1999-2000 Tanzania Comoros

COUNTRY PROFILE

Tanzania Comoros

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Comparative economic indicators, 1998

EIU Country Profile 1999-2000 © The Economist Intelligence Unit Limited 1999 1

June 30th 1999 Contents

Tanzania

5 Basic data

6 Political background 6 Historical background 9 Constituition and institutions 10 Political forces 12 International relations and defence

14 Resources and infrastructure 14 Population 15 Education 15 Health 16 Natural resources and the environment 16 Transport and communications 18 Energy provision

19 The economy 19 Economic structure 20 Economic policy 22 Economic performance 23 Regional trends

24 Economic sectors 24 Agriculture, forestry and fishing 25 Mining and semi-processing 26 Manufacturing 26 Construction 27 Financial services 28 Other services

28 The external sector 28 Trade in goods 30 Invisibles and the current account 31 Capital flows and foreign debt 32 Foreign reserves and the echange rate

Zanzibar

33 Political background 33 Historical background 34 Constitution and institutions 34 Political forces

35 Resources and infrastructure 35 Population

36 The economy 36 Economic policy 36 Economic performance

37 Economic sectors 37 Agriculture and fishing 38 Manufacturing 39 Other services

39 The external sector 39 Trade in goods

40 Appendices 40 Regional organisations 46 Sources of information 47 Reference tables 47 Population census results 47 Minimum wage 48 Transport statistics (mainland) 48 Electricity production (mainland) 49 Government finances (Union) 49 Money supply and credit (Union) 50 Interest rates 50 Gross domestic product (mainland) 50 Gross domestic and national product (mainland) 51 Gross domestic product by expenditure (mainland) 51 Gross domestic product by expenditure (mainland) 51 Gross domestic product by sector (mainland) 52 Gross domestic product by sector (mainland) 52 Prices 52 Production of principal food crops (mainland) 53 Production of principal cash crops (mainland) 53 Industrial production (Union) 53 Minerals production (Union) 54 Tourism trends (Union) 54 Exports (Union) 54 Imports (Union) 54 Main trading partners (Union) 56 Balance of payments, IMF estimates (Union) 57 External debt, World Bank estimates (Union) 57 Net official development assistance (Union) 58 Foreign reserves (Union) 58 Exchange rates (Union) 58 Government finances (Zanzibar) 59 Gross domestic product (Zanzibar)

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59 Gross domestic product by sector (Zanzibar) 59 Prices (Zanzibar) 60 Marketed production of principal cash crops (Zanzibar) 60 Tourism trends (Zanzibar) 60 Trend of external trade (Zanzibar)

Comoros

61 Basic data

62 Political background 62 Historical background 68 Political forces 69 Constitution and institutions 70 International relations and defence

71 Resources and infrastructure 71 Population 72 Education 73 Health 73 Natural resources and the environment 74 Transport and communications 76 Energy provision

77 The economy 77 Economic structure 78 Economic policy 80 Economic performance

81 Economic sectors 81 Agriculture, forestry and fishing 84 Manufacturing 84 Financial services 85 Other services

86 The external sector 86 Trade in goods 87 Invisibles and the current account 88 Capital flows and foreign debt 89 Foreign reserves and the exchange rate

89 Appendices 89 Regional organisations 91 Sources of information 92 Reference tables 92 Government finances 92 Money supply 93 Gross domestic product

93 Gross domestic product 93 Gross domestic product by expenditure 94 Gross domestic product by expenditure 94 Price movements for basic goods and services 94 Balance of payments 95 External debt, World Bank estimates 95 Net official development assistancea 96 Foreign reserves 95 Exchange rates

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Tanzania

Basic data

Land area 883,749 sq km (881,289 sq km mainland, 2,460 sq km Zanzibar), plus lakes totalling 59,100 sq km in area)

Population 32.3m, including 825,000 in Zanzibar (1998 estimate)

Main towns Population (1988 census) Dar es Salaam (capital) 1.36m Mwanza 223,000 Tanga 187,200 Zanzibar Town 157,600 Mbeya 152,800 Arusha 134,700

Climate Tropical on the coast, semi-temperate inland

Weather in Dar es Salaam Hottest month, January, 23-32°C; coldest month, July, 18-29°C; driest month, (altitude 14 metres) September, 26 mm average rainfall; wettest month, April, 263 mm average rainfall

Languages kiSwahili, English

Measures Metric system

Currency Tanzanian shilling (TSh). Average exchange rate in 1998: TSh664.7:$1. Exchange rate on June 25th 1999: TSh712.8:$1

Time Three hours ahead of GMT

Political background

The United Republic of Tanzania was formed by the union of Tanganyika and Zanzibar in 1964. The government is led by President Benjamin Mkapa of the Chama Cha Mapinduzi (CCM) party. Zanzibar has its own government for internal affairs (see Zanzibar: Political background).

Historical background

Early Arab influence— Although indigenous scholars are beginning to formulate a Tanzanian “history of itself”, the country’s early history has long been dominated by the writings and perceptions of foreigners. Arab traders were an early influence, establishing coastal settlements in the tenth century and 800 years later penetrating the interior as far as Lake Tanganyika, carrying with them Arab culture, Islamic beliefs and the Swahili language. Contacts with the outside world gradually increased through Zanzibar, especially after an Omani sultan, Sayyid Said, moved his capital from Muscat to the island in 1840.

—gives way to German French, US, German and British interests competed for trade in the area, but domination the German East Africa Company proved particularly adept at persuading unsuspecting chiefs to sign “treaties of friendship”, and in 1885 the company’s sphere of influence—stretching from the coast of Zanzibar to the central states of Ruanda and Urundi—was declared a protectorate of the German state. Comparatively small numbers of German settlers followed—unlike Kenya’s fertile highlands, much of the country was deemed unsuitable for European farmers to colonise—but there was significant resistance to imperial rule. Indeed, the multi-ethnic Maji Maji rebellion, which engulfed much of the south of the country in 1905-06 in response to the enforced cultivation of cotton, represented one of the most serious challenges to a colonial power in Africa at that time.

After the first world war German East Africa, with Urundi and Ruanda excised (and separately mandated to Belgium), came under British rule as Tanganyika under a League of Nations mandate. Thereafter, development of the colonial economy was disturbed by the UK’s expulsion of German settlers and its pre- occupation with establishing its own system of rule. In 1946, when Tanganyika became a UN trust territory, the British authorities were formally obliged to begin preparations for the territory’s independence. As a result the country did not experience the inter-war heyday of colonial development and exploitation in quite the same way as its immediate neighbours.

Independence Although there was growing opposition to both colonial and traditional “tribal” authority from influential coffee-producer co-operatives, members of the colonial bureaucracy and the nascent trade unions, African political associations emerged relatively slowly. The Tanganyika African Association (TAA) was established in 1929, but it was not until 1954—after a programme of forced removals of African homesteads to make way for post-war British settlers gave added impetus to the nationalist cause—that the TAA was reformed as an

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explicitly political organisation, the Tanganyika African National Union (TANU). TANU won a decisive victory in the country’s first general election, held in two parts over 1958-59, and its dominance increased in the subsequent, 1960, poll. TANU’s leader, Julius Nyerere, was asked to form a government and Tanganyika became independent from the UK on December 9th 1961.

The creation of Tanzania In Zanzibar the sultan and his largely Arab government were overthrown in January 1964, only weeks after securing independence, and the radically inclined Afro-Shirazi Party (ASP) came to power. Three months later, in the prevailing spirit of pan-Africanism and, in part, as a cold war response to the ASP’s socialist programme, Mr Nyerere signed an Act of Union with his Zanzibari counterpart, Abeid Karume, creating the United Republic. The Union was named Tanzania in October 1964.

The Arusha Declaration Mr Nyerere inherited a country that had been largely ignored by the British colonial authorities. It had few exploitable resources, only one major export crop (sisal) and a dilapidated education system. The problems that this created eventually led to the Arusha Declaration of 1967. Based on the Chinese communist model, the cornerstone of the policy was a series of collective agricultural ventures know as ujamaa (community) villages, while a strict leadership code required the political class to divest itself of private sources of income in the pursuit of “socialism and self-reliance”.

There was less than universal support for the programme—many peasants, in particular, regarded the ujamaa system as little more than compulsory resettlement—and the government’s response to any overt dissent was sometimes heavy-handed. Nevertheless, the Nyerere years were a period of successful nation-building and, until the latter part of the 1970s at least, of general improvements in both living standards and the provision of basic services.

The “second phase” Mr Nyerere was returned to the presidency unopposed in elections held every government five years from 1965 until 1980. In 1985, however, he stepped down and was replaced as Union president by Ali Hassan Mwinyi. Mr Mwinyi was in a sense unlucky: the period of his presidency—the so-called second-phase government—coincided with the West’s attempts to impose a multiparty democratic model upon aid-dependent states in Africa and an economic downturn resulting from the effects of some of Mr Nyerere’s mistaken policies. Nevertheless, the new president certainly did not help his own cause: Mr Mwinyi’s stewardship of the Tanzanian state was characterised by general weakness of leadership and, for all his declared offensives against mismanagement and dishonesty, a mushrooming of corruption. He failed to balance the interests of groups such as the country’s Christian and Muslim populations to the satisfaction of any party and, in the latter part of his presidency, was condemned for incompetence by Mr Nyerere, who remained chairman of the ruling Chama Cha Mapinduzi (CCM) party until 1990.

Pluralism and division Meanwhile, Tanzania was coming under donor pressure to move to multi partyism. In 1991 a presidential commission published recommendations on the establishment of such a system, and several new political organisations thus contested by-elections in 1992. This hardly constituted a level playing field, as the ruling party’s candidates enjoyed privileged access to state radio and other advantages, but the gradual dismantling of the single-party state also served to loosen the bindings that held the Tanzanian nation together, and numerous divisions—between mainland and isles over the future of the Union; between Muslim and Christian; between indigenous and Asian communities; between Zanzibaris of African and of Arab ancestry; and, latterly, between one African ethnic group and another within the mainland—became apparent.

The final months of Mr Mwinyi’s presidency were thus characterised by a succession of political crises including donor condemnation of “irregular activities” by the Ministry of Finance, numerous cabinet reshuffles and behind- the-scenes manoeuvring regarding the selection of the CCM’s presidential candidate for the 1995 elections.

Dubious elections The eventual winner of the selection battle, Benjamin Mkapa, undoubtedly benefited from Mr Nyerere’s open backing. It seems equally certain that Mr Mkapa’s victory in the presidential poll at the end of October, when he took 62% of the vote (compared with 29% for Augustine Mrema, a former interior minister turned opposition candidate), reflected the will of the Tanzanian people. The elections, however, were shambolic. The Zanzibari poll was universally denounced for its dishonesty, while the vote in Dar es Salaam had to be postponed for three weeks amid apparent organisational chaos and allegations by opposition parties of electoral fraud. Indeed, when the election results in seven Dar es Salaam constituencies were cancelled the opposition refused to re-run and unsuccessfully petitioned the High Court to declare the presidential and legislative results null and void.

Presidential and legislative electionsa

Presidential, Legislative, % of vote no. of seats Benjamin Mkapa 61.8 CCM 186 Augustine Mrema 27.8 CUF 24 Ibrahim Lipumba 6.4 NCCR-Maguezi 16 John Cheyo 4.0 Chadema 3 Total 100.0 United Democratic Party 3 Total 232

a Held on October 29th 1995.

Source: Electoral commission.

Third-phase government In his election campaign Mr Mkapa had promised a crusade against high-level corruption, and in January 1996 he appointed a former prime minister, Joseph Warioba, to chair a presidential commission of enquiry into official corruption. The allegedly corrupt Dar es Salaam city council was disbanded, while the then finance minister and presidential confidant, Simon Mbilinyi, established new

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standards of ministerial accountability by resigning in recognition of his responsibility for tax exemptions improperly granted by his juniors at the Treasury. The housing minister, Juma Ngasongwa, also resigned following the December 1996 publication of the Warioba report, which asserted that public- sector corruption was widespread.

Since 1997, however, the government’s commitment to eradicating corruption from public life has wavered. Most obviously, it failed to make public the contents of the Warioba commission’s report on corruption in the education sector and among individuals in the administration. The opposition National Convention for Construction and Reform (NCCR)—whose leader, Augustine Mrema, won a by-election in the Dar es Salaam constituency in October 1996—made considerable political capital out of this failure, producing documents purporting to show that Mr Mkapa and his finance minister, Daniel Yona, were guilty of official graft. These accusations—and, more importantly, donor concerns about the issue—seemed to spur the CCM into action, with the presidential commission on leadership ethics, for example, ordering five MPs to declare their assets and incomes in full.

Notwithstanding various investigations and sporadic arrests, the Warioba commission has remained a largely toothless force in the fight against official graft, to the chagrin of the Bretton Woods institutions. Pressure on the Mkapa administration to step up efforts in battling corruption intensified throughout 1998 and into mid-1999, and concrete results, notably the implementation of the recommendations of the second Warioba report, compiled in mid-1997, were increasingly being demanded by the World Bank and the IMF as a down- payment for further development assistance. However, with national elections in looming in 2000, it is unlikely that Mr Mkapa will sacrifice domestic political expediency for the sake of a high-level anti-graft witchhunt which is still seen by many conservative elements in government as an agenda imposed by international institutions.

Constitution and institutions

One Union— The interim 1965 constitution was replaced by a permanent Union constitution in 1977, and the United Republic is still governed under this. Following a number of amendments—to take account of the legalisation of a multiparty political system, for example—the constitution now provides for a unicameral National Assembly whose members, elected directly by universal suffrage or nominated by institutions including the Zanzibar House of Representatives, serve a five-year term.

The president—whose mandate is limited to a maximum of two five-year terms—is also supposed to appoint two deputies, one of them, the separately elected Zanzibari president, ex officio. Since the 1995 elections, however, there has been just one Union vice-president, elected as the successful presidential candidate’s running mate on the US model.

—two constitutions Under its separate 1985 constitution Zanzibar has its own administration for internal affairs, comprising a president, Supreme Revolutionary Council (in effect the cabinet) and House of Representatives. However, the division of competencies between the Union and isles authorities has proved to be a source of constant tension. Many mainlanders believe that Zanzibaris are over- represented in the Union government and parliament—indeed, the mainland does not have a separate government to attend to its own affairs, although in August 1993 militant parliamentarians forced through the National Assembly the so-called G55 motion providing for the establishment of just such a separate administration. The project was eventually reversed after the tactical intervention of the former president, Mr Nyerere, but the vote marked a de facto separation of powers between the government and the Union legislature.

