Document of The World Bank FOR OFFICIAL USE ONLY Report No. 27893-COM MEMORANDUM OF THE PRESIDENT OF THE INTERNATIONAL DEVELOPMENT ASSOCIATION TO THE EXECUTIVE DIRECTORS ON A TRANSITIONAL SUPPORT STRATEGY UPDATE FOR THE UNION OF COMOROS February 11,2004 Country Department 8 Africa Region This document has a restricted distribution and may be used by recipients only in the performance o f their official duties. Its contents may not otherwise be disclosed without World Bank authorization. Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized
Transcript
Document o f The World Bank
FOR OFFICIAL USE ONLY
Report No. 27893-COM
MEMORANDUM OF THE PRESIDENT
OF THE INTERNATIONAL DEVELOPMENT ASSOCIATION
TO THE
EXECUTIVE DIRECTORS
ON A TRANSITIONAL SUPPORT STRATEGY UPDATE
FOR
THE UNION OF COMOROS
February 11,2004
Country Department 8 Africa Region
This document has a restricted distribution and may be used by recipients only in the performance o f their off icial duties. Its contents may not otherwise b e disclosed without Wor ld Bank authorization.
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AAA AFD AfDB AU BADEA
CAS CDF CEM CPIA
CPPR DCA EERC EU FADC
FY GDP GNP GRIC HIPC HDI IDA IDF IFAD
IF1 IMF ISS
UNION OF COMOROS TRANSITIONAL SUPPORT STRATEGY UPDATE
CURRENCY EQUIVALENTS Currency Unit = Comorian Franc (KMF) US$1= KMF 394 (31 December 2003)
WEIGHTS AND MEASURES Metric system
FISCAL YEAR January 1 - December 31
ACRONYMS AND ABBREVIATIONS Analytical and Advisory Activities Agence FranGaise de Dtveloppement African Development Bank African Union (former OAU) Banque Arabe pour le Dtveloppement Economique en Afrique Country Assistance Strategy Community Development Fund Country Economic Memorandum Country Performance Institutional Assessment Country Portfolio Performance Review Development Credit Agreement Emergency Economic Recovery Credit European Union Fonds d i lppu i aux Dtveloppement Communautaire Fiscal Year Gross Domestic Product Gross National Product Governance Research Indicator Country Heavily Indebted Poor Countries Human Development Index Intemational Development Association Institutional Development Fund Intemational Fund for Agricultural Development Intemational Financial Institutions Intemational Monetary Fund Interim Support Strategy
JSDF KMF LICUS MDG MDTF NGO OAU
OIF
OP P.C. PCF PEFA
PIP PRGF PRSP SMF SSP TA UN UNDP UNFPA UNICEF
US$ WBI WDR WHO
Japan Social Development Fund Comorian Franc Low Income Countries Under Stress Millenium Development Goals Multi-Donor Trust Fund Non Govemmental Organization Organization o f African Unity (now: African Union) Organisation Internationale de la Francophonie Operational Procedures Per Capita Post Conflict Fund Public Expenditure and Financial Accountability Public Investment Program Poverty Reduction and Growth Facility Poverty Reduction Strategy Paper Staff Monitored Program Services Support Project Technical Assistance United Nations United Nations Development Program United Nations Population Fund United Nations International Children’s Emergency Fund United States Dollar World Bank Institute World Development Report World Health Organization
Vice President: Mr. Callisto Madavo Country Director: Mr. Hafez Ghanem Task Team: Mr. Wolfgang Fengler, Mr. Aurklien Kruse,
Ms. Anna van der Wouden, Mr. W i l l e m van Eeghen
I . Political Situation ......................................................................................................... 3 Background ......................................................................................................................... 3 Hopes for reconciliation ...................................................................................................... 3 Stalled progress and new hope ............................................................................................ 4 The challenge o f poor governance ...................................................................................... 5
. . .
I1 . Economic and Social Context. Government’s Strategy .......................................... 6 Poverty .......................................................................................................................... 6 Macroeconomic developments ........................................................................................... 7 Government’s Strategy and outlook ................................................................................... 9
I11 . Past Bank Engagement. Progress Under The Bank Interim Support Strategy . 10 Interim Support Strategy ................................................................................................... 10
I V . Strategy Update ....................................................................................................... 12 K e y objectives ................................................................................................................... 12 Bank’s program to meet the objectives ............................................................................. 12 Non-lending activities ....................................................................................................... 14 Normalizing relations ........................................................................................................ 15 Donor coordination and partnerships ................................................................................ 16 Risks and mitigation measures .......................................................................................... 17
Annexes Annex 1 Short-Term Results Matr ix ............................................................................. 19 Annex 2 Transitional agreement o f December 20. 2003 .............................................. 20 Annex 3 Remittances .................................................................................................... 21
Variance o f remittances to the three Comoran islands .................................. 22 Annex 4 LICUS Service Delivery Model .................................................................... 23 Annex 5 Matr ix o f Donor Activities ........................................................................... 25 Annex A 2 Comoros at a glance ...................................................................................... 30 Annex B 2 Selected Indicators o f Bank Portfolio Performance and Management .......... 32 Annex B3 IBRDADA Program Summary ..................................................................... 33 Annex B 4 Summary o f Non-Lending Services .............................................................. 34 Annex B 8 Operations Portfolio ...................................................................................... 35
This document has a restricted distribution and may be used by recipients only in the performance of their official duties . I t s contents may not be otherwise disclosed without W o r l d Bank authorization .
Boxes B o x 1 B o x 2
Timeline o f Events in the Union o f Comoros.. . . . .. . . . . . . . . . . . . . . . . .. . . . . . . . .. . . , , , M a i n features o f the I-PRSP.. . . . . . . . . . . . , . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ...
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.
EXECUTIVE SUMMARY
1. The three islands that form the Union o f Comoros have been under considerable stress experiencing more than twenty coups or attempted coups since gaining independence from France in 1975. Consequently, the Comoran population has experienced a gradual decline in living standards. Gross National Income (GNI) declined from approximately US$600 per capita in 1992 to US$380 today. The Human Development Index (HDI) stands at 0.528 ranking Comoros 134th out o f 175 countries. In recent years, many Comorans have le f t the country to reside in France.
11. In 1997, one o f the three islands, Anjouan, seceded from Comoros and political instability followed. In 2001, there were hopes that stability would return and economic growth would resume fol lowing the signing o f the reconciliation agreement in February o f that year. This agreement called for the reintegration o f Anjouan into the Union together with the islands o f Grande Comore and Moheli. The Interim World Bank Support Strategy (ISS) that was presented to the Board o n November 14, 2000 shortly after the government had signed a declaration with the Anjouanese rebels, supported the reconciliation attempts and proposed interventions that would reverse declining economic and social trends.
* .
iii. The reconciliation attempts, however, did not come to fruition and the population has not seen a reversal in i t s fortunes. Even though a new Constitution was adopted in a referendum held in December 2001, and presidents were elected for the Union and the three islands in early 2002, the subsequent political process stalled. Legislative elections were postponed and strong disagreements ensued between the three island parties and the Union on the sharing o f power and financial resources. An IMF Staff Monitored Program (SMP) from July 2001 to June 2002 was not renewed fol lowing i t s closure. Since then, Comoros has not had an integrated national budget and the island o f Anjouan has continued to collect i t s own revenues, decide on i t s own expenditures and to recruit i t s own c iv i l servants. IMF i s currently working with the Comoran authorities to establish an integrated budget and a fiscal framework.
iv. Following this prolonged period o f tension and unrest, an encouraging development occurred on December 20, 2003. Under the auspices o f President Thabo Mbeki o f South Afr ica and with active involvement o f the Prime Ministers o f Madagascar and Mauritius, as well as the French Minister o f Cooperation, the President o f the Union and the three presidents o f the islands signed an agreement to end the institutional crisis. The agreement sets out transitional measures for the division o f competencies between the Union and the islands, in particular customs administration and budget execution, and provides for strengthening o f key institutions. Legislative elections for the Union and the islands are scheduled for March-April 2004. The agreement calls for a heavy involvement and support from the donor community to increase the likelihood o f success.
