a result o f the energy and financial crisis. However, sound performance in agricultural a -1 14- production intended for the local market, supported by the increase in world commodity prices, and the relative improvement in the building and public works sectors reduced the impact o f the crisis somewhat for agricultural producers. The real GDP growth rate was below 1 percent as a result o f substantial inflation (approximately 7 percent) aggravated primarily by elevated fuel and transportation costs. The key export products (vanilla and cloves) declined substantially as a result o f the steady decline in world prices, the strength o f the Comorian franc, and l o w productivity in these sectors. Exports dropped to CF 2.2 billion as compared with nearly CF 5 billion in 2007, registering a decline o f more than 55 percent. Table 5.4. Comoros - Export Trends Comoros - Export Trends 2006-2008 Var Products (Val) Quantities (tons) Values (Millions o f CF) 08/07 in % 2006 2007 2008* 2006 2007 2008* Vanilla 60 74 35 21,009 1,274 643 -50 Cloves 1,670 2,722 915 2,054 2,866 679 -76 Ylang ylang 40 31 47 913 71 1 796 +12 Other 0.1 0.1 0.1 54 54 19 -64 essences Other 687 687 94 1 60 60 74 ' +23 products Total . 2,457 3,514 1,939 4,089 4,964 2,212 -55 f Source: Directorate General o Customs. . *Provisional figures, B C C estimates. The value o f imports increased by 27 percent in keeping with the increase in petroleum and food prices on the international markets, despite shortages o f certain products, specifically rice, for which the quantities imported were halved. Substantial fund transfers from Comorian expatriates, representing approximately 25 percent o f GDP, supported construction and household consumption activities-two factors underlying an increase in imports, primarily o f cement, construction materials, and automobiles. The petroleum bill also increased. -1 15- Table 5.5. Comoros - Import trends Comoros -Import Trends 2006-2008 Quantities (tons) Values (In millions o f Change CF) (%I Products 08/07 2006 2007 2008 2006 2007 2008 Rice 32,137 32,281 19,404 4,037 5,871 5,114 +13 Meat, fish 4,995 5,116 5,808 3,044 3,359 3,799 +13 Flour 5,475 5,204 5,452 89 1 939 1,250 +3 3 Sugar 5,537 4,026 3,,646 1,361 950 746 -2 1 Dairy products 1,958 1,489 1,592 1,154 902 1,155 +2 8 Pharmaceuticals 197 204 20 1 700 549 625 +14 Fabrics, apparel 1,162 898 95 7 703 75 1 501 -3 3 Petroleum 55,132 35,837 36,460 9,888 10,649 12,505 +17 products Cement 66,823 41,508 63,529 3,129 2,432 3,264 +34 Vehicles 2,169 2,540 3,440 2,944 2,989 9,532 +219 Iron, cast iron, 6,673 3,167 4,957 2,763 1,133 1,856 +64 steel Other 20,697 26,679 68,112 21,681 19,191 22,865 +19 Total 202,955 164,949 220,796 45,189 49,716 63,213 +27 f Source: Directorate General o Customs. *Provisional figures, B C C estimates. According to the available provisional data, the trade deficit amounted to C F 62 b i l l i o n in 2008, as against CF 44.8 billion in 2007, equivalent to 9.5 percent o f GDP in 2008, as compared with 6.7 percent o f GDP in 2007. The coverage rate o f imports with exports therefore deteriorated substantially, f r o m 10 percent in 2007 to 3.5 percent in 2008, correlating directly with the decline in exports and the increase in imports. The data o n foreign trade imbalances are also indicative o f the overvaluation o f the Comorian Franc as compared with the currencies o f the countries in the subregion. In fact, the E D I C data show that the C F has appreciated substantially in respect o f other Indian Ocean country currencies, and this effect has reduced the country's comparative advantages in the traditional export sectors. 5.2. SHORT-TERM ECONOMIC OUTLOOK The government's macroeconomic objectives for 2009 are: (i) real GDP growth rate o f a 0.8 percent; (ii) average inflation rate o f less than 5 percent; (iii) recurrent budget deficit an a limited to 8.5 percent o f GDP; (iv) investments equivalent to 12.3 percent o f GDP; (v) a primary budget balance improvement o f 1 percent o f GDP, substantially reflecting the need t o reduce expenditure, primarily in the wage bill; and (vi) a slight decline in net bank claims o n government with a view t o a sustained increase in bank credit t o the private sector. -1 16- Where fiscal management i s concerned, the 2009 budget aims mainly to reduce the primary budget deficit (excluding grants) to 1.6 percent o f GDP, as against 2.7 percent in 2008. This adjustment w i l l be obtained with savings f r o m expenditure o n security, the wage bill, and mechanisms t o address the energy crisis. Expected total public revenue and total expenditure were assessed respectively at CF 24.4 billion, equivalent t o 13 percent o f GDP, and C F 40.5 billion, equivalent to 21.5 percent o f GDP. In light o f the program and project grants already identified, in the amount o f C F 13.8 billion, or 7.3 percent o f GDP according t o the IMF report, and a clear reduction in payment arrears o f approximately C F 2.5 billion, equivalent t o 1.3 percent o f GDP, the overall budget deficit (cash basis) can be expected to amount to C F 2.5 b i l l i o n in 2009, as compared with 1.3 percent in 2008. Anticipated macroeconomic performance, the growth outlook, and fiscal forecasts for 2009 are insufficient to address the stakes and challenges the country must tackle if i t i s to break the vicious cycle o f poverty in which it i s n o w locked. The current situation in fact i s characterized by a double gap, with a substantial external deficit explained by insufficient exports o f goods and services, and a domestic deficit related to poor economic performance with reduced enterprise, household, and therefore also government revenue. The government therefore has n o headroom. Debt i s accelerating, and debt service has reached unsustainable levels. This situation in turn has l e d to net negative transfers, ruling out any possibility o f financing economic development and therefore o f reducing poverty. The state's net financing requirement for the 2009 fiscal year i s assessed at approximately C F 8.5 billion, equivalent to 4.5 percent o f GDP. This financing gap reflects CF 4.5 b i l l i o n in external debt service, including C F 3.3 b i l l i o n in current debt service and C F 1.2 b i l l i o n in arrears. The government must address negative net transfers o f C F 3.7 billion, equivalent to 2 percent o f GDP. Substantial, sustained growth w i l l be essential t o break this vicious cycle which i s literally suffocating the development process, rather than accompanying and expanding it. The government i s aware o f the need to improve financial intermediation to stimulate private sector development and support growth. T w o new foreign banks (Eximbank o f Tanzania and Banque FCdCrale des Comores) began operating o n the local market in 2008. This activity should give some n e w impetus to the private sector and enable a gradual recovery in commercial activity. The diagnostic study o n trade integration (EDIC) once again highlighted the need t o develop the Comoros's substantial tourism potential by attracting foreign direct investment (FDI). In light o f the country's existing potential, w e deem that incoming FDI could increase from an average o f 0.4 percent o f G D P per annum for the period 2000-07 to approximately 2 percent o f G D P in the medium term, deriving primarily f r o m tourism investments f r o m the Gulf States (Kuwait and the United Arab Emirates). In addition, effective improvement in the investment climate m a y attract FDI and encourage the population t o devote an increasing share o f the substantial remittances from Comorian expatriates t o productive investments rather than exclusively consumption. The draft Investment Code, approved by Parliament in 2007, can be expected to support this trend. Moreover, the establishment o f a single window for investors and the opening o f the National Agency f o r -1 17- Investment Promotion (ANPI) should help create a more dynamic environment more conducive to investment. Last, foreign trade liberalization i s also in progress with the conversion into indirect domestic taxes o f specific customs duties levied o n key products. Ad valorem customs duties were also adjusted to a maximum level o f 20 percent. 5.3. MACROECONOMIC FRAMEWORK The macroeconomic conditions to be achieved, the growth levels to be attained in the economic sectors, and the contributions from the technical and financial partners to finance the poverty reduction and growth strategy are specified in the macroeconomic framework, which also includes the guidelines for the program the government negotiated with the IMF and anticipates a positive outlook for PRGS negotiations following the 2009 midterm assessment under the Emergency Post Conflict Assistance (EPCA) program completed in M a r c h 2009. Last, i t reflects the estimated costs for the Comoros to achieve the MDGs. The quantified implications o f the sectoral programs are specified t o reflect projected sector growth. These forecasts are based o n investment in the sectors involved and reflect each sector's contribution to national growth formation. The macroeconomic framework was prepared using the following three scenarios: 1. The "PRGS" macroeconomic framework presents the projections o f the benchmark situation. I t includes the quantitative incidence o f the sector strategies adopted under the PRGS with the medium-term economic growth profile and macroeconomic framework; 2. The second "MDG" scenario reflects the assessment o f the costs for the Comoros t o reach the Millennium Development Goals, considering the massive investments f r o m the technical and financial partners and a substantial improvement in the country's aid absorption capacity; 3 . The third "IMF" scenario considers the simulations prepared by the International Monetary Fund in connection with the 2008 Joint Consultations with the U n i o n o f the Comoros under Article I V o f the Articles o f Association. This scenario i s based on recent trends in the country's economic performance and reflects the w o r l d economic scenario. The IMF's projections stop at 2013, while the PRGS projections are staggered until 2014. The projections were therefore extended to 2014 by replicating the 20 13 figures so that comparisons could be made with the other scenarios. 5.3.1. PRGS SCENARIO According to this scenario, economic growth during 20 10-20 14 will be based primarily on: (i) a sustained evolution in agricultural sector activities; (ii) development in the tourism sector; (iii) impetus and growth in the banking and financial intermediation sector; (iv) resolution o f new the energy crisis to enhance productivity in all economic sectors; and (v) effects induced by the new investments inherent in PRGS implementation. -118- Real GDP growth levels in 2009 should be situated at approximately 1.2 percent, slightly above the target o f 0.8 percent initially anticipated by the government. Effective PRGS implementation should put the Coniorian economy back 011 track in terms o f inore sustained real growth, t o reach 2.5 percent real G D P growth by 2010, and to move towards 5.6 percent by 2014. During the period 2010-2014, real G D P growth should average approximately 4.3 percent. This relatively sound economic performance can be expected to result f r o m a combined improvement in activities and investments in the primary, secondary, and tertiary sectors. F o r the period 2010-2014, these sectors can be expected to register average annual growth rates respectively o f 4.6 percent, 2.18 percent, and 3 percent. Below are the requirements to achieve these objectives: (a) The government must observe substantial budget discipline and fiscal restraint t o generate a minimum o f resources required to finance the PRGS; (b) The wage bill mus.t remain constant or contract following implementation o f the public sector reforms; (c] Additional resources must be allocated to PRGS implementation through increased investments, particularly in the k e y sectors o f agriculture, stockbreeding, fishing, and tourism; (d) Substantial investment i s particularly important in the agricultural sector owing to its importance in G D P formation and i t s preponderant role in the economy as the key source o f wealth, revenue, and j o b creation; (e) Reforms aiming to improve the investment climate must be executed t o attract further foreign direct investment to support tourism sector development; (f) The government must emphasize promotion o f tourism sector activities to exploit the enormous potential this sector offers; (8) M o r e tax revenue must b e mobilized and collected; (h) The government must take the steps required to reduce external debt service under the H P C Initiative; (i) The money supply must increase substantially to accompany economic growth, and inflation levels must be controlled; (j) Dynamic performance in the banking sector must lead to easier access to credit for the poor to support the development o f income-generating activities, and for the private sector. Sector growth assumptions 2010-2014 The primary sector w i l l remain the key driving force for medium-term growth. The expected growth rate will be 2.5 percent in 2010 to reach 5.9 percent by 2014, driven primarily by the -1 19- agriculture and fishing subsectors. With substantial investments planned in the agriculture sector, particularly to modernize the productive apparatus, substantially increase productivity, and improve marketing channels through road construction and increased access, agricultural production should increase by 15 percent. The acquisition o f new fishing boats, increased processing and storage capacities with more cold chambers and export facilities, combined with .the rationalized issue o f licenses to foreign boats should generate real growth o f 15 percent in the fishing sector. Growth in stockbreeding should be a more modest 6 percent as a result o f the existing constraints in this subsector. The forestry subsector should also register moderate growth o f 6 percent while consolidating the Comoros as the world's number one producer o f ylang ylang. The secondary sector should register a modest contribution to GDP formation during the period 2010-2014, owing to substantial adjustments t o be made, specifically in connection with the weakness in the manufacturing industry subsector o f the Comorian economy. Projected growth levels for 2010 and 2014 are respectively 0.5 percent and 1.7 percent. Growth in the manufacturing industry will remain moderate (6.5 percent) and should be driven in the medium term by the possible launch o f processing activities in the fishing subsector. The energy and water subsector can be expected t o grow an average o f 12 percent with the investments undertaken to modernize facilities. The improved situation in this subsector should have positive effects o n productivity in other economic sectors. In this connection, road construction, with substantial investments f r o m the European Union, and private investment in property construction should afford the building and public works subsector a growth level o f 7.5 percent. The contribution o f this subsector to national wealth formation should, however, remain modest. By contrast, the agricultural sector can be expected to benefit f r o m the construction o f roads that will help facilitate production flows. In this scenario, tertiary sector growth will be driven strongly by activities in the hotel subsector with an anticipated 15.5 percent in average growth during 2010-2014, owing primarily to development in the tourism sector. The revitalization o f banking and microfinance activities has potential t o increase the volume and therefore the accessibility o f credit. Substantial growth in the financial sector (an average o f 15 percent) should drive the overall tertiary sector. Transportation and telecommunications should also register substantial growth (an average o f 15 percent per annum for the period 20 10-2014) with investments in mobile telephony and telecommunications, as well as liberalization o f the sector. The connection o f the submarine cable that i s in progress should substantially increase capacities in the telecommunication sector and help reduce the cost o f services. Last, improved roads, establishment o f new airlines, and construction o f an international airport in N z w a n i are a l l investments that will support the expected dynamics in the transportation subsector. Demand should be driven by external demand that should undergo resurgence with the w o r l d recovery beginning in 20 10. The 4 percent average increase in exports for the period 20 10-20 14, the recovery in final consumption and investment, characterized in particular by the increase in FDI, can be expected to provide substantial impetus for growth. The domestic financing investment rate should remain low, however, increasing f r o m 1 percent in 2010 to approximately 2.3 percent in 20 14. By contrast, investment with external financing should increase substantially a -120- by an average o f approximately 12 percent for the period 2010-2014. The investment rate can be expected to increase to 6.9 percent in 2009, to 14.3 percent in 2012, and might decline slightly to 13.3 percent in 2014. Fiscal consolidation should be undertaken and pursued with a steady increase in budget revenue from 13.6 percent of GDP in 2010 to 15 percent of GDP in 2014. A special effort to control current expenditure, particularly the wage bill, will lead to a reduction in i t s share o f GDP from 15.2 percent in 2010 to 13.5 percent in 2014. The primary balance o f GDP should therefore be expected to improve to generate a slight surplus beginning in 20 13. Last, the PRGS scenario reflects only a small share (3 percent) o f financing requirements to achieve the MDGs, estimated at US$29.5 billion during the period 2008-2015. Table 5.6, Key macroeconomic aggregates for the PRGS framework (*) Projections 2009 2010 2011 2012 2013 2014 GDP at market prices (billions ofCF) 184.20 194.88 208.01 223.27 242.13 262.76 Budget revenue 23.95 26.50 28.71 32.37 35.59 39.41 Tax revenue 18.97 21.24 23.09 26.35 29.06 32.32 Nontax revenue 4.97 5.26 5.62 6.03 6.54 7.09 Total expenditure 40.7 57.24 61.1 65.26 69.02 70.67 Capital expenditure 12.71 27.1 29.3 31.9 33.3 34.90 Current expenditure 27.99 30.14 31.80 33.36 35.72 35.77 Wages 16.30 16.79 16.95 17.46 17.63 17.98 Wages / Total revenue (in percent) 68.1% 63.3% 59.1% 53.9% 49.5% 45.6% Internally-financed capital expenditure 1 2 3.1 4.2 5.1 6.1 Externally-financed capital 11.7 25.1 26.2 27.7 28.2 28.8 expenditure External financing 12.34 12.12 13.20 14.58 16.17 16.5 Project grants 11.04 12.12 13.20 14.58 16.17 16.5 Nonproject grants 1.30 0 0 0 0 0 Primary balance -4.0 -3.6 -3.1 -1.0 -0.1 3.6 Overall balance (not including grants) -16.8 -30.7 -32.4 -32.9 -33.4 -3 1.3 Financing gap 4.42 18.61 19.19 18.31 17.25 14.76 Real GDP growth (in percent) 1.2 2.5 3.6 4.4 5.5 5.6 Source: Ministry o f Finance, Budget, and Planning, Office o f the General Commissioner for Planning, (*) I n billions o Comorian fyancs, unless otherwise indicated. f -121- Table 5.7. K e y macroeconomic aggregates under the PRGS framework (**) Projections 2009 2010 201 1 2012 2013 2014 GDP at market prices (billions o f CF) 184.20 194.88 208.01 223.27 242.13 262.76 Budget revenue 10.3 10.9 11.1 11.8 12 12.3 Tax revenue 2.7 2.1 2.7 2.7 2.7 2.7 Nontax revenue 13 13.6 13.8 14.5 14.7 15 Total expenditure 19.5 29.1 29.1 28.9 28.4 26.8 Capital expenditure 6.9 13.9 14.1 14.3 13.8 13.3 Current expenditure 12.6 15.2 15 14.6 14.6 13.5 Wages 8.9 8.8 8.3 8 7.6 7.1 WagedTotal revenue (in percent) 68.07 63.35 59.05 53.93 49.53 45.63 Internally-financed capital 0.5 1 1.5 1.9 2.1 2.3 expenditure Externally-financed capital 6.4 12.9 12.6 12.4 11.6 11 expenditure External financing 6 6.2 6.3 6.5 6.7 6.3 Project grants 6 6.2 6.3 6.5 6.7 6.3 Nonproject grants 0.7 0 0 0 0 0 Primary balance -2.2 -1.9 -1.5 -0.4 -0.1 1.4 Overall balance not including grants -9.1 -15.8 -15.6 -14.7 -13.8 -11.9 Financing gap 2.4 9.6 9.2 8.2 7.1 5.6 - Real GDP growth (in Dercent) 1.2 2.5 3.6 4.4 5.5 5.6 (**) As apercentage o GDP, unless otherwise indicted. f 5.3.2 MDG SCENARIO The foregoing scenario (PRGS) reflects only a fraction o f the financing requirements to achieve the MDGs. The MDG scenario i s based on the MDG costing study conducted by the ministerial departments and reflects a l l costs related to MDG achievement. This scenario involves substantial investments f r o m the technical and financial partners in the agriculture, education, gender, health, water and sanitation, energy, and transportation sectors, with the assumption o f a significant improvement in the government's capacity to absorb external resources. The tables below indicate the l e v e l o f investments required by the MDG sector, in Comorian francs and U.S. dollars for comparative purposes. W c C c a .f v, 0 cu x P -126- 5.3.3. IMF SCENARIO With reference to recent trends and the efforts in connection with IMF Emergency Post Conflict Assistance, the Comoros can be expected to experience a decline in real GDP growth as compared with the previous scenario. In fact, the growth rate should be situated at an average o f 3.6 percent for the period 2010-2014, as against 4.3 percent in the PRGS scenario. The investment rate should reach an average of 14.5 percent per annum although with low levels o f domestic savings peaking at 5.2 percent in 2013. Where fiscal affairs are concerned, the efforts undertaken to control the wage bill and public expenditure will generally be reflected in the financing deficit to be arranged over the years to achieve 2.1 percent o f GDP by 2013, as compared with 4.8 percent in 2009. The domestic primary balance should also improve to register a slight surplus o f 0.3 percent o f GDP in 20 13, as against -1.6 percent in 2009. Table 5.9. Key macroeconomic aggregates from the macroeconomic framework under the IMF scenario(*) Projections 2009 2010 2011 2012 2013 GDP at market prices (billions o f CF) 192.82 199.45 21 1.84 226.96 244.36 Budget revenue 24.48 25.94 28.39 3 1.55 34.94 Tax revenue 18.31 19.62 2 1.68 24.36 27.20 Nontax revenue 6.17 6.32 6.71 7.19 7.74 Total expenditure 40.80 42.48 45.40 49.04 52.84 Capital expenditure 12.30 13.30 14.60 16.26 18.36 Current expenditure 28.50 29.18 30.80 32.77 34.49 Wages 16.90 17.09 17.60 18.48 19.13 Wages/Total revenue (in percent) 69% 66% 62% 59% 55% Internally-financed capital expenditure 1.03 1.25 1.41 1.71 2.23 Externally-financed capital expenditure 10.74 11.47 12.57 13.88 15.39 External financing 16.79 6.20 6.30 6.50 6.70 Project grants 11.33 6.20 6.30 6.50 6.70 Nonproject grants 5.46 0 0 0 0 Primary balance -3.20 -2.60 -1.80 -0.60 0.60 Overall balance not including grants -16.3 -16.5 -17.0 -2.8 -1.6 Financing gap 9.22 6.91 6.50 6.49 5.15 Real GDP growth rate (in percent) 1.o 2.0 3.0 3.50 4.10 Soirrces: Comorian authorities and IMF staff estimates andforecask f (*) I n billions o Cornorian francs unless otherwise indicated. -127- Table 5.10. Key macroeconomic aggregates from the macroeconomic framework under the IMF scenario (**) Projections 2009 2010 201 1 2012 2013 GDP at market prices (billions o f CF) 192.82 199.45 211.84 226.96 244.36 Budget revenue 12.7 13 13.4 13.9 14.3 Tax revenue 9.5 9.8 10.2 10.7 11.1 Nontax revenue 3.2 3.2 3.2 3.2 3.2 Total expenditure 21.2 21.3 21.4 21.6 21.6 Capital expenditure 6.4 6.7 6.9 7.2 1.5 Current expenditure, 14.8 14.6 14.5 14.4 14.1 Wages 8.8 8.6 8.3 8.1 7.8 WagedTotal revenue (in percent) 69% 66% 62% 5 9 '/o 55% Internally-financed capital expenditure 0.5 0.6 0.7 0.8 0.9 Externally-financed capital 5.6 5.8 5.9 6.1 6.3 expenditure External financing 5.9 6.1 6.3 6.5 6.7 Project grants 5.9 6.1 6.3 6.5 6.7 Nonproject grants 0 0 0 0 0 Primary balance -1.6 -1.3 -0.8 -0.3 0.3 Overall balance not including grants -8.5 -8.3 -8 -1.2 -0.7 Financing gap 4.8 3.5 3.1 2.9 2.1 Real GDP growth rate (in percent) 1 2 3 3.5 4 Sources: Comorian authorities and IMF stafS estimates andforecasts. (*) I n percent of GDP unless otherwise indicated. Table 5.1 1 below shows the different scenarios on a comparative basis. 127 s '? W s 0 0 0 0 3 C s 3 s 0 0 0 c I 2 c w C N '? a z 0 z N oi 4 c -? e N c 0 s C VI 0 .e 3 s i 0 Z C ; 3 C .