At the same time many Zanzibaris resent what they see as the overwhelming domination of the mainland, and this has prompted periodic attempts to take an independent policy line. Most controversially, Zanzibar acceded to the Organisation of the Islamic Conference (OIC) in late 1992, in contravention of the Union constitution’s provision for secular statehood. The Zanzibari government claimed that its membership was essentially a means of attracting additional aid flows and investment, but withdrew from the OIC in August 1993.

The role of the judiciary The judiciary has begun to exercise a new independence in the multiparty era. Lawyers have been prominent in the newly formed opposition parties, and some key judgments and rulings have gone against the government. The more significant examples include the October 1994 ruling of the High Court that independent candidates should be permitted to stand for elected office without the sponsorship of a registered political party. Rather than pursue an appeal, CCM planners chose to legislate their way out of a corner which would have opened the way for the Christian extremist and arch-Tanganyikan nationalist, Christopher Mtikila, to stand for the presidency, despite the fact that his Democratic Party remains unregistered because it is explicitly communal and refuses to organise in Zanzibar. A further constitutional amendment was made to block the right of a lone citizen to seek elected office.

Political forces

The CCM Until 1992 Tanzania was a one-party state and the CCM was that party. It dominated all aspects of life, including the workplace (where CCM “cells” were in operation), civil law enforcement and the military. Since the move to a multiparty state, however, the military has been depoliticised, a formally independent union movement has been created and the CCM has attempted to transform itself from a political elite into a mass grouping.

However, the party’s adoption of market-based economic reforms has not proved popular with all of its members, many of whom are concerned about the political effects on employment of the CCM’s stated commitment to privatisation, for example. Much of Mr Mkapa’s presidency has been marked by the need to walk a narrow political tight-rope between pursuing market-

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Important recent events

October 1990: Ali Hassan Mwinyi is re-elected Union recrimination. The CCM retains power. Benjamin Mkapa becomes president with the support of 71% of registered voters. president.

June 1992: Mr Mwinyi signs into law the Eighth October 1996: Augustine Mrema wins Temeke by-election for Constitutional Amendment Bill legalising opposition parties. the opposition NCCR.

January-April 1993: Supporters of the Democratic Party November 1996: Simon Mbilinyi resigns as finance minister leader, Christopher Mtikila, attack business premises of over tax exemptions improperly granted by more junior officials. Tanzanian Asians, and radical Muslim youths attack pork butcheries in Dar es Salaam. January-March 1997: The Warioba commission presents its report on corruption in the education sector and among August 1993: National Assembly votes unanimously in individuals in the administration. The document is not published, support of the G55 motion calling for the establishment of a and a subsequent cabinet reshuffle leaves the Council of Ministers separate mainland government. intact.

November 1994: Julius Nyerere makes public denunciations September 1997: Violence in Zanzibar as opposition to the of the prime minister, John Malecela, the Chama Cha president, Salmin Amour, mounts. Mapinduzi (CCM) secretary-general, Horace Kolimba, and, by implication, the president himself. December 1997-June 1998: Violence in Zanzibar intensifies, amid public outcry at the arrest—with little if any supporting December 1994: Mr Mwinyi appoints Cleopa Msuya evidence—of 17 Civic United Front (CUF) members on treason prime minister and, after donors freeze aid disbursements charges. over corruption, demotes the finance minister, Kighoma Ali Malima. June 1998-December 1998: Mr Mkapa comes under increasing international pressure to resolve the “Zanzibari February 1995: The interior minister, Augustine Mrema, question” amid reports that Mr Amour plans to amend the precipitates his own expulsion from cabinet and joins the constitution to stand for a third term. opposition National Convention for Construction and Reform (NCCR-Mageuzi). June 1999: A peace deal is brokered between the CCM and the CUF through the aegis of the Commonwealth. Donors indicate October-November 1995: Zanzibari and all-Union that development assistance to Zanzibar will resume, but will wait presidential elections are held in an atmosphere of chaos and to ensure that the peace holds.

inspired liberalisation measures, and ensuring that the old guard is not alienated.

The opposition Tanzanian opposition parties have failed to achieve any form of united front with which to challenge the hegemony of the CCM. More than a dozen new parties have been registered, but most are the personal political vehicles of one or another former CCM or TANU government official. And while a series of half-hearted efforts at unification have been made, these have foundered because of personality clashes and mutually exclusive presidential ambitions, among other factors.

At the same time, opposition groups have yet to formulate anything like a credible policy manifesto, with parties such as the National Convention for Construction and Reform (NCCR-Mageuzi)—led since March 1995 by the charismatic former interior and deputy prime minister, Augustine Mrema, who

won the Temeke by-election in October 1996—instead relying on frequent attacks against the CCM on sensitive subjects such as corruption. While this clearly riles the ruling party—in late 1997 two prominent NCCR-Mageuzi members were arrested for “disseminating false information”—it will not be sufficient to win over voters. That said, however, the only grouping to have attempted to promote a comprehensive manifesto—Chama Cha Demokrasia na Maendeleo (Chadema)—seems to have got scant additional support by doing so.

Main political figures

Julius Nyerere: Tanzania’s first prime minister. Inspired by socialist ideology, his economic policies in the 1960s and 1970s focused on centralised production and autarkic development. Still regarded as father of the modern Tanzanian nation who engendered a strong sense of patriotism and union.

Benjamin Mkapa: President and leader of the ruling Chama Cha Mapinduzi (CCM) party. Generally well regarded in the party and by the Bretton Woods institutions, donors and the diplomatic community.

Jakaya Kikwete: Foreign affairs minister. Beat Mr Mkapa in the first ballot for the presidential nomination in 1995, but stepped aside and supported him on assurances that he would be nominated again at the end of Mr Mkapa’s incumbency.

Daniel Yona: Minister of finance. Responsible for implementation of monetary and fiscal austerity measures since 1996, and consolidating relations with the Bretton Woods institutions. Secured Tanzania’s enhanced structural adjustment facility (ESAF) with the IMF in 1997.

Salmin Amour: CCM president of Zanzibar. Highly controversial figure widely suspected of rigging the 1995 election result to secure a second term. Has finally agreed to a peace deal with the opposition Civic United Front (CUF) brokered by the Commonwealth, but is thought to retain ambitions of amending the Zanzibari constitution to run for a third term.

Daudi Ballali: Governor of the Bank of Tanzania (BoT, the central bank).

International relations and defence

Regional co-operation— Tanzania’s principal regional partners are Kenya and Uganda, although relations have not always been easy. In 1977, for example, the break-up of the East African Community (EAC) led to a long dispute with Kenya, including the closure of the border between the two for a six-year period, while in October 1978 troops from Uganda invaded the Kagera Region of Tanzania. The Tanzanian army expelled the invaders and, with a small group of Ugandan exiles, invaded Uganda and overthrew the government of Idi Amin—an expensive venture that was long blamed for Tanzania’s subsequent economic problems. In 1985 the overthrow of the Ugandan president, Milton Obote, a

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close friend of Mr Nyerere, again strained relations between the neighbours and in 1994 Uganda’s support for the Rwandan Patriotic Front’s military campaign against the Rwandan government was interpreted in Dar es Salaam as having undermined Tanzanian mediation efforts. In the latter part of the 1990s, relations improved to the extent that the three countries began moving towards the revival of the EAC, setting up a secretariat to oversee the new community and establishing commissions for co-operation, joint railways operations and the harmonisation of revenue-collection methods. However, throughout 1998 and the first half of 1999 Tanzania’s commitment to negotiations on further integration between EAC countries flagged, amid growing concerns about the economic impact of a common market.

—and uncertainty Elsewhere in the region relations remain problematic. The victory of Laurent Kabila’s Alliance des forces démocratiques pour la libération du Congo-Zaïre (ADFL) in the Democratic Republic of Congo (formerly Zaire) may ultimately prove to be a stabilising force in a highly unstable region, but in the short term it merely prompted a new wave of refugees arriving in Tanzania, which already houses thousands of people displaced from Burundi and Rwanda. Tensions with the Burundian government mounted throughout 1997 and 1998, amid allegations that refugee camps in north-west Tanzania were being used as training centres for rebel interahamwe troops. Tanzania’s vigorous denials of the charges gained credence when the UN High Commissioner for Refugees, Sadako Ogata, confirmed that the camps were not fulfilling a secondary function. Relations were restored between the two governments in February 1999.

Further afield, relations have been particularly warm with the Scandinavian countries and with China, which gave considerable economic assistance to Tanzania in the 1960s and 1970s. The east European countries, the former Soviet Union and North Korea all maintained high diplomatic profiles in Tanzania, while links with the former colonial powers, the UK and Germany, have remained close.

Apart from its role in the Organisation of African Unity (OAU), Tanzania is also a member of both the Southern African Development Community (SADC) and the Common Market for Eastern and Southern Africa (Comesa, the successor to the Preferential Trade Area for East and Southern Africa—see Appendix, Regional organisations).

Armed forces The regular armed forces of the Tanzania People’s Defence Force (TPDF), which has been formally depoliticised since the ending of the single-party rule, numbered an estimated 34,000 in 1998/99, according to the International Institute for Strategic Studies. The army has more than 30,000 troops, of whom some 20,000 are conscripts. The navy, based in Dar es Salaam, Zanzibar and Mwanza, has approximately 1,000 active personnel, and 12 inshore patrol vessels and four torpedo craft. The air force numbers 3,000, including some 2,600 air defence troops, and has 24 combat aircraft. There is also a 1,400- strong paramilitary Police Field Force including a marine unit and air wing, while a Citizens’ Militia can call on 80,000 members. There are no realistic threats to Tanzania’s national security.

Armed forces, 1998/99 (no., unless otherwise indicated)

Total 34,000 Army 30,000 Air force 3,000 Navy 1,000 Defence expenditurea ($m) 123

a 1997 actual.

Source: International Institute for Strategic Studies.

Resources and infrastructure

Population

Employment and the labour force, 1990/91 (mainland)

No. % Agriculture 58,916 0.5 Mining & quarrying 3,195 0.0 Manufacturing 114,745 1.0 Electricity & water 12,288 0.1 Construction 70,195 0.6 Trade 141,973 1.3 Transport & communications 91,617 0.8 Finance 23,919 0.2 Government & other services 416,510 3.7 Total 933,358 8.3 Male 702,935 6.2 Female 230,423 2.0 Self-employmenta 869,725 7.7 of which: trade 549,415 4.9 Traditional agriculture 9,086,122 80.4 Total employment 10,889,205 96.4 Unemployedb 405,722 3.6 Economically active population 11,294,927 100.0

a Including unpaid help. b Available for work, but not engaged in any of the previous categories.

Source: Bureau of Statistics, Statistical Abstract 1992.

Agricultural employment EIU projections based on the 1988 census put the 1998 population at 32.3m, predominates making the country one of the most populous in Sub-Saharan Africa. At the same time it is one of the least urbanised: the 1988 census recorded an urban population on the mainland equivalent to just 11.5% of the total, while the population of the capital, Dar es Salaam, is expected to reach only 2m by the end of the century (up from 1.73m in 1995), according to the World Bank.

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Instead, 80% of the economically active mainland population are employed in “traditional” agriculture, where subsistence and smallholder cash cropping are combined, according to the Bureau of Statistics’s labour survey. Just 8% of the economically active population, and a mere 2% of women, were in formal employment in 1990/91, almost half of them employed by the government. Another 8% were self-employed, mostly in the trade and small-scale manufacturing sectors, and almost 4% were unemployed. (Population statistics are given in Reference table 1 and minimum wage data in Reference table 2.)

Education

Adult literacy is low The philosophy of “socialism and self-reliance” adopted by the Tanzanian government in the 1960s set great store by the provision of high-quality education—understandably, given that there were thought to be no more than 120 university graduates in the country at independence. As part of this programme villages and districts were encouraged to build their own schools, with government assistance, while education was made free and, officially at least, compulsory.

This still pertains, but early gains have since been reversed: total enrolment at primary and secondary schools as a proportion of the school-age population, for example, declined from 57% in 1980 to 36% in 1995 according to the UN Development Programme (UNDP)’s Human Development Report. The problem arises at the secondary-school level: while enrolment at primary schools was equivalent to 67% of children in the relevant age group, the proportion fell to just 5% at secondary level.

Unsurprisingly, therefore, adult literacy was little more than 30% in 1995, according to the UN Educational, Scientific and Cultural Organisation (UNESCO).

Health

Access to health services Provision of health services has followed a similar overall pattern to that of remains poor education: rapid expansion in the post-independence period until budgetary and balance-of-payments constraints began to affect delivery in the 1970s. At just over 51 years, the average life expectancy recorded by the World Bank in 1996 is better than that of many countries in Africa—neighbouring Uganda, for example, has an average life expectancy of just 40.2 years—while the infant mortality rate of 93 per 1,000 live births is only just above the average of so- called low human-development countries (excluding India). In terms of real GDP per head the country was the world’s fifth-poorest nation, according to the 1997 Human Development Report, but the UNDP’s wider Human Development Index—which is based on a number of factors including life expectancy and adult literacy rates—ranked Tanzania 150th out of 174 countries the following year. However, access to health services remains relatively poor: the UNDP calculates that only 42% of the population had access to health services over 1990-95 period, compared with 77% in Kenya

and 47% in Uganda. Equally, facilities at the Muhimbili Medical Centre, the country’s teaching hospital and main referral centre, remain dilapidated.

Since late 1996 the World Bank and IMF have repeatedly insisted on the importance of increasing expenditure on health. While the 1998/99 budget made some noticeable progress to this end, spending on health remains woefully low, and precariously dependent on aid inflows.

Natural resources and the environment

Unexploited mineral Tanzania is believed to have significant deposits of a range of minerals reserves— including nickel, gemstones, iron, coal, and has proven deposits of gold. With the exception of gold, these are largely unexploited, although coal is mined in the south-west of the country, while large soda ash deposits in Lake Natron are used for the production of caustic soda. The 1997 signature of a joint-venture agreement with foreign partners led to a mini-gold rush in the Lake Victoria area and has rekindled foreign interest in Tanzania’s mineral resources.

In addition, the country has petroleum deposits off Pemba island and elsewhere—Canadian firms spent some US$100m on exploration activities in 1997-98, although finds have thus far been disappointing—and substantial amounts of gas in the Songo Songo field. A gas-to-electricity scheme linking Songo Songo with a power-generating plant in Dar es Salaam was due to be completed in 1998, but a disagreement with the World Bank over another controversial power project has left the funding arrangements for Songo Songo shrouded in uncertainty, and consequently the gas field, which in theory could supply the three member states of the Tripartite Commission for East African Co-operation (EAC), remains untapped.