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Objectives
v. This update o f the previous Interim (now: Transitional) Support Strategy' for Comoros i s based on L o w Income Countries Under Stress (LICUS) -principles. I t covers a period o f 18-24 months and has two main objectives: (i) maintaining basic social services; and (ii) supporting the process o f reconciliation and facilitating the transition to a viable institutional structure. To reach these two objectives the Bank would: (i) re-orient its existing portfolio toward projects that use communities as the key deliverers o f services which have proven in Comoros to be more successful than those projects executed by the government; (ii) propose a new Services Support Project (SSP) that would help maintain the delivery o f social services to the poorest segments o f the Comoran society as well as address most urgent health and water sector needs; and (iii) if the reconciliation process proves sustainable, participate in a joint effort by al l the relevant donors to ensure the basic functioning o f key public institutions through a Multi- Donor Trust Fund (MDTF). In addition, the Bank would continue to support the I-PRSP process, carry out a rural sector review, and a poverty and social expenditure assessment, as well as address governance issues and work on empowering c iv i l society with the support o f the World Bank Institute (WBI).
vi. Proposed total new lending for the period covered by this strategy would amount to US$13.3 mil l ion. The Bank also proposes to co-finance the MDTF in the amount o f around $1.5 million, initially with funding from the Post Conflict Fund (PCF) and in a subsequent phase from the LICUS Trust Fund. In l ine with i t s mandate, Bank co-financed activities would be restricted to the overall economic management aspects o f the agreement and the strengthening o f economic institutions, customs in particular.
vii. This TSS Update presents two scenarios. In the event o f a successful reconciliation, marked by a stable macro-economic environment and implementation o f an agreed-upon budget, the Bank would move towards an engagement centered around the I-PRSP and granting o f interim debt relief. I t would also resume lending for projects to be executed by government institutions. Once a full PRSP i s in place, a full Country Assistance Strategy would then be presented to the Board. Should the reconciliation process stall, the Bank would limit i t s involvement to supporting community-based activities and analytical work, and would not be in a position to proceed with co- financing the MDTF.
viii. The following issues are suggested for Board discussion:
0 Does the Board consider that the Bank's strategy based on the LICUS principles i s appropriate? Does the Board agree to focus IDA lending on community-based projects until the political situation stabilizes?
0
' ISSs have been replaced by TSSs with the introduction o f OPiBP 2.30
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MEMORANDUM OF THE PRESIDENT OF THE INTERNATIONAL DEVELOPMENT ASSOCIATION
TO THE EXECUTIVE DIRECTORS ON A TRANSITIONAL SUPPORT STRATEGY UPDATE
OF THE WORLD BANK GROUP FOR THE UNION OF COMOROS
I. POLITICAL SITUATION
Background
1. The Comoros comprises the three Comoran islands that declared independence from France on July 6, 1975: Moheli, Anjouan and Grande Comore. A fourth island o f the archipelago, Mayotte, has remained under French sovereignty. The central government o f the country is located in Grande Comore. Comoros i s a small state with a population o f about 550,000 o f which approximately 50 percent live in Grande Comore, 42 percent in Anjouan and 8 percent in Moheli. GDP per capita was estimated at US$414 in 2002, down from about US$610 in the early 1990s.
2. For many years, the situation in Comoros has been marked by poverty, poor govemance and extreme political instability. Comoran politics have been characterized by rapid changes in direction and numerous coups involving foreign mercenaries. The ensuing instability has prevented the emergence o f effective institutions, and the lack o f government commitment toward socio-economic development has led to widespread disillusion with the State.
3. Dissatisfaction with the central government and declining living standards have also fueled separatism in Anjouan, culminating in the secession attempt o f 1997, which completely isolated the island. The leaders’ inability to reach an agreement on the reintegration o f Anjouan and the deteriorating economy eventually led to riots and unrest on Grande Comore. The country’s army intervened in response and took power in a bloodless coup o n April 30, 1999.
Hopes for reconciliation
4. Following the imposition o f an embargo on Anjouan by the Organization o f African Unity (OAU) and regional neighbors, and after intense negotiations during July and August 2000, the govemment signed a joint declaration with the Anjouanese rebels on August 26, 2000. The declaration called for a reunification o f the country with a large degree o f autonomy for each island.
5. Subsequently, in February 2001, al l parties signed a Framework Agreement for National Reconciliation in the town o f Fomboni (Moheli). The agreement outlined the path to reunification and democratization o f the country, including a referendum o n the new Constitution, a govemment o f national unity, and presidential and legislative
elections. With assistance from donors, much o f this was implemented, although with delays. The new Constitution was adopted on December 23,2001, and with it, the country changed i t s name to Union o f Comoros. Anjouan agreed to resume i t s participation in national institutions, albeit in practice with important restrictions with respect to fiscal and budgetary harmonization.
6. The Constitution contained provisions for electing a president and forming a government on each o f the three autonomous islands, as well as at the central level. During April and M a y 2002, in elections that entailed some controversy, the existing leaders o f Anjouan, Mohel i and o f the Union were elected presidents. On Grande Comore, Abdou Soule El Bak, a political opponent o f the Union President Azali, was elected to the new position o f island president.
Stalled progress and new hope
7. I t was not long before new lines o f confrontation emerged. The agreements had le f t room for interpretation and negotiation on the specific respective responsibilities and prerogatives o f the four governments. These became an object o f contention, particularly between the newly formed government o f Grande Comore and the central Union government, located on the same island. In July 2002, disagreements crystallized over fiscal and budgetary issues, particularly with respect to modalities for tax collection and customs administration.
8. Attempts to resolve these issues at a meeting in Paris in October 2002, during a joint World Bank and IMF mission in December 2002, at a second meeting in Paris (so- called “Paris 11”) sponsored by the Organisation Internationale de la Francophonie (OIF) in May 2003, and at South African brokered negotiations in August 2003 were not successful. The Union and island governments were not able to agree on a coordinated execution o f the budget for 2003. Attempts by both the central and the Grande Comore governments to collect the same taxes has had a negative impact o n business. Given the lack o f a single unified budget for the entire nation, public financial developments have been extremely hard to measure with accuracy, especially at the level o f the islands.
9. Nevertheless, after the failure o f previous attempts to reach an agreement, new hope emerged towards the end o f 2003. Negotiations led by the South African President Thabo Mbeki during his visit to Comoros in December 2003 paved the way to the signing o f an agreement ( “Accord sur les Dispositions Transitoires aux Comores ”) by al l parties in Moroni on December 20, 2003 (Annex 2). With emphasis on institution building and division o f competencies, the agreement calls for the holding o f parliamentary elections in March-April 2004. This recent development brings about a new opportunity for the national reconciliation process and provides for transitional arrangements that - if implemented - would steer Comoros towards greater institutional stability and normalization o f relations with the international donor community.