- v) VI x 8 2 e w C e u c ' 5 0 0 0 c 3 3 v; 3 a, - a - - 4 -130- CHAPTER V I ESTIMATED PRGS FINANCING REQUIREMENTS 130 -131- 6.0. INTRODUCTION During the period 20 10-20 14, the government intends to focus i t s efforts on and direct those o f the technical and financial partners to the implementation o f the priority programs identified. The strategy includes a total o f 32 priority programs. The required financial resources, including those already mobilized, are estimated at CF 463 billion for the period, equivalent to an average o f CF 92 billion per annum. The financial resources to be obtained during the period amount to CF 4 18 billion, equivalent to an average o f CF 83 billion per year. Table 6.1. Requirements by core strategy for the period 2010-2014 (millions o f CF) Total Financing Financing (CF % Core strategies acquired required millions) Core strategy I.Stabilize the economy 20,389 234,285 254,674 55.0 and lay the groundwork for strong and equitable growth Core strategy 11. Strengthen key sectors 802 55,025 55,826 12.0 by focusing on institution building and ensuring a broader role for the private sector Core strategy 111. Strengthen governance 6,560 14,817 21,377 4.6 and social cohesion Core strategy IV. Improve the health 8,406 62,234 70,641 15.2 status o f the general public . Core strategy V. Promote education and 4,020 28,768 32,788 7.1 vocational training with the aim o f developing human capital Core strategy VI. Promote environmental 5,013 23,030 28,043 6.1 sustainability and civilian security Total 45,190 418,159 463,349 100 131 -132- Table 6.2. Requirements by major sector for the period 2010-2014 (millions o f CF) Total Financing Financing (CF % acquired required millions) M a j o r sector Agriculture 47 15,808 15,854 3.4 Fishing 558 18,607 19,165 4.1 Stockbreeding 0 9,781 9,781 2.1 Tourism 0 6,025 6,025 1.3 Energy 850 70,154 71,004 15.3 Drinking water and sanitation 14,190 26,445 40,635 8.8 Economic and communication 3,616 67,025 70,641 15.2 infrastructure Environment and public security 5,013 23,030 28,043 6.1 Education 4,020 28,768 32,788 7.1 Health 8,406 62,234 70,641 15.2 Private and financial sector 197 4,804 5,001 1.1 Governance and social cohesion 6,560 14,817 21,377 4.6 Fiscal reform and commercial policy 1,733 70,661 72,394 15.6 Total 45,190 418,159 463,349 100 132 -133- Resources currently available for the period amount to CF 46.1 billion, equivalent to 9.2 billion per annum (Annex 1). In addition, the PRGS budgeting exercise indicates financing gaps far exceeding the estimates in the PRGS macroeconomic framework scenario, but much lower than the requirements assessed in the MDG budget exercise. The distribution o f financing required by core strategy and PRGS priority program i s presented in the tables below. 133 1 00 d r- vi 0- N 0- r- N 0 d VI m M e N 5 W N 0 e! 0 W 0 ; 1 0 m d 5 3 N cn N - d M 5 0 0 W 0 9 2 0 W c1 VI 0 d - m 0 W N m . " 00 m r- m - z 0 m m 6 * 0 00 2 U 2 d E: 0 t- 8 N N z 0 0 t- m P ci m 01 N 9 e m 5 0 0 0 0 0 8 m 0 P z a 8 m W d 2 ! I N d 0 0 0 0 0 8 ci 9 - 0 M N m t- W 0 m m \o t-- N N r- 2 d 0 m m 0 0 2 0 W M N W m d m Pa N E: m 0 0 00 m m 0 0 W m t- t-" L" " m N m m 0 0 M m v, m N N m m . 2 2 v, - m vi 0 N 0 00 00 a - m . vi N vi Do N W d d B d Do F d m I \o m m 0 3 I 2 d d 0 0 0 0 2 W r Do 0 e N N - m 0 N 00 r4 I 9 - m c im U r- 2 2 N : M - . m - m m . 0 0 2 I m C I 0 m N i;s 0 W m 3 W. e - 0 r- N m e 0 n - e 0, I m 0 N E: 0 VI 00 M I-- N r- m m s N r- m I- m m N? N m m 0 N 0 0 b, N W e m r- VI 0 W m r- N r( 0 N 0 0 m 0 d r- m m I 0 N m 0 W d m -. M 00 r- W e 0 m 0 N 0 v1 E E M 0 W m rc) 0 d f: 2 m n I Q' , m 0 0 N m Q' m m m. m 0 0 N 00 I CO m i I 0 0 m PI m M 00 0 N W N d N 2- C - t, 00, Iy N W vi 0 C d Q: m 0 C N rn -, t- !Y C 0 W 0 0 N Q C wl m d - t- m 3 t- a oo" 0 m C m 0 0 t- Q m oo N wl C N m N N t- \o Iy 0 $ 3 3 t i5 c C m r- Q t- m 0 O m I C d c? 3 t- vi ..- 00 vi e: h 0 0 C 3 OI UY \o Q z 2 d N r- x - m 0 C d N d m 3 e: n m w w 2; C x) m 00 m t- 0 E 3 rr v, 0 Q p! a > E L e M a - - m 0 0 m C m M N ' , " N. N Y m N 0 0 m C 2 0 N a 0 0 0 0 P C 0 Y N 0 t- 2 m - i d W 0 0 0 0 0 C m W d N a 0 0 0 d C m 0 m v, Y N '? W W 0 0 0 0 0 C m W d N a 0 0 0 0 v, C 0 m 2 0 ' , " m m N N Y N C 2 0 0 W 0 0 N a N 0 0 N C N m vr P m m N Y C 2 0 0 W 0 N a C Y - t- m 0 0 w 0 v, 00 m m N m m C 2 W m 0 0 W N 0 - P e, W . c 0 3 w , 3 - 1 42- CHAPTER VI1 PRGS MONITORING AND EVALUATION FRAMEWORK 142 -143- 7.0. CONTEXT The poverty reduction and growth strategy (PRGS) 2010-2014 aims to reach several objectives- specifically robust, sustained economic growth, a sustainable reduction in monetary poverty, and improved living conditions and socioeconomic well-being for households. The degree to which these goals are reiched will be measured using a monitoring and evaluation system. This system i s an essential component in PRGS implementation. Data collection, processing, and analysis; and the periodic drafting o f progress and performance reports are essential components in monitoring and evaluation o f performance in connection with the policies and programs implemented under the PRGS, to assist in i t s steering, and in the decision-making process. Unfortunately, the interim PRGS monitoring and evaluation mechanism did not function as expected for a number o f reasons. We should bear in mind the specific sociopolitical situation that has been present in the country for the past three years, that prevented major progress in PRGS implementation and in applying the monitoring and evaluation system. Other factors have also distorted the use o f the system. A m o n g other factors, w e observe a lack o f central coordination for the system, an absence o f resources to enable the organizations involved to conduct proper monitoring and evaluation activities, insufficient qualified personnel possessing the required specialized skills, and an absence o f technical tools that would have made i t possible to implement the system. In addition, the expectations o f the users and decision-makers concerning PRGS monitoring and evaluation were insufficiently clear. The government acknowledges the failings o f the interim PRGS monitoring system and intends make changes so that i t can operate more effectively. There are plans in connection with PRGS implementation t o build institutional capacities in this system and to rehabilitate the system used to collect and analyze the sectoral data and those describing household living conditions, in particular. Efforts will also be made to enhance accountability o f the decentralized units through support to the Sectoral Technical Groups (GTS) and the Committees for Development Planning, Monitoring, and Evaluation (COPSED). There are plans, in particular, to build institutional capacities in operational planning and monitoring o f program and project execution, and t o ensure these processes are implemented with appropriate accompanying measures. The government also intends to strengthen the National Statistics Directorate so that i t can more effectively coordinate the program o f surveys required for PRGS monitoring and evaluation. At the institutional level, i t will also be important to involve the decentralized units o f the island planning ministries and c i v i l society in monitoring activities, to enhance public ownership o f the PRGS, and the participative process, and thus t o improve the quality o f services and the efficacy o f policy and program implementation. The adopted technical and institutional system i s simple and reflects the country's geographic and institutional context. I t takes due account o f the government's limited human and financial capacities and optimizes use o f the existing structures already involved in PRGS implementation whenever possible. 143 e -144- 7.1. PRINCIPLES AND OBJECTIVES OF THE MONITORING AND EVALUATION SYSTEM Implementation o f the monitoring and evaluation system will rely on a combination o f qualitative and quantitative methods, and views according to each discipline to reflect the multidimensional nature o f living conditions.and poverty. Cross-cutting issues such as gender and human rights, trade, access to modem information and production technologies, and MDG attainment will be systematically considered in the monitoring and evaluation methodologies and activities. The approach will be as participative and inclusive as possible. The PRGS monitoring and evaluation system i s governed by the following six principles: 1. Consolidation of existing progress; 2. Promotion o f the participative approach and national ownership; 3. Gradual adoption o f the results-basedmanagement approach at the national and sectoral levels; 4. Accountability o f the technical ministries and islands in the execution and monitoring of different priority programs in their respective areas o f authority; 5. New impetus for and strengthening o f the statistical system at the central, sectoral, and decentralized levels; 6. Involvement of civil society in the monitoring and evaluation process. The system should be gradually implemented to reflect resource and capacity constraints, with institutional and human capacity building activities, and intermediate outputs at each stage. Rather than implement a complex superstructureinvolving many changing structures that would risk burdening the start o f the system with discussions on authority sharing and significant financing requirements, i t was decided to begin with a pragmatic approach, commencing with rapid actions designed to produce results in the short term that decision makers and users o f the system would consider to be useful. The system will then be expanded and enhanced through the gradual development o f strategic partnerships between the structures involved. The PRGS monitoring and evaluation system i s designed to provide data and anaIyses meeting the following characteristics: 1. Relevant in PRGS monitoring and useful in decision making. To that end, i t will be essential to coordinate effectively the players involved and the various operations to collect, analyze and disseminate the data, and in the preparation o f progress and performance reports; 2. Representative o f and faithful to the islands and socioeconomic sectors. I t will be important to ensure that data collection and processing tools are rigorously applied and to conduct disaggregated analyses useful in decision making; 144 -1 45- 3. Regular, useful, and timely. Effective coordination o f the system will be essential to observe schedules for collection, analysis, production o f reports, and dissemination o f the information to users. The monitoring and evaluation system will contribute to: 1. Reduce data duplications to save substantial financial, human, and material resources and to reduce confusion when different values are registered for the same indicator; 2. M a k e the data and analyses available to a l l users, ,requiring an effective information management system and communication strategy. An integrated information management system must be implemented gradually for effective public management o f programs and adequate monitoring 7.2. INSTITUTIONAL FRAMEWORK FOR MONITORING AND EVALUATION The institutional framework adopted for the implementation o f the PRGS monitoring and evaluation system i s based o n seven structures and involves the sectoral ministries and institutions participating in the implementation o f development programs and projects. 1. Interministerial Monitoring and Coordination Committee; 2. Strategic Committee for Coordination o f Development Assistance; 3. PRGS Technical Steering Committee (Office o f the General Commissioner for Planning); 4. Permanent Technical Secretariat for PRGS Monitoring and Evaluation; 5. National Statistics Directorate, decentralized agencies o f the Ministry o f Planning in the three islands; 6. Sectoral Technical Groups; 7. Committees for Development Planning and Monitoring and Evaluation (COPSED) in the three islands. The institutional framework o f this scheme i s illustrated in Figure 7.1. below. 145 e - 146- Figure 7.1. Institutional framework for PRGS monitoring and evaluation Inter-ministerialCommittee _ -- _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _for -Monitoring and I I I Evaluation (Economy and Finance) and central I I _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ t Directorate in the islands Committees for Development 1 Planning a n d Monitoring/Evaluation (COPSED) t I I I t C i v i l Society organizations 146 a -147- The Interministerial Committee on Monitoring and Coordination i s the government body responsible for policy decisions and dialog with the development partners. The Committee w i l l coordinate organization o f ad hoc meetings too keep abreast o f PRGS implementation progress. The Committee i s responsible for making the necessary decisions to improve coordination and efficacy in the scheme for implementing development policies, programs, and projects in connection with the PRGS. The Interministerial Committee for Monitoring and Coordination i s chaired by the Secretary-General o f the government. It i s comprised o f all members o f the Council o f Ministers and i t s secretariat i s covered by the Office o f the General Commissioner for Planning, which chairs the Technical PRGS Steering Committee and oversees the monitoring and evaluation system. The Interministerial Committee for Monitoring and Coordination will work closely with the Strategic Committee for Coordination o f Development Assistance, which i s responsible for effective coordination and optimization o f development aid in the Comoros. When required, the Committee may ask the PRGS Steering Secretariat to report on the status o f the PRGS or certain programs or projects. The Strategic Committee o n Coordination o f Development Assistance i s chaired by the head o f state. I t i s comprised o f members o f the Extraordinary Council o f Ministers and representatives from the technical and financial partners. The Office o f the General Commissioner for Planning provides the secretariat. The PRGS Technical Steering Committee i s responsible for supervising, coordinating, and steering PRGS monitoring and evaluation. This Committee i s at heart o f the monitoring and evaluation system. I t i s supported by the Permanent Secretariat for PRGS Monitoring and Evaluation, which works closely with the Committee and covers i t s secretariat functions. I t ensures that the monitoring and evaluation system i s functioning adequately and that the monitoring and reporting timetables are being observed. The Office o f the General Commissioner for Planning, through the Steering Committee and the Permanent PRGS Monitoring and Evaluation Secretariat, i s responsible for reporting on PRGS progress to the Interministerial Committee on Monitoring and Coordination. It will also be responsible for reporting to the Strategic Committee on Coordination o f Development Assistance on execution o f priority programs and projects implemented in the PRGS framework. More specifically, the PRGS Technical Steering Secretariat has the following responsibilities: 1. T o coordinate the PRGS monitoring and evaluation system and implementation; 2. To ensure that the adopted performance indicators are consistent with the PRGS core strategies and MDGs, and that they are u s e f u l in assessing progress in the area o f growth and poverty reduction; 3. T o propose a working program to monitor changes in living conditions and poverty, coordinate studies on the causes o f poverty and impact assessments for certain operations that have been imp1emented; 4. T o coordinate and contribute to the preparation o f annual reports on the progress o f PRSP implementation; -148- 5. T o execute and coordinate execution o f topical studies in connection with the PRGS and reflecting the requirements o f decision makers and monitoring and evaluation system users. This committee will also be responsible for disseminating the results o f studies and progress reports prepared by the players in the PRGS monitoring and evaluation system. These activities include publication o f studies and progress reports, organization o f workshops to present the results to decision makers, dissemination o f information to the players f r o m c i v i l society and the public at large, and in general the development o f a communication network with the sectoral ministries and island representatives. The PRGS Technical Steering Committee i s comprised o f members o f the Strategic Committee for Coordination o f Development Assistance instituted under Decree 09_062/PR, plus all ministry secretaries-general and island planning directors. The PRGS Steering Committee i s chaired by the General Commissioner for Planning. The Permanent Technical Secretariat f o r PRGS Monitoring and Evaluation will w o r k closely with the Sectoral Technical Groups that are responsible for planning, implementation, and management o f programs and projects, monitoring o f program and project execution, and collection o f sectoral data. These are the mainstays for the overall institutional framework and oversee day-to-day PRGS implementation. The Secretariat i s responsible for preparing the annual strategy implementation report, and in this capacity, it works with the Sectoral technical Groups, which play a central role in preparing annual performance reports for programs and projects. These activities will entail close cooperation with the island Development Planning and Monitoring/Evaluation Committees, coordinated by the Technical Steering Secretariat and the PRGS Monitoring and Evaluation Committee. The Sectoral Technical Groups (GTS) o f the sectoral ministries produce important information in PRGS monitoring and evaluation. They contribute, in particular, to the monitoring o f priority program execution by providing information o n the status o f programs and projects. Against this backdrop, implementation o f Medium-Term Sectoral Expenditure Frameworks (CDS-MT) and preparation o f the Annual W o r k i n g Plan (PTA) w i l l be used as an operational basis for implementation and monitoring o f PRGS priority program execution. This technical system w i l l enable the ministries to analyze the degree t o which the results o f their programs have been achieved on an annual basis, depending o n the resources that have been allocated to them. The establishment o f program budgets will facilitate monitoring o f priority program execution through a results-based management approach. The Sectoral Technical Groups are chaired by the secretaries-general o f the sectoral ministries and are comprised o f technical staff o f the ministries and technical and financial partners. They will participate in implementation o f sectoral strategies and approaches and o n monitoring sector financing, under the t e r m s o f Presidential Decree 09_062/PR in respect o f the implementation o f the institutional system for the coordination o f assistance. The Committees for Development Planning and Monitoring and Evaluation (COPSED) produce fundamental information for PRGS monitoring .and evaluation at the island level. They w o r k closely with the G T S o n planning, implementation, and monitoring and evaluation o f -149- development programs and projects. The COPSEDs work directly with the beneficiaries and are therefore front-line structures in the monitoring and evaluation system. They will participate actively in the system activities for their respective islands. The N a t i o n a l Statistics Directorate i s the agency responsible for statistical data collection and analysis. In the framework o f the PRSP monitoring and evaluation system, the National Statistics Directorate will be responsible for coordination o f the collection system in close collaboration w i t h the decentralized units o f the Ministry o f Planning in the islands, through the implementation o f the National Strategy for Statistical Development (SNDS). Accordingly, i t will be responsible for conducting and supervising national data collection activities, producing various reports o n the country's socioeconomic development and household living conditions, and contributing to progress and performance reports in connection with the agencies involved in PRGS monitoring and evaluation activities. The National Statistics Directorate w i l l be supported by the Statistics Services o f the decentralized Ministry o f Planning units in the islands. These structures will be technically strengthened to play a key role in the field data collection system. The National Statistics Directorate will discharge i t s duties t o carry out major national surveys, and specifically the census, the Health and Demographic Survey (enqzite De'mogruphie et Sunti-DHS), and the comprehensive household survey (enqu8te inte'gre'e uuprgs des me'nuges-- EIM). I t should also work closely with the Permanent Secretariat for PRGS Monitoring and Evaluation to serve as lead manager in the following activities: 1. To identify users' information requirements for the monitoring and evaluation system and indicators for which information i s required; 2. T o collect and format the secondary data required for PRGS monitoring; 3. To conduct surveys o n household living conditions; 4. T o analyze the data on household living conditions and poverty; 5. T o participate in conducting ad hoc surveys in connection with PRGS program and project monitoring and evaluation. A m o n g the other partners in the system, the Ministry o f Finance/Budget Directorate, the Ministry o f Economy, and the central bank will also play a key role in the PRGS monitoring and-evaluation system by producing studies and information on the economy, government revenue and expenditure, and on macroeconomic and financial indicators. These data will be used in connection with PRGS monitoring and evaluation to assess the economy's overall and sectoral performance. The relevant services o f the ministries will be involved in drafting certain sections o f the annual PRGS progress report. Last, civil society will participate in the monitoring and evaluation system at several levels. First, as a direct beneficiary o f development programs and projects, it will provide assessments o n the services received. Accordingly, i t will participate in the various surveys in connection with PRGS I -1 50- monitoring and evaluation by providing important information in assessing results and future requirements. I t w i l l subsequently participate directly in monitoring and evaluation activities, and specifically in the organization, promotion, and reporting o f public perceptions o f the programs and projects that have been implemented. Last, c i v i l society will participate in awareness meetings o n results and conclusions o f the reports produced by players in the system. The lessons will be shared with c i v i l society, along with recommendations to make the projects implemented more efficient and effective. 7.3. FEATURESTHE MONITOFUNG AND EVALUATION SYSTEM OF The monitoring and evaluation system i s designed to produce information useful in decision making. I t includes three complementary components: 1. Monitoring o f selected PRGS performance indicators; 2. Monitoring o f the execution o f programs and projects to be implemented in the PRGS framework; 3. Evaluation o f policies and programs implemented in the PRGS framework. 