—and other natural In terms of other natural resources, the country’s 12 national parks and 15 resources game reserves are heavily stocked with a wide range of flora and fauna. but with the exception of the “northern circuit” of game parks near the border with Kenya these remain relatively underexploited as yet. However, there is considerable potential for development as the Ngorogoro Conservation Area, Serengeti National Park and Selous Game Reserve are designated World Heritage sites, proclaimed in terms of a UNESCO convention to be of outstanding universal value. There are only a dozen such sites continent-wide and no others in East Africa.

Transport and communications

The concentration of Tanzania’s population on the periphery of the country poses enormous problems in terms of communications and transport, and such difficulties have been exacerbated by persistent underinvestment in the country’s infrastructure.

Roads Tanzania is currently in the middle of a ten-year Integrated Roads Programme, which is designed to upgrade 70% of the country’s 10,300 km of main roads

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and build some 3,000 km of new roads. Such action is clearly necessary: while connections between Namanga, Arusha, Moshi and Himo, and between the capital and Morogoro are generally good, only 25% of roads overall and just 10% of those in rural areas were in good condition in 1990, according to World Bank figures. In mid-1998 the EU announced an aid package of around $1bn for the upgrading and maintenance of Tanzanian, Kenyan and Ugandan roads.

Railways The 2,600-km line linking Dar es Salaam with the central and northern regions is operated by the Tanzania Railways Corporation, which is carrying out a 20- year modernisation programme. Nevertheless, the system remains in poor condition and cancellations are common. The Tanzania-Zambia Railway Authority (Tazara), meanwhile, operates 1,860 km of Chinese-built track linking Dar es Salaam with Kapiri Mposhi in Zambia, and has announced plans to build an additional line linking Tanzania with the Zambian port of Mpulungu on Lake Tanganyika. However, competition for Zambian tonnages by the South African (and even Namibian) ports has depressed volumes, and in 1997 Tazara cargo traffic was just 23% of designed capacity of 2.5m tonnes per year. (See Reference table 3 for historical transport statistics.)

Air and sea transport Tanzania has three international airports, Dar es Salaam, Kilimanjaro and Zanzibar, and more than 50 smaller official airports and airstrips. The national carrier, Air Tanzania Corporation (ATC), has suffered persistent financial difficulties since its foundation in 1977, even having to halt its international services for a time. In 1994 the Tanzanian carrier joined forces with South African Airways and Uganda Airlines to launch Alliance Airlines, which initially proved considerably more successful, operating scheduled passenger and cargo services to destinations in Africa, Europe, the Middle East and Asia. In mid-1998, however, ATC announced its withdrawal from the airline, stating that the surrender of its international routes to the “unprofitable” regional airline was hampering its search for a strategic partner for its privatisation, announced by the government in mid-year.

The Tanzania Harbour Authority (THA) operates Tanzania’s major harbours, at Dar es Salaam, Mtwara, Tanga and Zanzibar. The main port at Dar es Salaam has eight deep-water berths for general cargo, three berths for container vessels, eight anchorages, a grain terminal, an oil jetty and offshore mooring for supertankers. It traditionally handles considerable amounts of Zambian cargo, as well as some cargo for Burundi, Rwanda, Uganda and the Democratic Republic of Congo (formerly Zaire). However, since 1990 the political reforms in South Africa have led to an increase in Zambian trade through South African ports, and in 1997 the THA initiated a $24m modernisation programme in an attempt to win back such trade.

Post and The postal and telecommunications services are in a poor state. According to telecommunications the International Telecommunications Union, Tanzania had just 0.29 main phone lines per 100 inhabitants in 1992, compared with figures of 0.77 in Kenya and 3.99 in Namibia. In Dar es Salaam, at least, the telephone system is being rehabilitated with assistance from Japan’s Mitsubishi Corporation, but despite increased private-sector participation following the 1993 part-

privatisation of the Tanzanian Posts and Telecommunications Corporation— and the mid-1999 announcement that a further 35% of the telecoms company is to be sold to a private investor—teledensity is expected to rise to no more than 0.38 lines per 100 people by 2000.

Media There are three daily newspapers, all of them owned by the government or aligned with it. However, a relatively free press has been permitted since 1988 and a flood of new titles has appeared since then. In the new environment of political pluralism, parts of the independent media are adopting a critical role in the raising of debate, in contrast to their propagandist functions of the past.

Nevertheless, the only medium of true mass communication remains the radio: according to the UNDP, there were 276 radios per 1,000 people—against 16 televisions per 1,000—in Tanzania in 1995. The national radio station, Radio Tanzania, is closely controlled by the Chama Cha Mapinduzi (CCM) government, while Radio Tumaini is operated by the Roman Catholic Church.

Energy provision

Primary energy balance, 1998 (m tonnes oil equivalent)

Elec- Oil Gas Coal tricity Other Total Primary production 0.00 0.00 0.00 0.46a 9.21 9.67 Imports 1.13 0.00 0.00 0.00 0.00 1.13 Exports 0.03 0.00 0.00 0.00 0.00 –0.03 Primary supply 1.10 0.00 0.00 0.46a 9.21 10.77 Net transformationb –0.28 0.00 0.00 –0.31 –0.05 –0.65 Final consumption 0.81 0.00 0.00 0.15c 9.16 10.12

a Expressed as input equivalents on an assumed generating efficiency of 33%. b Transformation input and output, plus energy industry fuel and losses. c Output basis.

Source: Energy Data Associates.

Power shortages constrain In 1996/97 the Tanzania Electricity Supply Company (Tanesco) produced growth 1.93bn kwh of electricity, a 1.5% increase on the previous year’s total. However, supply remains erratic, and depleted water levels in the dams that generate hydroelectricity mean that load-shedding power cuts continue to hold back industrial growth. Indeed, the amount of power generated from hydro plants fell slightly in 1996/97, to 1.66bn kwh.

Tanesco is trying to address the problem by, for example, installing emergency generating capacity at the Ubungu power station outside Dar es Salaam, and rehabilitating the Kitadu hydroelectric facility. In late 1997 Independent Power Tanzania announced plans for the construction of a 100-mw power plant that would produce 15% of the country’s electricity when it came on stream in mid- 1998; however, the World Bank rejected the project as economically unviable. Throughout 1998 the government became increasingly embroiled in thorny negotiations with the Malaysian backers of the project, and in February 1999

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the matter was referred to an arbitrator at the International Centre for the Settlement of investment Disputes. (For further data on electricity production see Reference table 14.)

Tanzania: energy production (m kwh)

1994/95 1995/96 1996/97 % change Hydroelectricity 1,372.5 1,669.8 1,660.4 –0.6 Thermal electricity 297.9 229.2 266.6 16.3 of which: gas-fired 146.0 180.4 219.7 21.8 Total 1,670.4 1,899.0 1,927.0 1.5 Source: Tanesco.

Mineral fuels In 1993 an estimated 840,000 tonnes of petroleum products were consumed nationwide. The Tanzanian and Italian Petroleum Refinery (Tiper) in Dar es Salaam has an annual capacity of 670,000 tonnes/year and has been undergoing phased rehabilitation. However, a World Bank report released in early 1995 argued that the facility was fundamentally uneconomic and should be closed. Oil prospecting has been undertaken in the areas of Lake Victoria and Lake Tanganyika, as well as on the continental shelf off Zanzibar, but so far no reserves that have merited exploitation have been discovered. This has not deterred prospectors however: in April 1999 the Tanzania Petroleum Development Corporation and Western Geophysical (WG), a Houston-based oil company, began prospecting for oil between Zanzibar and the Mozambican border.

There is a proven reserve of 33bn cu metres of natural gas in the Songo Songo field off the coast of Lindi Region, and work on an onshore processing plant on Songo Songo island started in 1997. Nevertheless, gas production remains low, accounting for only 11% of total energy production in 1996/97, according to Tanesco.

Production at the Kiwira and Ilima coal mines in Mbeya Region rose to some 40,200 tonnes in 1993. Because of high ash content, the mines’ output does not find a ready market with the main nearby consumers, and at times large quantities of coal have been stockpiled at the mine for want of buyers. Coal deposits at Mchuchuma, on the southern border with Mozambique, are estimated to total 60m tonnes.

The economy

Economic structure

Diversification is needed The Tanzanian economy is heavily dependent on agriculture, which in 1996 accounted for 56% of GDP and employed an estimated four-fifths of the labour force, mostly in subsistence and smallholder cash cropping. This makes it

highly vulnerable to external shocks—in 1997 and 1998, for example, the El Niño and La Niña weather patterns brought extensive flooding and drought, reducing agricultural production and thus growth—and the government is keen to foster diversification. It has thus reversed the years of underinvestment in the mining sector and is selling a number of manufacturing companies to the private sector. Progress, however, is likely to be slow: in 1996 manufacturing and mining together accounted for less than 8% of GDP. (For historical data, see Reference table 12.)

Main economic indicators, 1998 (Union)

Real GDP growtha (%) 4.0 Consumer price inflationa (av; %) 12.8 Current-account balance ($ bn) –562.5 Exchange rate (av; $) 664.7 Population (m) 32.3 Foreign debt (year-end; $ m) 7,524.6

a Mainland only, EIU estimate.

Source: EIU, CountryData.

Comparative economic indicators, 1998

South Tanzaniaa Mauritius Africa UK Kenya GDP ($ bn) 8.3 5.3b 116.1 1,415.8 10.1b GDP per head ($) 256 3,620 2,753 23,945 342b Consumer price inflation (av; %) 12.8 6.8 6.5 2.7 5.8 Current-account balance ($ bn) –0.6 –0.1b –2.2 –6.1 –0.1c % of GDP –6.8 –1.5b –1.9 –0.4 –1.4 Exports of goods fob ($ bn) 1.0 1.8 28.7 268.1 2.0b Imports of goods fob ($ bn) 1.5 2.3 27.1 302.0 –2.7b External debt ($ bn) 7.5 2.5 25.1 – 6.2b Debt-service ratio, paid (%) 16.1 8.1 13.7 – 22.7 a Mainland only. b EIU estimate. c Fiscal year starting July 1st 1995.

Source: EIU, CountryData.

Relatively high rates of capital formation have been recorded in recent years, the total averaging 28% of GDP over the 1991-94 period, as a result of economic reforms adopted under a series of IMF programmes. These investment levels have been achieved, however, only by virtue of heavy aid flows to shore up the balance of payments.

Economic policy

There is no alternative Tanzania has been engaged in a process of more or less continuous structural adjustment since 1986, when the government reached agreement with the IMF on support for a three-year economic recovery programme. In pursuit of this,

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agricultural marketing has been liberalised, foreign-exchange controls have been lifted and a new investment code offering competitive incentives has been put in place. Commitment to fiscal austerity measures prompted by the IMF and the World Bank remain central to the Mkapa administration’s domestic policy. In the 1997/98 and 1998/99 budgets, for example, the government announced its intention of reducing the number of civil servants and freezing public-sector hiring, although limited progress was made to this end. (See Reference table 5 for historical data on government finances.) Such policies have not proved popular with the Tanzanian public, but, given the country’s ongoing balance-of-payments problems, there are few credible alternatives to IMF-backed reform. In both years, the Mkapa administration and the minister of finance, Daniel Yona, in particular were praised for adhering to tough growth and fiscal targets in the trying context of the El Niño and La Niña weather phenomena, and it was expected that similar stringency would feature in the 1999/2000 budget.

Union government budgetsa (TSh m; fiscal years Jul-Jun)

1996/97 1997/98 Total revenue 572,030 695,300 of which: import taxes 163,089 244,059 income taxes 125,726 141,495 sales taxes 128,962 155,961 Total expenditure 585,952 927,484 Recurrent 557,056 618,688 Development 28,896 308,796 Financing Foreign (net) –44,363 76,968 Domestic (net) –41,927 –72,150

a Budgets are presented as balanced. Figures for receipts do not distinguish deficit-financing items; recurrent spending includes debt repayments.

Sources: Budget speeches 1996 and 1997.

Monetary policy The liberalisation of the financial services sector and the establishment of open developments markets in foreign exchange and government paper have extended the scope for the implementation of an active monetary policy. Interest rates have been freed as private banks have joined the sector and, since the launching of regular Treasury-bill auctions in August 1993, it has been possible for the Bank of Tanzania (BoT, the central bank) to peg its discount rate, and so the general interest-rate structure, to bond yields. There have been real constraints on the operation of monetary policy, however. In thin bidding in the early T-bill auctions, marginal yields were set at extremely high and volatile rates. (For data on money supply and credit, see Reference table 6; for interest rates, see Reference table 7.) Moreover, until recently the monetary implications of the government’s budgetary overruns have thwarted BoT efforts to control growth in the main monetary aggregates as part of the campaign against inflation. At times the BoT has been openly critical of central government, in a way that would have been impossible in the past. The BoT has adopted a policy of

releasing credit to the government on a cash-budget basis, the amounts released depending closely upon revenue collection in the preceding month. Inflation having reached a 17-year low in late 1996, the BoT in January 1997 made a controversial reduction to minimum reserve requirements (thus easing its monetary-policy stance; for historical data see Reference table 14).

Longer-term policy goals In the longer term, the government is keen to reduce Tanzania’s dependence on foreign development assistance. In part this is driven by an awareness that aid flows from some of the country’s major donors are set to fall (see The external sector: Capital flows and foreign debt), but it is also a continuation and extension of the Nyerere government’s policy of self-reliance. The fact is that despite a decade of more or less continuous structural reform, Tanzania is among the most aid-dependent states in Africa, receiving an annual average of just under $1bn in development assistance over 1993-97. Fiscal austerity measures and an effective campaign against corruption are important steps in any campaign to lessen dependence, as are improvements to the physical infrastructure and the services provided by publicly owned utilities.

At the same time Tanzania is committed to the reduction and harmonisation of trade tariffs as part of its membership of the Southern African Development Community (SADC) and the Tripartite Commission for East African Co- operation (EAC) with Kenya and Uganda. The SADC, for example, is theoretically committed to achieving regional free trade by 2004. However, few analysts believe that this timetable is feasible, and any substantial reductions in tariffs would face opposition within Tanzania.

Economic performance

Steady growth Analysis of the economic performance of the mainland (separate accounts are compiled for Zanzibar) is confused by the fact that two sets of constant price data have been maintained in recent years. However, most official statistical publications have now abandoned those based on 1976 prices as the main measure of growth, and have adopted the 1985- and 1992-based series as a more reliable measure of actual economic performance. Recorded growth rates are also distorted by the redirecting of parallel-market activity through official, taxed and recorded channels.