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Box 1 - Timeline of Events in the Union of Comoros
6 July 1975
Aug. 1975
1975-1997: Aug. 1997 Nov. 1998
Apr. 1999 Aug. 2000 Feb. 2001 Dec. 2001 Apr.1May 2002
July 2002 Oct. 2002 May 2003 Dec. 2003
MarlApr. 2004
Independence from France. The islands o f Grande Comore, Moheli and Anjouan form Islamic Republic o f Comoros. The island of Mayotte votes to remain under French administration. First coup d’Etat: President Ahmed Abdallah toppled in coup assisted by French mercenary Bob Denard. Several coups d’Etat or attempted coups. Declining living standards, poor govemance. Island o f Anjouan secedes from Comoros. Riots and unrest on Grande Comore follow. President Abdoukarim dies. Interim President Massonde and secessionists try to take advantage o f the situation. The OAU tries to broker a peace accord. Coup on Grande Comore led by Colonel Azali Assoumani. Joint declaration between government and Anjouanese rebels. Framework Agreement for National Reconciliation (Fomboni agreement). New Constitution adopted and change o f name to “Union o f Comoros”. Presidential Elections for the Union and the islands: Colonel Azali Assoumani elected President o f the Union; Mohamed Bacar: Anjouan; Abdou Soule El Bak: Grande Comore; and Mohamed Said Fazul: Moheli New lines o f disagreement emerge between the Union and the islands Paris I meeting to resolve the continuing crisis Paris I1 meeting New Agreement under auspices o f President Mbeki o f South Africa and Prime Ministers o f Mauritius and Madagascar. Legislative elections expected.
T h e challenge o f poor governance
10. Whi le Comoros experienced some violence between 1997 and 1999, casualties remained low, partly because o f the geographical separation o f the islands. In this sense, Comoros i s not a typical war-tom, post-conflict country recovering from heavy loss o f human and physical capital. Nonetheless, the indirect costs o f the secessionist conflict remain high. During the crisis, instability increased in Anjouan. The island’s leadership was overthrown twice (in 1999 and 2001) and a group o f young militias emerged, after a failed invasion attempt o f the national army in 1998, further destabilizing the island.
11. Comoros’ main challenge remains poor governance and the resulting socio- economic decline. The Govemance Research Indicator Country (GRIC) 1996-2002 shows that Comoros compares poorly to the regional average on five out o f six measures o f governance2, although i t compares more favorably to the regional average o n measures o f “voice and accountability”. Identification o f entry points for future reforms requires a solid understanding of the roots o f poor govemance in Comoros as well as the bottlenecks hampering positive changes in governance.
12. Years o f political instability have eroded the legitimacy and accountability o f the State and prevented the emergence of strong and effective public institutions as evidenced by the virtual collapse o f government service provision. L i t t le progress has been made in creating effective island level governments or representative local government structures. The institutional vacuum has been partially f i l led in Anjouan through the election o f thirty mayors. A fledgling mayoral system has also begun to emerge in Grande Comore.
The Govemance Research Indicator Country (GRIC) 1996-2002 suggests that Comoros measures lower than the regional average o n pol i t ical stability, government effectiveness, regulatory quality, rule o f l a w and control o f corruption. Percentile ranking o n voice and accountability in Comoros in 2002 was 34.3 percent compared to a regional average o f 3 1 .O percent.
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13. In this weak institutional environment corruption i s prevalent. Customs, which provides some two thirds o f the country’s revenues are widely considered a major source o f corruption. Unconventional business practices have also flourished. Examples include the single-source contracting for the country’s telephone code, Anjouan’s efforts to provide off-shore banking facilities outside of any legal framework, the lack o f intemational competitive bidding in state-managed o i l or rice imports, and the “double privatization” o f the port o f Mutsamudu (first by the Union, then by Anjouan). The few companies o f intemational standing that were active in Comoros have le f t the country in recent years, reflecting a poor environment for private sector activity.
11. ECONOMIC AND SOCIAL CONTEXT, GOVERNMENT’S STRATEGY
Poverty
14. In 2001, per capita GN13 was US$380, only slightly above i t s 1982 level and significantly below i t s highest point in 1992, when per capita GNI stood at US$650 (Chart 1). Ranked at 168 in the world, Comoros i s one o f the poorest nations. Although no updated poverty profile i s available since the last 1995 survey, some indicators are known. L i f e expectancy stands at 60 years and the infant mortality rate i s 76 per 1,000 births. High rates o f malnutrition among children (43 percent o f children less than two years o f age suffer from moderate malnutrition), and i t s effect on resistance to infectious diseases suggest that the mortality rate wil l continue to be high. Levels o f education and health are l ow despite the fact that many Comorans invest remittance funds in private or religious social services. Public service delivery i s poor and opportunities to acquire wealth through formal sector activities are very limited. A large number o f Comorans have le f t their country in search o f better fortunes. I t is estimated that approximately 20 to 25 percent o f the people o f Comoran origin live outside Comoros, mainly in France.
15. Against the background o f economic decline and a lack o f domestic resources to finance public services, remittances from the Comoran Diaspora have been a dominant force in shaping Comoros’ economy and society, both stabilizing the extemal balance and creating disincentives for local entrepreneurship (Annex 3).
Chart 1. Comoros per capita income (1982-2000)
1982 1984
Source: World Bank W D I Database 2003
GNI per capita, Atlas method, current US$ 3
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Macroeconomic developments
A limited resource base and an erosion of competitiveness
16. Comoros i s an economy centered around local services (47 percent) and agriculture (41 percent), with a very small industrial base (12 percent). Consumption represents 101 percent o f GDP, and i s driven by remittances and characterized by rural subsistence economy. Foreign exchange eamings stem from exports o f cloves, vanilla, perfume essence (Ylang-ylang) and remittances from the Comoran diaspora. Comoros was part o f the French franc zone and the Comorian franc (KMF) is now pegged to the euro. In 1994, the KMF was devalued by 30 percent, while the other currencies o f the French franc zone were devalued by 50 percent in foreign currency terms. In Comoros, however, this devaluation was not accompanied by appropriate macroeconomic and structural policies. As a result, the gains in competitiveness attained in 1994 were eroded and the economy continues to be plagued by high production costs, slow growth and chronic fiscal deficits.
Low growth and a continuous decline in GDPper capita
17. Between 1998 and 2003 Comoros witnessed six consecutive years o f negative per capita GDP growth. GDP growth rebounded somewhat to reach 2.5 percent in 2002 (up from 1.9 percent in 2001 and -1.1 percent in 2000), in part due to favorable increases in intemational prices o f Comoros’ key exports (Table 1) and to the resulting expansion o f the construction sector. The resumption o f external support in late 2001 and 2002 also contributed to a slight rebound in the GDP growth. For 2003 a similar GDP growth o f about 2.5 percent i s expected. In spite o f these favorable developments, Comoros was unable to reverse the trend o f a negative GDP per capita growth. Preliminary projections for 2004 are along the same lines with real growth expected to reach 3 percent.
Rising inflation and a fragile fiscal situation
18. After climbing to almost 6 percent in 2001, inflation declined to 3.3 percent in 2002 and i s expected to retum to higher levels at 5.5 percent for 2003. The country’s overall balance o f payments remained slightly positive in 2002 (0.8 percent o f the GDP) as a result o f the favorable developments o f Comoros’ terms o f trade in 2002. For 2003, Comoros i s likely to register a current account deficit (excluding official transfers) o f 1.4 percent o f GDP. The overall fiscal deficit reached 6.2 percent o f the GDP in 2002, and the government continued to accumulate substantial intemal and extemal arrears. Due to weak and unreliable data, the fiscal outcomes for 2003 are s t i l l largely unknown although i t i s likely that the fiscal deficit 2003 wil l be lower than the 2002. For 2004, i t i s expected that inflation wil l go down to 4.5 percent with fiscal balances and the current account deteriorating only slightly at -1.5 and -2 percent respectively.
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Overall fiscal balance, incl. Grants Current account balance
Current account balance
External payment arrears (in US$ million at end period)
(excluding off. Transfers)
(including off. transfers)
External Debt 19. In i t s 28 years o f independence, Comoros has become heavily indebted and carries a debt burden that i t i s unable to service, in spite o f receiving almost al l o f i t s international aid on concessional terms. In 2002, total external debt was estimated to have reached 97.6 percent o f the GDP. Comoros already has large arrears to multilateral creditors (African Development Bank (AfDB), Banque Arabe Pour le De'veloppement Economique en Afrique (BADEA)) and wil l have to face a sharp increase in i t s debt service payments to International Development Association (IDA) in the next five years, when the grace period o f seven Bank projects comes to an end.