0 Monitoring of performance indicators The first component entails the assessment o f changes in the population's living conditions and the performance o f the Comorian economy, through the measurement o f selected performance indicators (effects and impacts). This approach will essentially involve annual or biennial monitoring and measurement o f the performance indicators presented in Annex I this paper, to which will provide the information and data required to prepare an annual PRGS progress report. This component consists in organizing and supervising activities to monitor poverty, household living conditions, and the economic and social situation in general. The aim i s systematic production o f baseline indicators for each priority area identified in the PRGS. This component will in particular provide data on: (i)trends in poverty; (ii)overall economic and sectoral growth and the macroeconomic framework; (iii) infrastructure development; (iv) private sector development; (v) social sector (education, health, and social security); and (vi) governance. Monitoring o f PRGS priority program execution The second component will monitor execution o f programs and projects implemented in connection with the PRGS. This component w i l l monitor the use o f financial resources and the attainment o f the annual results targets established by the agencies involved in the implementation o f their respective annual w o r k i n g plans. Each sector responsible for program and project implementation will be required t o produce an annual performance report establishing the linkages between the use o f the resources obtained and the results achieved, as compared with the targets envisaged for the period. These reports will b e used as benchmark documents in producing the annual PRGS progress report. -151- Execution monitoring involves collection and analysis information o n finance, use o f resources, and indicators o n the process, activities, outputs, and effects o f the programs and projects. The annual program and project performance reports will more specifically cover: 1. Measurement o f performance in the area o f financial management (input indicatovs); 2. Measurement o f institutional Performance and governance in management o f processes and execution o f activities according to the adopted timetables and budgets (process and activity indicators); 3. Measurement and monitoring o f performance in accordance with the adopted targets to determine any discrepancies between projections and performance (021tptit indicators); 4. Measurement o f perceptions, satisfaction, and use o f services by the target populations (effect indicators). Surveys o f beneficiaries will be an important factor in the monitoring and evaluation system. They will provide users' assessments o f the services made available to them by the administrative agencies, project supervisors, and public enterprises. This information will be used t o analyze discrepancies between the forecasts and physical and budget outputs in execution o f priority program and activities, so that recommendations can be made for adjustments in execution o f operations or programs, or budgets reallocated t o optimize the efforts to reach the adopted objectives. 0 Policy analysis and program and project evaluation The third component involves policy, program, and project evaluation. Such evaluations will be carried out on an ad hoc basis to reflect the requirements o f decision makers and the availability o f resources. This component m a y include ex ante assessments o f potential projects, midterm and completion evaluations, and expost impact assessments. The latter w i l l a i m to measure the impact o f a given program or policy o n socioeconomic players or o n the target populations. The evaluations will be based o n administrative data and the data f r o m surveys collected by the sectoral departments, f r o m specific surveys o f target groups, and primary data collected in connection with household surveys conducted by the National Statistics Directorate. The assessments will a i m t o measure the effects o f policies, programs, and projects o n the target groups and on the PRGS development goals (growth, poverty, and social development). The evaluations will be used t o establish linkages between program and project execution and the results on the development and well-being o f the target groups. Evaluation studies should be programmed according to the effective implementation timetables o f the sector projects and programs, and the decision makers' requirements, so that sectoral programs and strategies and those under the PRGS can be revised accordingly. They will also be used to assess the efficacy o f priority programs in light o f the long-term objectives defined in the PRGS. The Permanent Technical Secretariat for PRGS Monitoring and Evaluation will essentially identify and select relevant problem scenarios f o r analysis, identify service providers, which may be internal or external players under programs and projects -152- (research centers, consulting firms, consultants, etc.), allocate resources, and supervise execution, dissemination o f studies, and use the results to improve policies, programs, and strategies for intervention. The monitoring and evaluation system w i l l provide decision makers with relevant information and PRGS progress reports on an annual basis; annual performance reports on programs and projects implemented by the agencies involved, and satisfaction reports, in which the target groups assess the services offered under the programs and projects implemented. The system will use the results o f the assessments to provide ad hoc comprehensive analyses. 7.4. PROGRESS REPORTS AND OUTPUT TIMETABLE The progress report on PRGS implementation constitutes the synthetic document for all outputs from the PRGS monitoring and evaluation system. I t will be prepared with a participative approach, on an annual basis. The Office o f the General Commissioner for Planning will coordinate the efforts to prepare the report, which will include the following components: A summary o f cyclical factors,.recent developments, and achievements in PRGS implementation structured by PRGS core strategy, and a summary o f action plan execution; This synthetic document w i l l also use performance reports o n priority program implementation. These reports will analyze the execution o f programs and projects. I t should be an administrative duty o f the ministries involved to prepare these reports on an annual basis. A statistical annex should be used to consolidate the information, specifically covering living conditions and poverty, economic growth, the macro framework, infrastructure, private sector, social sector (health, education, and social security), and governance. This annex i s the key output for monitoring the performance indicators. , An annex involving programs and projects w i l l present a summary o f the annual working plans organized b y sector. To comply with the report production timetable, the system should maintain, supply, and centralize information on: (i) indicators in Annex 1; and (ii) the technical and financial execution o f programs and projects. The various monitoring and assessment reports and studies can be archived at a website to facilitate dissemination and consultation by users. I t i s important to ensure that the monitoring and evaluation system outputs are highly visible. Other output communication channels will be envisaged to ensure that the results gain proper support and to promote the exchange o f good practices. 7.5. IMPLICATIONS FOR THE NATIONAL STRATEGY ON STATISTICAL DEVELOPMENT Monitoring and evaluation o f the activities incorporated into the core strategies requires a critical mass o f information, which means that the national statistics system should be strengthened. Against this backdrop, implementation o f the national statistics development strategy provides an - 1 53- opportunity to ensure that the monitoring and evaluation system i s operating effectively. Implementation o f this strategy in fact aims to meet the requirements o f statistics users by developing k e y areas in data collection, investing in the basic infrastructure for effective information collection and management, building analytical capacities, strengthening data dissemination, and enhancing coordination with the other components o f the system. All o f these factors will make i t possible t o consolidate the monitoring and evaluation system. 7.6. IMPLICATIONS ON CAPACITY BUILDING The multiple challenges related to the national statistical information management system and the innovations embodied in the establishment o f the information system for monitoring and evaluation focusing on poverty reduction and participative development management bring to light a number o f areas where support i s required for the implementation and monitoring and evaluation system to operate effectively. The players in the system should have collection and analysis tools and standard guides to assist them in preparing the various progress and performance reports. A precise production timetable for producing.the various reports must be prepared and observed by all parties involved. All players in the national system for planning, program management, and monitoring and evaluation activities should benefit from capacity building and accompaniment in the implementation o f monitoring and evaluation tools. The quality and relevance o f monitoring and evaluation rely largely o n efforts to be made upstream to strengthen the national planning system, particularly in the c i v i l society sectors and agencies involved in program and project implementation. I t will, in fact, be difficult to implement an effective monitoring and evaluation system if the precepts for operational planning o f programs and projects are not observed. This effort primarily entails an understanding o f the tools as the logical framework, the capacity to define and document the relevant performance indicators, to design budgets and establish realistic timetables, to prepare contracting plans and manage the government contracting cycle, to oversee program and project implementation, and t o implement rigorous controls, audits, etc. I t will therefore be important to provide a capacity building program for PRGS implementation, monitoring, and evaluation, covering the overall cycle o f programming, implementation, and monitoring and evaluation o f policies, programs, and projects, targeting the players involved. At the institutional level, the problems observed during the interim phase must be corrected to promote effective circulation o f information between the stakeholders, t o improve the operation o f cooperation and steering structures, and prepare precise specifications for all agencies involved in PRGS monitoring and evaluation. 7.7. IMPLICATIONS ON EFFICACY AND HARMONIZATION OF OFFICIAL DEVELOPMENT ASSISTANCE The PRGSP i s a reference document to steer the process o f development and the operations o f all technical and financial partners in respect o f the national priorities. A prior survey o f a l l technical and financial partners was conducted. The numerous consultations between the government and the technical and financial partners brought to light the importance o f continuing the mutual coordination efforts to ensure that assistance i s more effective. a -154- The 2010-2014 action plan, which will be used in PRGS implementation, will be validated jointly by the government and the technical and financial partners. Through this action plan, the government intends to: (i) strengthen assistance coordination based o n the national priorities and affirm i t s leadership; (ii) enhance transparency, efficacy, and responsibility in the management o f resources allocated to development; (iii) consolidate program approaches and common assistance implementation mechanisms; and (iv) harmonize management o f the technical partners' missions and analytical activities to reduce the relevant costs. The government will also endeavor to strengthen the dialog with the technical and financial partners through the consolidation o f j o i n t sectoral technical groups based o n the priorities defined in the PRGS. The following will be organized in this connection: (i) i n t annual sectoral jo reviews; and (ii) j o i n t annual PRGS review. The government intends for these reviews to be a conducted within the first h a l f o f each year so that the recommendations can be taken into account in preparing the program budgets and the general state budget. -155- CONCLUSION The poverty reduction and growth strategy (PRGS) i s the new unifying framework for a l l sectoral strategies and constitutes the reference document for the government's interventions during the period 2010-2014. The PRGS was prepared and validated with the participation of a l l sectors o f Comorian society. The success o f this strategy will depend largely on the government's capacity to ensure that i t gains support from the various players involved. This will require: 0 Effective support for the content o f the strategy from the agencies responsible for its implementation, the central and island governments, and from the local governments; 0 Sustained efforts by the government to mobilize and effectively use resources, as a priority, for effective implementationo f priority programs; 0 Institutional and human capacity building at all levels (central and island) to ensure effective PRGS monitoring and assessment; 0 Greater harmonization o f assistance from the technical and financial partners in accordance with the Paris Declaration. To minimize the risks, the government intends to strengthen the steering mechanism and institute a coordination mechanism involving a l l players. This institutional mechanism will include the implementation o f a powerful monitoring and evaluation system, responsible for monitoring progress achieved and proposing any corrective measures that may be required. To make the PRGS operational, the Government will prepare an action plan for PRGS implementation. This action plan will make i t possible to specify in the medium term the priority programs and investments that will help accelerate growth and lead to sustainable poverty reduction. This action plan will provide the linkages between the PRGS, sectoral strategies, and the resources required to reach the established objectives. -156- ANNEX 1 PERFORMANCE INDICATORS FOR PRGS MONITORING -1 57- Table A l . PRGSP performance indicators and targets - 2010-2014 Bench- Bench- Targets mark PRGSP performance indicators value Unit year 20 10 Real rowth rate - GDP 0.8 I % 2007 2.5 5.5 5.8 - Agricultural, fishing, and 4.0 1 % 2007 6.8 11.3 11.3 stockbreeding sector- - Tourism sector 5.2 % 2007 3.1 Outstanding external debt 2,04 1 Milli 2008 2204 2094 5691 ons of T CF External debt services 706 Milli 2008 659 ons of CF Annual growth rate, tax revenue CF 22 % 2008 5 billion 3 2005 50 75 90 15 10 2004 living below the poverty line 2004 2004 2004 2008 25 2004 2007 80.0 2007 76.0 2008 76.3 ercent o f the population 12-24 2008 0.74 0.79 0.84 2008 .0.56 0.65 0.73 ~ 2003 69.7 71.0 73.2 76.0 79.7 write (proportion o f the 2004 - 1 58- Bench- Bench- Targets mark mark PRGSP performance indicators value Unit year 20 20 10 11 12 13 agricultural salaried employment Women members o f parliament, 2.3 % oercent o f total Neonatal mortality rate 29 1 /1,000 2007 25 22 21 20 19 2005 live births Maternal mortality rate 400 /100,000 2005 380 , 338 295 255 215 Proportion o f births in health 13.9 % 2005 40 50 55 60 65 facilities S T I prevalence rate % 3.6 2 1.5 <1 <1 H I V / A I D S prevalence rate 0.025 O Y 0.025 0.025 0.025 .I Y V m 43 0 w e a m 3 0 c;.l 43 : : 0 5 0 v, CI 0 e l- ' 0. 8 3 Y 0 % 2 i2 e Y C 1 +-' C 3 a 3 3 3 VI C * .3 w 0 e, e '7 a e L. Q 2 .- r L 1 0 Y Ld s U fi e, a e, a e u w l * Ld L c a Y M c C a .e V i V .I L 2 G 0 E 0 0 m k 0 U U a2 d a v1 E v1 2 .I z 0 'CC C a I- O Y o e, VI e, B .- C W d W 3 N I 03 m v) aJ .I U > .I U .I U m h 0 a c a i cj - . ( 3 0 9 Ch 0 0 N 8 5 E W .I e, c, 0 6 Y C 3 0 2 W 5 C .e 1: .d cr, 2 W VI . c 8 > .C .d 4 0 i? Y i? Y C C s 3 3 3 3 & & x P Lo bl E .- C VI .e M P C .e 0 z 3 W C m a 5 C 4z 9 e, 00 0 C C .A cd 3 E 0 W > e i 3 0 M W c ai3 b 0 ,z 3% e, e, c Q 0 v1 2 a .I + Y .I ." Y V m i 0 9 m 0 0 N d d m cm 0 Q, e a e 3 0 7 rn 0 0 c1 2 Y G 3 0 u U G 3 U C 2 Y d c 2 : 3 0 0 W 0 cd e, 4 . ^ v) 0 .e m 0 0 r4 2 Y 0 Y E 6 E e, d 2 x D 5 F r i 3 0 9 \o 0 0 c1 0 " 0 , c1 N i 0 9 \o 0 0 N a - 3 0 a 2 a .P b 2 b g E4v 0 0 m I t. C 0 U .I m L 0) e &I w L a C m e 0 .I U m r- t \o m 2 a L a .- vl U a e m n z Y C e 0 k > .I e a2 e 0) rcc 0 e 0 U .I .- U Q 0 rn a H w z I 0 L + e ANNEX 3 FINANCINGAVAILABLE FOR E A C H PRGS CORE STRATEGY AND PRIORITY PROGRAM I 1 * 19 II W r c p: c r c N - /I W 'ci n 3 n 3 0 I a n c) 0 L" W I 3 co 3 vl a 3\ P n 0 0 t; N n u t; n 3\ r- vl . . rn W 5 I * UNION OF THE COMOROS UNITY - DEVELOPMENT - SOLIDARITY ------------ PRESIDENCY OF THE UNION OF THE COMOROS ----------------- OFFICE OF THE COMMISSIONER GENERAL FOR PLANNING ACTION PLAN FOR IMPLEMENTATION OF THE 2010-2014 POVERTY REDUCTION AND GROWTH STRATEGY September 2009 1 a PREFACE This action plan was prepared with a view to implementation of the Poverty Reduction and Growth Strategy (PRGS). I t presents the expected results and budget forecasts for implementing the priority programs adopted for the period 201 0-2014. The choices made reflect the expectations o f all participants in the PRGS process. Based on the participative diagnostic conducted in connection with the preparation o f the Poverty Reduction and Growth Strategy, the Sectoral Technical Groups (GTS), which included participation o f representatives from the islands and the Committees for Development Planning and Monitoring/Evaluation (COPSEDs), identified and budgeted thirty-two (32) priority programs. The choice o f programs was also subject to discussions in the framework o f technical workshops, at the level o f the islands and the Union, as well as discussion and validation workshops at various levels. The Government o f the Union o f the Comoros intends to support these priority programs, as its resources allow, and to implement the institutional reforms required to accelerate growth and poverty reduction. Through the practical implementation o f the Poverty Reduction and Growth Strategy, the government intends to spare no effort to reach the objectives it has established, and in so doing to progress toward achieving the Millennium Development Goals (MDGs). The Comorian people firmly believe that, with the support o f the international community, the challenges impeding the country's development process can be addressed. This action plan will make it possible to restore growth and to achieve sustainable poverty reduction in the Comoros. President o f the Union o f the Comoros Moroni, September 10, 2009 ii ACRONYMS AND ABBREVIATIONS ACTIV Comorian Association o f Veterinary Technicians and Nurses AFD Agence Frangaise de Diveloppement AFDB African Development Bank AGR Income-generating activities AIEB Support for basic economic initiatives AIMPSI Moroni Prince Said Ibrahim International Airport AMIE UNDP Micro and small-scale enterprise support project APSA Association o f Animal Health Professionals APSP Association for Private Sector Promotion ASECNA Air Navigation Safety Agency BADEA Arab Bank for Economic Development in Africa BCC Central Bank o f the Comoros BDC Banque de Diveloppement des Comores BIC Banque pour 1'Industrie et l e Commerce des Comores c.a.f. Cost, insurance, and freight CF or KMF Comorian franc CHN National Hospital Center CHR Regional Hospital Center CIPR Regional Education Inspection District CNAD National Committee for Development Support CNE Caisse Nationale d'Epargne CNLS National Committee to Fight HIV/AIDS and Sexually-Transmissible Infections COI Indian Ocean Commission COMACO Compagnie de Manutention des Comores COMESA Common Market for Eastern and Southern Africa COPSED Comitis de Planificationde Suivi-Evaluation du Diveloppement [Committees for Development Planning, Monitoring, and Evaluation] CURE Emergency Loan for Economic Recovery DECVAS DCveloppement des Cultures Vivri2res et Appui SCmencier [Development o f Food Crops and Seed Support] ... 111 DFI Decentralized Financial Institutions DIJEC ' Comorian comprehensive early childhood development DOTS Directly-observed treatment course (tuberculosis treatment strategy) EAP Environmental action plan EBC Budget and consumption survey EDF European Development Fund EDS Demographic and health survey EFA Education for A l l EIM Comprehensive household survey EPI Expanded Program on Immunization EU European Union EVF Education for family living EVIH HIV/AIDS survey FADC Community Development Support Fund FA0 Food and Agriculture Organization o f the United Nations FEE Water and electricity fund FER Road Maintenance Fund FP Family Planning FR Road Fund GBCF Gross Fixed Capital Formation GDP Gross domestic product GNP Gross national product GTS Sectoral technical group HDI Human Development Index HIPC Heavily Indebted Poor Countries Initiative HIV/AIDS Human immune deficiency virus/Acquired immune deficiency syndrome HPI Human Poverty Index ICPD International Conference on Population and Development IEC Information, Education, and Communication IFAD International Fund for Agricultural Development iv IMCI Integrated Management o f Childhood Illness IMF International Monetary Fund KAP Knowledge, attitude, and practice M A -MWE Comoros water and electricity company. MDEF Medium-term expenditure framework MDG Millennium Development Goals MECK Mutuelle d'Epargne et de CrCdit ya Komori MFI Microfinance institutions MICS Multiple Indicators Cluster Survey NAP-EFA National Action Plan - Education for A l l NEPAD New Partnership for Africa's Development NGO Non-governmental organization NICT New information and communication technologies NN National network ODA Official development assistance OHADA Organization for the Harmonization o f Business Law in Africa PNAC National Autonomous Pharmacy o f the Comoros PNDRH National Human Resource Development Plan PNDS National Health Development Plan PNE National Program on Environment PNLP National Program to Fight Malaria PNLS National Program to Fight AIDS PNS National Health Policy POPS Persistent organic pollutants PRGF Poverty Reduction and Growth Facility PRGS Poverty Reduction and Growth Strategy PRGSP Poverty Reduction and Growth Strategy Paper RGPH General population and housing census RHFP Reproductive health/family planning RNFD National network for women and development V SME Small and medium-scale enterprises SMEISMI Small-scale enterprises and industries SNPT National Postal and Telecommunication Company STI Sexually transmitted infections UA African Union UN United Nations UNDAF United Nations Development Assistance Framework UNDP United Nations Development Programme UNFPA United Nations Fund for Population Activities UNICEF United Nations International Children's Emergency Fund UNS United Nations System VAT Value-added tax WB World Bank WHO World Health Organization vi CONTENTS Page Preface ... 