However, the data reveal an economy expanding at a moderate underlying pace. According to the 1985-based figures, the average annual growth rate was 3.8% over the four years to 1995. (Historical data on GDP are given in Reference tables 8 to 12.) This puts increases in real GDP marginally ahead of the population growth rate, but real income per head has been growing by less than one percentage point a year. The expansion of 4.2% in 1996 (according to BoT figures) was somewhat ahead of the underlying rate of growth, but expansion slowed to 3% in 1997 owing to adverse climatic conditions associated with the El Niño oceanic current; however, it recovered somewhat to 4% in 1998.

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This again demonstrates the Tanzanian economy’s dependence on agriculture. The sector has grown more or less in step with the rest of the economy over the past decade and its share of GDP in total value added has hovered around 55% as a result. In contrast, recorded manufacturing growth has traditionally been poor: the sector’s contribution to GDP has shrunk steadily from 8.2% in 1992 to 6.5% in 1996—not least because of the impact of power shortages which continued into 1998 (see Economic sectors: manufacturing). The sector staged something of a recovery in 1996/97, owing mainly to the beneficial effects of the government’s ongoing privatisation programme; however, intermittent electricity shortages and cuts throughout 1997 and early 1998 hampered growth considerably.

Mining’s contribution to GDP remains small, but the sector is thought to have grown by 9.6% in 1996 and 8% in 1997. The revision of the mining investment code in 1997, combined with considerable gold finds by Australian and Canadian firms in particular, has increased foreign direct investment (FDI) inflows considerably, and strong growth is expected in mining to 2000 and beyond. The official opening of the Golden Pride mine in central Tanzania has placed the country among the top new locations for prospecting activity in Sub-Saharan Africa.

Regional trends

Dar es Salaam accounts for almost one-fifth of mainland GDP and records the highest rates of output per head. However, the capital’s share in national economic activity has been declining, from 25% of GDP in 1980 to an estimated 17% in 1993 (the last year for which figures are available), as the growth of the government machine has been restrained and new investment, in sectors such as agriculture, mining and tourism, has increased economic activity in the hinterland. Nevertheless, the project to move the country’s capital to Dodoma, which contributes just 3% of mainland GDP, has in effect been abandoned.

Regional gross domestic product, 1993 (mainland)

Land area Share in national GDP per head (sq km) GDP (%) (TSh) Dar es Salaam 1,393 17 88,629 Iringa 56,864 11 70,621 Arusha 82,306 8 40,524 Mbeya 60,350 7 36,988 Shinyanga 50,781 7 30,920 All 20 mainland regions 881,289 100 32,170 Source: Bureau of Statistics, National Accounts of Tanzania, 1976-93.

Economic sectors

Agriculture, forestry and fishing

The food crop is vulnerable The agricultural sector remains highly labour-intensive, employing an estimated four-fifths of the country’s workforce, and accounts for roughly 55% of GDP. The main subsistence crops include maize, sorghum, millet, cassava, rice, plantains, wheat and pulses. However, yields are low since food crops are generally produced by peasant smallholders without access to modern technology or fertilisers. Such crops are also highly vulnerable to drought—in 1993/94, for example, poor rains reduced maize production to 1.8m tonnes. Similarly, the failure of rains in the south of the country in 1997—owing to weather conditions associated with the El Niño oceanic current—led to a 20% contraction in some crops (see Reference table 15 for historical data).

Tanzania: production of key food crops (‘000 tonnes)

% Peak output 1995/96 1996/97 change Period Amount Maize 2,638 2,107 –20.1 1988/89 3,125.0 Paddy 681 533 –21.8 1989/90 740.0 Wheat 61 68 11.5 1989/90 106.0 Pulses 384 379 –1.3 1985/86 432.1 Banana 631 769 21.9 1993/94 834.0 Cassava 1,478 1,611 9.0 1991/92 1,778.0 Potatoes 446 336 –24.6 1989/90 996.1 Source: Bank of Tanzania, Economic Operations Report.

Cash crops Of the major cash crops, coffee, cotton, tobacco and cashew nuts are grown mainly by smallholders, while sisal and tea are grown mainly on large estates. Production of cash crops fluctuates according to weather conditions, with the coffee crop, for example, varying between 40,000 and 56,000 tonnes over the past five years. In 1995/96 improved rains and prices offered by competing buyers helped raise coffee production to 52,000 tonnes, but drought in the second half of 1996 led to a decline in output to 41,000 tonnes in 1996/97. Flooding in that 1997/98 due to the El Niño effect saw output plummet to around 620,000 60-kg bags, and a similarly reduced crop was expected in 1998/99. Moreover, the long-term prospects for the coffee sector remain in doubt. Such was the devastation to coffee bushes in the northern third of the country that some analysts are predicting that the sector might disappear altogether unless a massive campaign of re-planting in disease-resistant, more robust bush varieties is undertaken soon.

Tanzanian producers are also vulnerable to fluctuations in international commodity prices: in 1998, for example, the price of arabica, which accounts for 75% of Tanzanian output, plummeted to $1.35/lb from $1.89/lb the

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previous year. (Historical data on cash crop production are given in Reference table 16.)

Livestock Tanzania’s national cattle herd is made up almost entirely of short-horn Zebu and numbered 13.4m in 1996, according to estimates from the UN Food and Agriculture Organisation (FAO). Roughly 13m were indigenous stock, with 237,000 dairy cattle and 121,000 in commercially managed beef herds. In addition there were an estimated 9.7m goats and 4m sheep. Commercial slaughterings were estimated at 1.95m head.

Forestry Ten logging companies produced 143,313 cu metres of timber in 1992. These companies, subsidiaries of the Tanzania Wood Industry Corporation (Twico), are being privatised.

Fishing In 1997 Dar es Salaam approved a plan to build a $180m shrimp farm despite stiff opposition from environmental groups. Operated by the African Fishing Company and largely funded by the European Investment Bank, the farm will consist of up to 10,000 ha of ponds using high-technology equipment from South-east Asia to produce $250m of shrimp for export to Europe and Asia. However, final approval for the farm reportedly depends on the submission of an acceptable environmental-impact study, and the introduction of mechanisms to limit environmental damage to the Rufiji river delta, which is part of the Mafia Island marine national park.

Mining and semi-processing

A growth sector Although its share of national income is small, at only 1.4% in 1996, the mining sector contributes a significant share of exports—earning $600m a year—and has attracted substantial new foreign investment in recent years. The government acted to boost this in May 1997, when it lowered taxes on the mining sector by abolishing export levies and stamp duties on foreign sales, and gave new investors year-long tax breaks. Indeed, the Tanzanian government rightly expressed confidence that the sector was set for a mini- boom following the signing in 1997 of a $50m joint venture to prospect for gold in the Lake Victoria district. The mining sector reached a crossroads in February 1999, when Mr Mkapa formally opened the Golden Pride mine in central Tanzania. The deposit contains an estimated 2.7m ounces of gold, and initial projections suggest that the mine will yield around 5.4 tonnes/year of gold.

However, the potential economic benefits of increased gold production could well be partially offset by lower prices: the bullion price declined to a 12-year low in late 1997 following the sale of substantial gold reserves by the Australian and Swiss central banks, and has yet to recover fully; indeed, the plan to sell further gold to finance debt relief could depress the price still further. (Historical statistics on minerals production are given in Reference table 18.)

Diverse mineral deposits Iron ore is mined at Chunya in Mbeya Region, while potentially more productive deposits exist at Liganga in Iringa Region. Nickel deposits have attracted one of the most important new investments in the sector, with Sutton Resources and Romanex International of Canada becoming involved in the development of deposits in Kagera Region in the far north of the country. Phosphate, salt, tin, gypsum and kaolin are all also mined, and deposits of a wide range of other minerals have been confirmed. Although foreign interest in Tanzania’s diverse mineral deposits remains strong, severe flooding in the northern third of the country in late 1997, which caused the deaths of over 100 mine workers, raised concerns over security conditions in the country’s mines. The government has promised to standardise and enforce security regulations throughout the country, in a bid to assuage investor concerns, but in practice does not have the resources to do so.

Manufacturing

Water and power shortages Tanzania’s manufacturing sector, which is dominated by state-owned industry, hit production— has long suffered serious constraints. In the 1970s and 1980s these consisted of external shocks such as high oil prices and interest rates. More recently, however, manufacturers have been hit by infrastructural problems. In particular, repeated water-supply crises in the capital have affected companies such as brewers and distillers, while irregular power supplies from the Tanzania Electricity Supply Company (Tanesco), which deteriorated in 1997 and only began to improve in late 1998, have hit production throughout the industrial sector. Given these factors, as well as persistent underinvestment and mismanagement, it is hardly surprising that the manufacturing sector contributes a very small share of national income: according to the Bank of Tanzania (BoT, the central bank), manufacturing’s share of GDP fell to a mere 6.5% in 1996, when production of aluminium, iron sheets and spirit collapsed (see also Reference table 17).

—and foreign participation Hopes for a turnaround in the sector rest on investment by foreign companies. remains limited Some has materialised—in early 1997, for example, Coca-Cola opened a $35m bottling plant in Dar es Salaam—but participation is largely dependent on the pace of privatisation, which has thus far been slow. The problem for the government is that many of the state manufacturing concerns are so rundown that they are not attractive to foreign buyers, while there is strong domestic opposition to the sale of going concerns on the grounds of both economic nationalism—that is, an unwillingness to sell the “family silver” abroad—and the potential effects on staffing levels.

Construction

Activity increases with According to the BoT, construction activities accounted for 4.9% of GDP at investment factor cost in 1996. Substantial construction work is necessary in both the housing and the infrastructural sectors: as of 1992, for example, the World Bank reported that more than 70% of the city’s population lived in unplanned

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settlements with limited access to basic services. However, the sector has been constrained by Tanesco’s rounds of load-shedding power cuts since 1992. These affected cement companies, and the resulting reduced output pushed up prices and required increased imports. It is hoped, however, that the government’s efforts to improve tourism infrastructure will necessitate substantial investment in new roads and bridges.

Expenditure on gross fixed capital formation, 1997 (mainland)

Value (TSh m) Buildings 275,579 Residential 63,558 Rural (own-account) 133,316 Non-residential 78,705 Other works 112,591 Land improvement 31,727 Roads & bridges 15,850 Water supply 9,428 Other 55,586 Equipment 318,973 Gross fixed capital formation 713,783 Source: Bureau of Statistics, Economic Survey, 1997.

Financial services

Private investors sought Private participation in commercial banking—which was the preserve of the state from 1967, when the Arusha Declaration was adopted, until 1991—is steadily increasing. The UK’s Standard Chartered Bank, for example, runs a Tanzanian operation capitalised at TSh1bn, while Belgium’s Banque Belgolaise is the main shareholder in Eurafrica Bank Tanzania and South Africa’s Standard Bank Investment Corporation owns a chain of branches taken over from the defunct Meridien BIAO Bank. And in late 1997 the government began seeking strategic foreign investors to take a majority stake in the state-owned National Bank of Commerce (NBC), which is scheduled for privatisation. Despite widespread resistance in the banking sector, the NBC was split into two units in October 1997, with NBC (1997) serving corporate clients and the National Microfinance Bank targeting smaller customers. NBC (1997) remains the country’s largest bank, with 35 branches and deposits of TSh200bn ($280m), while National Microfinance has more branches (95) but a much smaller deposit base of TSh95bn. The government plans to retain a minority stake in the two privatised operations, but the sale of NBC (1997) has proved tortuous and, to the chagrin of the IMF, the deadline for bids for the bank was extended to the end of January 1999. The divestiture is expected to be completed in the second half of 1999.

The government also retains a majority shareholding in the Co-operative and Rural Development Bank, which provides commercial banking services and loans for rural development, the Tanzania Investment Bank, which is designed to facilitate economic development, and the Tanzania Postal Bank. The Bank of Tanzania is the country’s central bank.

After months of delays, the Dar es Salaam stock exchange (DSE) was finally launched in March 1998. The Capital Markets and Securities Authority has licensed five stockbrokers—Rasilimali, Tanzania Securities, Exim Securities, Solomon & Company and Orbit Securities. However, with just one company listed on the DSE, the bourse has yet to attract significant portfolio inflows.

Other services

Tourism—growing strongly The development of Tanzania as a multicentre tourism destination offers considerable potential, and an increasing number of international travel companies are offering trips combining safaris in the country’s national parks and game/forest reserves with trips to the “Spice Island” of Zanzibar. Tourist numbers are certainly increasing: in 1997 arrivals were estimated at 326,192 (up from 201,744 in 1992, but unchanged on the previous year) and tourism receipts reached $392m, a 21% increase on the previous year. (See Reference table 19 for historical data.)

The government hopes to build on this, increasing visitor arrivals to 500,000 a year and tourism revenue to $500m by 2000, a target which seems highly optimistic. To this end it has set aside funds for improving road links in major tourist areas, while Alliance Airways has launched direct flights from European cities to Kilimanjaro Airport. The weekly service is designed to give tourists direct access to popular attractions such as the Serengeti game park, Ngorogoro conservation area and, of course, Mount Kilimanjaro. However, despite attempts to improve tourist facilities—for example, the government has invited international hotel groups such as Hilton, Holiday Inn and Marriott to take over the running of the state-owned Kilimanjaro Hotel—the Tanzanian industry remains very much in the shadow of its Kenyan equivalent.

The external sector

Trade in goods

Coffee dominates exports Following a sharp increase in export earnings, Tanzania’s trade deficit narrowed to $449m in 1996, where it remained in 1997—a considerable improvement on some of the deficits recorded in the early 1990s. There were a variety of reasons for these poor historical trade imbalances, including depressed coffee prices over 1989-93, sluggish non-traditional exports and the government’s initial failure to extend liberalisation measures to the country’s leading export commodities.

The move to trade The government’s response to the balance-of-payments problems which liberalisation emerged in the late 1970s was to impose tightened import controls. The tighter they became, the greater was the incentive to resort to parallel-market financing. Moreover, the World Bank has estimated that the combined impact of tariffs, sales tax and quantity restrictions amounted to effective protection

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on domestic manufacturing of 500% (ie the equivalent of making imported manufactures freely available but at six times the price of local products). This promoted gross inefficiency in domestic production; trade liberalisation has thus been a key element of the reform programme.