20. Given that Comoros i s not able to sustain i t s external debt burden, i t is crucial for the country to obtain debt re l ie f and to normalize i t s relations with external creditors. In the absence o f debt relief, debt payments to IDA alone wil l increase from $1.2 mi l l ion in 2003 to $2.0 million in 2006. If Comoros were to reach the Highly Indebted Poor Countries (HIPC) decision point i t s debt service payments to IDA and the IMF would be reduced by about half. Given the HIPC December 2004 sunset clause, concrete progress by the Government would need to be rapidly made to be eligible for this debt relief. The immediate impact o f HIPC debt rel ief on Comoros' cash f low would, in the f i rs t instance, be limited as Comoros wil l have to clear substantial accumulated arrears owed to other creditors. The main benefit from HIPC would therefore come from normalizing relations with i t s external creditors, which would allow for new lending and the resumption o f positive net flows to Comoros.
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Government’s Strategy and outlook
PRSP process
21. The Comoran authorities have produced a draft I-PRSP, which was validated in three participatory workshops held on each island in M a y 2003. Additional workshops were held with the Diaspora in Marseille and Paris, leading to a national seminar with the Diaspora in Comoros in September 2003.
22. By and large, the PRSP consultation process has remained on track despite political tensions. However, the deterioration o f the political and social climate has decreased the relevance o f the draft I-PRSP. The main achievement o f the PRSP process has been in bringing the Union and the three island authorities and stakeholders together to discuss common issues, even if the content o f the strategy appears increasingly disconnected from the institutional, political and social realities that the country i s facing.
23. While producing the I-PRSP i s an important achievement, the next steps and the ability to move towards a full document will depend on the general political evolution o f the country. Unless the institutional situation improves and a reliable budgetary framework i s established, the I-PRSP i s unlikely to be implemented. The absence o f a central government budget and a realistic macroeconomic program and the absence o f an IMF Staff Monitored Program to be followed by a Poverty Reduction and Growth Facility (PRGF), wil l also constrain the availability o f HIPC and complementary donor support. Following the signing o f the December 2003 agreement, IMF i s working with the Comoran authorities on establishing an integrated budget and a fiscal framework for the country. This would pave the way to a SMP and subsequently PRGF.
Box 2. M a i n features o f the I-PRSP
The Comoros draft I-PRSP i s based o n three major bui lding blocks: (1) An in-depth analysis o f poverty in Comoros supported by available quantitative and qualitative data. (2) An analysis o f potential growth sectors, particularly agriculture and fishing. (3) A l i s t o f “Strategic axes” for implementing the Poverty Reduction Strategy.
The I-PRSP recommends focusing the government’s attention o n sectors wh ich have altogether strong growth potential and an immediate effect o n employment and poverty. In Comoros, the agricultural and fishing sectors have been identif ied as top priorities, given their relative labor intensity and important export-led growth potential.
Mos t importantly, the I-PRSP also identifies the poli t ical crisis as a major obstacle to poverty reduction, and improvements in governance as a sine qua non condition for breaking the poverty trap.
Based o n this analysis, the I-PRSP defines f ive strategic axes for economic growth and poverty alleviation: 1) 2) fostering private sector development 3) promoting agricultural development 4) reinforcing govemance, justice and security 5) focusing o n social services and social service delivery
creating the conditions for sustainable economic development
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111. PAST BANK ENGAGEMENT, PROGRESS UNDER THE BANK INTERIM SUPPORT STRATEGY
24. Donor assistance has not been able to prevent the decline in GDP per capita. The Bank has carried out 19 projects since the Comoros joined the Bretton Woods Institutions in 1976: four Infrastructure and Road projects; three Education projects, three Health and Population projects, two Rural projects, one Social Fund, one Private Sector Project, one Structural Adjustment credit, one Emergency credit, and three other projects (Coconut Rehabilitation, Development Bank, Regional O i l Spi l l Contingency). A majority o f the completed projects have been rated unsatisfactory. Capacity constraints, institutional instability and poor governance were stated as causes o f poor project outcomes.
25. Comoros was in arrears to the World Bank from 1998 to January 2000. Fol lowing settlement o f arrears by the government, the suspension o f disbursements was lifted on January 6, 2000. The World Bank held a Country Portfolio Performance Review (CPPR) in March 2000, on the basis o f which i t restructured and re-launched project activities.
Interim Support Strategy
26. In November 2000, an Interim Support Strategy (ISS) was presented to the Board. I t s objective was to support Comoros in i t s transition out o f the secessionist crisis. Under the base case scenario, the Bank was to prepare an Infrastructure Project and provide non- lending services in the form o f a Country Economic Memorandum (CEM) and a grant for institutional capacity building. Under the high case scenario, which assumed an end to the separatist conflict and progress on national reconciliation, the Bank was also to prepare an Emergency Economic Recovery Credit (EERC) (Table 2).
27. By mid-2001, Comoros entered the high-case scenario as tangible and decisive progress towards national reconciliation had been made as demonstrated by the preparation o f an integrated budget and the resumption o f government transfers to Anjouan. The Bank prepared an EERC in the amount o f US$6 mi l l ion to further support the transition out o f the secessionist crisis. The EERC, which represented ha l f o f the total support provided by the international community, became an important factor in the transition process.
Evaluation of lending activities under the ISS
28. The performance o f the Bank projects has been mixed. The Bank’s proactive engagement through the EERC has had a positive overall impact on the provision o f basic social services and helped substantially to stabilize the fragile socio-economic situation in Anjouan. However, the EERC was not sufficient, by itself, to support and sustain the transition process and to bring about a reversal in the decline o f per capita incomes.
29. The Social Fund has become an important pillar o f the Bank’s engagement. I t has been performing well and with U S $ l l million, i t i s the largest project in the portfolio. In a difficult institutional environment, the project has delivered services to the poor and was
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among the f i rst projects to be operational in al l three islands. The Infrastructure, Water and Environment (IWE) project, however, performed poorly and was closed in FY03. The project was unable to disburse funds for road rehabilitation and water supply as a result o f complexities associated with implementation o f required sector reforms, the new decentralized framework for the country, and difficulties within the implementation unit.
Evaluation of non-lending activities under the ISS
30. Rather than conducting a CEM, Bank support was reoriented toward activities deemed to have a greater impact in the changing context. Inter alia, the Bank (i) made available two trust funds (one capacity building grant and a PRSP trust hnd) to support the elaboration o f a development vision for Comoros; (ii) mobilized a Post Conflict Fund grant to ensure the reintegration o f Anjouanese militias (US$SOO,OOO); (iii) supported the PRSP process; (iv) helped set-up a computerized Public Investment Program (PIP); and (v) provided technical assistance on budget management, including an in-depth evaluation o f salary arrears, an analysis o f the structure o f the c iv i l service, and a c iv i l service census in Anjouan.
3 1. The PCF grant helped support a comprehensive demobilizationheintegration package on the island o f Anjouan, led by the African Union (AU) and the OIF, the objective o f which was twofold: (i) to reduce the immediate threat represented by the militiamen and (ii) to contribute to local economic development by training the demobilized youth in small-scale activities that could be carried out at the village level. While the project was successful in addressing the f i rst issue, progress was more modest with respect to professional reintegration.
32. The Bank focused on a series o f informal reports that were considered increasingly relevant to Comoros’ changing pol icy environment. These reports consisted of: (i) an assessment o f the energy sector in response to Comoros’ energy crisis; (ii) an analysis o f remittances to support the PRSP-process and help prepare the Services Support Project; as well as (iii) an evaluation o f the budget management framework according to the Bank’s standardized assessment for HIPC-countries (“1 5 HIPC benchmarks”).