11 Abbreviations 111 Contents vii Context 1 SECTION I. POVERTY REDUCTION AND GROWTHSTRATEGY (PRGS) ORIENTATIONS 3 1.O. Introduction 1.1. Poverty reduction and growth strategy objectives and core strategies 1.2. Poverty reduction and growth strategy preparation process 1.3. Operating strategy Section 11. Action Plan for the period 2006-2009 10 2.0. Introduction 11 2.1. . Core strategy I Stabilize the economy and lay the groundwork for strong and equitable growth 11 2.1.1. Program 1.1. Enhance government and fiscal operations 11 2.1.2. Program 1.2. Integrate and facilitate domestic and international trade 20 2.1.3. Program 1.3. Improve the energy supply at a low cost 25 2.1 :4. Program 1.4. Improve basic economic infrastructure and communication services 35 2.1 -5. Program 1.5. Increase access to drinking water, sanitation, and sustainable resource management 42 2.2. Core strategy 11. Strengthen key sectors by focusing on institution building and ensuring a broader role for the private sector 59 2.2.1. Program 2.1. Support private sector organization 60 2.2.2. Program 2.2. Financial intermediation and microcredit 67 2.2.3. Program 2.3. Enhance security o f property resources 69 2.2.4. Program 2.4. Support the creation o f a favorable environment for agriculture sector development 72 2.2.5 Program 2.5. Restore agricultural and agrofood production 75 2.2.6. Program 2.6. Protect livestock against exotic infectious diseases and intensify animal production sectors 79 2.2.7. Program 2.7. Create an environment conducive to the harmonious development o f the sector 86 2.2.8. Program 2.8. Develop a conservation, processing, and marketing system for fish products 88 2.2.9. Program 2.9. Support tourism development 93 vii 2.3. Core strategy 111. Strengthen governance and social cohesion 100 2.3.1. Program 3.1. Promote good governance, social cohesion, solidarity, and consolidation o f peace 100 2.3.2. Program 3.2. Improve the legal framework, promote anticorruption measures, and strengthen transparency in fiscal management 106 2.3.3. Program 3.3. Strengthen the capacities o f the judiciary institution 112 2.3.4. Program 3.4. Fight terrorism and transnational crime, and strengthen civil security 116 Core strategy I V . Improve the health status o f the general public 121 2.4.1. Program 4.1. Fight malaria and priority diseases 121 2.4.2. Program 4.2. Integrated sexual and reproductive health development 129 2.4.3. Program 4.3. Fight HIV/AIDS and sexually transmissible infections 134 2.4.4. Program 4.4. Strengthen the efficacy o f all aspects o f the health system 137 2.5. Core strategy V. Develop education and vocational training with the aim o f developing human capital 145 2.5.1. Program 5.1. Develop education, technical instruction, and occupational training, to reflect the requirements o f the job market 145 2.5.2. Program 5.2. Improve access to and quality o f basic (preschool and elementary) and secondary education 153 2.5.3. Program 5.3. Develop competent human resources and the sectoral (SWAP) approach in education 160 2.5.4. Program 5.4. Promote literacy, sports, and cultural activities 165 2.6. Score Strategy VI. Promote environmental sustainability and civil security 169 2.6.1, Program 6.1. Conserve biodiversity and equitably share its advantages 169 2.6.2. Program 6.2. Conserve and develop agro-biodiversity 175 2.6.3. Program 6.3. Adapt to climate change 182 2.6.4. Program 6.4. Fiscal rehabilitation with an ecological focus 190 2.6.5. Program 6.5. Capacity building for multisector environmental management and coordination 197 2.6.6. Program 6.6. Establish prevention and management mechanisms for risks related to natural and climate disasters 203 1. SECTION 1 1 SUMMARY OF FINANCIAL RESOURCES REQUIRED FOR PRGS IMPLEMENTATION FOR THE PERIOD 2010-2014 209 3.0. Introduction 210 3.1. Financial resources required for implementation o f the PRGS 20 10-2014 210 ANNEX Annex 1. Survey o f programs and projects in progress supporting achievement o f the PRGS objectives 217 viii CONTEXT The Union o f the Comoros has adopted a poverty reduction and growth strategy (PRGS) for the period 2010-2014. The paper i s the culmination o f a lengthy participatory process that began in 2003 with the preparation o f the interim version o f the strategy. This approach made it possible to involve all government institutions, civil society, and economic players. The interim poverty reduction strategy paper was very well received by the development partners, particularly the Bretton Woods institutions and the European Union. Several partners commented on the PRGS with a view to its improvement. It was reviewed and updated to reflect new information that became available. The 2010-2014 PRGS now serves as the reference document for the Union o f the Comoros in the area o f socioeconomic development. The 2010-2014 action plan i s part o f the follow-up efforts in the PRGS preparation process. Its purpose i s to propose a coherent set o f medium-term priority programs for PRGS implementation. The 2010-2014 action plan presented in this paper was prepared using the same participative approach as applied in preparing the PRGS. The Sectoral Technical Groups (GTS), which included sectoral experts and representatives from the three islands, prepared sectoral action plans encompassing the priority programs and operations to be implemented to set the stage for restored,economic growth and sustainable poverty reduction. These priorities were covered in several technical validation and discussion workshops. Targets (results to be achieved) were specified for each priority program and operation. A budget indicating the financial resources required for implementation o f the action plan was estimated, indicating contributions in the form o f national and external resources. The government intends to contribute available national resources, external resources, and any resources generated through debt reduction in connection with the Heavily-Indebted Poor Countries (HIPC) Initiative to implement the priority programs under the action plan. The 2010-2014 action plan comprises thirty-two (32) priority programs devised under the six core strategies o f the plan. Average annual financial requirements are estimated at CF 94 billion, equivalent to 200,000,000 per annum over a five-year period. Commitments from donors and lenders now amount to an average o f CF 10 billion per annum for the period 201 0-2014, equivalent to approximately 20,000,000 per year. Additional financial requirements amount to approximately CF 420 billion for the period, equivalent to an average o f approximately CF 84 billion per year. Although the required level o f financial resources may seem substantial, it i s important to consider these figures in light o f the country's specific sociopolitical and economic situation, particularly the substantial requirements the government faces to consolidate the national reconciliation effort, to meet i t s domestic and external commitments, and above all, to restore growth and the process o f development with the aim or reducing poverty and achieving the Millennium Development Goals (MDG) by 2015. We must bear in mind that, during the latter half o f the 1990s and for most o f the 2000s, the Comoros has sustained repeated political, social, and economic crises. Not only have these 1 instabilities threatened the country's integrity-they have also led to substantial reductions in official development assistance from the international community during this period. Development assistance has dropped from US$65,000,000 per annum (equivalent to US$165 per capita) during the early 1990s to less than US$14,000,000 at the end ofthe 1990s (equivalent to approximately US$28 per capita), and has not regained any ground since the early 2000s, despite the 2005 Mauritius Conference. This decline in aid, combined with the drop in export revenue, have exacerbated the country's economic and social crisis. Today, this context reflects substantial deterioration in the basic social and economic infrastructures, growing apathy among civil servants and workers in the private sector, an accelerated emigration of the most competent human resources and potential investors, and deteriorated living conditions for the population, particularly in rural areas. Real per-capita income dropped substantially between 1993 and 2003, and continues to deteriorate. Estimated average annual GDP growth in real terms was less than 1 percent during the past two years. This situation represents and annual decline in per-capita GDP o f more than 1 percent, taking into account demographic growth. The socioeconomic situation has reached a critical limit, potentially ushering the Comoros into a period of instability and social agitation. Although the sociopolitical situation i s still unstable, the context i s now more conducive to the resumption o f the development process, as attested by the Comorian people through their active participation in the preparation of the PRGS and in the development o f its action plan. If targeted at the identified priorities, the financial resources the government intends to mobilize will give the necessary impetus to restore the development process. We should point out that the financing o f the action plan will enable the Union o f the Comoros to join the developing nations now on the road to achieving the Millennium Development Goals by 2015. This paper i s divided into three sections. Section One reviews the major focuses o f the PRGS. Section Two includes a detailed presentation of the priority programs adopted for each PRGS core strategy, indicating results in terms o f the targets to be achieved and the financial resources required to implement the programs. The last section o f the paper presents the budget summary for all programs adopted for the period 2010-2014. Annex 1 provides a survey of programs and projects in progress supporting the attainment o f objectives under the six PRGS core strategies. 2 SECTION I POVERTY REDUCTION AND GROWTH STRATEGY ORIENTATIONS 3 1.0. INTRODUCTION The poverty reduction and growth strategy (PRGS) for 201 0-2014 was subject to a broad consensus among the development players in the Comoros on the core strategies and priority programs to be implemented during the coming years to give new impetus to the development process. Living conditions for Comorians stand to improve substantially if the country i s to succeed to (i)consolidate political stability and effectively establish institutions and strengthen the government at the central and decentralized levels; (ii) restore economic growth by focusing on promoting the private sector and trade; (iii)develop and develop institutional and human capacities; and (iv) engage all public players, civil society organizations, economic transactors, and international organizations in the implementation o f the strategy. 1.1. POVERTY REDUCTION AND GROWTH STRATEGY OBJECTIVES AND CORE STRATEGIES The poverty reduction and growth strategy has two major objectives: robust economic growth and a sustainable reduction in poverty and inequalities. Six (6) core strategies have been adopted in accordance with these major objectives: Core strategy I.Stabilize the economy and lay the groundwork for strong and equitable growth This strategy involves conducting major fiscal reforms, reorganizing the administration, adopting incentive trade policies to promote the integration o f the Comoros into the regional and world economies; implementing measures to make the Comorian economy more competitive, particularly in the key sectors o f agrofood and tourism; executing reforms and investments to guarantee a regular energy supply at a reasonable cost; and building and improving basic economic infrastructures (roads, ports, airports, and telecommunications) to support foreign trade as well as to enable Comorian economic players and producers to optimize the opportunities available to them on the domestic market. Core strategy 2. Strengthen key sectors by focusing on institution building and ensuring a broader role for the private sector This core strategy involves implementation of priority programs aiming to develop and increase productivity in key economic growth sectors and to help achieve a sustainable reduction in poverty. This strategy primarily involves agriculture, stockbreeding, fishing, and tourism. While the traditional components o f the agrofood sector are better known, and their contribution to economic development and food security no longer remains to be proven, the tourism sector offers great potential that has never truly been tapped. The measures under this strategy aim at building institutions and strengthening the regulatory framework governing growth sectors; supporting intensified, improved productivity; strengthening competitiveness, and capacity building for commercial activities and marketing circuits. This core strategy also covers accompanying measures to strengthen the financial intermediation system and access to microcredit facilities, support for nonfinancial services to promote private sector development, and an improved business climate. These activities constitute essential measures for the country to enable the underprivileged sectors to become integrated into the modern economy and to consolidate the development o f micro and small- scale enterprises, which are often highly vulnerable to economic shocks. 4 Core strategy 3. Strengthen governance and social cohesion This strategy aims to consolidate good governance and social cohesion by constructingthe democratic and administrative institutions o f the Union and the islands. I t aims primarily to strengthen the regulatory framework by clarifying the responsibilities, roles, and scope o f authority o f the national institutions with a view to a renewed, constructive social dialog. Through implementationo f the adopted priority programs, this strategy will make it possible to improve governance and the efficacy o f public institutions; to implement a true decentralization policy at the rural community and municipality levels; to renew a constructive social dialog to provide citizens with greater peace and security; to give all citizens access to transparent, equitable justice; and to fight transnational crime. Core strategy 4. Improve the health status o the general public f Core strategy 4 aims to give the public better access to quality health service, targeting the most vulnerable groups and rural populations, and to give priority to the measures to reduce anemic diseases and to improve all areas o f the health system. In this connection, the government will focus i t s efforts on implementationo f programs aimed at reducing malaria and priority diseases, improving mother and child health, preventing HIV/AIDS, improving health system management with a view to more efficient, effective health services, and improving the hospital environment. Core strategy 5. Promote education and vocational training with the aim o developing f human capital The education sector in the Comoros should produce a socially-responsible, educated population capable o f taking advantage o f economic opportunities. I t i s a powerful vehicle for change in behaviors that must also help citizens reach goals and give them better governance and improved health. The government intends to focus its efforts and to direct those o f its partners to meet these major challenges. Core strategy 5 emphasizes better access to quality education at all levels, a shift o f the ministry's efforts to technical and vocational training, and further support for informal training through literacy activities targeting young people and adults. Core strategy 6. Promote environmental sustainability and civil security We note that most o f the environmental constraints the Comoros faces are similar to those found in Small Island Developing States (SIDS) under Agenda 21 and the Barbados Plan o f Action: ecological and economic instability; substantial vulnerability to climate change and natural disasters; insufficient response and management capacity; and a narrow base o f energy resources at high costs. In the Comoros, perhaps more than anywhere else, the environment i s the focal point o f the key economic sectors that produce commercial goods and services. Recent studies have shown that growth in the Comoros i s still highly contingent on development in the agrofood and tourism sectors, both o f which are highly dependent on the natural surroundings, the 5 quality o f the environment, and its conservation. The government therefore chose to make the environment a central issue in the PRGS. Several ambitious priority programs will be implementedto protect the environment and ensure its regeneration, conservation and rational, sustainable exploitation, while being mindful of the well-being o f current and future generations. The Union o f the Comoros i s a poor, vulnerable country that faces many risks, including cyclones, droughts, epidemics, tornadoes, brush fires, tidal waves, floods, major accidents, landslides, volcanic eruptions, and risks related to the presence o f an active volcano (earthquakes).This vulnerability might be aggravated by an insufficient capacity to prepare, prevent, and respond appropriately to risks and disasters. The government takes this issue very seriously as it intends to establish mechanisms to prevent and manage risks and disasters in connection with global warming. During the next five (5) years, the government intends to focus i t s human and financial efforts and to direct those o f its development partners toward implementation o f the priority programs adopted in this action plan. 1.2. POVERTY REDUCTION AND GROWTH STRATEGY PREPARATION PROCESS Based on the lessons learned from the past in the area o f national development planning, and on the experiences o f other countries, the government adopted the foundations and reference framework that guided the preparation of the interim poverty reduction and growth strategy. The adopted approach was based on the following four principles: A strategy devised with a participative approach designed to involve the public, key players in civil society, and the private sector in defining poverty reduction strategies; A gradually developed strategy, relying on existing information and dialog and exchange through regional and national workshops and roundtable discussions. The strategy was improved and updated to reflect the recent data on household living conditions; A strategy targeting potential growth areas, and particularly the economic sectors comprising the vulnerable and poor groups, to achieve sustainable poverty reduction while being mindful o f the essential social dimensions identified; A cross-cutting strategy to ensure that the macroeconomic environment and sectoral programs and policies are effectively integrated, to reflect more effectively the dimensions characterizing poverty, and to propose innovative operations to address the multiple factors impeding growth and poverty reduction. The action plan for the period 2010-2014 used the same participative approach. The Sectoral Technical Groups (GTS) and island sectoral experts from various areas helped determine the priorities and prepare this paper. 1.3. OPERATING STRATEGY The experience o f the Comoros and many developing countries shows that economic growth i s a necessary condition for sustainable poverty reduction. To improve the population's living 6 conditions, national production must be increased, jobs created, and revenue generated. The scope o f the impact depends on sector performance, the political and institutional , environment, macroeconomic and sectoral policies, and the level o f inequality prevailing between the socioeconomic categories and environments. Numerous studies also show that economic growth can be accompanied with an increase or reduction in inequalities depending on the sector in which the growth i s concentrated. When we observe a substantial concentration o f poor households in a given sector, we can expect substantial growth in the sector to have a more substantial impact on poverty reduction than if growth were induced in a sector encompassing fewer poor households. B y contrast, growth deriving from a sector where few poor people are concentrated can also contribute indirectly to reduce poverty and inequalities, provided that the government establishes effective redistribution policies. There are two major options in terms o f sectoral priorities to reduce poverty through growth: promote GDP growth in the country's leading growth sectors where the country has greater comparative advantages, and ensure that some benefits o f this growth are redistributed through redistribution policies; or adopt a "pro-poor policy" aiming to boost the income o f the poor in the sectors where they are concentrated, which will also lead to an increase in GDP. The government o f the Comoros chose to use a combined approach, by targeting the sectors where the poor are concentrated, to achieve a rapid and direct increase in their income, and by stimulating medium-term development o f new growth sectors, the benefits o f which can be redistributed through taxation and through equitable, incentive-based public expenditure policies. The short-term approach involved a special focus on the agrofood sector the private sector in general, as these sectors typically register a significant proportion o f households, a poverty incidence exceeding the national average, and therefore individuals likely to respond quickly to incentives. The authorities are convinced that promoting growth in these sectors will directly contribute to revenue generation for households and revenue for the government. Tourism development was deemed an area with great potential as it stands to create substantial multiplier effects in a number o f economic sectors. The preliminary data indicate that the Comoros has substantial potential in the medium term to become a major source o f economic activity, jobs, revenue for households and the state, and foreign exchange. Tourism i s a particularly interesting sector in poverty reduction as it i s job-intensive, and most o f the skilled jobs the sector requires call for short-term training (ranging from a few months to a few years). If effectively managed, this sector represents a sustainable source o f income and can contribute to environmental conservation. Tourism development in the Comoros clearly requires recourse to Comorian and foreign private investors to provide capital and know-how. In the context o f market globalization, these players will only provide such support if the county presents advantageous market opportunities, offers comparative advantages over other destinations, and ensures greater political and macroeconomic stability. The same applies to issues involving security o f assets and persons, the foreign investment code, the availability o f transportation and energy infrastructures, and proper tourist accommodations. I n addition to questions related to the type o f sector to be given priority in poverty reduction and growth, the type o f growth will also affect poverty reduction. Unskilled labor-intensive growth will be the focus in all sectors whenever possible as i t will be much more effective in poverty reduction than capital-intensive growth. To that end, the government intends to give 7 priority systematically to labor-intensivetechnologies, particularly those requiring unskilled labor, such as public construction works and road maintenance, in the construction sector, agrofood sector, etc. Poverty i s not only the result of insufficient income. It i s also the result o f insufficient access to different forms o f capital, and specifically human capital. The government intends for all Comorians to be healthy, well educated, and able to reach their personal and professional potential. To that end, individuals must be able to take the economic opportunities made available to them to earn their living and ensure the well-being o f their families. The education sector plays a strategic role in this connection as it is the best mechanism to transmit social values and to develop skills to enable individuals to find the means and motivation to build a country that offers a good quality o f life. Against this backdrop, the PRGS places special emphasis on vocational training activities in addition to those directly targeting the formal education sector. I t is a priority, in fact, to allocate limited public resources to training for young people and adults in growth sectors where they will have the greatest chances o f finding jobs, rather than being unemployed new graduates and thereby becoming candidates for forced emigration. The aim will be to promote sectors requiring short-term training, such as agrofood technology institutes and hotel and tourism schools, to provide specialized and skilled labor required for the development o f identified growth niches. The government i s aware that substantial demographic growth i s a major constraint for the country's development. The current demographic growth threatens the natural environment, increases tensions between communities in terms o f access to limited productive resources, and too often breaks up families as a result of emigration. Demographic growth in fact accentuates demand for basic social services, while available financial and human resources are quite limited. The government intends to attack this problem directly through strengthened family planning programs in connection with the PRGS. The introduction o f the relevant training modules into the training curriculum, in the public and private sectors, i s a priority under the PRGS. We know that reducing the demographic growth rate also requires broad education, with a focus on education for girls and adult literacy. Activities in these two areas will receive special attention. Good governance i s a necessary condition for poverty reduction in the Comoros. The government o f the Union o f the Comoros intends to continue the process o f national reconciliation, democratization, and decentralization so that the islands can be more autonomous and to enable civil society organizations gain increasing responsibility and involvement in the development management process. Insufficient governance and political instability have been factors in increasing poverty and impeding the economic and social development process. The danger o f secessionism will be present as long as the constitutional institutions have not been effectively established in the Union and the islands. Accordingly, good governance is the focus of concerns for the new Comorian group and the PRGS. The government will continue to establish these institutions in partnership with the island authorities, for a unified approach to the challenge o f growth and poverty reduction in the Comoros. The world has changed substantially since September 11,2001. Social and economic development i s more dependent on a country"s ability to ensure the security o f property and 8 persons. Against this backdrop, the fight against terrorism and criminal activity has become a major global issue that must be addressed by all countries. The government i s determined to guarantee security on i t s territory to promote social peace and development. The 2010-2014 action plan i s part o f this context o f change and proposes programs reflecting the priorities identified. 