In 1984 the government permitted “own funds” imports, by which a range of goods could be imported against private holdings of foreign exchange on a “no questions asked” basis. In 1992 own-funds imports accounted for 27% of the value of all import licences granted. In 1987 an open general licence (OGL) scheme was introduced, under which official supplies of hard currency were available without restriction on a “first come first served basis” for imports of an expanding list of items. The OGL positive list was replaced in 1991 by a negative list of those remaining items which could not be imported under the scheme, before the scheme itself was replaced by foreign-exchange auctions in August 1993. Foreign aid donors have channelled balance-of-payments support through various routes as the import regime has been modified, with the result that high levels of overall imports have been sustained. In late 1994, however, key donors began to withhold support in this area as a means of pressing the government to act on the pervasive and corrupt allocation of discretionary import tax exemptions. In the wake of the elections of late 1995, balance-of- payments support was restored.

From 1986 exporters of a restricted range of commodities were permitted to retain part of their earnings for the import of essential inputs. The range of exports covered and the retention rates permitted were progressively increased, concentrating initially on promoting non-traditional exports. By the end of 1994, 100% retention had been extended even to the export of coffee. The country now has a comprehensively liberalised trade regime.

Manufactures were adversely affected by chronic power shortages and their recorded value fell to $68m in 1998, according to the Bank of Tanzania (BoT, the central bank). Coffee remained the leading export earner, at $115m, followed by cashew nuts ($112m). Non-traditional export receipts fell, reducing overall export earnings to $676m—down by 6% on the year-earlier total (see Reference table 20 for historical export data). There is, however, every reason to treat all trade data with suspicion, since official statistics take little account of widespread parallel-market activity (industry analysts estimate that as much as half of the country’s actual gold output, for example, may be smuggled).

Also in 1998 imports rose to $1.56bn from $1.34bn the previous year. Imports of capital goods rose by 34% to $663m—an increase the government attributes to expansion in the industrial sectors—while those of consumer goods climbed by 6% to $372m, from $351m in 1997. Given the decrease in purchases of fertilisers and the dramatic fall in world petroleum prices in 1998, imports of intermediate goods fell by 15%. (Historical import data are given in Reference table 21.)

IMF direction-of-trade statistics, which are compiled from trade partners’ returns (and therefore likely to be inaccurate), suggest that the country’s

leading export markets in 1997 were Germany, India and Japan, while its main suppliers were South Africa, Kenya and the UK (see Reference table 22).

Main trading partners, 1997a (% of total)

Exports to: Imports from: Germany 8.5 South Africa 12.1 India 8.2 Kenya 10.2 Japan 7.6 UK 7.4 UK 6.9 Saudi Arabia 5.5 Rwanda 6.6 China (mainland) 4.9 Netherlands 5.6 Japan 4.6 Malaysia 2.6 India 4.1

a Based on partners’ trade returns and subject to a wide margin of error.

Source: IMF, Direction of Trade Statistics Yearbook.

Invisibles and the current account

Current-account deficit According to the IMF’s International Financial Statistics, Tanzania’s current- narrows account deficit totalled $707m in 1997, a considerable deterioration on the 1996 figure of $511m. (See Reference table 23 for IMF balance-of-payments data.) However, such data should be treated with caution, as there are considerable discrepancies between the IMF and the BoT over historical current-account data (see Appendix, sources of information).

Nevertheless, certain trends remain evident. For example, inward current transfers, used to offset the country’s trade deficit, remain high, although they did dip by a considerable 34% in 1997 to $245m. The balance is also sustained by foreign investment, which has trebled since 1994, albeit from a low base, and debt relief. But, despite recently renewed foreign capital participation in the economy, the payment of investment income (interest, profit and dividends) has remained fairly flat, the total being determined more by the country’s erratic payments of interest on its external debt. Exports of non- factor services, which totalled $715m in 1997, have risen with increased tourism receipts. Net earnings from the sector are likely to be low, however, given the high import content of providing for tourists in a country with few consumer goods industries capable of meeting the quality requirements of overseas visitors.

Current account, 1997/98 (Union) ($ m; fiscal years Jul-Jun)

Merchandise exports fob 644.9 Merchandise imports cif –1,401.6 Trade balance –756.7 Current-account balance (incl official transfers) –450.9 Source: IMF, Tanzania: Recent Economic Developments, April 1999.

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Capital flows and foreign debt

Increased capital inflows Movements of long-term capital to finance the current-account deficit fell throughout the early 1980s, and net outflows were recorded over the middle of the decade. With new loans becoming available in the wake of agreement with the IMF in 1986, however, net long-term capital flows have been positive since 1988. Increasing autonomous capital inflows, which reflect foreign investment in the liberalised Tanzanian economy, have also contributed to the reversal of the previous four years’ net outflows. Central bank data for 1996/97 put inflows of direct investment at $150m, 12% up on the year-earlier period. Loan disbursements during the year totalled $247m. Meanwhile, repayments increased to $370m, and the country added $214m to its arrears in 1996/97, according to the central bank.

Capital flows and the balance of payments, 1997/98 (Union) ($ m; fiscal years Jul-Jun)

Current-account balance –450.9 Net direct investment 165.0 Loan disbursements 421.9 Loan repayments –217.9 Errors & omissions –50.9 Overall balance –132.8 Financing Use of reserves –60.8 Increase in debt arrears 79.1 Debt rescheduling & forgiveness 54.3 Source: IMF, Tanzania: Recent Economic Developments, April 1999.

Debt relief granted In early 1997 the Paris Club of official bilateral creditors, to which Tanzania owes almost one-third of its estimated $6.1bn external debt, agreed to write off $1bn of debt falling due in the three years to November 1999 and to reschedule the remainder over 23 years. Nevertheless, Tanzania’s debt burden remains heavy. According to the World Bank’s Global Development Finance, the country’s external debt was equivalent to 97% of GNP and no less than 573% of exports of goods and services in 1997. Even taking into account the Paris Club initiative, debt service still exceeded $160m in 1997. (World Bank figures on external debt are given in Reference table 24.)

Tanzania has high hopes for admission to the World Bank’s heavily indebted poor countries (HIPC) initiative, having followed an IMF-backed adjustment programme rigorously for nearly three years, one of the key criteria. However, in mid-1998 the IMF rebuked the government for exaggerating the extent of debt-service obligations and distorting relevant data in a bid to garner increased development assistance. Although Tanzania remains a likely Sub- Saharan candidate for HIPC, negotiations on admission to the programme are unlikely to commence before early 2000.

Continuing aid dependence Tanzania is heavily reliant upon official aid for financing its development projects and for balance-of-payments support. Disbursements have fallen since the turn of the decade, but in 1990-91 the country was second only to Mozambique in its dependence on aid from OECD Development Assistance Committee (DAC) countries. However, foreign assistance has become increasingly scarce in recent years, and the government was seriously concerned by the end-1997 announcement by the Japanese government that its aid budget was to be cut by 10%, with flows redirected towards East and South-east Asian nations. Japanese assistance to Tanzania had already fallen by 48% in 1997. This was a serious development for Tanzania given that Japan was its chief bilateral donor in 1996, contributing almost one-fifth of the bilateral total (see Reference table 25). At the same time, Dar es Salaam’s success in adhering to World Bank and IMF-inspired austerity measures has prompted a belief among some donors that Tanzania now has sufficient resources to begin to fund national development for itself. The World Bank’s soft-loan affiliate, the International Development Association (IDA), is the largest overall backer of Tanzania, extending net credit of $169m in 1997.

Foreign reserves and the exchange rate

Reserves recover— From the end of 1994 the suspension of balance-of-payments support by some of Tanzania’s aid partners put pressure on the country’s reserves, leading to a decline to just $270.2m at the end of 1995 (see Reference table 26). However, the restoration of support helped boost reserves to $440m the following year, and in 1997 the total increased by an impressive 40% over the year-earlier period, taking the total to $622m. Reserves were then sufficient to cover just over four months of imports, but fell by 4% to $599m by end-1998, largely due to the impact of food purchases.

—and the shilling remains Tanzania’s official and bureau exchange rates were unified in 1993, since which resilient time the exchange rate has theoretically been determined by the market (although in practice the central bank has stepped in to support the shilling where necessary). Since 1994 the Tanzanian shilling has remained fairly stable against the dollar (see Reference table 27), and in 1996 it actually appreciated in real terms. The currency remained resilient in 1997, in part because corporate demand for foreign exchange has been constrained by drought conditions in the second half of the year, and in part because demand for the shilling increased following the decline in the Kenyan currency from KSh55:$1 at the beginning of the year to almost KSh70:$1 after the IMF withdrew support in the third quarter. After a sharp decline in the first half of 1998, due to the knock-on effects of the downturn in economic activity as a result of the El Niño weather phenomenon, the rate of depreciation of the shilling slowed. However, by mid-1999, the currency began to lose its value more rapidly, reflecting increased demand for hard currency and concerns about underlying economic fundamentals.

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Zanzibar

Zanzibar consists of two Indian Ocean islands, Unguja and Pemba, and several islets. The islands’ administrative capital, Zanzibar Town, also known as Stonetown, is on Unguja.

Political background

Under the constitutional peculiarities of the United Republic of Tanzania (see Tanzania: Political background), Zanzibar is ruled as part of the Union and has its own government competent in internal matters. The 1977 constitution provided for the Union government to have competence in external affairs, defence, external trade currency and the like, while the Zanzibari authorities retained responsibility for development of the isles and other domestic issues. The line between the two has often been blurred, but it is on this basis that the isles’ administration is led by the Zanzibari president, Salmin Amour, assisted by a council of ministers. The 70-member House of Representatives legislates on internal matters.

Historical background

Zanzibar became independent two years after mainland Tanganyika, on December 10th 1963. On January 12th of the following year a bloody revolution overturned the largely Arab government of the Zanzibar Nationalist Party, banished the sultan and his family and put the majority (largely African) Afro Shirazi Party (ASP) into power. On April 12th 1964 the president, Abeid Karume, signed a declaration of unity with Tanganyika, and the two countries now constitute the United Republic of Tanzania.

Aboud Jumbe, who succeeded Mr Karume after the latter was assassinated in 1972, was the vice-president of the Union until his resignation in early 1984. Mr Jumbe had been unable to contain increasing discontent on the isles about their unification with the mainland. Ali Hassan Mwinyi then became Zanzibar’s president and automatically first vice-president of the Union, positions which he held until assuming the Union presidency in November 1985. Idris Abdul Wakil became Zanzibar’s president after elections in November 1985, at which point he became second vice-president of the Union. His presidency was unpopular and ended in October 1990 when Salmin Amour was elected, having stood as the sole presidential candidate.

Constitution and institutions

The process of integration with the mainland has been messy. A steady accretion of powers in the hands of the Union government has run alongside Zanzibar’s practice of exercising greater autonomy in its affairs than the 1977 Union constitution implies. Since the mid-1980s secessionist sentiment has been strong and an increasingly offshore direction in economic policy threatened to strain relations over matters such as exchange control, where de facto Zanzibari liberalisation was implemented before parallel reforms were officially adopted at Union level in 1992.

In early 1993 the Union was pitched into crisis when it emerged that the isles had become a member of the Organisation of the Islamic Conference (OIC) in their own right, despite constitutional provisions that the United Republic be a secular state and foreign policy an area of Union government competence. Zanzibar was obliged to withdraw from the OIC later in the year. In late 1994 the Union legislature passed a constitutional amendment under which the Zanzibari president is no longer, ex officio, Union vice-president. The reform was necessary to avoid the possibility that the two most senior members of the Union government might come from different parties after the 1995 elections, in which it was felt that the candidate of the pro-autonomy Civic United Front (CUF), Seif Shariff Hamad, had a realistic chance of winning. However, the move was unpopular in Zanzibar, where the change was interpreted as a downgrading of the isles’ presidency.

Political forces

The then single party, the Afro Shirazi Party, merged with the mainland’s Tanzanian African National Union as the Chama Cha Mapinduzi (CCM) in 1977. The new multiparty system, instituted in 1992, denies the isles their own parties, despite the glaring contradiction this implies when Zanzibar has its own president, legislature and constitution. The Kamati ya Mageuzi Huru (Kamahuru), disguised as a Union-wide organisation by virtue of its 1992 merger with the mainland Chama Cha Wananchi as the Civic United Front (CUF), is the strongest opposition movement. Secessionist sentiment is strong but, because of the fears of many Zanzibaris that independence would result in renewed Arab dominance of the islands, does not hold sway unopposed.

In May 1988, after serious demonstrations in Zanzibar, Idris Abdul Wakil sacked (among others) his chief minister, Seif Shariff Hamad, alleging that he was plotting a coup. A year later Mr Hamad was arrested under the Union National Security Act, but it was not until 1992 that he was brought to trial on charges of being in possession of state documents. Since being released he has played a prominent role in the Zanzibar wing of the opposition CUF, and stood as the party’s presidential candidate in the 1995 elections to the isles’ presidency.

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Mr Hamad is widely believed to have won the vote by a narrow margin, and his exclusion from power by fairly blatant vote-rigging remains an open sore among his (mainly Pemban) support base. Waves of generally non-violent ethnic cleansing removed much of the Pemban population from Unguja and parts of the mainland during 1996. The CUF mounted an energetic international campaign to have the announced election result overturned, but without success, leaving Pemba ungovernable and further marginalised. Relations between Pembans and the Zanzibari government deteriorated steadily throughout 1997, amid persistent calls for the removal of Mr Amour. Rumours in mid-1998 that Mr Amour planned to amend the constitution in order to stand for a third term, combined with arbitrary arrests of CUF members on spurious treason charges, further incensed not only Pembans but ordinary Zanzibaris supportive of the opposition.

After months of shuttle diplomacy between Zanzibar and the mainland by the Commonwealth secretary-general and an emissary, a peace deal was struck in June 1999 which appeared to offer a solution to the so-called Zanzibari question. The CUF agreed to end its boycott of the Zanzibari House of Representatives (HoR) and to recognise the legitimacy of Mr Amour’s tenure, in exchange for a review of the constitution and electoral legislation, reforms of the electoral commission, and two additional seats in the HoR. The deal was greeted with cautious optimism by the diplomatic and donor communities, which are eager for concrete evidence that Mr Amour does not intent to stand for a third term.

Resources and infrastructure

Population

Zanzibar consists of two islands, Unguja and Pemba, and a number of small islets, with a total land area of 2,460 sq km, situated 35 km off the mainland of Africa. In 1963 its population was nearly 320,000, including 19,700 Asians as well as Arabs, Africans and Comorians. Many of the minority non-African groups, especially Arabs and Asians, were dispossessed and came under pressure to leave after the 1964 revolution, during which a disputed number, sometimes put as high as 18,000, were killed. The 1988 census estimated a population of 641,000 and a growth rate of 3% per year, suggesting a 1998 total of some 862,000 (see Reference table 1). The main language is Swahili, of which Zanzibaris are native speakers. Almost the entire population adheres to Islam and Muslim radicals have been active, particularly in response to the perceived “cultural pollution” occasioned by the increasing numbers of Western tourists visiting the isles.