Lessons Learned from the Past and Current Bank Engagement
33. In summary, the key lessons learned from evaluating the Bank’s portfolio in this unstable and changing environment are that: (i) projects implemented through communities have been more successful than those implemented through the government; (ii) activities need to be designed with a flexible set o f tools to remain operational; (iii) expected outcomes o f the activities need to be set at a realistic level thereby closing the expectation-achievement gap; (iv) donor coordination and joint efforts are essential in bringing about positive developments in Comoros; (v) the PRSP process has proved to be a good mechanism to bring parties together to discuss common development problems and solutions. These lessons are applied in this strategy update as laid out in the fol lowing section on the Bank’s program.
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Table 2. Interim Support Strategy (November 2000)
~
Lending
Non-lending
Activity Infrastructure project
EERC (under high case)
C E M
Capacity building grant (IDF)
Status Presented to the Board in March 200 1
Presented to the Board in August 2001. The EERC was complemented by a PCF-financed reintegration project targeting young Anjouanese militia
Instead o f preparing a CEM, the Bank has: (i) supported the PRSP-process starting in March 2002, (ii) prepared informal ESWs on Energy, Education and Remittances, and (iii) produced an evaluation o f the budget system. The IDF has been made available in 2001. In addition, PRSP and PEFA-trust funds have been mobilized in 2002 and early 2003.
IV. STRATEGY UPDATE
Key objectives
34. The World Bank proposes a strategy that takes into account the lack o f political stability, the profound institutional weaknesses and the absence o f a coherent macroeconomic framework. The strategy update has two key objectives for the next 18- 24 months: (i) maintaining basic social services; and (ii) supporting the process o f reconciliation and facilitating the transition to a viable institutional structure.
35. In the relatively short timeframe o f this strategy update the Bank aims at fully supporting Comoros in i t s reconciliation process thereby laying the foundations for a more normal relationship leading to a full PRSP, paving the way for a full Country Assistance Strategy. At the same time, however, the strategy i s designed to support activities that seem to work irrespective o f political instability. The Bank maintains flexibility to withdraw financial support from the government and focus exclusively on community-based activities in the event the reconciliation process was to fai l and instability continues.
Bank’s program to meet the objectives
36. To achieve these key objectives the Bank would: (i) re-orient its existing portfolio toward projects that have used communities for service delivery and have proven to be more successful than those projects executed by government; (ii) propose a new Services Support Project (SSP) that would help maintain the delivery o f basic services to the poorest segments o f the Comoran society; and (iii) if the reconciliation process proves sustainable, participate in a jo int effort by al l the relevant donors to ensure the basic functioning o f key public institutions by co-financing a Mult i-Donor Trust Fund.
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Moreover, the Bank would continue to support the I-PRSP process, carry out a rural sector review and a poverty and social expenditure assessment as well as address governance issues and work on empowering c iv i l society with the support o f the World Bank Institute (WBI).
Reorienting the existing portfolio
37. Under the new strategy the Bank’s portfolio wi l l be restructured and streamlined so as to make i t more suitable to the existing institutional capacity o f the country. In June 2003, a Pi lot Agricultural Services project and the IWE project were closed, and an Education project was closed in December 2003. Currently there are two active projects: one supporting Health and a Social Fund. As o f January 2004, total commitments amount to US$19.9 mi l l ion and undisbursed balances to US$2.1 million. Both o f these active projects are expected to close in June 2004 and are considered to be performing satisfactorily in terms o f meeting development objectives, and implementation progress. For the foreseeable future follow-up activities in these sectors wi l l be carried out through community-based operations.
New lending
38. The strategy proposes one single comprehensive Services Support Project (SSP) o f US$13.3 million, which i s presented to the Board in conjunction with this strategy. The SSP builds on the achievements o f the successful Social Fund closing at the end o f FY04. The SSP has been designed to fit the current institutional context, addressing selected poverty reduction goals as spelled out in the draft I-PRSP. The SSP seeks to maintain service delivery with a particular emphasis on disadvantaged communities (Annex 4). I t s main activities include small-scale social and economic infrastructure, and support for the most urgent health and water sector needs. The SSP also focuses on strengthening the basic capacity o f local communities, municipalities, c iv i l society and other development partners to conduct a local development process which i s participatory and transparent.
Supporting transition with other donors: the Multi-Donor Trust Fund
39. While past efforts have not succeeded in overcoming the institutional crisis, i t i s critically important for the Bank to support the efforts to resolve the crisis with the help o f key development partners o f Comoros: South Africa, Madagascar, Mauritius, France, the OIF, the AU, the UN family, the European Union, and the IMF. I t is hard to envisage how sustainable economic development and poverty reduction can be brought about without a sustainable resolution o f the political crisis. To increase the likelihood that the December 2003 agreement wil l lead to stability in Comoros, the international community has agreed to coordinate i t s assistance for the transition through a Mult i-Donor Trust Fund. The MDTF would support Comoros in the implementation o f the budget and the new fiscal framework that i s expected to be agreed upon with the IMF in the very near future. I t would also build and strengthen the key government institutions and provide assistance to ensure that key public functions are undertaken properly such as the collection and sharing o f customs revenues between the islands, the execution o f the budget and the regular payment o f Comoros’ debt service obligations.
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40. The Bank proposes to co-finance the M D T F in the amount o f around $1.5 million, initially with funding from the Post Conflict Fund and in a subsequent phase from the LICUS Trust Fund. In l ine with i t s mandate, Bank co-financed activities would be restricted to the overall economic management aspects o f the agreement and the strengthening o f economic institutions, customs in particular. Disbursements from the MDTF and the Bank financing would be based on the achievement o f specific benchmarks agreed upon by the Comoran authorities and the donor community.
41. Other donors have requested that the Bank contribute to this effort to assist in leveraging a coordinated approach. IDA funds are not appropriate for this purpose, since the transitional program financed by the M D T F i s grant based (due to risky environment and poor debt sustainability analysis), and Bank co-financing requested i s small in size but must be delivered extremely rapidly to support the transition in a timely manner. The PCF and, under these exceptional circumstances, LICUS Trust Fund facility respond to the need to mobilize rapid support for the strengthening o f institutions, early efforts at pol icy reform and capacity building. Like the Social Services Project which provides support through community based development, the MDTF would not be administered by the government, but by the UNDP, which i s the only international development agency with a presence on the ground.
Non-lending activities
Building knowledge and empowering civil society
42. Preliminary experience in LICUS countries suggests that ESW d other forms f pol icy dialogue need to play a more important role in identifying the root causes o f institutional instability and poor governance. In order to build knowledge and empower c iv i l society, this strategy proposes a combination o f (i) support to the PRSP process; (ii) simplified ESW; and (iii) governance technical assistance by WBI. These three instruments should reinforce each other and complement the SSP. The three activities wil l also benefit from the project’s capacity to collect service delivery data.
43. PRSP. The Bank wil l continue to support the PRSP process through an existing trust fund and the proposed analytical work. Given the complementarities with other interventions, the PRSP process wil l play an even more important role in providing a platform for c iv i l society to voice i t s ideas. In the context o f Comoros, the process should aim at being selective and realistic. The precise nature o f the PRSP process, in particular i t s link to the HIPC process, wil l also depend on the progress o f the political transition. However, emphasis should be laid on deepening the dialogue with stakeholders, in particular local communities on the three islands, so as to contribute to the national reconciliation process.
44. This strategy entails the preparation o f two formal pieces o f ESW:
(i) Rural sector review. Comoros has agricultural potential and most poor people live in rural areas. The rural sector review will analyze how Comoros can
- 1 4 -
overcome constraints to productive activities in the rural sector, such as existing land tenure arrangements, distortions in the fiscal and tar i f f regimes, and the lack o f financing and the existence o f key hurdles in the supply chain.