9 SECTION I 1 ACTION PLAN FOR THE PERIOD 2010-2014 10 2.0. INTRODUCTION The action plan presents the multiannual plan for the priority programs the government intends to implement during the period 2010-2014. These programs are presented according to the six (6) core strategies o f the PRGS. A total o f thirty-two (32) programs were adopted, involving thirteen (13) sectors. They are presented in terms o f objectives and results to be achieved for each major operation. Estimated costs and financing requirements to implement these operations are presented in Section I11o f this paper. 2.1. CORE STRATEGY I.STABILIZE THE ECONOMY AND LAY THE GROUNDWORK FOR STRONG AND EQUITABLE GROWTH Five priority programs were identified to help stabilize the economy and lay the groundwork for equitable growth. The government's priority with this core strategy i s to enhance macroeconomic management, government operations, and effective fiscal management, to promote domestic and international trade, make the Comorian economy more competitive, guarantee a low-cost energy supply, improve basic economic infrastructures and communication services, and finally to make investments to improve access to drinking water and a more healthy environment. The following programs were adopted: Program 1.1. Enhance government and fiscal operations; Program 1.2. Integrate and facilitate domestic and international trade; Program 1.3. Improve the energy supply at a low cost; Program 1.4. Improve basic economic infrastructures and communication services; Program 1.5. Increase access to drinking water, sanitation, and sustainable resource management. 2.1.1. Priority program 1.1. Enhance government andfiscal operations The period 2006-2008 has been particularly difficult time for the government, as it faced a threefold challenge: (1) an unprecedented economic crisis at the world and national levels; (2) alarming fiscal and public sector deterioration; and (3) persistent political and institutional crises. The Public Expenditure and Financial Accountability (PEFA) report prepared in 2008 entailed a comprehensive fiscal analysis. The report brought to light a number o f weaknesses, insufficiencies, and dysfunctions in fiscal management. During recent years, the fiscal deterioration has accelerated and the distortions in good governance and public management have multiplied. As a result, the government now faces a major fiscal crisis and a disorganized, unmotivated administration. The time has therefore come for reconstruction and return to budget orthodoxy. New instruments will be adopted to improve financial and budget management. The government intends to promote a results-based public management approach and to introduce tools under the medium-term expenditure framework (MTEF) and program budgets. Along with the adoption o f these reforms and new instruments, it will be essential to strengthen the capacities o f the government and to review the national system for planning, management, and monitoring and evaluation o f public programs. It will also be essential,to strengthen 11 information flows between the Union and the islands, the quality and regularity o f statistics, and the system used to manage the expenditure process. Fiscal recovery goes hand in hand with institutional improvement. The deterioration in government operating conditions, as its size far exceeds the country's financing capacities, i s not only a source o f negative motivation for the existing civil servants, it also leads to a flight of the best trained and most dynamic personnel. Moreover, the financial crisis has led to the outright disappearance o f operating resources and to deterioration in equipment. The absence o f any ongoing management system for equipment i s a source o f substantial waste. The shortage o f operating resources and equipment leads to further lethargy and dependency on development partners. In addition to the government's efficacy and sound fiscal management, the issue o f privatization o f state enterprises and companies i s a focus for the government's concern and must be pursued. The state's gradual divestiture from the productive sectors and commercial activities to benefit the private sector i s vital. This divestiture will be pursued through a voluntary policy based on comprehensive structural reform measures. These reforms are even more necessary with the establishment of the Comoros in the Common Market for Eastern and Southern Africa (COMESA), which requires customs and fiscal reforms to ensure that administrative practices and regulations are more broadly harmonized. While the government i s aware o f structural and recurrent problems, it i s also mindful o f the difficult decisions that must be made to correct the fiscal and overall administrative situation. The specific objectives o f this program during the period 2010-2014 are presented in Table 2.1.1. 12 - - Y ( 5 Y Y 5 6 Y Y Y Y 5 5 5 5 8 8 8 8 8 a 8 8 a a a a a 0 0 0 m 2 0 N b, c 5 Y Y 5 Y 5 Y Y 6 5 C Y a, 5 2 e, a 8 8 a 8 8 a 8 a 8 a a m m vi m 9 W b, hl N N c - Y Y 5 Y Y Y 5 5 5 f5 Y a C 8 8 8 8 8 8 a m N a m N a m N a d - a m a s Y 5 u 5 Y Y Y 5 5 5 Y 5 8 a 8 a 8 8 a 8 a 8 a a IA IA m '? $I I N N N - e Y Y 5 5 +d Y Y 5 e, e 8 a, 0 b a 8 a 8 a a 8 a, m N m N m 2 W m 3 Q\ 0 0 N .- C Y 5 - Y .E .- 0 8 5 3 a L? 8 a 2 N .. v, 00 .. I n W 0 0 LL 0 0 U N N Y 6 E ! ii 2 Y c W E W a 2 Y 4- 6 6 8 8 a a m 09 4 Y 4- 6 6 8 8 a a r? OQ I Y 8 E 0 G 00 0 I 0 2 - :- W v, 0 m c N 0 0 a d. m - tc r e v! d C N 4 W W - - N E N I I N - r v, r e 'c! \D C N 4 v) 00 - - 5 c I 'c! 0 0 N 4 W yz - 01 v) .- e, rA % .- ft Y ft Y 8 5 e, e, Y Y cd $ .e Y v) k 5 6 '5 '5 ti 5 -0 e, 5 rr Lcl 0 0 g g I Y g P P % 3 E .- E - .e E E e, N .e L L P P 5 - 5 s + + c3 e a a C? e c! e e e e e e - II W m c" 01 m N vl 2 - W e d rci N vl W QI N F \o d W N vl vl W \o T 5 U v, m $5 U 5 -0 d v, m Z Z E .C vi g $ eB) Y e d Z Z E .C 5 -0 `"e 3 .E! 0 k Z d V.0 . . - E 0 .C I 2 P b b 4 a B e) e Y 3; U 9 rr 0 0 m c\1 0 m c\1 * 0 00 0 c.l 2 d n W x .- C M .- e .- 0 a D r 0 I- P 00 0 N - 0 I N B a 21 a s E r 1 Ccl 0 v) W Y 3 0 3 0 b P d z I- b e, E g e, > I 2.1.2. Program 1.2. Integrate and facilitate domestic and international trade Commercial policy based on the multilateral trade framework and the regional economic integration process adopted by the government will help stimulate the economy while reducing rent-seeking behaviors, lowering factor costs, facilitating trade, and improving the business and investment climate. The multilateral trade system and agreements with COMESA will help stabilize trade policy through a firm anchoring in a market economy. One o f the objectives in this area i s to increase the export growth rate. The government also intends to implement accompanying measures (training, strengthened professional organizations and associations, and access to information and financing) to enable the most disadvantaged to profit from this growth and to enjoy i t s benefits. The government concurrently plans to stimulate domestic trade in local goods to provide a better supply for the general public. Reforms will be undertaken to remove barriers to the circulation o f goods. These measures should promote inter-island trade flows and guarantee more regular supplies and prices. The specific objectives o f this program during the period 2010-2014 are presented in Table 2.1.3. They aim primarily to promote development o f national, regional, and internationaltrade. 20 id 5 2 a, d a E d id 5 g n m id 3 u 5 5 g a a d - G n E I id 5 g n m rr 0 L c 5 e N N ; n N o\ c 5 N e N E n N o\ I 6 N 2 N ; a N OI - I e, N 2 N N W I e, m 2 m 2 N n W - .- B n 4 m N Y 5 s n 0 2 Y s 0 n 0 Qi e, P 3 5 S 0 5 C OO c c 2 3 2.1.3. Program 1.3. Improve the energy supply at a low cost Energy i s a key sector in economic recovery, and more importantly, in recovery o f the private sector, and i s therefore i s a focus o f the 201 0-2014 PRGS action plan. The energy problems the Union o f the Comoros has faced for a decade require a medium and long-term strategic approach. The actions now in progress are designed to stabilize energy production and to provide consumers with a regular energy supply. The Poverty Reduction and Growth Strategy aims to increase the energy supply at competitive prices so that the sector can operate sustainably and to allow growth sectors to develop. The energy sector diagnostics brought to light the need for rational biomass management, greater autonomy in terms o f imported petroleum products, more effective production systems and network, and diversification o f the energy supply with new energy sources such as solar, hydraulic, wind, and geothermal energy. Owing to the narrowness o f the market, high electricity production costs explained by high petroleum prices are leading to major problems in the long-term development o f the energy sector. These problems are accentuated by the absence o f a sectoral strategy paper, an unclear institutional framework, and insufficient human resources for effective management o f the sector. To address these challenges, the action plan has adopted a priority program designed to clarify and strengthen the institutional and organizational framework, and to give the country a national strategy for effective energy management. Second, it aims to strengthen the energy infrastructures for storage, production, and distribution, and to reduce technical and non- technical losses related to energy production, distribution, and marketing through a national energy management and efficiency program. This program will also aim to promote the substitution o f firewood by introducingnew cooking technologies, and particularly, improved heating facilities and the use o f modern fuels. Last, diversification o f energy sources i s emphasized in support o f the country's energy autonomy, along with the promotion o f clean energy sources to preserve the environment. The specific objectives o f this program and target results for the period 2010-2014 are presented in Table 2.1.5. 25 L I I L I I 2 e 5 N $ a e, a 0 O L m II 2 c1 Y 5 5 N 2 e, $ n a vi d 0, c Y 5 5 8 a 8 a vi vi 2 * Y 5 5 3 3 8 8 0 m a a I- vi 0 \o c.l Y e 5 5 $ 8 n a vi vi II N I 1 3 I Y Y 5 5 $ a 8 n W 0 b m a 0 0 I ? 3 I h I I a B e e W a I I I I B I I T s e, cr a 0 :z - 8 b a 0 m E M I M E z a, Y m -a 6 B e e W a d m I le, 2.1.4 Priority program 1.4. Improve basic economic infrastructure and communication services The economic infrastructure and communication service sector involves roads, ports, airports, telecommunication, and information and communication technologies. These subsectors are necessary and strategic factors in the country's economic development. Development o f the road system w i l l intensify economic activity and increase the circulation o f goods and persons. However, the absence o f a policy adapted to the road context in the Comoros, insufficient financing to cover road maintenance, the insufficiency o f the national roads, and training requirements to manage and oversee the works are handicaps in the country's economic development. The government's adoption o f a new concession management approach and the development . o f existing infrastructures constitute an advantage for the port and airport sectors. The port sector faces tremendous difficulties owing to excessive costs o f transshipment and anchorage operations as a result o f substantial offloading lags and congested docking areas. Where airports are concerned, development and fitting out projects are under way, although the problem o f security i s s t i l l present. Development o f economic activity and social services sectors w i l l be strengthened when the players grasp and internalize information and communication technologies (ICT), as development in this area i s essential for the Comoros to become integrated into the world economy. Despite the progress that has been made in telecommunication development in recent years, service prices are s t i l l high. A t the national level, the country s t i l l lacks a sufficiently accessible, effective, and reliable service network. The specific objectives o f this program and targets for the period 201 0-2014 are presented in Table 2.1.7. 35 c .- Y 0 d c 0 2 z .C E C CI E s - .. a 2 0 CI - e, m Y .. .- Y a 3 3 H 0 4z c1 2 -0 c m - a 0 P e, U 0 Y E & 5. u b) 5 Y Y 5 6 8 a 8 a 0 0 I- vi Y 5 5 C) 8 P 8 a 0 0 v) d Y Y 5 5 2 e, a 8 P 0 0 I n m Y * E 5 2 e, a 8 .a 0 0 d N * Y 5 5 8 P 8 m 0 m 41 71 9 m I S 2 0 N 00 m Y 6 m m N 0 N g a z z 0 0 Y Y 5 6 V .- e 0 z m N g a 8 a a 0 0 9 W - W Y Y ' 0 C 6 m m m N m n I N $ a $ a 0 m I- W Y 6 m m m N 0 N g a 0 W - - Y 5 Y C 0 0 d m N 0 r4 $ a $ a 0 m d N U T -0 C m Tr w 0 N 2 0 N $1 0 N Y e a, 0 b a 0 E: Y a, E 8 9 a 0 d 0 E: 0 2 0 r4 0 \o 3 2 n Y e, 5 2.1.5. Program 1.2. Increase access to drinking water, sanitation, and sustainable resource management Access to high-quality drinking water i s a fundamental requirement that must be met as a priority. This factor o f well-being i s identified in the MDGs and i s included in the PRGS priorities. The relationship between drinking water and public health i s well known. Studies have shown that the use o f poor quality water for consumption i s a source o f infectious and parasitic diseases that are still the number one cause o f mortality and morbidity in the Comoros today. In general, the least favored groups are more vulnerable to diseases related to poor water quality. The risks o f waterborne diseases and pollution are quite high in the Comoros, owing primarily to the absence o f protection for wells or pumping facilities, and water quality monitoring and control mechanisms. Only a few salinity analyses are performed on an ad hoc, partial basis. Health hazards are observed primarily through the prevalence o f waterborne diseases such as diarrhea and typhoid. The quality o f l i f e and health of individuals i s also determined by the environment in which they live. A healthy, improved environment i s a determinant factor in the health o f individuals, and particularly children, who are much more vulnerable to diseases related to an unhealthy environment. With accelerating demographic growth and urban development, we observe a significant increase in production o f household waste and wastewater, untreated hospital waste, and waste related to transportation activities (motor oil drainage, automobile bodies, etc.). The absence of a system to manage household waste, wastewater, and sanitation i s a major public health problem. Wastewater and rainwater management are major concerns in both urban and rural areas. In the Comoros, access to high-quality water i s s t i l l a luxury for the majority o f the population. Less than 15 percent o f the population reportedly has access to drinking water meeting the accepted standards. Moreover, the country has virtually no sanitation system. Wastewater and solid waste are discharged into the sea in the population's immediate living environment. The country has no national water strategy or master plan. Activities in the water and sanitation sector are conducted essentially in the absence o f any institutional or regulatory framework, which reduces their efficacy and performance. This program aims, as a priority, according to the national challenges and Millennium Development Goals, to increase access rates to drinking water and sanitation, to improve the quality o f the public water supply, and to ensure effective resource management. The program also focuses on redefining the institutional and regulatory framework for the water sector and on improving the management system, to reflect public operators and players in the public, private, association, and community sectors. The stakes underlying this program also include capacity building and scientific and technological surveillance to ensure sustainable development in the water sector. Where sanitation i s concerned, the stakes consist o f developing technical, material, and organizational capacities required to establish an adequate system for collection and disposal o f liquid and solid waste in population centers and households, for sustainable habitat 42 development, to protect resources, and to limit environmental pollution (contamination, household waste, health hazards, neighborhood conflicts, etc.). The specific objectives of this program during the period 2010-2014 are presented in Table 2.1.9. 43 W ag 2% %"a D a 0 4- 0 44 Y Y 5 5 s 0 ; ti N a n 0 0 I- vl Y 5 ti Q 0 d I 6 ; Q 0 d 0 Y 1% 'd 3 0 N 2 0 N I h I `6 L .SG 3 IA I I 2 .- e e 0 Y 0 m m O LF E 0 L k2 - I- s n E 2"-cl `C B o - +e , '- a gE z2 c 4 - I .- C 2.2. CORE STRATEGY 11. STRENGTHEN KEY SECTORS BY FOCUSING ON INSTITUTION BUILDING AND ENSURING A BROADER ROLE FOR THE PRIVATE SECTOR This core strategy involves implementation o f priority programs aiming to develop and increase productivity and performance in key economic growth sectors. This strategy primarily involves agriculture, stockbreeding, fishing, and tourism. While the traditional components of the agrofood sector are better known, and their contribution to economic development and food security no longer remains to be proven, the tourism sector offers great potential that has never truly been tapped. The measures under this strategy aim at institutional support and redefinition of the regulatory framework governing growth sectors; support for the intensification, improved productivity, strengthened competitiveness, and capacity building for commercial activities and marketing circuits. This core strategy also includes accompanying measures aiming to strengthen the financial intermediation system and access to microcredit, support for nonfinancial services to promote private sector development, and an improved business environment. These activities constitute essential measures for the country and the underprivilegedsectors to become integrated into the modern economy and to consolidate the development of micro and small- scale enterprises, which are often highly vulnerable to economic shocks. A total of nine (9) priority programs were identified under Core strategy 11. They are included in two major subgroups: (i) strengthen the private sector (two programs); and (ii) restore growth through key sectors (seven programs), which in turn are divided into three subsectors (agriculture and stockbreeding, fishing, and tourism). Strengthen the private sector Program 2.1. Support private sector organization; Program 2.2. Financial intermediation and microcredit. Restore growth through key sectors - Agriculture and stockbreeding subsector Program 2.3. Strengthen security for property resources; Program 2.4. Support the creation o f a favorable environment for agriculture sector development; Program 2.5. Restore agricultural and agrofood production; Program 2.6. Protect livestock from exotic infectious diseases and intensify animal production sector activity. - Fishing subsector Program 2.7. Create an environment conducive to harmonious development o f the sector; Program 2.8. Develop a conservation, processing, and marketing system for fish products. - Tourism subsector Program 2.9. Support tourism development. 59 STRENGTHEN THE PRIVATE SECTOR The private sector in the Comoros i s poorly organized. The Chambers o f Commerce, Industry, and Agriculture have recently emerged from a lengthy institutional crisis. Elections were held and a new leadership team for the Union o f Chambers o f Commerce was elected by the members. This institution now requires new impetus. Further, professional organizations provide few services to their members. The more structured formal sector, comprised essentially of small and medium-scale enterprises, coexists with a substantial informal sector that requir,es support and formal organization. While reforms are necessary at the legislative and regulatory levels, Comorian enterprises also urgently need to develop their professional status. To that end, expertise and skills must be developed in areas essential for their progress. Such services include legal counsel, accounting, management, quality control, information technology, market research, marketing, selection o f production technologies, processing, marketing, packaging, storage, information management, after-sale services, etc.. The consulting sector i s undeveloped and i s based on a few projects involving assistance in enterprise creation, and a handful o f new enterprises with limited resources that sell their services to existing firms. To establish a sustainable, competitive supply o f enterprise services, it i s an important matter to strengthen the consulting service sector so that a professional entrepreneurial fabric can be gradually established within the private sector. The Comorian private sector also includes the financial service sector. Until last year, there was only one general private bank (BIC), along with two decentralized financial institution networks: Meck and Sanduck. Two new foreign banks (Eximbank o f Tanzania and a Kuwaiti bank) were approved by the central bank to open branches in the Comoros. Banque de Developpement des Comores was also recapitalized and has recently returned to the market, having opened a microfinance window and emerged as a competitor for Meck and Sanduck. Although the system registers excess liquidity, credit i s still costly and the limited services available do not meet the requirements of a developing country. We can, however, expect new banks to introduce more competition, leading to the introduction o f new financial instruments (such as venture capital companies), and a gradual decline in interest rates. In this framework, the action plan for 2010-2014 focuses on operations designed to support private sector organization and to develop and strengthen financial intermediation and microcredit. I t is based on the following two priority programs that will be implemented during the period 2010-2014: Program 2.1. Support private sector organization; Program 2.2. Financial intermediation and microcredit. 2.2.1 Prior@ program 2.1. Support private sector organization Targeted actions will be taken to strengthen the human and institutional capacities o f the Chambers of Commerce and professional associations so that they can provide useful services to their members. These actions will be included in a program o f operations designed to improve the investment climate; make enterprises more competitive; reduce rent-seeking economies and taxes, primarily for large enterprises; strengthen the judiciary institutions with judges specialized in financial and commercial matters; establish the Supreme Court; and 60 implement the Organization for the Harmonization of Business Law in Africa (OHADA) Chart o f Accounts, which the Comoros adopted several years ago. There are also plans to develop an arbitration authority for disputes filed with the Chamber of Commerce. The adoption of implementing decrees for the new investment code and the establishment o f a national agency for investment promotion in the Comoros (ANPI) completed this scheme. The overall objective o f the program i s to increase the growth rate in private investment from 12 percent en 2006 to 25 percent by 2014. The specific objectives of this program are presented in Table 2.2.1. 61 * - m Y 0 5 Y m 0 b) a 2 m N +- 5 8 n 0 m 0 2 0 N 0 m d I- c E e, 8 m - O m Q a I- Y % hl 8 n m N 0 m W m e - * C E .- * $ E Q 0 0" * E $ n 0 * - 2 E .- k 6 +a 0 8 * E n 0 e, * E! 3 c. 0 0 W m -L 0 m m m 0 0 m m N 0" - m .- 0 : 3 0 m N d N 0" E: 0 N B G5 - c E 0 m IA CI k- 0 m vl N .- C 3 m - m .- 0 m rn t- 2 o i e d 0" W 0 \o N - 0 N 0 rn - 0 N N m vl d z 0 N N W 0 m 2.2.2. Priorify program 2.2. Financial intermediation and microcredit There are plans to implement organizations for elected officials and employees o f decentralized financial institutions (DFIs), and to build the internal audit and supervision capacities o f the institutions involved. Efforts w i l l be made to obtain authorization from the central bank for the Sanduck Regional Union in M w a l i and Ngazidja. In terms o f developing new financial instruments, consultations w i l l take place with the public and transactors to develop a better definition o f the desired targets and instruments. Strengthened prudential measures w i l l be adopted and a compulsory savings insurance scheme implemented for DFIs. Women already constitute more than 50 percent o f DFI clients, and efforts w i l l be made to increase this proportion, as many poor women would like to arrange small loans to support their trading activities. There are currently no financial instruments that meet this need. Efforts w i l l be made to develop special activities targeting this population group. The specific objectives o f this program are presented in Table 2.2.3. Table 2.2.3. Specific objectives and targets o f the Financial intermediation and microcredit program Targets Programs and Performance Benchmark objectives indicators year value 2010 201 1 2012 2013 2014 Objective 2.2.1. Rate o f increase Improve in credit to the 20 percent 30 percent 25 percent 25 percent 25 percent intermediation private sector through DFIs The operations adopted and expected performance targets under this program are listed by objective in Table 2.2.4. The program includes a total o f seven (7) operations. 