The economy

Economic policy

The policies of central planning and state control introduced by the isles’ revolutionary government from the 1960s contributed to the subsequent economic decline. However, Zanzibar was uniquely unfortunate in the degree to which its external terms of trade deteriorated after the early 1980s, when the world market for cloves, which contributed practically all export earnings, went into sharp decline. In the decade to 1986, when the Union government came to terms with the IMF, the Zanzibari economy contracted by one-quarter in real terms and in 1988 the isles’ government launched its First Economic Recovery Programme (ERP or FERP). The immediate aims of the FERP were to arrest this decline and address the worsening external and fiscal deficits, while also accommodating the consequences of reforms being implemented on the mainland. Tax reforms and the removal of rice subsidies addressed the fiscal imbalance directly. Meanwhile, devaluation (shared with the mainland), liberalisation of agricultural marketing (apart from cloves), and real producer price increases for cash and food crops were introduced in a bid to raise output. Little reform of the public enterprise sector was undertaken, but the passing of the Investment Protection (Amendment) Act in 1989 attracted increased private foreign investment, in the renascent tourism industry especially.

The launch of the FERP coincided with a cyclical downturn in the clove harvest and thus a deterioration was recorded in most short-term indicators. However, in real terms fixed investment rose by an annual average of 37% in the three years to 1991, laying the foundation for greater subsequent growth in the non-clove economy. In 1992 the government unveiled the successor to the FERP, the Second Economic Recovery Programme (SERP). This provided in general terms for a continuation of the policies of the FERP: a progressively greater reliance upon market mechanisms and private initiative complementing the reforms of the Union government. (For data on Zanzibari government finances see Reference table 28.)

Economic performance

National accounts data reflect a mixed performance over the period of the FERP. The established downward trend in real economic activity was relieved by a cyclical upturn in clove production immediately before the introduction of the FERP in 1988. Output then fell in the 1988/89 crop year and as a result real GDP growth was only 1.1% in 1988. Thereafter a trend of improved underlying growth in the non-clove economy was established. Per head income began to rise again in real terms in 1990 and a bumper clove harvest combined with increased real value added in construction and tourism produced a 4.8% expansion of the economy in 1991. Real income per head rose by 1.6%. The underlying momentum was maintained in 1992-95 when average annual GDP growth of 3.4% was achieved despite a cyclical downturn

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in the clove crop, and 1996 saw accelerated growth of some 6.2% (or 3.3% on a per head basis). Economic activity on the isles has thus returned to around its 1976 level (the year in which the current data series begins), when GDP was TSh979m ($11.8m). (For historical data on GDP at factor cost, see Reference table 29.)

Declining agricultural role The traditional dominance of agriculture in the economy has been reduced by an overall decline in the spice and copra industries (the very good 1991 clove harvest notwithstanding), together with the recent growth in tourism. The latest developments reflect an increasingly offshore orientation, apparently inspired by the success of Mauritius. Export-processing zones are also being tried with some success. In 1992 the government identified an undeveloped enclave on each of the two main islands as the chosen sites to be developed by the Zanzibar Free Economic Zone Authority (Zanfreza). Free-zone incentives include generous tax holidays and import tax exemptions which encouraged a busy trade with the mainland in smuggled goods. This trade route—the so- called Zanzibar loophole—emerged as a significant drain on the Union government’s finances and a key sticking point in negotiations with the IMF. Despite the increased activity in the free zones, the sector with the greatest potential—and a future as an important complement to the parallel mainland industry—is tourism. As of 1996, the latest year for which data are available, the trade and tourism sectors contributed 31% of GDP (see Reference table 30 for a historical series on sectoral contribution to Zanzibar’s GDP).

Prices As measured by the Zanzibari consumer price index, inflation on the isles peaked higher than on the mainland. During 1988 the prices of goods and services consumed by a representative household rose by almost 49% on average. The figure was still as high as 43% in the following year, when the mainland national index showed inflation falling to 26%. The persistence of shortages of locally produced basic goods and the isles’ greater dependence upon imports of food and other consumer goods (given shared devaluation) all contributed to this contrasting experience of inflation. After 1991, however, the Zanzibari inflation rate fell broadly in line with price trends on the mainland (see Reference table 31). In 1996 prices rose by 19% on average, but the rate slowed substantially to 8.3% the following year.

Economic sectors

Agriculture and fishing

Clove output dominates Agriculture’s share of total output fell from 48% in 1991 to 35.5% in 1996, the latest year for which data are available, with the Pemban clove plantations still accounting for most of the sector’s value added. The isles’ exports represented 63% of international trade in cloves in 1980, but have declined in the face of stiff competition from new producers such as Brazil and increased domestic production in the main export market, Indonesia, where large quantities are

used in the manufacture of kretek clove cigarettes. As a result of this long-term shift in market fundamentals, export unit prices have declined markedly. From a peak of $8.89/kg in 1983, Zanzibari clove exports realised only $1.10/kg in 1992. This trend compromised the First Economic Recovery Programme (FERP) policy of offering increased real purchase prices to producers. The cyclical nature of clove yields (further confused by the fact that production statistics are generally published on a calendar-year rather than a crop-year basis) makes it difficult to discern shifts in long-term production trends. However, the clove plantations have been undergoing rehabilitation and in 1991 production reached 15,394 tonnes, more than in any year since 1963. The 1992/93 harvest reflected the usual downturn expected after a bumper crop and production in 1993 fell to 1,843 tonnes. Production rose to 4,927 tonnes in 1994, declined to 1,576 tonnes the following year, and then increased more than sixfold to 10,339 tonnes in 1996. The general demoralisation of the Pemban population after the 1995 elections is expected to be revealed in further poor output figures. Indeed, for much of 1997 civil disturbances and anti-government activity kept most Pembans away from the clove farms, and although precise data on the 1997/98 crop were still unavailable in mid-1999, the indications were that it had declined by around 90%.

Copra is produced from about 5m coconut trees on some 160,000 ha. These plantations, most of them on Unguja, have also been undergoing rehabilitation, since poor husbandry had greatly reduced their productivity. Copra output fluctuates widely with the crop cycle: marketed production has ranged from 6,926 tonnes in 1990 to 767 tonnes in 1997. Seaweed has become an important export crop for some coastal communities: in 1997 4,252 tonnes were sold to China. Chillies are also produced for export: 0.2 tonnes in 1997. Food production accounts for 60% of all cultivated land; the principal subsistence crops include millet, maize, sweet potatoes, bananas, cassava, peas, rice, groundnuts and sorghum. Tobacco and rubber are also grown and there is a Chinese-built cigarette factory. The growth of cardamom is being encouraged, as well as vanilla and peppermint, as additional foreign exchange earners.

The isles have an extensive artisanal fishing industry, and the government is seeking to develop a modern fishing fleet. The 1990 catch was 9,100 tonnes, down from 17,000 tonnes in 1987.

Manufacturing

According to the 1988 census of industries, 113 industrial enterprises were operating in mining (10), manufacturing (102) and a power station on Unguja. During 1987-92 a further 21 industrial projects were approved by the Zanzibar Investment Promotion Agency (ZIPA). Despite recent free-zone activity, the manufacturing sector is still predominantly state-owned. In 1988 public enterprises accounted for 91% of gross output in manufacturing, but only 77% of value added, reflecting the generally poor performance of state-owned industries. Under the Second Economic Recovery Programme (SERP), parastatal reforms were outlined which, if implemented, would see such enterprises finally wound up. As a result of its dependence on agro-industry, the overall

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performance of the sector suffers crop cycle vicissitudes. In 1991 real value added was affected by the poor 1990/91 clove harvest among other factors, and activity in the manufacturing sector contracted by half. According to the Bank of Tanzania (the central bank), sectoral growth reached 22% in 1995, having averaged 9% a year over the previous five years, but fell to just 2.9% in 1996.

Capacity utilisation is The Chake Chake clove distillery, opened on Pemba in 1983, produces essential very low oils for export, but output has been constrained by irregular power and water supplies and shortages of spare parts and raw materials. Recent improvements raised capacity utilisation to 60% in 1990. The Mahonda Sugar Factory operated at just 22% of its 6,000 tonnes/year capacity on average throughout the 1980s. During 1992 it closed entirely and in 1995 it produced only 671 tonnes, although thisrose to 896 tonnes the following year. The economic viability of a domestic sugar industry is therefore doubtful. Apart from another 30-40 food and beverage manufacturers, there are small enterprises processing sheet metal and manufacturing both bakelite and PVC electrical accessories, as well as soap, clothing, wooden furniture, aluminium utensils and paint. Many of these are producing at 10% or less of their full capacity and others do not operate at all.

Other services

Tourism Zanzibar recorded more than 40,000 visitor arrivals in 1990, the majority from outside Africa (see tourism trends, Reference table 33). The total has risen rapidly recently and the increased value added in tourism is a major factor in the expansion of the hotels and restaurants sector. However, the total number of bednights sold has climbed more slowly than arrivals as the average length of stay has declined. Improved sea links with the mainland, now including a hydrofoil service which has cut the journey time to 90 minutes, explain this trend. There is also much investment in small hotels, in which overseas companies, benefiting from the new climate for foreign investment, are becoming involved on a greater scale. The tourism sector is a potential vehicle for economic recovery, although this would not be without its costs in environmental and other respects. Properly developed, however, Zanzibar could offer a combination of beach and cultural attractions to the highly profitable luxury end of a market also being catered for by the game parks of the mainland.

The external sector

Trade in goods

The isles generally record a substantial deficit on their external merchandise trade account (see Reference table 34), although part of this is compensated for by services receipts such as those associated with tourism. An exception was 1989, as the sale of the 1987/88 bumper clove crop raised export earnings more than fivefold and a small surplus was recorded. The trade deficit totalled $68.7m in 1996/97, 15% down on the year-earlier figure.

Appendices

Regional organisations

The Lomé Convention The Lomé Convention affords a group of 71 African, Caribbean and Pacific (ACP) countries preferential trade and aid links with the EU. The present convention (Lomé IV), which expires in February 2000, is being renegotiated.

Lomé IV was signed in 1989, replacing the previous agreements signed in 1975, 1979 and 1984. The convention maintained the long-term development aims of previous conventions, but placed new emphasis on economic policy reform in member states in line with the general emphasis on “conditionality” among multilateral funding bodies. After protracted negotiations between France (which wanted to increase total funding) and the UK and Germany (which sought to cut contributions and switch to bilateral aid), an agreement was reached in 1995 for total funding of Ecu14.6bn ($19.1bn at that time) until 2000, representing a 22% increase on the previous five years.

To achieve the Lomé objectives, a number of instruments were clearly defined in the convention. The most important was the European Development Fund (EDF), with an allocation of Ecu13.3bn. The EDF is the main source of multilateral EU aid to the ACP countries, and most of the funding is provided as grants. The remaining Ecu1.3bn was allocated to the European Investment Bank (EIB), which lends on a commercial basis. In addition, the ACP states gained a 16% cut in import tariffs on (mainly agricultural) products that did not previously enjoy preferential treatment. The convention also established two other separate schemes. The Stabilisation of Export Earnings Scheme (Stabex) was set up to cover losses of earnings caused by a fall in prices or a decline in production of the main ACP agricultural exports. Funding allocated to Stabex was increased by 62% to Ecu1.5bn under Lomé IV. Sysmin, a special financing facility for countries reliant on the export of minerals, was increased by 16% to Ecu480m. The schemes, however, suffer from a shortage of funds.

The convention has failed to bring about the intended growth in trade, since the share of ACP countries in the EU's total imports fell from 6.7% in 1976 to 3.4% in 1997. Negotiations between the EU and the ACP countries on renewing the convention started in September 1998. The EU—in particular Germany and the UK—wants to reform the convention, whose preferential arrangements have come under increasing attack from the World Trade Organisation (WTO). (In 1997 the WTO ruled that aspects of the EU-ACP arrangement over banana imports were unfair, which contributed to an escalating trade dispute between the EU and the US in 1999.) At an EU-ACP meeting in Dakar in February 1999, the EU restated its position, which was to introduce a new conditionality emphasising good governance and to maintain the present arrangements between 2000 and 2004, replacing them with free- trade agreements over another period of ten years.

The ACP countries prepared a common negotiating position at a meeting in Libreville, Gabon, in October 1997, and expressed their preference for

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maintaining the status quo. They were opposed to the new governance conditionality, but indicated their willingness to phase out the preferential arrangements—after a period of ten years. In addition, they resolved to boost intra-ACP co-operation, partly through organisations such as the Southern African Development Community (SADC). This would also fit the objectives of the EU, which wants to see greater regional integration among the ACP countries allowing it to negotiate separate sub-agreements within the Lomé Convention.

Tripartite Commission for Established in May 1996, the Tripartite Commission for East African Co- East African Co-operation operation (EAC) is the successor to the now defunct East African Community (EAC) (1967-77). Its three members are Kenya, Tanzania and Uganda. Unlike the old East African Community, which attempted to impose supranational control over all areas of government, the new EAC focuses on the harmonisation of policies. Specifically, when the EAC was formed, the dismantling of borders for the free movement of people, a common travel document and a joint secretariat for railways were envisaged. Other measures to be tackled included the harmonisation of fiscal and monetary policies, and policies on traffic, the environment and security. Progress has begun in some of these areas, and the EAC is now looking at developing a regional economic infrastructure and promoting trade and investment. Significantly, the EAC was not designed to create a common currency and monetary union in the first instance, although that may be a long-term possibility, but to provide a strong alternative to other regional trading organisations such as the Southern African Development Community (SADC) and the Franc Zone.

At their first anniversary meeting in Arusha, Tanzania, in May 1997, the three member states moved closer to establishing an economic and political federation when they adopted a common passport and flag and laid the groundwork for co-operation through a formal treaty. The three presidents launched the East African Co-operation Development Strategy for 1997-2000. The document sets out a comprehensive action programme, focused on the establishment of a single market and investment area, emphasising the roles of the private sector and civil society. A regional conference on the private sector is planned for October 1999.

