2013 Index of Economic Freedom

Comoros

overall score47.5
world rank157
Rule of Law

Property Rights30.0

Freedom From Corruption24.0

Limited Government

Government Spending82.4

Fiscal Freedom64.7

Regulatory Efficiency

Business Freedom44.7

Labor Freedom51.2

Monetary Freedom74.6

Open Markets

Trade Freedom68.8

Investment Freedom15.0

Financial Freedom20.0

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Quick Facts
  • Population:
    • 0.7 million
  • GDP (PPP):
    • $0.8 billion
    • 2.2% growth
    • 1.5% 5-year compound annual growth
    • $1,232 per capita
  • Unemployment:
  • Inflation (CPI):
    • 6.8%
  • FDI Inflow:
    • $6.8 million
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Comoros’s economic freedom score is 47.5, making its economy the 157th freest in the 2013 Index. Its overall score is 1.8 points higher than last year, reflecting noteworthy increases in labor freedom, business freedom, and freedom from corruption. Comoros is ranked 39th out of 46 countries in the Sub-Saharan Africa region, and its overall score is lower than the regional average.

Comoros contrasts sharply with other African island nations that have found in greater economic freedom a path to modernization and sustainable development. Low scores on property rights and corruption in particular contribute to its standing as one of the world’s least economically free countries. The public sector remains inefficient and lacks transparency. Political crises have undermined confidence in the government and contributed to macroeconomic mismanagement, resulting in dismal economic performance over the past five years.

The overall entrepreneurial environment remains severely constrained. An overbearing regulatory framework, exacerbated by poor access to credit and high financing costs, stifles economic activity and hurts business expansion, hiring, and the development of a vibrant private sector.

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Background

The Union of the Comoros is an archipelago of three islands: Grande Comore, Anjouan, and Moheli. Political turmoil has hampered economic and social development, but a 2001 constitution granting each island increased autonomy has provided some stability. The presidency rotates among the three islands every four years. The peaceful transfer of power to Ikililou Dhoinine in 2010 is a sign of growing political stability, and macroeconomic and structural policies have improved. Comoros is highly dependent on foreign aid to support its economy, and remittances from Comorans living abroad are an important source of income. Fishing, agriculture, and forestry employ approximately 80 percent of the population and provide over 40 percent of GDP. Comoros is among the world’s leading producers of ylang-ylang (a perfume ingredient), cloves, and vanilla. In March 2012, Comoros awarded a license for the exploration of oil and gas to a privately owned Kenyan company.

Rule of LawView Methodology

Property Rights 30.0 Create a Graph using this measurement

Freedom From Corruption 24.0 Create a Graph using this measurement

Political stability has improved since the smooth transfer of power to President Dhoinine in June 2011, but the judicial system is ineffective, contracts are weakly enforced, and courts are relatively inexperienced in commercial litigation. The government lacks the capacity to enforce intellectual property rights laws. Officials often engage in corrupt practices with impunity.

Limited GovernmentView Methodology

The top income tax rate is 30 percent, and the top corporate tax rate is 50 percent. Other taxes include a value-added tax (VAT) and an insurance tax. The overall tax burden equals 11.4 percent of total domestic income. Government spending is equivalent to 24.3 percent of total domestic output. With continuing budget surpluses, Comoros is on track to complete the Heavily Indebted Poor Countries Initiative, paving the way for multilateral debt reduction.

Regulatory EfficiencyView Methodology

The overall regulatory framework remains poor. Establishing a business costs more than the level of average annual income. Retail services are the largest source of employment, and formal-sector employment is negligible. Inflation began to increase in 2012, exacerbated by the rising cost of imports caused primarily by high global fuel prices and depreciation of the euro-pegged Comorian franc against the dollar.

Open MarketsView Methodology

The trade-weighted average tariff rate is 8.1 percent, and myriad non-tariff barriers undermine trade freedom. Non-transparent investment regulations and underdeveloped markets inhibit investment. The small financial sector, dominated by banks, has recorded modest growth in recent years. With two new banks coming into operation, the small banking sector has expanded, but many people and businesses still rely on informal lending.

Country's Score Over Time

Bar Graph of Comoros Economic Freedom Scores Over a Time Period

Country Comparisons

Bar Graphs comparing Comoros to other economic country groups

Regional Ranking

rank country overall change
1Mauritius76.9-0.1
2Botswana70.61.0
3Rwanda64.1-0.8
4Cape Verde63.70.2
5Madagascar62-0.4
6South Africa61.8-0.9
7Ghana61.30.6
8Uganda61.1-0.8
9Namibia60.3-1.6
10Burkina Faso59.9-0.7
11The Gambia58.80.0
12Zambia58.70.4
13Tanzania57.90.9
14Gabon57.81.4
15Benin57.61.9
16Swaziland57.20.0
17Mali56.40.6
18Kenya55.9-1.6
19Senegal55.50.1
20Malawi55.3-1.1
21Nigeria55.1-1.2
22Mozambique 55-2.1
23Seychelles54.91.9
24Côte d'Ivoire 54.1-0.2
25Djibouti53.90.0
26Niger53.9-0.4
27Cameroon52.30.5
28Mauritania52.3-0.7
29Guinea51.20.4
30Guinea-Bissau51.11.0
31Central African Republic50.40.1
32Ethiopia49.4-2.6
33Liberia49.30.7
34Burundi490.9
35Togo48.80.5
36Sierra Leone48.3-0.8
37São Tomé and Príncipe 48-2.2
38Lesotho47.91.3
39Comoros47.51.8
40Angola47.30.6
41Chad45.20.4
42Republic of Congo 43.5-0.3
43Equatorial Guinea42.3-0.5
44Democratic Republic of Congo39.6-1.5
45Eritrea36.30.1
46Zimbabwe28.62.3
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