67 0 0 N - 0 0 N 0 0 N 0 0 N - B. 0 - 9 e, 0 N $ m CI c 6 .e E .I t s E U . E I -5. .- 0 T a .- n E .- T n -n .- c C .- L E 6 E c P h E h e W 0 0. E .. > c .- C h - e RESTORE GROWTH THROUGH K E Y SECTORS Restored growth and sustainable poverty reduction require development o f and expansion in key growth sectors likely to create income and wealth. In the Comoros, these are sectors that house a significant proportion o f the population, and have traditionally been the driving sectors o f the Comorian economy (agriculture, stockbreeding, and fishing), or a largely underdeveloped sector that nonetheless offers substantial potential for both direct and indirect growth through its potential multiplier effects on the rest o f the economy (tourism). The seven (7) priority programs in this subgroup o f Core strategy 2 are presented according to the three (3) growth sectors. - Agriculture and stockbreeding subsector In the Comoros, agriculture and stockbreeding are traditionally combined within the same farm. Farms are small and the livestock (cows, sheep, and goats) are tethered. Stockbreeding aims primarily to cover the household meat and milk requirements, and to provide fertilizer for the farmland. Stockbreeding also provides supplementary income and serves as a savings mechanism. Four priority programs have been identified to meet the challenges in the agricultural and stockbreeding sector. 2.2.3. Program 2.3. Enhance security o property resources f The property problem i s both physical, in terms o f access to land; and legal, in terms o f ownership rights. These two dimensions are interdependent. In physical terms, the land problems basically involve village land management, planning to maintain the land and restore its fertility, and the limited size o f farms. Legal issues include the absence o f laws and the failure to apply property law that poorly defined and unacknowledged. In 2007, a financing arrangement was executed to establish a property registry. Work i s in progress and will continue during PRGS program implementation. The state will concurrently take steps to encourage the registration o f land resources. The cost o f registration, which i s now quite high, will be reduced to make registration procedures more accessible. There are also plans to clarify the law on land ownership, sharecropping, and the rights and obligations of the different parties involved. This'approach will provide greater security and transparency, and in the long term will make it possible to organize the real property market and stimulate investment. The specific objectives o f the program to enhance security o f property resources are presented in Table 2.2.5. 69 * e, 2 Q 0 \o - * E i Q 0 M 0 wl - * E E 0. 0 N 0 M * e, E n 10 c I Ici E e e M e 0 0 0 0 - 0 0 0 N VI 0. Q B n 0 VI 0 Q N 0" I if, cl 2.2.4. Program 2.4. Support the creation o a favorable environment for agricultural sector f development In the context o f sharing responsibilities between the state and civil society, organizations for farmers, professionals, and private transactors must play an increasingly important role in the economic development process, particularly in rural areas. We should expect them to participate actively in the definition o f strategic guidelines, project implementation, monitoring, and evaluation. Insufficient performance in the agricultural sector i s largely explained by a lack o f involvement on the part o f economic transactors in the decision-making mechanisms, planning o f activities, and support for key rural development functions. To restore growth in the agricultural sector, participative and community development must be reinforced, placing special emphasis on productive activities and organizational factors related to the technical, administrative, and financial management o f farmers' organizations, and better coordination o f all parties involved. The specific objectives o f the program to support establishment o f an environment conducive to development o f the agricultural sector are presented in Table 2.4. I. Table 2.2.7. Specific objectives and targets o f the program to support establishment o f an environment conducive to development o f the agricultural sector Targets Specific Performance Benchmark 7 objective indicator year value 2010 201 1 2012 2013 2014 Program 2.4. Z pport the creat n o f a favorab environment for a ricul ral sector d' elopment Objective 2.4.1. Strengthen the institutional Annual rate o f framework increase i n 5 percent 10 percent 12 percent 12 percent 10 percent 10 percent and capacities agricultural o f operators to investment promote and plan sector development The operations adopted and expected performance targets under this program are listed by objective in Table 2.2.8. The program includes a total o f thirteen (13) operations. 72 0 0 N E: 0 N E: 0 N E: m 0 m w 13 E: 13 w E: m c s w 0 L z - \o 2 .- ; 3 G C v) 3 8 4- cc. L D 5 z I C .- 3 E n 8 e L m 2.2.5. Program 2.5. Restore agricultural and agrofood production Food crops. The Comorian population i s essentially rural (70 percent) and earns i t s living from agriculture. Food and commercial vegetable production have been the focus o f several pilot projects during the past 10 years. Technical itineraries are effectively in use to intensify production. Disease tolerant high-yield varieties have been identified and tested with success in rural areas, although their generalized use has not truly begun. Local production in fact i s still insufficient to cover domestic market demand. In addition to being an importer o f exotic food products (rice, wheat flour, oil, sugar, milk, and powdered milk), the country buys large quantities o f food and commercial vegetables from neighboringcountries (Madagascar, Tanzania, and South Africa). These imports adversely affect the Comoros as they tend to replace local production, where certain products and regions are concerned. Insufficient national agricultural production i s explained by a number o f factors, including: (i) small family farms that focus primarily on household food security rather than commercial production; (ii) low productivity making local products less competitive; (iii) insufficient investments to increase output; (iv) food and commercial vegetable circuits insufficiently organized to market the products; and (v) an exchange rate for the Comorian franc making imports more attractive than local products. Cash crops have traditionally played an important role in the economic development o f the Comoros. These sectors now face substantial price fluctuations on the world market and are becoming less attractive to Comorian producers owing to a particularly strong Comorian franc against the currencies o f countries in the subregion. Moreover, the lack o f investment has led to a decline in crop quality and productivity. Despite these difficulties, the fact remains that these crops offer substantial growth potential in the sector and constitute a considerable source o f potential revenue. Such activities have clear potential to generate direct increases in revenue for producers, processing agents, exporters, and government. This program aims to support the intensification and improvement o f agricultural productivity through better access to inputs and production technologies, organization and structuring o f the sectors, and investments designed to facilitate agricultural product marketing and exporting. The specific objectives o f the program to support establishment o f an environment conducive to development o f the agricultural sector are presented in Table 2.2.9. 75 - - 6 E -n m vl - m -a, vl -6 - E n n I c 6 -6 E n E n 2 0 hl - 6 c) E 0 n vl m m m 0 m c? c 0 m 53 m N 0 m m m d m N I * - W E E n E n `A 0 d 2 c I 6 - e, `A n n `A N 0 I E 2 I e, E n 2 I W E n m U A 2.2.6. Program 2.6. Protect livestockfrom exotic infectious diseases and intensify animal production sector activity Poverty reduction in rural areas also involves development o f stockbreeding, and small-scale stockbreeding in particular, to meet the basic food requirements and to generate additional income. As pasture land i s limited, animal production must be increased through greater productivity and through diversification and support for small-scale stockbreeding, which i s easier to control and which requires less space and fewer resources. Small-scale stockbreeding i s also a major income generating activity for women, and therefore contributes directly to improve the well-being o f the household members-particularly children. In recent years, problems with imports o f diseased animals (primarily cattle) have led to epidemics that decimated the herd. Enhanced health control has therefore become an essential factor in developing the animal sector. Actions will be taken to promote more effective health inspections o f imported animals. There are,also plans to establish an advisory service to support small-scale producers-specifically women stockbreeders at this level, and to expand and intensify development o f small-scale stockbreeding. Table 2.2.1 1 presents the specific objectives and targets o f the program. 79 9 0 N 1 ; C CI 5 2 e, a m 3 C W $ n 0 41 Y 5 $ n 0 0 0 00 0 0 W 2 CI 5 Y e W $ n 0 0 h 5 n 0 0 2 r- - U 5 3 5 6 a 0 0 W $ a 0 0 00 W Y 5 Y 5 8 n 0 0 m $ n 0 0 h d Y CI Y 5 6 5 $ a B E 8 n 0 W m 0 0 N d m a W c u % i 5 0 0 0 8 0 " ' , 2 n I 3 0 0 0 0 2 0 0 o* v? IA N 2 2 0 - 0 0 z- 0 0 0 8 0 0 0 0 2- d e L, N N " 8 2 0 0 z 0 0 0 - '". 0 I- 8 IA 0 O 0 8 0 0- IA m v) % m w .- -0 E J? 3 .- id 3 M .e L 3 z c 2 * 6 2 C 6 2 - .- m s VI 0 N W R 0 W 0. a g 0 0, 1 C 6 8 s Y - m 0 N a 8 a s .e VI 0 0 a 2 N * 6 c1 3 0 8 a c1 0 2 - * 6 H 2 a, 0 a N 0 2 Y E s: 8 a - 0 N 0 I 0 * C I E: - c E: - N E: - 0 N y1 N E: 4i 0-0 2 2 - B 5: .- m 2 # 0 5 N E: e, N a m 00 Y x .- C I 0 z- 0 N 0 - 0 0, vr ~ 0 0 8 0 0 8 n I N 0 5 - 0 0. 0 4: 0 0, c 0 4: v, I- O 4: 0 v, 3 0 vl vl c\1 Fishing subsector The Union of the Comoros has considerable fishing potential, which could contribute substantially to growth, poverty reduction, and provide higher-quality food for most o f the population. However, the scope o f the resource i s not fully understood and i s based on estimates that date back approximately 30 years. The top priority i s therefore to establish a solid knowledge base on resources that can be exploited under renewable conditions. Two priority programs have been identified to meet the challenges present in the fishing sector. 2.2.7. Program 2.7. Create an environment conducive to the harmonious development of the sector Development o f the fishing sector i s based on the establishment o f an incentive environment conducive to increasingthe catch while respecting resource renewal, focusing on inter-island and export trade. The government would like to encourage organization o f the sector, to learn more about exploitable resources, and promote responsible management o f fish resources to optimize economic efficiency in the sector. Organization o f the sector requires strengthening o f professional fishermen's organizations, support services and agencies, and promotion o f exports and trade. 86 l- ea 1 I 0 vl N to Ei l v l 00 L 3 0 0 4 cr 0 e, B 2 .9 2.2.8. Program 2.8. Develop a conservation, processing, and marketing system for fish products During the past 20 years, the country has succeeded in transforming traditional fishing into artisanal fishing using fiber glass boats with small motors. Fishing techniques have also developed. As a result, artisanal fishing i s now fairly effective in meeting domestic demand in the Comoros. Future development o f Comorian fishing requires modernization o f the sector, which calls for the (i) introduction o f new fishing techniques; (ii) use o f larger boats capable of navigating in high seas; (iv) extension o f fish preservation techniques; (v) development o f the cold chain; and (vi) organization o f marketing activities. Some Comorian operators are now interested in making the required investments. The modernization o f artisanal fishing will not only help to meet the requirements o f the domestic market, but will also promote the gradual integration o f Comorian fishing into the export markets. With the participation o f the sector players, the government intends to support efforts to develop and promote fishing products to increase job creation and income. Expanded preservation and processing capacity for fish products will reduce losses-an essential condition for sector development. Efforts must also be made to find new, more lucrative outlets to absorb increased catch volumes and to develop new products. Modernization o f the fishing industry will require investments to develop small fishing ports, build storage facilities and cold chambers, and develop roads to access the national highway system for rapid transportation to consumer centers. The specific objectives o f this program are presented in Table 2.2.15. 89 Y 5 $ n W s Y Y 8 $ E e, R a 0 \o 2 s Y ' 5 Y 0 $ a 0 8 n E: Y 5 0 Y C e, $ a 0 0, 0 c n d b Y c b) 8 0 0 m R I- C) C b) 0 8 R 2 E .- c, U u 3 0 m C z I e e PI n. * C W 0 0 v, 5 a v, N 0 0 IA * 8 0 0 v, $ a 0 N * E 0 v, r 4 m 5 a v, 3 * C W 0 v, Bc1 m 5 N a e -oQ 2 .- Y 0 as m v e cd u 5 a a 3 v, 0 * W 5 4.r 0 0 0 r4 N 0 00 r 4 C - 0 ._ Y 00 e, wl w & a U I a 9 Tourism subsector While the Union of the Comoros has a clear comparative advantage in tourism, it has not been exploited in the same way as in the Indian Ocean region, for which tourism has been a powerful engine for development. T 2007, Mauritius and the Seychelles respectively n welcomed 906,000 and 161,000 incoming tourists, as compared with just over 20,000 in the Comoros. The World Tourism Organization projected a growth rate o f 6.3 percent per year in this sector for the period 1995-2020 in the Indian Ocean Region. The main constraint for the Comoros i s the lack o f hotels. The level o f comfort and amenities varies substantially, with only one fourth o f the accommodations being situated at the three- star level. None of these establishments offers seaside tourism. The absence of international level tourism establishments ties in closely with the country's political problems that began in 1997. The target group i s middle class tourists. Seaside tourism essentially would be marketed, highlighting the country's magnificent beaches, with an ecotourism content focusing on the unique features the Comoros offers, like no other place in the world, such as hiking trails to the Karthala Volcano; discovery o f the largest known fruit bat living in the virgin forest; ccelacanthe, a fish dating back several million years thought to have been extinct; and the extraordinary site of the Mwali national sea park where the whales come to breed. 2.2.9. Program 2.9. Support tourism development The government will continue i t s current policy to look actively for international investors to implement large-scale tourism projects meeting international standards. The future projects should be located on the islands o f Mwali and Ndzuwani to balance development between the islands. The current policy will be adapted to create tourism development centers that will include (i) a land improvement plan; (ii) actions to improve airports, ports, roads, and access to electricity; (iii) liberalization o f the skies to introduce airline competition; (iv) promotion o f supply contracts between hotels and the rural communities; and (v) support for the development of microenterprises and income-generatingactivities required for sector development. To maximize the synergies, public private partnerships will be developed with economic transactors and local communities. Development of the business hotel trade in the cities will also be encouraged, along with micro-hospitality units in rural areas. Comorian tourism will be promoted as a product on the Internet (with the creation o f an interactive website); a CD-ROM, brochures, prospectuses will be produced, and representatives from the hotel industry will participate in targeted tourism fairs. Where eco- tourism developments are concerned, hiking trails will be developed and marked, monuments and historical sites will be rehabilitated, and traditional and artisanal production will be encouraged. Plant and animal wildlife preserves will be created on the three islands and additional resources will be provided to maintain the Mwali sea park and to stop poaching. Substantial efforts will also be made to improve professionaltraining in the hotel and restaurant trades. While the local training capacities are geared up, training will be organized in nearby countries to recycle existing hotel staff and to train young people. Language training, particularly Arabic and English, should also be provided. 93 To implement this program, the Tourism Directorate, which might ultimately become a ministry, must be reinforced. The authorities plan to establish a Tourism Office in the medium term. During the next two to three years, however, its functions can be covered with existing capacities pending the effective operational launch o f Comorian tourism in 2010/2011 with the opening o f two major tourism complexes now under construction in northern Ngazidja. Priority in the immediate future should be given to the establishment o f a coordination mechanism encompassing the ministries involved, economic transactors, and municipalities. The specific objectives ofthis program during the period are presented in Table 2.2.17. 94 Y 5 I 5 8 a 8 a v, v, N Y -3 6 Y 5 Y 5 5 V b a 8 8 a $ R a 0 n I vl v, 00 hl P A A N Y Y 5 4- 5 6 8 a $ u b a a 0 v, 0 00 b A r4 A Y 5 Y Y 3 5 $ a $ 8 a a 0 0 0 00 A c\1 N Y 6 8 a $: E & E L Q m c 1 6 U i .-l 5 c) U 0 e - Y cd a 0 Q 2 a - f e N - 6 N - 2 0 N - - m 0 N N g 0 m 0 0 N 2 2 N 0 0 QI Q\ N 0 0 vi vi - m e, Y 0 f .- 5, z Y 9 N c? 2 IA IA vl vl v, vl I I m - e e e 0 0 0 E: W E: W 0 N 2.3. CORE STRATEGY 111. STRENGTHEN GOVERNANCE AND SOCIAL COHESION 1 Core strategy 1 1 involves two key sectors that have a substantial impact on socioeconomic development, the sociopolitical future, and unity o f the Union o f the Comoros: the governance and national cohesion sectors The 2010-2014 action plan has adopted four (4) priority 1: programs for Core strategy 1 1 Program 3.1, Promote social cohesion, solidarity, and consolidation o f peace; Program 3.2. Improve the legal framework, promote anticorruption measures, and strengthen transparency in fiscal management; Program 3.3. Strengthen the capacities o f the judiciary institution; Program 3.4. Fight terrorism and crime, and strengthen civil security. 2.3.1. Priority program 3.1. Promote social cohesion, solidarity, and consolidation of peace Since the Comoros gained independence on July 6, 1975, the country has not experienced true political stability conducive to socioeconomic development and the establishment of a viable political and institutional framework consistent with the population's expectations. The Union o f the Comoros must recover from several decades o f political instability and 10 years o f quasi-separatist crises. Substantial efforts since March 2008 (including peaceful elections in June 2008) set the stage for the country's reunification, political reconciliation, and the restoration o f institutions. However, the extent and size o f this crisis and the profound suspicion it has created mean that any progress i s fragile as the parties to the conflict cannot be relied upon to honor their commitments. This situation requires further efforts and ongoing support from the international community, which are essential for the country to stabilize and, more importantly, to move forward. The specific objectives o f this program during the period 2010-2014 are presented in Table 2.3.1. 100 Y 5 Y 5 Y 5 $ a $ p. $ a z 0 N 0 N s I Y I 5 5 8 a P 8 a 0 0 0 N N N Y Y Y 5 5 5 5 c) 2 a, $ $ $ n n n n 0 0 0 0 N N N N Y Y Y c1 5 3 5 5 5 6 8 n $ a 5 a $ a 8 a 0 0 0 0 0 m N N N N Y Y Y 4- Y E 5 5 5 5 8 a 2 0 P, 8 a $ a 8 a 0 0 0 0 0 W N N N N 0 2 - 0 v, 0 0 v, 2 0 w 0 v, - 0 v, 0 0 0 m rl 2 0 0 0 d v, 10 - 0 0 0 0 9 0- t-4 - 8 C s * -0 .- 0 m c.l i E 0 0 N 3 C 0 m I 3 C 0 52 3 m i w C (P m aJ 2- s . o 3 m 3 3 W 3 N m rn L W Y 5 0 3 c m o 2.3.2. Priority program 3.2. Improve the legal framework, promote anticorruption measures, and strengthen transparency in fiscal management The legal framework i s characterized by varied sources of law. This combination o f sources, that we would expect to enrich the system owing to the legal pluralism it creates, instead leads to uncertainties as to the basis o f the law, jeopardizing the entire legal system. Hence, it i s important to harmonize the legal framework. Further, this framework i s not accessible to the public. There are in fact a number of obstacles to accessing the texts as they are dated, decentralized, often relatively difficult to find, and frequently unsuitable for the situations they are meant to govern. The vast problem ofjudicial and institutional reform must be addressed in order to give justice professionals, and more generally speaking, governments; individuals; and private, civil, and commercial organizations appropriate legal instruments to ensure juridical security and the emergence of a society o f law. I t i s a well known fact that substantial corruption, that undermines political, economic, and social affairs, exists in the Comoros, and its harmful effects on the country's development are generally regretted. This i s a problem in society, which disrupts the legal systems, effective economic management o f public affairs, political decision making for the country, and accentuates social inequalities. To fight poverty more effectively and promote its development, the Comoros should enhance its public management with an effective effort against all forms o f corruption, to promote effective administration. However, this administration faces many problems, such as a bloated work force and excessive expenditure; reduced purchasing power for civil servants which leads to absenteeism, permissiveness, corruption, saturation o f the civil service; and abusive recruitment in flagrant violation o f the texts governing the civil service. Further, the wage bill substantially exceeds the budget targets, absorbing more than 70 percent o f real revenue (85 percent according to the IMF mission forecasts), preventing the state from covering most o f its expenses, to meet only the most urgent. In addition to these macroeconomic difficulties, a variety o f other cyclical and structural constraints are still present in many different areas. In addition, the Comorian government i s highly centralized in the capital, meaning that it i s far from most users or beneficiaries, which i s a disadvantage for those living in the remote areas o f the country. I t i s therefore essential to complete the decentralization process initiated by the Constitution o f December 23, 2001. In 2001, the country devised a new institutional framework that generalizes the principle o f subsidiarity and that provides four levels of power: federal, island, regional, and local. This approach should, in operational terms, lead to new institutional management mechanisms, particularly at the local and regional levels. These local development dynamics have promoted the development o f the municipalities. 106 7 I Y * 8 5 8 a 8 a 0 0 El d * * 5 0 8 b a 8 a 0 0 2 W Y Y C 0 C 0 $ a 8 a 0 2 4: 5 Y I 8 5 8 a 8 a 8 a 0 0 0 -m E .- Y 0 E W 8 - m C .- 0 Y $ 8 - m C N ._ 0 +- W E a, 0" - ~ m E N m .- r 0 E a, 0" * - C Q) 6 - m N a v1 Y e U Y C U 8 e 2 f W b W W e 3 A 5 ._ E r u C 2 A 5 C e Y W ; Y e a 4 x .