(ii) Poverty and social expenditure assessment. A national census and a household survey wil l be completed in 2004, allowing Comoros to significantly improve the focus o f i t s policies. Based on this census and household survey, the Bank proposes to conduct a poverty assessment which wil l update recent poverty trends in Comoros and provide a profi le key characteristics o f Comoros’ poor. The assessment will be combined with a public expenditure analysis focusing on the delivery o f social services to the poor. This analysis would provide essential inputs to the PRSP and baseline data for poverty targeting o f donor projects.
45. Governance technical assistance. The media remains a relatively dynamic and independent stakeholder, and hence an entry-point for govemance support. With the support o f the WBI, the Bank wil l carry out a govemance assessment and strengthen the capacity o f Comoran joumalists. Such training wil l be closely coordinated with the activities under the SSP and the planned ESW so as to leverage the accountability effect o f the project.
Normalizing relations
46. The Bank wil l resume normal lending activities if the reconciliation process allows for the resumption o f normal economic activities with a stable macroeconomic environment and the implementation o f a budget in the context o f a coherent macroeconomic program supported by the IMF under a PRGF. Key elements o f a normal relationship between Comoros and IDA would consist of: (i) the finalization o f the I- PRSP; (ii) granting o f interim debt relief; (ii) accelerated progress towards a full PRSP leading to the preparation o f a full CAS and permanent debt rel ief under the completion point o f the HIPC initiative; and (iv) normalization o f Comoros’ relations with key donors and multilateral creditors.
47. In the event the reconciliation process stalls, the Bank will continue to restrict i t s engagement to community-based activities and analytical work, and would not be in a position to co-finance the MDTF.
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Table 3. Bank Assistance for January 2004 - December 2005 Country Context
SUCCESSFUL RECONCILIATION
NO RECOXCILIATION
Characteristics
Progress in reconciliation Stable macro- economic environment Agreed upon budget and implementation o f a unified fiscal and budgetary framework.
Reconciliation attempts fai l Macro-economic situation remains unstable Growth i s weak or negative No unif ied budgetary and fiscal framework.
B a n k Assistance
Lending Services Support Project
Grant assistance
AAA
WBI governance technical assistance
Financing o f Mult i-Donor Trust Fund
Rura l sector review (early FY05) Poverty and social expenditure assessment (end FY05)
Continued support t o PRSPiHIPC-process to help Comoros reach HIPC decision point
Lending Services Support Project
AAA
WBI governance technical assistance
Rura l sector review (early FY05) Poverty and social expenditure assessment (end FY05)
Continued but l imi ted support to PRSP process focusing o n conflict mit igation
Donor coordination and partnerships
48. Against the background o f Comorosy institutional instability and the dif f iculty o f working in Comoros, donors have reinforced their cooperation and coordination. The Bank and the UNDP have taken the lead in this effort, organizing several multi-donor meetings and drafting multi-donor Aide-Memoires.
49. All donors consider the prevailing govemance environment as the single greatest obstacle to development in Comoros. In light o f this, and given the looming debt crisis, a l l donors have agreed to limit their lending operations as much as possible, to emphasize instead grant-based assistance and systematically exploit synergies between their respective programs (see the Matr ix o f Donor Activities in Annex 5). This i s particularly important given the likely negative effects o f reduced donor support on poverty and economic growth.
50. In addition to the existing close cooperation and the planned Mult i-Donor Trust Fund, the Bank has agreed with development partners to create the fol lowing synergies in i t s assistance:
0 The Services Support Project (SSP): The new project has been designed in close collaboration with development partners, including the Agence Franqaise de De'veloppement (AFD), the International Fund for Agricultural Development (IFAD), the European Union and the UNDP. Moreover, the IFAD i s preparing a parallel project concentrating on the economic empowerment o f the rural population. The EU
- 1 6 -
i s focusing on the education sector, while the AFD will finance rural water in communities in Anjouan. These activities are complementary to those o f the SSP.
0 The PRSP: The Bank wil l continue working closely together with development partners, specifically the UNDP and the French Cooperation, to support the PRSP process. This cooperation wil l be extended to include financing o f a household survey which wil l provide new baseline data for targeting the poor. This wil l be particularly relevant for the PRSP process and community centered interventions by the donors.
Risks and mitigation measures
5 1. This strategy faces four main risks:
(i) Failure of the reconciliation process. The main risk o f the strategy i s that the past repeats i t se l f and the reconciliation fails. Given the entrenched interests that risk i s very real. The risk i s reduced, however, by the strong commitment and concerted support provided by the international community both in terms o f political and economic assistance. Indeed the December 2003 agreement enjoys high level, visible and broad backing and contains bui l t- in incentives for the agreement to work. Success in the implementation o f the agreement would entail the normalization o f relations with Comoros' partners as well as substantial debt rel ief . N e w aid flows would gradually become available as Comoros meets the benchmarks agreed upon by i t s regional partners and the entire donor community. O n the other hand, failure o f the reconciliation process would imply a virtual stop o f a l l new support to the government and in al l likelihood a continued decline in per capita incomes.
(ii) Weak institutional capacity: Another risk i s that weak institutional capacity wil l hamper the implementation o f the December 2003 agreement. The entire donor community i s fully cognizant o f this risk and has committed itself to the provision o f extensive technical support for the functioning o f key public institutions. The Bank will contribute to this jo int effort o f the donor community by financing the services o f highly qualified and experienced personnel to fol low the implementation o f those aspects o f the December 2003 agreement related to economic management and revenue collection.
(iii) Insufficiency of resources and default. Comoros has large domestic arrears as well as international arrears' to multilateral creditors. Moreover, i t wil l see a sharp increase in i t s debt service payments to IDA in the coming years. These heavy debt obligations risk jeopardizing key social expenditures and increase the likelihood o f default to IDA. The proposed strategy foresees maintaining positive net flows from IDA in the immediate future through the existing project and proposed new lending. At the same time, the work needed to put in place an I-PRSP process and a sound macro- economic program i s intensified in very close collaboration with the IMF and the other donors. Comoros wil l only be able to benefit from the HIPC initiative before the sunset clause applies in December 2004, if i t i s able to show a satisfactory track record by December 2004.
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(iv) Political interference in implementation of SSP project. There i s a risk that the Union and the islands authorities will interfere with the decision-making process o f the SSP and undermine the demand-driven and community based dimensions o f the project. This risk has been mitigated in the design o f the project by creating a strong, independent and autonomous project management. In addition, the project wil l be closely supervised by the Bank on a regular basis.
James D. Wolfensohn President
By Shengman Zhang
Washington, DC February 11,2004
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Annex 1 Page 1 of 1
Expected outcomes in two years
Short-Term Results Matrix
Intermediate Outputs and Support by the World Indicators Bank and Development
partners
0 Agreement o n a new fiscal framework including: (i) revenue sharing; (ii) revenue collection; and (iii) expenditure sharing. Creation o f institutions as per December 2003 agreement
Increased number o f students in F A D C bui l t or rehabilitated bui l t or rehabilitated schools / classrooms Increased number o f persons in project intervention areas benefiting f rom a reduction in transport time and cost Increased number o f communities with development plans meeting participatory process criteria
Technical assistance f rom relevant development partners
0 Funding through the MDTF 0 Bank and other relevant
donors continue to support the PRSP process
0 Government continues to pay (i) salaries; and (ii) counterpart funds o f active donor projects
0 Diaspora fund continue to co- finance local services at existing rate
small-scale infrastructure projects
0 At least 44 communities wil l benefit f rom at least one sub- project At least 50% o f the population in project intervention zones will have access to drinking water wi th in 1 km A t least 50% o f population in project intervention zones indicate knowledgelsatisfaction w i th their participation in community development plans
SSP will complete at least 3g4
Pillar 2 : Facilitating transition to a viable institutional structure - 0 Integrated budget agreed upon
0 Satisfactory performance o f and implemented
customs as per December 2003 agreement
0 EU Education Project 0 IFAD Rural Development
Bank Services Support
0 Bank E S W will provide
Project
Project
baseline data and analysis focusing o n poverty, service delivery and agricultural production
0 Bank and other relevant donors continue to support the PRSP process.
Target values are as o f project mid-term which coincides with the end o f this strategy period.