Issues yet to be resolved include how the benefits from common investment and services will be shared, and ways of increasing intra-regional trade (which is currently less than $1bn and heavily skewed towards Kenyan exports). Since the co-operation agreement was signed, Kenya, Uganda and Tanzania have tried to harmonise their fiscal and monetary policies; one measure includes avoidance of double taxation. The agreement also provides for joint measures to prevent tax evasion. Other achievements include the convertibility of the currencies of the three states, pre- and post-budget consultations between the finance ministers, synchronisation of the budget day in the three countries, establishment of a Monetary Affairs Committee between the central banks, and co-operation in capital and securities regulation. In an attempt to promote trade and investment, the East African Business Council has been established, drawing members from national private-sector organisations in the region.

Lawyers have also formed their own forum, the East African Law Society and the East African Securities Regulatory Authority has also been established.

In infrastructure, the three countries are undertaking joint projects in power, road and rail transport, including a digital transmission system estimated at $69m. The project is at an advanced state of implementation and is financed by the telecommunications authorities of the three countries, together with the European Investment Bank (EIB) and the East African Development Bank.

The current co-operation agreement, which has a life-span of ten years, is being upgraded to a treaty for the East African Community which will establish a common market and then monetary union, and in the long run, a political federation. A draft treaty for the community was launched at the ninth meeting of the Permanent Tripartite Commission for EAC on April 30th 1998. The draft is currently under public debate. The signing of the treaty is scheduled to take place by July 1999, although that deadline may slip. Discussions on broadening the membership base to include Rwanda and Burundi will also continue, as will discussions among leaders about the relationship of the EAC with the existing but moribund Common Market for Eastern and Southern Africa (Comesa) and the thriving SADC.

Common Market for The Common Market for Eastern and Southern Africa (Comesa), which is Eastern and Southern based in Lusaka, Zambia, is the successor organisation to the regional Africa (Comesa) Preferential Trading Area (PTA), and came into force on December 8th 1994 after 12 member states ratified the integration treaty. Comesa is a weaker rival to the Southern African Development Community (SADC) and includes Angola, Burundi, Comoros, the Democratic Republic of Congo (DRC, formerly Zaire), Djibouti, Egypt, Eritrea, Ethiopia, Kenya, Madagascar, Malawi, Mauritius, Namibia, Rwanda, Seychelles, Sudan, Swaziland, Tanzania, Uganda, Zambia and Zimbabwe. South Africa's decision not to join the organisation, which aims to liberalise trade between the member countries, has given the SADC the stronger hand. Mozambique and Lesotho withdrew from Comesa in 1997 to concentrate on their membership of the SADC.

The original PTA, which was launched in 1981, aimed to liberalise trade and encourage co-operation in industry, agriculture, transport and communications. At a meeting in Lusaka in April 1997 the Comesa heads of state agreed that a common external tariff structure would be introduced to deal with all third-party trade by 2000. The main obstacles to successful integration are the unclear nature of the relationship with the SADC, most of whose members also belong to Comesa. Another constraint has been the strict “rules of origin”, which stipulate that preferential treatment can be granted only to goods produced by companies that are managed by, and 51% of whose equity is held by, nationals of a member state. Kenya and Zimbabwe originally argued strongly against this rule. The agreed schedule for removing customs barriers has frequently been revised. Comesa is to establish a free-trade area (FTA) by 2000 and all countries are supposed to have reduced tariffs by 80% as at October 1996. In fact, only six countries (Comoros, Eritrea, Sudan, Tanzania, Uganda and Zimbabwe) have reached this level; Kenya, Malawi and Mauritius have achieved 70% and are working towards the 80% level. All other countries,

EIU Country Profile 1999-2000 © The Economist Intelligence Unit Limited 1999 Tanzania 43

except Angola, Ethiopia and the DRC, and those countries that still enjoy a derogation from publishing these tariffs (Swaziland and Namibia), have reduced tariffs by either 60% or 70%.

In general, commitment to the organisation and its financing is rather frail. The administration budget of approximately $4m is heavily dependent on Kenya and Zimbabwe and meetings are frequently cancelled. The civil strife in many member countries has also impeded attempts at regional integration. Further attempts at crossborder investment promotion, monetary harmonisation and the like have been superseded by EAC and SADC initiatives.

Under the old PTA a multilateral clearing facility was established in Harare, Zimbabwe, in February 1984. A PTA monetary unit of account (UAPTA), then equivalent to the SDR, was used to settle debts between members every two months, the balances being payable in dollars. The 1997 heads of state meeting endorsed a proposal to replace the UAPTA with a Comesa dollar, fixed to the US dollar. Intra-Comesa trade accounts for only about 5% of members' global trade. The reasons for this small share include the distortions arising from widespread crossborder smuggling, a lack of political commitment and weak balance-of-payments and foreign reserves positions. In some cases there are hardly any official trade links between member states, but a few countries (Kenya, Madagascar, Tanzania, Uganda, Zambia and Zimbabwe) account for 60% of total intra-Comesa trade. In 1997 Kenya alone exported over $1.5bn of goods to other Comesa countries, most of which went to Uganda and Tanzania.

A PTA Trade and Development Bank was established in 1986, but only became operational in 1989. Now renamed the Comesa Trade and Development Bank, its headquarters have been relocated from Bujumbura (Burundi) to Nairobi (Kenya). As well as the African Development Bank, 15 Comesa members hold shares in the bank; in December 1997 its total assets, including loans, amounted to $120m.

Southern African In August 1992 Angola, Botswana, Lesotho, Malawi, Mozambique, Namibia, Development Community Swaziland, Tanzania, Zambia and Zimbabwe signed a treaty establishing the (SADC) Southern African Development Community (SADC). This replaced the Southern African Development Co-ordination Conference (SADCC), which was formed in 1980 by the Southern African states in a largely unsuccessful attempt to reduce the region's economic dependence on white-ruled South Africa. Namibia joined SADCC shortly after independence in 1990, while South Africa became a member in 1994, Mauritius in 1995 and the Democratic Republic of Congo (DRC, formerly Zaire) and Seychelles joined in 1997.

SADC inherited SADCC's secretariat, based in Gaborone, Botswana, and the responsibilities of each member for co-ordinating a different policy sector have remained broadly unchanged. The end of apartheid in South Africa, following multiracial elections, and South Africa’s admission into SADC on August 29th 1994, has inevitably shifted some of SADC's political and economic emphasis, although its goals remain broadly the same: promoting regional trade and integration, boosting the region's general economic independence and

mobilising support for national and regional projects. In mid-1994, before South Africa joined SADC, only 4% of members' trade was within the community, while 25% was with South Africa—a pattern that has not changed greatly.

Although SADC voted in 1994 to set up a regional rapid-deployment peacekeeping force—and there are longer-term plans for a regional development bank, a common currency and a regional parliament—the group's main focus in recent years has evolved around trade issues. In August 1996 SADC heads of state (except for Angola) signed a protocol for creating a regional free-trade area by progressively reducing, and ultimately removing, all import tariffs between member states over a period of eight to ten years. Implementation of the plan has been complicated by pre-existing subregional trade groupings, such as the Southern African Customs Union (SACU), and individual countries' reluctance to open vulnerable sectors to competition. Progress was made in 1997 when all members agreed to ratify a trade protocol which provides for the phased reduction and ultimate elimination of tariffs on goods originating in member states. South Africa, which has by far the largest economy in the region, has agreed to reduce its tariffs over an eight-year period; the other members have been given a ten-year period.

In addition, SADC members want to make common cause in increasing their access to European markets and secure stable commodity prices under the Lomé Convention, or its successor. In March 1999 the EU and South Africa successfully concluded their own trade negotiations. Many other SADC countries, particularly members of SACU, feel threatened by such an arrangement and fear that they could be flooded with cheap European imports.

However, progress on trade issues and other intra-SADC co-operative mechanisms in areas such as mining, establishing a landmine-free zone and drug-trafficking has been delayed, owing to the re-emergence of security issues. In particular, disputes among members over intervention in the civil war in the Democratic Republic of Congo (DRC, formerly Zaire) have created tensions which have sidelined other regional initiatives. According to SADC's defence protocol, member states are bound to help defend standing governments from foreign invasion and internal insurgencies. Whereas Zimbabwe, Angola and Namibia sent troops to the DRC to support its president, Laurent Kabila, South Africa was initially opposed to intervention. Indeed, the growing animosity between Zimbabwe's president, Robert Mugabe, and the South African leadership threatens to undermine SADC. In a further complication for mutual security arrangements, South African and Botswanan troops entered Lesotho in September 1998 to prevent a coup, leaving South Africa open to criticism for an inconsistent regional policy. While Zambia and South Africa have more recently emerged as mediators in the DRC conflict, security matters will continue to overshadow all SADC initiatives, making political will to implement the free-trade zone increasingly scarce.

Organisation of African The OAU was founded in 1963 by 30 African nations to promote solidarity and Unity (OAU) higher living standards, to defend the sovereignty of member states and to eliminate colonialism. Another 21 signatories have since joined, the last of

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which was South Africa in 1994. Morocco left in 1985. The OAU is committed to creating an Africa-wide customs union and to removing tariff and non-tariff barriers by 2004. The organisation has been criticised for a lack of decisive action, and has been hampered for years by severe budgetary problems.

The foreign ministers of member states meet twice a year to discuss the implementation of the organisation's accords. The issues raised are dealt with at the annual assembly of heads of state, which meets in June or July. The annual conference is hosted by the member state that is due to take over the chairmanship of the organisation for the next year. The 1998 conference took place in Ouagadougou, Burkina Faso, where the Burkinabé president, Blaise Compaoré, assumed the chairmanship of the organisation. There have, in addition, been three extraordinary conferences of heads of state: the first was in 1970 to discuss the Angolan crisis; the second, in 1980, sought to address the continent's economic problems; and the third, in 1990, attempted to address the problem of African debt.

The OAU is committed to the creation of an African economic community (AEC) according to the Lagos Plan of Action drawn up in 1980. This was originally scheduled to be in place by 2000, but at the 27th summit of heads of state in Abuja, Nigeria, in June 1991 this target was postponed to 2025. The AEC treaty, signed at the summit, outlined six stages, including the removal of tariff and non-tariff barriers to trade and the establishment of a continent-wide customs union by 2004. A commitment was also made to establish an African common market, with a central bank and single currency, by 2031.

The problem of conflict resolution has come to dominate the annual summit of heads of state. At the 1992 summit the OAU was criticised for never having successfully resolved a conflict in any of its member states. The possibility of establishing a military force to observe and monitor ceasefires negotiated by the OAU has been raised by several heads of state but no formal commitment has been made. The issue has been particularly pressing in the wake of renewed ethnic violence and border disputes since the mid-1990s, notably the Great Lakes crisis, the Ethiopian-Eritrean war, and the civil wars in Guinea-Bissau and Sierra Leone. The chaos and violence which followed the attempted secession of two islands from Comoros also remains unresolved.

Any move to step up the activity of the OAU is hampered by the organisation's severe budgetary problems. In November 1995 the ten worst debtors, owing $16.5m between them, were debarred from speaking or voting at any OAU meeting. The return of full rights is conditional upon their paying a large part of their arrears.

The OAU remains a high-profile talking shop. Little real action results from its policy decisions, constrained as it is by limited funds and the varying levels of commitment of its members.

Sources of information

National statistical sources The primary statistical source in Tanzania is the Bank of Tanzania (BoT, the central bank), which publishes an annual Economic and Operations Report, a quarterly Economic Bulletin—the scope of which was narrowed during 1994 to permit more timely publication of the main monetary and banking series, and a Monthly Economic Review. In addition, the Bureau of Statistics publishes a wide and expanding range of data series, summarised annually (but with considerable delay) in each year’s Statistical Abstract, while the Planning Commission is responsible for the annual Hali ya Uchumi wa Taifa. However, all such data should be treated with caution: official statistical publications do not always distinguish between data compiled for the mainland or for the Union as a whole, while inconsistencies between publications (and indeed different editions of the same publication) are frequent.

International statistical The main international sources on Tanzania are the World Bank’s annual sources Global Development Finance, World Tables and Trends in Developing Economies; the OECD’s Geographical Distribution of Financial Flows to Developing Countries; and the IMF’s International Financial Statistics. These draw almost exclusively on national sources, and thus tend to be consistent with them. That said, however, there is a major disparity between the BoT and the Fund over current- account data for 1990-95: the IMF’s revised figures appear substantially to discount aid transfers, for example, despite citing the central bank as the source for its statistics. Equally, IMF and World Bank data are not always consistent— internal documents, which often form the basis for lending decisions by the institutions’ boards of directors, tend to diverge from national data rather more than the statistics released to the general public.

Energy Data Associates, Regent Street, London SW1Y 4NR

Select bibliography The Britain-Tanzania Society, Tanzanian Affairs (tri-annual), London

Business Times (independent, weekly), Dar es Salaam

Daily News (semi-official, daily), Dar es Salaam

G Hyden (ed), Beyond Ujamaa in Tanzania: Underdevelopment and

an Uncaptured Peasantry, Heinemann, London, 1980

Initiative Marketing International, The Business Guide to Tanzania (annual), London

M H Y Kaniki (ed), Tanzania under Colonial Rule, Longman, London, 1980

D Mans, “Tanzania: resolute action”, in I Husain and R Faruqee (eds), Adjustment in Africa: Lessons from Country Case Studies, World Bank, Washington, DC, 1994

A H Sarris and R van den Brink, Economic Policy and Household Welfare during Crisis and Adjustment in Tanzania, New York University Press, New York, 1993

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Secretariat for Analysis of Swedish Development Assistance, Evaluation of Swedish Development Co-operation with Tanzania, Ministry for Foreign Affairs, Stockholm, 1994

Reference tables

Reference table 1 Population census results

1967 1978 1988 Mainland Population (‘000) 11,959 17,036 22,534 Annual growth ratea (%) n/a 3.3 2.8 Density (per sq km) 14 19 26 Zanzibar Population (‘000) 355 476 641 Annual growth ratea (%) n/a 2.7 3.0 Density (per sq km) 148 198 267

a Average since previous census.

Sources: Bureau of Statistics, 1988 Population Census: Preliminary Report.

Reference table 2

Minimum wagea (end-period)

1991 1992 1993 1994 1995 TSh per month 3,500 5,000 5,000 10,000 17,500 % nominal change 40.0 42.9 0.0 100.0 75.0 % real changeb 8.8 17.3 –20.2 50.4 36.3

a Excluding allowances. b Adjusted for change in national consumer price index.

Sources: Bureau of Statistics, Selected Statistical Series 1951-91; budget speeches.