- Y $ U W B 3 - - z Y G 2 .C a a 0 m 4 Y 5 $ a 0 d B $ a 0 m I 1F P hl hl e 1- Y Y 5 $ n 0 W v, - I Y 5 8 n O v, 0 3 I 3 rc 0 U 3 v1 ._ C 0 c, m L &, 0 W e 2.3.3. Priority program 3.3. Strengthen the capacities o the judiciary institution f The judiciary today i s characterized by a number o f problems that make it a difficult matter to access judicial services and that seriously impede its internal operations. Problems include insufficient institutional organization; a substantial shortage o f qualified, specialized, and experienced human resources; and a lack o f operating resources. The process o f organizing the judiciary i s still incomplete. The basic courts and Supreme Court are not in place. The judiciary lacks both judges and associate personnel (justice assistants and administrative support staff). Execution o f court decisions is a source o f problems as there i s currently no executive body to perform this function. Whether the government or individuals are involved, this situation will inevitably result in cases o f impunity, weakening the enforceability o f court decisions and the authority o f the judges who made them, and ultimately undermining the judiciary institution as a whole. Problems related to the execution o f court decisions also shed light on the penitentiary system as the country lacks penitentiaries worthy o f the name. Existing remand homes are in a particularly difficult situation owing to their advanced state o f disrepair and noncompliance with international human rights legislation. Access to justice i s limited owing to its distance from those under i t s jurisdiction, high costs o f proceedings, legal assistance shortages, and ignorance o f the law. As a result o f this situation, certain persons and communities have engaged in parallel activities that do not necessarily ensure social peace or the respect o f the principles o f law provided in the legislation. 112 Y 6 8 v) E a .- Y 0 2 2 I % 0 Y 6 5 Y 8 P 8 P 0 N 2 Y Y 6 e 0 $ a $a $1 L ! $ t 0 0 0 0 m d r4 m 3 Y Y Y E 0 e, 5 $ 5 fl$ a a a 0 0 0 0 m d m N 5 Y 6 Y 6 a $ a 8 a 0 0 0 m N m Y Y 1 6 2 Q) Y c 0 Y 6 $ 0 a a 8 P 0 0 e .- i 0 .- i a z i .I t m .I a V .- a 0) d cl 0 -0 c e m .- . c) V I m P m u 0 P E 5 m 3 P E .- e c, 1 p: u .- 2 0 ; ; t+ rr) E m L M E: a l- I E a- 0 i a .- 13 Y 2 .e ?? .- a .- W 0 a c, s W c v) u cc W L 0 m .- W .- c, 0 a n - 2 - - 0 o s W .- * 0 -2 $ .- m r-l E > Jz bb 0" c e Y v) 0 Y E c 5 2 n W 5 cc 0 .- Y 9 0 W - 9 a I 1 3 0 B m W e L - m i a e v) 2 Y 0 W 9 W W 5 z .- 0 Y 2 i2. + 0 3 W ll- I v, 0 T 2.3.4 Priority program 3.4. Fight terrorism and transnational crime, and strengthen civil security Like many countries, the Union of the Comoros i s vulnerable to possible terrorist activities on their territory. The country's geographic features, with an exclusive maritime area o f 240,000 square kilometers, and its insufficient technological capacities make it vulnerable to a variety o f security problems. For example, the Comoros lacks the equipment to provide adequate security at airports or ports, or to cover i t s territorial waters. Economic development requires an adequate level o f security at the borders. The tourism sector, which i s identified as one o f the country's vehicles for growth, requires border security meeting international standards if it i s to reach its development potential. Fishing i s undergoing full-scale expansion. A coast guard must be established for surveillance at sea to protect national resources against pillaging and to protect the lives o f fishermen as distressed vessels are a frequent problem. 116 s s Y c c Y Y Y e, 0 $ a $ a $ CT $ n 0 0 0 0 0, 2 4: 4: s s Y Y 8 0 b a a vl 0 0 I I w I I s Y Y Y e e, c e, i a i a i P 0 0 0 0 vl vl vl vl L m a, h 2 * 0 I U 2 Y m F z c .- .- C a, 8 U C I E 2 -0 e e' U ru 0 s cl f 3 M b a c) m 0 m 0 N 0 d m s '0 ki 1 I $ M Y P 9 0 W 8 m I - m C .- Y 0 E 0" 2 .- 0 E Y 0" I. s Y 2 a, n 0 01 c 3 4. 0 m Pl d 2 cc 0 1/1 2 0) x m L 0 -0 S a S e 3? .- .5 1/1 c u 6 m . *.s h B W B & a %' 43 P 0 D W w u i e 6 a a E .- E 1/1 h 0 c w .- k 0 L c . *.I? b L 3 4 E a, 5 e b. e 6) 2 m 0 r Y Y Y c. 6 E C a, c a, 5 u b 8 $ R R m R m n 0 0 m V V - 0 - e Y Y E Y 6 Y E * c E 8 $ a, 8 Q R R R R 0 2 E: E: 0 m m 2 - Y Y 8 Y E Y 8 E 2 2 $ $ a, - a, P, R R R 0 m m N 0 m m E: Y u E Y c Y E 5 a, 5 a, 8 8 8 Q R R R 0 0 0 0 E: m - N N Y Y Y 8 E E 0 b 2 2 R a, R a, R .- $ N 10 m Y 0 m N N b) cr b' 0 0 Y E $ R m N 1 1: 9 a: a 0 U U m Y Y Y 5 5 5 Y C 0 e, 0 z 0 2 0 $ 2 2 8 e, e, a, a a a a r1 c 0 c1 0 0 0 2 2 2 2 4- Y Y Y 5 5 Y 5 0 5 5 $ 0 2 $ $ $ a 8 e, p. a a z 0 r 4 0 0 0 0 E: 2 E: E: I Y Y 5 C C Y 0 0 e, 5 0 2 0 $ 0 $ $ 2 N a 0 0- 0 N a 0 a 0 . w a 0 E: E: a 2 - Y Y 5 5 c1 5 5 0 0 $ b. 0 8 N a 0 a 0 a 0 2 00 2 Y .5 Y 5 Y 0 5 0 $ 8 r4 a 0 a 0 p. 0 E: W E: Y c 5 5 Y 5 ; 0 - d 2 0 u b 8 3 e, 0 N n a a 0 0 0 E: E: 2 - Y c 5 5 Y 6 rr) 3 8 0 0 8 8 0 N p. 0 2 p. 0 n 0 E! E: 4: - Y 5 5 C 2 0 N 8 a 0 0 0- ; n 0 m 0 2 2 - 3 5 5 +d 3 g ; 3 0 0 0 N a Wl 3 a 0 r- m - z 0 N - L VI 0 c m u B .- c : 0 s m e L a` Y * Y 5 5 5 8 P, 8 a 0 8 a 0 0 0 2 E: E: Y Y E 5 0 b a ; a 0 0 0 2 El Y * E 5 Y E $ a 8 a 0 8 a 0 0 vl E: E: l- -- Y 5 c) E w 8 a 0 b a 0 0 41 E: - 3 Y 5 m 8 a 8 a i 0 0 E m El El F E s Y I c V z I- 0 c u C I u J g V F .- .- u C m U e s 0 .- m .C e s I I L E I 5 c" .- U 0 c & ._ c) I W v1 a .- - c .- P > E c U I u c) u I c e .- 'B i e U C I 5 4 a + a 5 P .- c u .- > .- 2 U c c g u g V U u u - - e 4- CI e, 5 G - n 0 e 0 0 Y 5 0 .$ Y 5 e, i a a z 0 0 Y Y 5 8 0 Y E b a $ a e z 0 \o 0 - Y Y 5 5 Y 8 G $ 8 - Q a 0 n \o 0 0 * 4- e 5 Y 8 $ e, a Q $ a 0 \o 2 0 LFI C a CI 5 $ - a 0 0 00 .3 c1 5 4- 3 E e, $ 0 e, 4- a a W 0 W El 2.4.2 Priority program 4.2. Integrated sexual and reproductive health development The disadvantaged rural populations, in particular, do not have access to quality reproductive health and family planning ( W F P ) services, which partially explains the high rates o f fertility (5.1 children per woman), maternal mortality (380 per 100,000 live births), and child mortality (74 per 1,000). The shortage o f RWFP services i s explained, inter alia, by operational insufficiencies in remote facilities, which are understaffed with qualified personnel (almost exclusively medical assistance nurses), operate in run down buildings, and register a shortage o f adequate equipment. As a result, people are forced to travel to more distant health centers, which also fail to provide quality services to meet the needs o f these populations. This entails additional costs, limiting health care access for the poor. In addition to the supply side shortages, the insufficient use of reproductive health and family planning services i s explained by the lack of interest shown by rural and disadvantaged households in these services. These people are generally not convinced that such services are important, particularly as the cost represents a major obstacle for low-income women with repeated pregnancies. To address this situation, the government has decided to .focus on improving reproductive health services in remote health units. Staff training, equipment, and supplies of consumables will be reinforced. The services will be equipped with transportation means for obstetric emergencies. There are plans to rehabilitate 49 health units and 15 district health centers. Social communication activities will be subcontracted with rural radio services and NGOs to sensitize the populations, particularly young people. The integrated sexual and reproductive health development program includes three specific objectives. The targets for the period 2010-2014 are presented in Table 2.4.3. 129 Y * * * 8 C E E Y E " Q) E a g a v, N 8 a g a 8 n 0 0 0 v, l- m W N N - 1 * 8 8 c 2 2 8 E v, v, a, W N a n n 0 0 W W * c U 8 u c 8 e b g v, a\ hl a a $ 0 2 v, - * Y E c-' 8 C 8 Q) W m 2 W m 0. a a 0 W m P '" d * * c 8 C 8 Y 0 E 0 00 CCI 8 R E a g n $ n v, N v, 0 0 'd I- v, d n n m 00 0 0 0 0 hl v c c! E 0 c 8 m $ E I a - n 9 m 2 s E 5 z n 4 l- Y 5 Y 5 2 e, a 8 a 0 0 00 I Y E 5 Y 5 8 2 - 0 0 a 0 I I & 0 - 00 - 0 0 * c kY Y 5 e, f! 5 0 N $ a 8 a 0 0 0 00 2 3 5 2 3 0 e, c.l a 0 I I - s Y 5 0 - N 0 a 0 0 -r s - Y c 5 vl 8 a $ a 0 0 m 4: 4: 0 m F s Y 5 Y c 5 8 u - a 4: a b a 0 0 0 m w i- s 3 Y 5 c) Y 5 8 a 8 a 8 8 0 0 a a m m 4: 4: m i- s c Y 4- 5 5 8 a 8 a 8 a m 0 m 12 rn i- c e c Y 0 5 5 8 a w 8 0 0 vl vl m i- 0 0 m vl 4: m 0 m E 2 m rn E - 0 m m - 0 m 4: 0 0 N m 0 0 m m I 2 0 PI m m 2 -0 5 cd e, 2.4.3. Priority program 4.3. Fight HIV/AIDS and sexually transmissible infections While the HIV infection prevalence rate i s s t i l l low in the Comoros, the risk o f an explosion i s s t i l l present owing to poverty as a contributing factor to AIDS, infrequent use o f condoms, increasing prostitution (particularly clandestine activities), rapidly growing exchange with countries heavily affected by this pandemic, massive returns o f very young Comorian expatriates, and the substantial prevalence o f sexually-transmissible infections. The public i s also vulnerable to this problem owing to insufficient knowledge o f H I V transmission mechanisms and appropriate preventive measures. Even if the rate o f H I V positive prevalence was estimated at 0.09 percent in 1999 and 0.025 percent in 2003 with confirmed predominance in women, and persons 15-49 years o f age (0.13 percent), an explosion i s possible and preventative steps must be taken now. Factors to promote the spread o f the epidemic are present, and more specifically: (i) substantial prevalence o f sexually transmissible infections; (ii)insufficient knowledge among the general public of H I V transmission and prevention mechanisms; (iii) infrequent use o f condoms in casual sexual relations; and (iv) discriminatory attitudes against persons living with HIV/AIDS. A shift in operations targets three populations at risk of infection (men having same-sex relations, female sex workers, and those suffering from STIs). These prevention programs benefiting the target groups will be developed, and will include diagnosis and awareness activities and promotion o f the use o f condoms. Accordingly, 20 voluntary diagnostic centers will be established through the District Health Centers (CSD) to provide better public access. An intense campaign to promote the use o f condoms will be developed with a substantial increase in the number o f community-basedsites where condoms will be distributed. The program will also serve as a base for STIIAIDS education in the school environment to reach young people 10-24 years o f age. Awareness activities for young people will also be conducted outside the school environment. According to available estimates, the program expects to treat approximately 70 persons living with HTV with antiretroviral drugs (ARVs). To that end, a capacity-building program for health personnel on coverage for persons living with H I V will be undertaken. Care centers for persons living with H I V will be supplied with ARVs. Last, a survey o f seroprevalence will be conducted on the general population to measure the impact o f the operations. The program to fight HIVIAIDS and sexually transmissible infections has one objective. The targets for the period 2010-2014 are presented in Table 2.4.5. 134 Y 5 i \4 m 0 0 8 0 0 N 0 0 3 m 00 - I 6 0 0 8 0 6 a m 0 0 K m l- Y 0 0 6 8 0 6 a 4: 0 0 on 0 N P I 6 V G a 4: 0 0 m VI 0 2.4.4. Priority program 4.4. Strengthen the efficacy and efficiency o all aspects o the f f health system Health care management directly affects the quality o f health care services in the overall health facilities in general. I t impacts the accessibility o f care and containment o f health expenditure through a more effective use o f available financial, human, and material resources. Aware o f this PRGSP pillar, the National Health Policy (PNS) o f February 2005 provided seven points for operational implementation. These points are still valid, as l i t t l e progress has been made since 2005. The actions described below will be undertaken in connection with the present PRGS: - The state's political commitment to increase the share o f health care in the national budget to 15 percent; - U s e o f the "simulated participation" technique consisting in negotiatingwith the communities to make individuals aware o f the advantage o f contributing to health service management and financing. Health service users should be considered true partners; - Equality and equity in heath facilities, leading to better, more effective and efficient management, more rigorous exercise o f responsibilities to the public, more effective services, and higher-quality care; - Training activities for health professionals, review o f the human resource development plan, and establishment o f a computerized system will be undertaken to make health services more efficient; - Establishment and management o f an environment conducive to health: access to drinking water and sanitation, a healthy and safe environment, an appropriate diet, and a healthy lifestyle; - A contractual approach for health care workers, without the state's divestiture from health finance; - Diversification o f health finance mechanisms, specifically through: (i) reinforcement o f the system o f mutual associations; (ii) creation o f a health insurance system that would initially cover state-owned companies, large private companies, and civil servants (the systems should be improved as some companies such as SNPT, MAMWE, etc. have already begun to provide health care coverage for their staff); and (iii) gradual implementation o f insurance in the communities that would rely on the Mutuelles de CrPdit (Meck) networks in urban areas and the Caisses d'Epargne (Sanduk) networks in the villages. All components o f the program to strengthen the efficacy and efficiency o f all aspects o f the health system include 10 (ten) objectives. The targets for the period 2010-2014 are presented in table 2.4.7. 137 * * 5 4- 5 5 8 a g a 8 R 0 0 c\1 0 0 0 d 2 00 Y 5 CI 6 8 a 2 e, a 0 v, e m 0 m F - I Y * I * 6 5 5 5 s l g 8 2 E 0 1 : : a a e, a W a 2 0 0 0 v, o\ m \o * 4- 5 5 +- G g a 8 a 2 e, 0 2 a v, 00 x 0 2 m I Y 5 6 Y 6 8 a 2 e, P 0 CC 0 0 + QI m c1 - I Y 5 5 Y 2 6 .e, a 8 a 0 m 0 m 0 00 d e, 0 S' P 5 s I ti ; W -0 1 P m 4 .e 3 s5 $ fda Y 5 e e a 3 Y 5 Y 5 2 G a 0 p. 2 0 0 x vi 2 0 m Y g c 5 Y W 8 0 W $ a n 5 0 0 vi 2 Y c 0 8 0 4- vi a 0 vi Y 5 5 c) Y 5 2 $ a N c c $ n 0 a vi 0 0 m m 0 c 3 m c $ a 0 N Y c 5 Y c. 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W a 0 m 0 0 E: 00 r- d - s s Y Y e Y 5 3 ; 8 a E a 2 W a 0 m k! e, a 0 0 0 0 2 W \o d s s Y c Y Y 5 W E a E 2 a a E a 0 N E a 0 m 0 0 m r- d m s Y Y E ; a 2 k! e, a 0 vl m L v) * 0 .- I V -a .- C v1 .- C 0 * I L E 0 - Y 5 0 ; a 0 \D 0 m m - - Y 8 0 0 B a 0 \o 0 m m - Y 5 0 0 B N d 0 m 0 a 0 m - Y 5 Y 5 0 ; a c-4 W 0 d $ m 0 d E: Y 5 - Y C e, 8 0 a m 0 m E: 0 ki a 0 0 m E: P C m s Y 0 2 e, m a 0 2 - s Y 0 m ; n 0 2 0 m - 0 m - 0 m 0 E: 43 0 I 1 .- 0 CI E 0 u i E 0 U u 2 6 c 0 .I ; i E E a .- 0 i e I I I f L u a 0 u m e e P E V 6 b" 0 : f .- i V Y 5 - 2.5 CORE STRATEGY v. DEVELOP EDUCATION AND VOCATIONAL TRAINING WITH THE A I M OF DEVELOPING HUMAN CAPITAL Poverty i s not only the result o f insufficient income. I t also derives from insufficient access to different forms o f capital, and specifically human capital. The government intends for all Comorians to be healthy, well educated, and able to reach their personal and professiona1 potential. The education sector plays a strategic role in this connection as it i s the best way to transmit social values and to develop skills to enable individuals to find the means and motivation to build a country that offers a good quality o f life. Analysis o f the school system's performance shows that the net school enrollment rate i s low on all islands, and particularly in rural areas where fewer girls are enrolled in school than boys. This situation i s attributable in part to the shortage o f classrooms on a l l three islands, particularly Ngazidja and Ndzuwani, and the inability o f disadvantaged families to pay school fees for their children. The widespread use o f the double-shift system, the high studendteacher ratio, the teaching level of the instructors, lack o f scholastic and didactic materials, and the inadequate health and nutritional status o f many children, are sources o f problems in the education system underlying substantial repeater and dropout rates. Human resource training is essential in economic development, as in an increasingly integrated market economy, the competitiveness o f the enterprises and the country's attractiveness to potential foreign investors depend largely on whether sufficient quantities o f skilled labor are available in the appropriate areas. Further, as a result o f the country's strong demographic growth, it i s essential to help the new generations to become educated, to increase their chances o f finding a job and securing decent living conditions. Technical and occupational training largely offer Comorian young people, particularly the poor, greater economic opportunities, enabling them to escape unemployment, poverty, delinquency, etc. Against this backdrop, the 2010-2014 action plan places special emphasis on technical and vocational training activities in addition to those directly targeting the formal education sector. I t also gives priority to informal education and management capacity building in the education system. The action plan adopted the following four priority programs to be implemented during the period: Program 5.1, Develop education, technical instruction, and occupational training, to reflect the requirements o f the job market; Program 5.2. Improve access to and quality o f basic (preschool and elementary) and secondary education; Program 5.3. Develop competent human resources and the sectoral (SWAP) approach in education; Program 5.4. Promote literacy, sports, and cultural activities. 2.5.1. Program 5.1. Develop education, technical instruction, and occupational training to reflect the requirements o the j o b market f In the context o f poverty reduction, technical education and occupational training are major tools in support o f human capital development. Human resource training, particularly competent, skilled labor, i s essential in the country's sustainable development, and therefore in 145 economic growth. I t gives the beneficiaries the skills to improve their living conditions and those o f their households, and provides labor in sufficient qualities and quantities, which i s essential in a context o f globalization where enterprises are becoming increasingly competitive. Investment in human capital i s also an important factor to help attract foreign investors. Technical education should be promoted in lower secondary school and a voluntary occupational training program should be developed for young drop-outs, those who never attended school, and uneducated adults, who constitute a substantial proportion o f the active population, to integrate them more effectively into the country's socioprofessional fabric. In the area o f technical and occupational training, the priorities will be to: (1) reorganize the subsector to focus on growth training sectors; (2) rehabilitate the existing schools; (3) build and adequately equip new facilities; (4) diversify the available training; and (5) train teachers and instructors. This option must reflect the country's priorities and the choice o f growth sectors. In the context o f national reconciliation, the university i s an essential instrument in social cohesion and consolidation o f national unity. In this connection, it must play a fundamental role in strengthening the national identity and promoting a new spirit o f citizenship. To that end, the university requires an appropriate, attractive environment, and sufficient facilities to meet training demand for mid-level and senior managers in areas deemed to be priorities for the country's development. The university must offer more diverse training with the twofold objective o f meeting the expectations of young people while reflecting the stakes deriving from modernization. There are five (5) specific objectives in the program, which are presented in the table below, along with indicators to assess performance in program implementation. Benchmark values are also presented, along with targets for the PRGS period. 146 Ij 0 N 2 : K c 0 r- c 2 I C $ n 0 00 I e, 0 r- c-l W $ P Y 6 $ P 0 IA - Y 6 k 0 IA Y W $ R I e, $ IA m E I $ a c 6 P 0 E: c 6 $ R I c W $ P 0 00 - c W E a 0 r- ~ 0 N c b a a e, 0 0 0 0 VI 0 E: VI \D a vl N c - Y I c 6 5 $ 2 P n a n IA VI N N I 6 6 c c-l 5 2 W $ n n IA VI N IA I I c c.l E R a $ a 0 t L I 0 (E: 141 c d t-4 0 m W c 0 00 2 m d 0 \o c 0 t-4 d z! d 0 Ei d N r- r- d d d X m Y s e, c 0 L 2 U B v) .- 9 'CI C .C 3 0 m 0 m m v, m hl 0 m cu l ) c r cu c m 0 m CI m 0 m m m hl hl 0 m CI m m m N m s N 0 0 0 0 d d 0 0 N 0 0 N N 0 0 N 2 2 N 0 0 m m N m m CI N 2.5.2. Program 5.2. Improve access to and quality o basic (preschool and elementary) and f secondary education Preschool education does not exist in the Comorian formal education system. Early childhood coverage and education are provided by the Koranic school (a well-established secular institution present throughout the Comoros), and with the recent introduction o f western nurseries located primarily in urban areas that serve only a fraction o f the 3-5 year age bracket. Studies confirm, however, that a satisfactory early childhood education, within the family as well as within more structured programs, has a positive impact on child development and learning capacities. This program aims to build capacities to accommodate and educate children. . To reach the aim o f providing quality education for all at the horizon 201 5, the government must rehabilitate, build, and equip classrooms, update education programs and methods, strengthen scientific disciplines and teaching languages, provide initial and ongoing training for education inspectors and teachers at the elementary and secondary levels, facilitate availability and accessibility o f textbooks to students and educational and didactic materials to teachers, to ensure effective learning and enhance the performance o f the education system. This program aims to improve the supply and quality o f academic training in primary and secondary schools. 153 - * Y * 5 5 Y Y C W C 5 2 $ n $ a 2 e, a a 0 o\ 0 \D m W 0 2 2 c 0 01 * Y Y e 5 Y 5 5 0 8 a 8 a $ a $ a z m m 0 m m m 2 Y Y U 5 5 5 5 Y 5 c) 8 a 8 a 8 a 2 K $ a 0 0 m W m m m 1I W d W - e U U Y 5 6 I , - Y C W W 5 .. $ a $ a $ a a m W m m W I I d m W - Y Y Y + 5 5 Y 6 E e, 5 8 8 0 = $a $ 2 W m a n n n 0 W 0 m \o W I I d CJ IA c 5 U ,Y 5 5 Y 6 2 W n 8 a 8 n 2 W a m d m 3 m W d e, Y E e Y - W E 0 B - 0 0 Jz x E i v 5 3 0 c1 $ 0. 0 Q\ 0 ` 0 0 1 Y Y Y 5 6 5 i 0 01 $ $ c1 R n P a I o m m 1 2 0 \D Y Y Y 6 6 6 Y 5 2 0 c1 8 n $ a /I $ n I - 0 d Y Y Y Y 5 5 5 5 $ P $ a 8 R $ P I - Q\ m m d m m 0 N ` Y 3 5 6 Y 5.1 0 8 $ c1 R P n m 0 m d N 7- C 2 r! 0 m 2 hl c" ~ c 0 0 0 0 W c\I m W e 0 \o - m B 5 rC e Y c a .. 7 C % 5 W C e .e a %= 4- i e 4i Lo b 8 I 5m d 5 -W rr d i 0 0 0 0 0 0 0 0 W 0 0 W " ' , vi m m - - - 0 0 0 m 0 0 0 0 0 vi W m L? vl h) " L, m z 0 0 0 0 0 0 0 0 W . -j 0 0 l v- vi hl m h) 0 0 - 0 vl 0 0 0 0 W d " ' , m 0 vl I(- vi a - - 0 - 0 0 0 0 8 0 0 2 W vi 0 ICI .- Y 6 e .- Y e ' a a % - m * W 0 0 c 3 i ? m -0 C 5 % rc 0 L 2z g .s Z b - 0 0 -0 5 c 3 2 e L .5 B C .- 0 a .- * a m V r a % W ;; 7- C T ?. . l N 0 0 8 2 0 vl fci 0 vi d m 0 0 0 d 8 0 0 2 - 9 N vl vl W d \D 0 00 d hl P W 03 '? W 0 vl d - . c C d hl 0 vl P d 5 c c 0 . " 0 m - vl 0 e * z .- U .- C W U C a E e a" - s U P .- L . U W a e U E U i 2. v1 b c 2 0 0 0 - 0 0, fl" c B - 0 0 0 2 0 - * 0- d 5 - T 0 x 0 E 8 i z .C m 0 L 5 m e, Y Lc 0 kj , I z 5 M gJ - 3 w c m M e s .C d e, Y e, 5 e - .e v1 3 e I- C 2 I 5 8 a 0 m * Y 6 8 a 0 E: Y c W 8 * 5 : n 0 Q\ * 5 2 u 5 $ a 0 E: * 5 8 n F i 0 n W a n 0 0 0 d 2 00 P * * 5 5 2 W a ; n 0 0 00 m * * Y 6 5 6 6 a 8 a 2 W n 0 m 0 \o \o m * * c: W 5 8 a 8 a 0 0 d N 0 14: * Y 5 5 Y 5 8 n 8 n 8 a 2 2 m I - C 7r Y 5 0 E a L W c 0 ri a 0 0 l ) r 00 I CI C W 5 n 0 0 d \o --I E N - Y 5 $ a CI 5 u L. W n 0 0 N N * z C e, 2 0 0 r 4 a 2 + e W n N 1 -r vi 2 vi hl vi I W - vi N vi 0 0 0 0 2 hl 0 W N vi - vi vi - 0 vi - 0 vi 0 v, vi (-4 v, r- m - N N - 0 0 m 0 0 o\ - N N - v, c N N hl N 0 n I d m - N N - 0 00 - N N I n 0 N 0 m 0 0 CI m N m 0 0 N m 0 m cr 0 2.5.4. Program 5.4. Promote literacy, sports, and cultural activities Illiteracy i s one o f the main obstacles to the country's social and economic development, and i s a major challenge to be met with the aim o f achieving Education For A11 at the horizon 201 5 and to reach the Millennium Development Goals. The total illiteracy rate i s still quite high in the Comoros. It i s estimated at 40.9 percent according to the Multiple Indicators Cluster Survey (MICS) 2000, and primarily affects economically productive populations. This situation i s both an impediment to economic growth and a factor in vulnerability and impoverishment. Appropriate action should be taken in connection with poverty reduction to enable this important sector o f the active population. to acquire the knowledge and skills required to improve their living conditions and to participate effectively in the joint effort to reconstruct the national economy and thereby to improve the standard o f living, for individuals and for the community. 