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Annex 2 Page 1 o f 1
Transitional agreement of December 20,2003
(i) O n December 20, 2003 the President o f the Union o f Comoros, Azal i Assoumani; the President o f h j o u a n , Mohamed Bacar; the President o f Moheli, Mohamed Said Fazul; and the President o f Grande Comore, Abdou Soule El Bak, signed an agreement for national reconciliation under the auspices o f President Thabo Mbeki o f South Africa.
(ii) The agreement was signed in the presence o f the President o f South Africa, Thabo Mbeki; Prime Minister o f Mauritius, Paul Berenger; Prime Minister o f Madagascar, Jacques Sylla; Deputy Foreign Minister o f Tanzania, Abdulkader Shareef; Secretary General o f the OIF, Abdou Diouf; Minister o f Cooperation and Francophonie o f France, Pierre Andre Wiltzer, Ambassador o f France and Representative o f the European Union, Jean-Pierre La j aunie; Representative o f the United Nations, Mamadou Kane; and Secretary General o f the Indian Ocean Commission, Wilfrid Bert i le.
(iii) The agreement sets out transitional measures in the following key areas:
0 Customs. The agreement calls for a joint customs administration under the authority o f the State, represented by the Un ion government. To ensure independence, transparency and efficiency o f customs, a Customs Council consisting o f international experts and Comorans wil l be set up. Furthermore, an international Harmonization Committee wil l be formed with a mandate to oversee harmonization o f norms, structures and macro-economic data. The signing parties have invited the World Bank to s i t in this Committee as well as to provide international experts to the Customs Council. Budget. Two weeks from the signing o f the agreement a transitional budget wil l be put in place. The agreement sets out distributional shares o f the budget for each o f the islands, the execution o f which wil l be under the surveillance o f the Harmonization Committee. The Harmonization Committee wil l also establish a system to control the expenditures and to ensure their transparency. After the adoption o f legislation for the sharing o f competencies, a consolidated budget wi l l be implemented. Legislative elections. Elections are to be held in March and April 2004 under the scrutiny o f a Monitoring Committee consisting o f the signing parties as well as international community. This Committee wil l be chaired by the African Union. Exceptional arrangements for Grande Comore. A retroactive payment wi l l be made for the island o f Grande Comore to cover expenses the island was entitled to since January 2003. Security arrangements. The African Union i s invited to provide civilian and military observers for the duration o f the transitional period.
0
0
0
0
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0 Support from the international community. The agreement calls for technical and financial assistance from the donor community to support the transitional measures.
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Annex 3 Page 1 of 2
Remittances
(i) Remittances play a central role in Comoros’ economy and society. Comoros i s among the leading countries in the world in terms o f remittances per capita and the share o f remittances relative to total exports. An estimated 20 to 25 percent o f the people o f Comoran origin live abroad (some 150,000 to 200,000 people), o f which between 85,000 and 150,000 are living in metropolitan France, many with French citizenship. The diaspora maintains strong ties to the Comoros and remits over 15 bi l l ion Comoran Francs (over US$35 million) annually, representing almost twice the product o f total merchandise exports. Since the late 1990s, remittances increased substantially, which pushed the current account into surplus (see chart below).
Key components o f Balance of Payment 1984 - 2002
30
20
10
-1 0
-2 0
-30 Year
Source: “Remittances in Comoros ”, Draft report, World Bank Africa Region
(ii) However, remittance receipts through formal channels vary enormously between the three islands. With roughly equal populations, Grande Comore and Anjouan receive respectively 91 percent and 7 percent o f the total. If one considers net transfers, the difference becomes even starker, because Anjouan has a negative balance o f transfers (56 percent o f transfers were outbound), whereas Mohel i has roughly equal amounts o f ingoing and outgoing transfers and Grande Comore a strongly positive balance (79 percent inbound).
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Annex 3 Page 2 o f 2
Variance of remittances to the three Comoran islands (2001,2002, in KMF m)
Source: “Remittances in Comoros”, Draft report, World Bank Africa Region, (based on Western Union data)
(iii) Given i t s financial weight and direct contribution to the economic l i f e o f Comoros, the diaspora has an important role to play in the country’s development. This strategy and the SSP seek to harness those inflows, which are naturally based o n community/village l inks, by allowing diaspora money to be used as matching funds for community development projects. One o f the advantages i s to provide an outlay for diaspora development investment that i s entirely transparent and secure, thus encouraging altogether the formal channels for remitting diaspora money, productive use o f remittances and continued financial involvement o f an otherwise increasingly skeptical diaspora. The diaspora also constitutes a pool o f human capital which ought to be mobilized, be i t for development projects or for accountability enhancing activities.
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Annex 4 Page 1 of 2
L I C U S Service Delivery Model
(i) The 2004 World Development Report (WDR 2004) describes a traditional model o f service delivery (illustrated in chart below) which includes three groups o f interacting stakeholder: (i) citizens, as clients, influence policymakers; (ii) policymakers influence service providers; which in turn (iii) deliver services to the clients. Service delivery failures occur when any o f these relationships breaks down. For instance, when citizens are unable to influence public action (break on the le f t side o f the triangle), when service providers’ salaries are not paid (break on the right side o f the triangle), or when there are difficulties in implementing services, such as poorly trained or absent teachers (break on the bottom o f the triangle).
Service delivery in LICUS-countries
(ii) In Comoros, significant gaps exist along both the lef t and right sides, as wel l as the bottom o f the triangle. To provide some re l ie f in the short term, the SSP seeks to establish a “short-cut” in the triangle by increasing the client’s direct power over providers through heightened monitoring, participation, and choice. In the short- and medium -term, this wil l strengthen the connection along the base o f the triangle between the citizens and services. Such processes wil l be conducted through local intermediary bodies, such as village councils (comi th depilotage). The goal i s not to provide a comprehensive long term solution to service delivery failures in Comoros, which wil l eventually require a re- engagement o f the state, but rather to avoid further deterioration o f human capital in the short term.
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Annex 4 Page 2 of 2
(iii) Eventually, the project can also help ‘amplify’ the voice o f the poor (who are the main victims o f service delivery failures) and foster stronger l i n k s on the le f t side o f the triangle - between the citizens and pol icy makers - by ways o f demonstration effects and by building bottom-up demand for end-user accountability. To that end, the SSP wil l introduce community development planning and community-contracting models into the program design. Providing competitive opportunities and incentives to local mayors to respond to community needs via pro-citizen and downwardly accountable processes, wil l begin to scale up this impact and further decrease the accountability gap between the citizens and policymakers. Transparency at the local level wil l also be enhanced through project monitoring by local independent media. These measures should al l contribute to “strategic incrementalism” (WDR 2004), whereby acute service delivery problems are alleviated alongside with long-term efforts to rebuild state capacity in service delivery.
