Comoros: Leveraging remittances to finance development

Between 2000 and 2013, remittances from Comorian nationals living in France (estimated between 150,000 and 300,000 people) have increased from 12.5 billion to 59 billion Comorian francs (KMF), and now represent about 25 % of Comoros’ GDP, making it the fourth most dependent country in the world for diaspora transfers. Most remittances were sent through the informal sector and aimed at domestic consumption.

Comoros should use diaspora’s resources to increase its productive capacities, said Said Adejumobi, Director of the United Nations Economic Commission for Africa (ECA) in Southern Africa, while attending the 21st session of the Intergovernmental Committee of Experts recently held in Moroni.

Studies from several African countries, he added, show that remittances are usually spent to meet essential needs such as food and shelter. "Nevertheless, a larger share of remittances should be allocated to local infrastructure development, investment or vocational training".

His Excellency Mr. Azali Assoumani, President of the Union of the Comoros, explained that his Government had committed to put in place a national development policy encouraging private investments by the diaspora.

President Azali said he wants to strengthen the dialogue with the Comorian diaspora to identify how to better channel these funds for investment and development. He also urged ECA to support its government in developing a framework that would leverage remittances from the diaspora more efficiently.

Exploiting diaspora’s resources to diversify and strengthen the country's economy, however, requires greater trust and reform of the national banking and financial sectors.

According to the analysis conducted by Mr. Abdou Katibou, Director General of the National Investment Promotion Agency of the Comoros (ANPI), remittances from the Comorian diaspora have been increasing and remain essential to the Comorian economy. Estimates by the Central Bank of Comoros show that remittances represented about 25% of Comoros Gross Domestic Product in 2013, equivalent to 160% of budgetary revenues and 380% of official development aid. The benefits of remittances from the diaspora are far from negligible.

Rwanda and Ethiopia could inspire the Comoros through their experience in mobilizing diaspora resources.

In 2012, Ethiopia mobilized nearly $600 million. These funds increased to $1.5 billion in 2014 and $ 3.5 billion in 2015. Ethiopia has managed to mobilize its diaspora to finance part of the construction of the "Grand Renaissance" dam. When completed, this dam will be Africa's largest hydropower plant with a capacity of 5,250 megawatts.

As for Rwanda, in the past decades, the country has been engaging its diaspora in the country development agenda. "The diaspora is like one of our provinces" said Mr. Godfrey Kabera, Director General of Planning and Development Research at the Ministry of Finance and Economic Planning.

From the highest level of the state, Rwanda has been engaging with its diaspora and their families so that they devote a larger part of their savings to finance investment, business development and job creation. The Rwandan President made 11 visits to major cities around the world to meet with the diaspora and friends of Rwanda, to present the national development strategy and invite them to contribute to it.

The increased attention paid to remittances should not, however, mean that they can substitute other sources of development finance, which on the contrary need to be mobilized more effectively, such as foreign direct investment, official development assistance or fiscal resources.

Issued by:

Communications Section
Economic Commission for Africa
PO Box 3001
Addis Ababa
Tel: +251 11 551 5826