165 * * * * s 5 5 C e, U r c c 8 e, a 8 e, a 8 e, a 8 a L5 0 0 0 v) 00 00 IA m * * * C e, 5 s ; a 8 a 8 a I- v) 0 0 F d m * * ( U Eh 5 s h 8 a 8 a c- m F 10 hl I * * 5 Y 6 C e, c h ; a 8 P 8 a Q\ 0 0 W hl hl Y 5 5 c 8 e, p: a d W 51 s c1 8 e, 0 0 0 W W \o \o ._ C IA e e, s s 0 N - 0 0 hl 0 0 W 0 0 W - 2 0 00 0 m 0 m N hl N - vl U % IO L 2 a 2 ;- N 3 I 0 d 00 N - 2 - 0 0 0 hl d N 0, - m c 0 s .I Y m L 0 a 0 B U .- U m m .- e 5 x B a, 2 c E e L -e, ._ 3 z L cc 0 n b z 5 m f .- B C U a, b" 0 b E U !E U a, c v) - Y .e GI .I 8 - s' m m - m - m - m - m - z a 8 s a rc 0 L W D E i 2.6. CORE STRATEGY VI. PROMOTE ENVIRONMENTAL SUSTAINABILITY AND C I V I L SECURITY The constraints affecting the Comoros are similar to those identified for SIDS under Agenda 21 and the Barbados Plan o f Action: ecological and economic instability; substantial vulnerability to climate change and natural disasters, insufficient response and management capacity, and a narrow base o f energy resources at high costs. The national policy and action plan for the environment, which constitute the reference documents, revealed substantial, alarming environmental trends and threats, including degradation o f land and deforestation, absence o f or poor natural resource management, deterioration o f the environment, lack o f appropriate management tools for urban and coastal areas, and an absence o f integrated policies reflecting the cross-cutting dimension o f the environment. The political, economic, legal, and regulatory framework i s not appropriate for the current context and must be revised or supplemented to reflect the autonomy that has been granted to the islands: (i) organic framework as promulgated does not define the sharing o f authority the for environmental management and protection between the Union and the islands; (ii) many implementing texts for the Framework Law in respect o f the environment have yet to be drafted; (iii) national legal framework has not been revised to constitute a framework to the allow implementation o f the conventions the Comoros has ratified; (iv) there i s no institution responsible for drafting, revision, and harmonization o f legal texts deriving from various sectors; (v) there i s a mismatch between the human resources provided in the organic frameworks and the requirements for the institutions to meet the responsibilities incumbent on them. The financial resources required to equip and implement the directorates are to all intents and purposes nonexistent. As a result, these institutions are not capable o f discharging their duties, particularly in the area o f planning, coordination, extension, supervision, and awareness activities. Six priority programs were identified to meet these challenges. Program 6.1. Conserve biodiversity and equitably share its advantages; Program 6.2. Conserve and develop agro-biodiversity; ' Program 6.3. Adapt to climate change; Program 6.4. Fiscal consolidation with an ecological focus; Program 6.5. Capacity building for multisector environmental management and coordination; Program 6.6. Establish prevention and management mechanisms for risks related to natural and climate disasters. 2.6.1. Program 6.1. Conserve biodiversity and equitably share its advantages I n the Comoros, virtually all o f the population's subsistence activities are based on the direct exploitation o f natural resources. Such resources are therefore the main source o f income for the sectors o f the population hardest hit by the drama o f human and monetary poverty. Now, these related resources and ecosystems are threatened by uncontrolled exploitation, at the risk o f permanently compromising this essential economic potential. The important issue i s that the conservation o f biodiversity contributes to the country's sustainable socioeconomic development, particularly for local communities that account for the majority o f the population, who are dependent on natural resources for survival. Sustainable exploitation and development o f natural resources are clearly essential levers to reverse the current trends characterized by impoverishment and increasing marginalization o f the people, and to improve their living conditions. In this connection, a network o f protected 169 areas, co-managed with the village communities, should be established and implemented. Beyond the dimensions o f environmental conservation and sustainable natural resource management in the zones to be protected, these areas will primarily be used as tools to attract interest and highlight the exceptional latent eco-tourism potential the Comoros has never managed to exploit, and to derive all the benefits the country can expect in support o f i t s economic development and social progress. The specific objectives o f this program during the period are presented in Table 2.6.1. 170 x e, 3 s -8 - v) .- Y v) A * E $ Lo A .- * v1 e, L A 5 h z .- *a a B U E A ._ h L v) .- P Lc Lo 0 0 3 L x I: s e A H d E c k E a vi m 2 e! .- 0 m Y m B c .- N G 5 Y 0 Q) 2 E Y e, P 00 0 Q\ c1 vl - E P vl 2 .- c 0 c .- m N s - E p. 5 2 e, P I n E ! 0 cs hl r 4 m e .- Y 0 m 5 .- Y N - vi 5 Q 2 W cz 5 0 2 d * K e, 0 00 * 5 $ n 0 rn rc P 0 C P v) C .- 0 - Y m v) Y .- 0 e, 0 a 4 3 0 N 0 0 m I m - k 0 $ ._ - c N 3 m v) Y 0 0 0 .e e, r4 a .7 4 0 0 m m - 2 3 .- Y 0 v) 3 m 0 c V 0 .e I .e, 7 a g N a m 0 0 hl hl - 2 0 N - 2.6.2. Program 6.2. Conserve and develop agro-biodiversity There i s a type o f traditional agro-forestry practiced in the Comoros that has many advantages in terms o f environmental conservation (soil, water, and habitat for flora and fauna species), and in terms o f production (food, water, and wood for working and energy). This traditional growing method in the Comoros i s very stable and provides permanent soil cover, reducing erosion, promoting distribution o f surface water, and optimizing the use o f parceled areas through the staggering o f production cycles. There are several types o f traditional agro- forestry systems depending on the ecological condition o f the sites, their exposure, soils, and drainage. ,The special features o f Comorian products derive from traditional production methods consistent with the requirements o f agro-biological crops, and from the presence o f varieties endemic in the Comoros or that have become rare at the regional scale. The genotype features o f the varieties present in the Comoros have been preserved, primarily as a result o f the plant reproduction techniques used for vanilla and the absence o f programs to introduce new varieties o f these species. Conservation and sustainable use o f the species and varieties cultivated in the Comoros have substantial benefits at the regional and world scale, preserving genotype material peculiar to the country or subregion, and preserving the potential to adapt these cash crops at the regional scale. Improved productivity in and stabilization o f this system should make it possible to limit deforestation and the extension o f cultivated lands at the expense o f the natural forests, helping conserve agro-biodiversity and biological diversity in the forest ecosystems. The aim at this level i s therefore to preserve and develop agriculturally important varieties and species and traditional agro-forestry systems specific to the Comoros, and to promote their exploitation. The specific objectives and targets o f this program are presented in Table 2.6.3. 175 s v1 -2 c U m m c 2 e, -2 + k! n U 0 m a 0 0 s 0 (u 3 5 $ n 0 m Y 5 E (u L 0 c.l n 0 m c 3 w I . I 8 w 0 (u n 0 \o 3 5 3 5 z $ E - 0 (u n P 0 v, m Y 5 $ P (A - e 0 N a m m - m 2 El 0 0 9 N a n m L a 0 m - e P V U a fi V a a 2 g `CI 0 N U f L Y E 0 $ fs Q) 0 E L m 8 a VI - 0 CI c m Y U Y v1 L b P 0 1 e H -0 U t 3 0 * x E N Q. 0 2 $ - 0 6 m 8 Q. - \o z 0 8 e V B 2 i ?e VI 0 N % u a -2 * E m rn - E m m Y U Y L P m a 0 5 ?. ! e f e, a F e a 6 m I? 5 c : I 2 0) L E 7 e, - i 0 N - Y 6 2 0 E N a 0 vl - I Y Y 6 6 2 E E Y v) s .I 0 N R P, v, m 0 I r hl - Y .- 6 E Y 5 c P, 0 c.l Y 6 ; R E: rr 0 V 0 5 .C 3 c * 4 m c: 4 b 0 - a 0 0 0 8 z 0, 0 - 0 8 3 2 00 4 3 b Q 0 0 0, vl 2.6.3. Program 6.3. Adapt to climate change The effects of climate change include accelerated losses of coastal strips o f land, reduced agricultural and fish production, contamination o f coastal water tables with seawater, and displacement o f more than 10 percent o f the coastal population. As i s true for SIDS,' the Union o f the Comoros supports the objectives to reduce greenhouse gas emissions and the principle of anticipating and preparing for events related to climate change. Energy sources should be diversified to move towards energy autonomy, and natural forest deforestation should be limited by developing pilot projects focusing on alternative sources o f energy such as wind and solar energy, hydroelectricity, and community reforestation parcels for firewood. Climate change will therefore have substantial impacts on health, food security, economic activity, water resources, and physical infrastructure. These impacts can be disruptive in this archipelago, whose economy and life are largely dependent on agriculture, tourism, and fishing, and where most the population lives on the coast. Above all, climate change runs the risk o f cancelling out the development efforts that have been made in connection with specific food security and poverty reduction strategies. This issue adds new difficulties in the country's progress towards sustainable development. The new challenge today i s to address the current and future impacts o f climate change and take the necessary steps to reduce their effects. The specific objectives and targets of this program are presented in Table 2.6.5. 1 Small Island Developing Countries. 182 I 5 $ a 0 m Y 6 $ n 0 m Y C e, 8 n 0 N Y E e, $ a IA m * 6 fj P m rr m 0 m x D E: W - m u .e e d 0 hl v) d \D m 0 e .C 0 * \o m .- 0 e 0 \D c1 c c1 d 0 CI v1 5 u u e, c 0 E v1 5 c-' u 0 e, m c 8 vr E c-' 0 0 2 m 0 0 vr v1 5 c-' V e, m 0 v, c 0 0 vr m 5 u u e, m 0 s m m 0 0 c1 P e A .- M e - e Y C C A W a CI e 6 n u 0 E - 0 m u - 5 w e t W 6 P rr e c. 5 c) I C 0 W 0 e $ b e A a CL 3 m m M .- e e c) 0 P L 8 .- C v) A - w 0 L 5 4- I 5 a CI v) 8 n 6 n A 0 0 0 m U L a 0 Y m c .C v1 e .- 0 c c s. v1 e 0 P '0 Y e a s. m L ' 3 Y 5 ; a 0 m r- r- M L V 3 0 v1 P m m 0) C u v1 m B P * i m M - L e a i A C - U C m v1 - u e .- m B C 0 u V C u e 8 P d u Y U C s . a A $ c u 5 U - 2.6.4. Program 6.4. Fiscal consolidation with an ecologicalfocus Integration o f the ecological dimension into the fiscal area and into the financing o f economic activity i s a completely new approach in the Comoros. The Comorian fiscal system does not reflect the conventional concerns of fighting pollution and conserving natural resources and ecosystems. The same applies to initiatives aimed at promoting positive activities for the environment. The public contracting code does not require environmental clauses to be incorporated into public tenders. The decree instituting impact studies has not been applied in practice owing to the absence o f practical implementation provisions and a complete lack o f understandingo f the relevant legislative provisions. The nascent network o f decentralized financial institutions in the Comoros i s not, at least in practice, designed to address the stakes underlying ethical finance, aside from the grassroots credit institution dimension. These institutions use essentially the same conditions for operations and for extending credit as conventional financial institutions. To date, there are no institutional joint guarantee mechanisms or partnership structures to support and sustain ecologically and socially responsible loans. Two initiatives are now being tested by the AMIE Project,*involving the introduction of a joint guarantee system through women's organizations in connection with specialized loans for disadvantaged women, and MECK3 Moroni, by grantingjoint agricultural loans in partnership with SNAC.4The concept o f ethical finance and the relevant implementation tools, including socially and ecologically responsible investment and credit instruments, constitute a new area for local players. A UNDP-supported study conducted by the International Union for Conservation o f Nature (IUCN) recommended the establishment of a trust fund for biodiversity conservation. Development of such a financial tool will involve alternative, innovative financing mechanisms, including external debt conversion mechanisms, through debt-for-nature swaps. The aim would be to integrate sustainability criteria into fiscal management instruments, and to develop financing mechanisms reflecting the essential need to preserve the country's natural resources and social equity. The specific objectives and targets of this program are presented in Table 2.6.7. 2 AMIE: UNDP Micro and small-scale enterprise support project. 3 MECK: Mutuelle d'Epargne et de Credit ya Komor. 4 SNAC: National Union o f Comorian Farmers. 190 b. 0 - 5 $ a m N E v1 cc E 0 Y .- 0 5 Y E $ a % i 0 0 n N b, W E ~ b. 0 P ru 0 b. 0 Y 0 b. 0 2 4- cc 0 Y .- m 5 c $ a E E & 0 e a b. 0 T 1 I b 0 L f.2 8 e, L 0 Y T rc 0 rc 0 P C I 2.6.5. Program 6.5. Capacity building for multisector environmental management and coordination All o f these mechanisms acknowledge that sustainable development in the Comoros i s largely dependent on the capacity o f the government and the public to ensure sustainable management o f natural resources and ecosystems. The lack o f capacity observed at all levels, however, i s preventing effective implementationo f environmental management planning, instruments, and policies. Accordingly, systemic, institutional strengthening o f environmental management structures at the island and national levels should be considered a priority. Regional sustainable development planning should also be introduced to optimize the actions identified under each component. This approach i s particularly relevant in the current context in which the country i s establishing a new institutional and administrative framework. These activities are intended to give the country environmental knowledge and management tools, to establish a legislative and regulatory framework, and effective public services and institutions. Specialists must also be trained and the public must be informed and sensitized in order to become more effective participants in environmentalmanagement. To achieve the goals described at this level, national and local capacities must be developed to incorporate the environment into development plans and programs, and for their cross-cutting management. The specific objectives and targets o f this program are presented in Table 2.6.9. 197 a 4 !2 a - m vl m IA vl m hl m 0 0 0 2 .- e C a m R e L z 0 .a C a U I E 8 L Q) .- bo C c V $ m c P L c - .- t? 0 P co e e a .- 0 h U I Y 9 e C C Y 0 m U 0 V .- c C 0 e a e c . ) E t e E e, 0 V a I a c e - e 2 E 0 a e .- E - U > m L E - e e 0 U a .- a V > .I C 0 U e e .I .I e, w W L C V 0 a - e U U le a 5 .- % c 0 z - c e .r" B z - e 0 L a z W = .- U bl e 3 .- 0 .- 5 a e, e c J) c L 1: 0 P m a .I .- U C 0 co B a m c 0 w e u" I w L k E .- +E W W 0 .- c V W c $ 8: z g 0 - - 0 0 c1 m C Y 2 F - a C d n e 0 E - 0 0 t V L 0 C V t 0 * .- e e m z 0 - 8 Y 0 e B e b- e i+ e Y 0 CI C 0 L 0 .d Y 0 E 3i 2 P t- Y V Y - I E L 2 r4 0 r4 4 Ifi u z F 2.6.6 Program 6.6. Establish prevention and management mechanismsfor risks related to natural and climate disasters The major natural risks to which the Comoros islands are normally exposed include tropical , cyclones, floods, tidal waves, and for Ngazidja, eruption o f the Karthala Volcano, as well as other risks inherent in the presence o f an active volcano. Where climate change i s concerned, the national report confirms that the populations in the coastal areas are exposed to exceptional events such as cyclones and violent winds potentially resulting in tidal waves. Abundant precipitation could cause landslides and fallen earth. These events could destroy strategic infrastructures and impede inter-island communications. The key issues in this case are the control and prevention o f risks and natural and climate disasters. The underlying concerns focus on disaster risk preparedness, response, and management schemes. The specific objectives and targets o f this program are presented in Table 2.6.11. 203 6 1 g I 5 I 5 8 Q Q E Q m m -3 I I 5 5 5 % I g $ E a, a a n w 0 0 N c1 c1 5 I 6 5 $ Q a $ a 0 m P e $ Y I 5 1 5 $ 0. D. I 5 I c a, $ a E a, Q 0 m m I Y G 8 0 $ a $ Q 0 0 0 O I I 0 6 0 0 2 $ a zE $5 I i 0 e, e, O I a a 2 I n i C a, V 3 0 0 a m 0 #, T1 9 e *- 0 e E >" i5 i 6 m 2 0 0 a * 0 E m % E e, 5 cr 0 9 .- I 0 a, b' 0 s u m e, L P v1 c a, 2 e Y 5 2 u a m b Y 6 Y 6 2 W 2 W m P a cu m 0 b b Y 5 # R 0 hl 0 b Y 5 Y 0 5 b R $ n 0 N 0 0 b n I v) Y Y 0 5 u 5 N b P $ R 0 m m m o .Y ' .. c * * E 6 m $ $ P P 0 0 m m c.' 8 d m ; P 0 W e w e Y . n W C v m $ n 0 vi 0 r- c I E Y * 6 .II e d N # n W $ V 8 P 0 n 0 vi 0 v) \o * c e Y . m Y C W 6 W v N $ P $ $ a 0 W n vr d s s U -r 0 * 5 N E n 0 \o 0 N * s 0 0 N E a 0 d W .L *u 0 a 0 U e m E e 00 2 a SECTION 3 SUMMARY OF RESOURCES REQUIRED TO IMPLEMENT THE PRGS ACTION PLAN FOR THE PERIOD 2010-2014 209 3.0. INTRODUCTION The government intends to focus its human and financial efforts and to direct those o f i t s partners on implementation of the 2010-2014 action plan. This section o f the action plan presents the estimated financial resources required for each core strategy, priority program, and year, as well as the domestic and external financial contributions already acquired or required for implementation during the period considered. 3.1. Financial resources required for 2006-2009 action plan implementation The strategy includes a total o f 32 priority programs. The required financial resources, including those already mobilized, are estimated at CF 482 billion for the period, equivalent to an average o f CF 96 billion per annum. The financial resources to be obtained during the period amount to CF 420 billion, equivalent to an average o f CF 84% billion per year. Core strategy I.Stabilize the economy and lay the groundwork for strong and equitable growth. The budget for Core strategy 1 by program for the period 2010-2014 i s approximately CF 255 billion, o f which CF 234 billion i s required. Core strategy 11. Strengthen key sectors by focusing on institution building and ensuring a broader role for the private sector. The budget for the period 2010-2014 amounts to CF 72.3 billion, o f which CF 5 5 billion i s required. Core strategy 111. Strengthen governance and social cohesion. The budget for the period 2010-2014 amounts to CF 23.7 billion, CF 17.1 billion o f which i s required. Core strategy IV. Improve the health status of the general public. The budget by program for Core strategy I V for the period 2010-2014 amounts to CF 70.6 billion, CF 62.2 billion o f which i s required. Core strategy V. Promote education and vocational training with the aim of developing human capital. The budget by program for Core strategy V for the period 20 10- 2014 amounts to CF 32.8 billion, CF 4 billion o f which i s required. Core strategy VI. Promote sustainability of the environment and civil security. The budget for the period 2010-2014 amounts to CF 28 billion, CF 23 billion o f which i s required. Table 3.1 Provides the distribution o f financing acquired and required for each core strategy for the period 2010-2014, while the last column indicates the relative weight o f the sector in overall financing. 210 Table 3.1. Requirements b y core strategy for the period 2010-2014 (millions o f CF) Total Financing I Financing- (millions . Core strategies acquired required o f CF) Percent Core strategy I Stabilize the economy . 20,389 234,285 254,674 52.8 and lay the groundwork for strong and equitable growth Core strategy 11. Strengthen key sectors 17,234 54,976 72,301 15.0 by focusing on institution building and ensuring a broader role for the private sector Core strategy 111. Strengthen governance 6,598 17,160 23,758 4.9 and social cohesion Core strategy IV. Improve the health 8,406 62,234 70,641 14.6 status o f the general public 4,020 28,768 32,788 6.8 Core strategy V. Promote education and vocational training with the aim o f developing human capital 5,013 23,030 28,043 5,8 Core strategy VI. Promote environmental sustainability and civilian security 61,751 420,154 463,349 100.0 Table 3.2 Provides the distribution o f financing acquired and required for each core strategy for the period 2010-2014, while the last column indicates the relative weight o f the sector in overall financing. Table 3.2. Requirements b y sector for the period 2010-2014 (millions o f CF) Total Financing Financing (millions M a j o r sector acquired required of CF) Percent Agriculture 47 15,808 15,854 3.3 Fishing 558 18,607 19,165 4.0 Stockbreeding 16,523 9,733 26,256 5.4 Tourism 0 6,025 6,025 1.2 Energy 850 70,154 7 1,004 14.7 Drinking water and sanitation 14,190 26,445 40,635 8.4 Economic and communication inffastructure 3,616 67,025 70,64 1 14.6 Environment and public security 5,013 23,030 28,043 5.8 Education 4,020 28,768 32,788 6.8 Health 8,406 62,234 70,641 14.6 Private and financial sector 197 4,804 5,OO 1 1.0 Governance and social cohesion 6,598 17,160 23,758 4.9 Fiscal reform and commercial policy 1,733 70,66 1 72,394 15.0 Total 61,751 420,254 482,205 100.0 Table 3.3. presents the overall budget for the 2010-2014 action plan broken down by core strategy and by program. 21 1 00 m :- vl r- N -Y E" \o 2 N N w m z m 0 0' N h \o N 0 0 0 N Q\ N 0 0 0 \o 0 d .. c - E: 0 \o N 0 vl d r- 0 N m d Q\. I 2 m - m c 0 - m r- m m a- m 0 0 z m m 4 Y b 0 e, v) e, c a > .- 2 6) 5 b. - P 2 0 b. e, -0 a 9 2 a on .- E L 2 e e, -0 e a M - .- e .- -0 3 9 E .- 0 c .- c 3 Y v) .- E e 0 M .- e Y 0 P x 9 v) Y b u 2 x s e 2 GI e 2 ; ; Pi x 2 c.l 2 I v) u s - n . L C 0 c Y c;' U 5? R 3 0 C N d C s 0 Y N C k. C 2 Y 0 c1 ti a 2 0 E N C 2 r r 0 0 N ; s 0 z 0 N $ d 2 m 6 m c 4 + m s 0 N 2 0 c1 N w 0 N I c 0 N s: 0 N B 2 e Po a r- - 0 0 0 0 r- 2 vi r- d P 0 N 0 0 0 0 W N il' 0 9- 0 *! 0 0 0 m 00 0 W N m 0' N 0 * 5 5 ? 5 E L P 0 * c v1 Y + W 5 b e c ANNEXI SURVEY OF PROGRAMS AND PROJECTS IN PROGRESS IN SUPPORT OF ACHIEVING THE PRGS OBJECTIVES 217 INTRODUCTION This survey o f projects and programs in support o f the objectives o f the PRGS was established based on the work o f the Sectoral Technical Groups (GTS), with information collected from the Office o f the Commissioner General for Planning, sectoral ministries, project organizations, and, whenever possible, donors and creditors. Although it i s possible that certain small projects may have been omitted from this list, most of the projects and programs in progress throughout the Comoros extending beyond 201 0 have been identified to the best of the GTS members' knowledge. The level o f financing for these projects/programswas estimated to reflect the available information and the classification o f projects/programs by core strategy and operating sector according to the main purpose or dominant component o f the project. For the six (6) core strategies adopted the PRGS, we observe a total o f 20 projects and programs for which financing has been acquired, including 201 0, throughout the Comoros, totaling approximately CF 46.1 billion, covering the period 2010-2014. The projects are distributed as follows among the PRGS core strategies and priority programs: Core strategy I. Stabilize the economy and lay the groundwork for strong and equitable growth; Core strategy 11. Strengthen key sectors by focusing on institution building and ensuring a broader role for the private sector; 0 Core strategy 111. Strengthen governance and social cohesion; 0 Core strategy IV. Improve the health status o f the general public; 0 Core strategy V. Develop education and vocational training with the aim o f developing human capital; 0 Core strategy VI. 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