Most recent estimate (latest year available, 1996-02) Poverty (% ofpopulation below national poverty line) Urban population (% of total population) Life expectancy at birth (years) Infant mortality (per 7,000iive births) Child malnutrition (% of children under 5) Access to an improved water source (% ofpopulation) Illiteracy (% ofpopulation age 75+) Gross primary enrollment (% of school-age population)
Male Female
KEY ECONOMIC RATIOS and LONG-TERM TRENDS 1982
GDP (US$ billions) Gross domestic investmenffGDP Exports of goods and services/GDP Gross domestic savings/GDP Gross national savings/GDP
Current account balanceiGDP Interest paymentsiGDP Total debffGDP Total debt service/exports Present value of debVGDP Present value of debffexports
0.11 31.4 15.7 6 . 8 9.5
-10.2 0.7
64.2 4.3
1982-92 1992-02 (average annual growth) GDP 1.7 1.0 GDP per capita -0.9 -1.5 Exports of goods and Services 7.3 -3.8
0.60 390 0.23
2.6 2.8
34 61 59 26 96 44 76 82 70
1992
0.28 19.5 17.1 -3.1 6.7
-19.6 0.7
67.1 5.6
33.9 135.4
2001
1.9 -0.6
-10.1
Sub- Saharan
Africa
674 470 317
2.5 2.6
32 47 91
55 37 78 85 72
2001
0.22 13.2 15.9 0.0
16.0
1.8 0.4
102.9 3.9
70.0 226.8
zoo2
2.5 -0.2 8.8
Low- income
2,511 430
1,069
1.9 2.3
31 59 76
76 37 96
103 88
2002
0.25 12.9 15.8 0.6
13.7
1.1 0.6
100.8 8.1
65.1 221.5
2002-06
3.0 0.3 5.3
Development diamond'
Life expectancy
-.?
i
GN i Gross per + pnmary capita enrollment
I i
Access to improved water source
-- Comoros Low-income group
Economic ratios.
Trade
-
Indebtedness
Comoros Low-income arouo
---
STRUCTURE of the ECONOMY
I% of GDP) Agriculture 3 3 5 374
Manufacturing 3 7 4 2 Industry 1 4 1 108
Services 524 51 7 4 7 2 4 7 2
Private consumption 768 836 8 3 7 80 1 General government consumption 299 195 1 6 3 1 9 3 Imports of goods and services 538 39 7 2 9 2 28 1
__ ~~
Note 2002 data are preliminary estimates Group data are through 2001
* The diamonds show four key indicators ln the Country (in bold) compared with its income-group average If data are missing, the diamond will be incomplete
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Annex A2 Page 2 of 2
Comoros
PRICES and GOVERNMENT FINANCE
Domestic prices (% change) Consumer prices Implicit GDP deflator 6.5
Government finance (% of GDP, includes current grants) Current revenue Current budget balance Overall surDlus/deficit
1982
TRADE
(US$ millions) Total exports (fob)
Vanilla Cloves Manufactures
Total imports (cif) Food Fuel and energy Capital goods
Export price inde$1995=100) Import price inde$1995=100) Terms of trad$1995= 100)
BALANCE of PAYMENTS
(US$ millions) Exports of goods and services Imports of goods and services Resource balance
Net income Net current transfers
I982
1982
22 51
-28
1 19
Current account balance -1 1
Financing items (net) Changes in net reserves
15 -4
Memo:
Conversion ratq'DEC, local/US$) 328.6
EXTERNAL DEBT and RESOURCE FLOWS
(US$ millions)
Reserves including golcL/S$ millions) 11
1982
69 IBRD 0 IDA 8
Total debt outstanding and disbursed
Total debt service IBRD IDA
Composition of net resource flows Official grants Official creditors Private creditors Foreign direct investment Portfolio equity
World Bank program Commitments Disbursements Principal repayments Net flows Interest payments Net transfers
1 0 0
. . . 16 1
12 2 0 2 0 2
I992
-6.5 -6.5
15.0 -6.4
-16.6
1992
22 16 0
74 13 7
125 64
194
1992
48 111 -63
4 5
-55
55 0
27 265.0
1992
188 0
40
4 0 1
. . . 17 0
0 3 0 2 0 2
2001
2.9 8.5
16.0
-3.6 -1.6
2001
17 10 4
52 12 10 5
181 122 148
2001
35 64
-29
2 31
4
17 -21
63 549.3
2001
226 0
79
3 0 1
10 8 0
17 12 1
11 1
10
2002
3.3 4.5
19.1 -2.9 -6.2
2002
19 13 4
57 12 11 6
184 123 149
2002
39 70
-30
0 33
3
7 -9
72 521.1
2002
250 0
96
6 0 1
1 9 0
0 12 1
11 1
10
Inflation (Oh) ~ 1 0 _r
97 98 99 w 01 02
GDP deflator -CPI -
I Export and import levels (US$ mill.)
170 T 60 50 40 30 20 10 0
96 97 98 99 00 01
Exports Imports
I Current account balance to GDP (Oh)
2 0 2 4 6 8
-10 -12 -14 -16 i-18
Composltlon of 2001 debt (US$ mill.)
A. IBRD E - Bilateral B . IDA D - Other multilateral F . Private C - IMF G - Short-term
Development Economics 1/20/04
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Annex B2 Page 1 o f 1
Annex B2 - Comoros Selected Indicators of Bank Portfolio Performance and Management
Average Implementation Period (years) 3.8 4.8 4.8 6.0 Number of Projects Under Implementation a 6 6 4 2
Percent of Problem Projects by Number a r c 0.0 0.0 25.0 0.0 Percent of Problem Projects by Amount a, 0.0 0.0 29.8 0.0 Percent of Projects at Risk by Number a , d 0.0 33.3 25.0 50.0 Percent of Projects at Risk by Amount as 0.0 44.2 29.8 57.8 Disbursement Ratio (%) e 12.2 43.0 34.9 27.4 Portfolio Management CPPR during the year (yes/no) No No No No Supervision Resources (total US$) 341,000 592,000 280,000 265,000 Average Supervision (US$/project) 57,000 85,000 47,000 70,000
Memorandum Item Since FY 80 Last Five FYs
Proj Eva1 by OED by Amt (US$ millions) 80.1 23.7 % of OED Projects Rated U or HU by Number 53.8 66.7 % of OED Projects Rated U or HU by Amt 55.2 74.2
Proj Eva1 by OED by Number 13 3
a. As shown in the Annual Report on Portfolio Performance (except for current FY). b. Average age of projects in the Bank's country portfolio. c. Percent of projects rated U or HU on development objectives (DO) and/or implementation progress (IP). d. As defined under the Portfolio Improvement Program. e. Ratio of disbursements during the year to the undisbursed balance of the Bank's portfolio at the
beginning of the year: Investment projects only. * All indicators are for projects active in the Portfolio, with the exception of Disbursement Ratio,
which includes all active projects as well as projects which exited during the fiscal year.
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Annex B3 Page 1 of 1
Annex B3 - IBRD/IDA Program Summary -Comoros As of 01/06/2004
Proposed IBRDllDA Base-Case Lending Program a
Fiscal year Proj ID Strategic Rewards b Implementation b (H IM) Risks ( H M ) US$(f4
2004 Services Support Roject 13.3 H H
Total: 13.3
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Annex B4 Page 1 of 1
Annex B4 - Summary o f Non-Lending Services As o f 01lQ6I2QO4
Product Completion FY Cost (US$OOO) Audience a Objective
Recent completions
Energy Note FY03 26,000 Government KnowledgdProblemSolving
Underway
PRSP TSS-Update
FYO4 87,000 FYO4 65,000
Bank Bank
Knowledge Knowledge
Planned
Rural Sector Review FY05 200,000 GovtlBank Knowledgdproblem-solving Poverty and Social Expenditure Assessment: FY05 179,000 GovtlBank Knowledge
a. Government, donor, Bank, public dissemination. b. Knowledge generation, public debate, problem-solving
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I
iD m
The Core Task Team comprised Wolfgang Fengler, Aurelien h s e , Anna van der Wouden and Willem van Eeghen. The team was strongly supported by the LICUS- team, particularly Sarah Cliffe, Kathryn Casson and Catherine Moeller, as well as Vincent da Cruz and Cede Wodon, but many others contributed.