Reference table 3 Transport statistics (mainland)

1993 1994 1995 1996 1997 Railways Tazara Cargo traffic (‘000 tonnes) 889 635 639 614 586 Passengers carried (‘000) 2,220 1,824 1,733 1,269 1,326 Tanzania Railways Corporation Cargo traffic (‘000 tonnes) 1,205 1,234 1,342 1,244 1,038 Passengers carried (‘000) 1,747 1,517 1,251 1,007 557 Air Air Tanzania Corporation Cargo carried (tonnes) 1,978 2,308 3,426 2,884 2,851 Passengers carried (‘000) 190 185 223 205 188 Passenger load factor (%) 56.7 56.9 55.3 53.8 53.1 Port (Dar es Salaam) Cargo (‘000 tonnes) 4,674 4,054 4,387 n/a n/a Passengers (‘000) 433 499 n/a n/a n/a Source: Planning Commission, Hali ya Uchumi wa Taifa katika Mwaka, 1997 (Economic Survey, kiSwahili edition).

Reference table 4 Electricity production (mainland) (m kwh; fiscal years Jul-Jun)

1992/93 1993/94 1994/95 1995/96 1996/97 Electricity generated 1,672 1,855 1,670 1,899 1,927 Hydro 1,552 1,762 1,373 1,670 1,660 Thermal (non-gas) 121 93 152 49 47 Thermal (gas) – – 146 180 220 Source: Bank of Tanzania, Economic and Operations Report.

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Reference table 5 Government finances (Union) (TSh m; fiscal years Jul-Jun)

1993/94 1994/95 1995/96 1996/97 1997/98a Total revenue 242,444 331,239 448,373 572,030 695,300 of which import taxes 57,363 91,248 121,243 163,089 244,059 income taxes 58,505 86,645 103,871 125,726 141,495 sales taxes 63,254 72,643 94,712 128,962 155,961 Total expenditure 413,053 439,550 422,656 585,952 927,484 Recurrent 338,364 407,858 417,274 557,056 618,688 of which: wages & salaries 77,884 111,494 156,087 199,228 226,000 interest payments 44,025 50,164 59,605 113,647 117,572 Developmentb 74,689 31,692 5,382 28,896 308,796 Balance before grants –170,609 –108,311 25,717 –13,922 –231,183 Grants 106,790 58,505 31,096 81,416 227,366 Cash adjustments –40,696 –14,753 –70,590 18,797 0.0 Overall balance –104,515 –64,559 –13,770 86,290 –4,818 Financing Foreign (net) 63,958 2,956 –42,392 –44,363 76,968 Domestic (net) 40,557 61,603 56,169 –41,927 –72,150 a Budget estimates. b Includes net lending.

Source: Bank of Tanzania, Economic Bulletin.

Reference table 6 Money supply and credit (Union) (TSh bn; end-period)

1993 1994 1995 1996 1997 Currency in circulation 122.2 176.4 244.3 257.7 287.9 Demand deposits 124.9 153.3 184.0 191.6 206.0 Money (M1) 247.1 329.6 428.3 449.2 493.9 Savings & time deposits 120.0 156.9 185.4 235.8 266.5 Money (M2) 367.1 486.5 613.7 685.0 760.4 Foreign currency deposits 53.5 83.3 139.2 133.1 166.7 Money (M3) 420.6 569.7 752.9 818.1 927.1 Net foreign assets 27.1 116.4 165.8 290.3 398.9 Net domestic credit Central government 184.1 181.1 279.3 295.8 239.5 Other domestic sectors 245.8 280.2 247.8 141.3 183.0 Other items –36.3 –7.9 60.0 90.6 105.7 Total assets 420.6 569.7 752.9 818.1 927.1 Source: Bank of Tanzania, Economic Bulletin.

Reference table 7 Interest rates (%; period averages)

1994 1995 1996 1997 1998 Central bank discount rate 27-68 40-50 15-41 11-21 18-23 Treasury billsa (91 days) 30-72 26-72 7-29 5-15 12-15 Commercial bank savings deposits 24-26 15-27 11-22 7-13 11-19 Lending rate Short-term 28-39 27-45 28-46 21-28 22-27 Medium- & long-term 24-39 31-40 29-38 21-32 26-30

a Treasury-bill auctions were introduced in August 1993; fixed price issues over 1989-92 bore yields in the range of 12-16%.

Source: Bank of Tanzania, Economic Bulletin.

Reference table 8 Gross domestic product (mainland) (at factor cost)

1993 1994 1995 1996 1997a Total (TSh bn) At current prices 1,607.8 2,125.3 2,796.6 3,452.6 3,832.3 At constant (1992) prices 1,281.0 1,298.9 1,345.2 1,401.7 1,457.4 Real change (%) 0.4 1.4 3.6 4.2 4.0 Per head (TSh)b At current prices 62,332 80,125 102,526 126,572 126,572 At constant (1992) prices 49,664 48,970 49,317 49,970 49,970 Real change (%) –2.4 –1.4 0.7 1.3 0.0

a Provisional. b Calculated using population estimates extrapolated from census results.

Source: Bank of Tanzania, Economic Bulletin.

Reference table 9 Gross domestic and national product (mainland) (TSh bn; current prices)

1990 1991 1992 1993 1994 GDP at market prices 758.0 935.1 1,130.6 1,404.4 1,822.6 Net indirect taxes 94.3 100.3 99.6 115.8 162.6 GDP at factor cost –663.8 –834.7 –1,031.0 –1,288.6 –1,659.9 Net factor income from abroad –40.4 –40.4 –70.4 –59.9 –69.5 Gross national product 623.4 794.3 960.6 1,228.7 1,590.4 Source: World Bank, Tanzania: The Challenge of Reforms.

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Reference table 10 Gross domestic product by expenditure (mainland) (% of total)

1990 1991 1992 1993 1994 Private consumption 76.0 90.1 90.7 86.8 89.6 Government consumption 6.9 7.7 7.1 9.1 7.7 Gross fixed capital formation 37.2 26.8 29.9 29.0 27.5 Increase in stocks 3.6 2.8 2.8 3.2 3.2 Exports of goods & services 14.0 11.3 15.1 20.5 26.4 Imports of goods & services –37.8 –38.7 –45.7 –48.6 –54.3 GDP at current market prices 100.0 100.0 100.0 100.0 100.0 Source: World Bank, Tanzania: The Challenge of Reforms.

Reference table 11 Gross domestic product by expenditure (mainland) (% real change)

1989 1990 1991 1992 1993 Private consumption 4.7 –10.3 0.8 2.6 6.7 Government consumption 27.7 –5.3 11.9 –9.8 –12.2 Investment 1.7 49.8 –1.2 2.2 2.8 Exports of goods & services 31.8 5.2 7.9 22.7 8.3 Imports of goods & services –11.0 –14.5 15.8 1.9 1.0 GDP at (1985) market prices 11.4 1.5 0.8 2.7 4.1 Source: Bureau of Statistics, National Accounts of Tanzania, 1976-93.

Reference table 12 Gross domestic product by sector (mainland) (% of total)

1992 1993 1994 1995 1996 Agriculture, forestry & fishing 54.8 54.8 54.8 56.8 55.7 Mining & quarrying 1.9 1.4 1.6 1.4 1.4 Manufacturing 8.2 7.9 7.3 6.7 6.5 Electricity & water 2.1 2.1 2.2 2.2 2.1 Construction 4.7 4.9 5.0 3.5 4.9 Trade & tourism 16.2 14.7 14.7 14.8 14.7 Transport & communications 6.4 6.9 7.2 7.2 7.1 Financial & business services 4.5 9.7 9.5 9.2 9.3 Public administration 5.1 4.7 4.8 5.0 4.8 Imputed bank service charges –3.9 –7.1 –7.0 –6.7 –6.7 GDP at current factor cost 100.0 100.0 100.0 100.0 100.0 Source: Bank of Tanzania, Economic Bulletin.

Reference table 13 Gross domestic product by sector (mainland) (% real change)

1993 1994 1995 1996 1997a Agriculture 3.0 2.4 6.6 4.5 3.1 Mining & quarrying 8.2 15.0 11.7 9.6 8.0 Manufacturing 0.6 –0.2 1.6 4.8 3.0 Electricity & water supply 0.9 2.0 6.1 11.1 8.3 Construction –17.7 1.3 –18.9 9.4 5.0 Transport, storage & communication 0.1 0.9 5.9 1.1 8.5 Finance & business services 6.1 2.4 –1.4 –1.7 1.7 GDP at (1992) factor costb 0.4 1.4 3.6 4.2 4.0

a Provisional. b Includes trade, public administration and other services.

Source: Bank of Tanzania, Economic Bulletin.

Reference table 14 Prices 1994 1995 1996 1997 1998 Consumer prices index (1995=100) 77.0 100.0 119.7 138.9 156.7 % change year on year 32.9 29.9 19.7 16.0 12.8 Source: IMF, International Financial Statistics.

Reference table 15 Production of principal food crops (mainland) (‘000 tonnes; crop years Jul-Jun)

1993/94 1994/95 1995/96 1996/97 1997/98 Maize 1,812 2,567 2,663 1,879 2,726 Paddy 614 722 734 528 548 Ricea n/a 470 443 346 n/a Wheat 59 75 84 –380 111

a Converted from paddy at 65%.

Sources: Southern African Development Community (SADC) Regional Early Warning Unit, Food Security Quarterly Bulletin; Bank of Tanzania, Economic and Operations Report; Economic Bulletin.

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Reference table 16

Production of principal cash crops (mainland)a (‘000 tonnes; crop years)

1992/93 1993/94 1994/95 1995/96 1996/97 Coffee (Jul-Jun) 47.9 48.5 43.5 52.0 41.0 Cotton (lint) (Jul-Jun) 68.8 48.4 44.5 84.2 84.5 Tea (Jul-Jun) 22.0 22.4 24.8 25.0 18.2 Cashew nuts (Oct-Sep) 42.3 46.5 63.4 82.0 63.0 Tobacco (Apr-Mar) 23.3 24.0 18.3 28.0 35.4 Sisal (Jan-Dec)b 24.3 30.5 25.5 30.0 30.0

a As marketed through licensed channels and so excluding significant smuggling of some crops. b 1991/92=1991, and so on.

Source: Bank of Tanzania, Economic and Operations Report.

Reference table 17 Industrial production (Union) (1985=100)

1992 1993 1994 1995 1996 Aluminium 118.2 134.8 110.5 48.1 15.0 Beer 64.8 74.9 74.6 117.2 164.2 Cement 180.1 199.2 182.4 196.5 193.0 Cigarettes 142.1 146.0 126.9 138.7 140.0 Iron sheets 116.7 115.1 78.6 82.5 29.0 Petroleum 90.4 88.1 86.1 100.8 85.1 Textiles 126.0 103.9 88.4 53.7 57.6 Konyagi (spirit) 195.3 195.6 204.4 209.0 185.0 Sugar 104.5 94.6 100.0 93.8 92.9 Paint 174.1 156.1 147.8 236.7 381.6 Source: Bank of Tanzania, Economic Bulletin.

Reference table 18 Minerals production (Union) (‘000 tonnes unless otherwise indicated)

1993 1994 1995 1996 1997 Gold (kg) 3,370 2,861 3,200 6,517 8,082 Diamonds (ct ‘000) 40.8 17.2 49.5 54.5 72.8 Coloured gemstones (tonnes) 33.0 48.5 111.4 92.5 106.5 Coal 99.7 109.6 43.2 86.4 91.2 Salt 83.4 84.3 6.7 137.3 119.7 Phosphate 2.2 n/a 1.1 n/a n/a Tin 12.0 9.0 n/a n/a n/a Gypsum 51.0 53.0 1.1 50.5 54.3 Limestone 161.8 174.0 106.2 122.2 128.2

Source: Planning Commission, Hali ya Uchumi wa Taifa katika Mwaka, 1997 (Economic Survey, kiSwahili edition).

Reference table 19

Tourism trends (Union)a 1991 1992 1993 1994 1995 Arrivals (‘000) 186.8 201.7 230.2 261.6 293.8 of which from: Africa 72.9 n/a n/a n/a/ n/a Europe 67.2 n/a n/a n/a n/a Americas 41.5 n/a n/a n/a n/a Gross receipts ($ m) 89.0 120.0 146.8 192.1 258.1 Hotels Bednights soldb (‘000) 394.8 407.0 471.4 n/a n/a Room occupancy ratec (%) 30.4 31.8 31.3 n/a n/a Capacityb (rooms) 6,150 6,180 6,335 n/a n/a

a Visitors from abroad. b Mainland only. c Including Tanzanian guests, who accounted for two-thirds of bednights sold on average, 1991-93.

Sources: Bureau of Statistics, Hotels and National Parks Statistics 1993 and Selected Series: 1951-91; offical estimates.

Reference table 20 Exports (Union)a ($ m; fob)

1994 1995 1996 1997 1998b Coffee 115.4 142.6 137.7 117.4 114.8 Cashew nuts 51.2 64.0 93.8 75.1 112.4 Minerals 30.0 44.9 54.4 92.8 102.5 Manufactures 77.0 109.3 110.8 104.4 68.2 Cotton 105.1 120.2 137.7 116.5 53.8 Tea 39.5 23.4 26.3 30.1 32.0 Tobacco 20.6 27.1 47.0 12.9 25.7 Petroleum products 5.5 11.0 11.1 12.4 7.4 Total incl others 519.4 682.9 761.7 718.8 675.9

a All trade data are subject to a wide margin of error and should be treated with caution. b Provisional.

Source: Bank of Tanzania, Economic Bulletin.

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Reference table 21

Imports (Union)a ($ m; cif)

1994 1995 1996 1997 1998b Consumer goods 558.1 377.7 361.8 351.0 372.1 Intermediate goods 290.4 609.0 531.0 490.4 418.5 Petroleum & products 149.0 193.8 158.4 187.0 116.0 Industrial raw materials 129.7 403.4 349.3 284.0 287.0 Fertilisers 11.7 11.8 23.3 19.4 15.5 Capital goods 656.5 554.2 501.0 496.3 662.9 Machinery 306.7 295.3 255.8 277.1 363.3 Transport equipment 242.3 209.6 202.7 187.4 231.9 Building materials 107.5 49.2 42.5 31.8 67.7 Total incl others 1,505.0 1,540.8 1,393.8 1,337.7 1,558.9

a All trade data are subject to a wide margin of error and should be treated with caution. b Provisional.

Source: Bank of Tanzania, Economic Bulletin.

Reference table 22

Main trading partners (Union)a ($ m)

1993 1994 1995 1996 1997 Exports to: Germany 4850666560 India 4053588858 Japan 3745595954 UK 39 31 39 41 49 Rwanda 25 30 36 41 47 Netherlands 21 25 36 38 40 Belgium-Luxembourg 39 16 9 12 14 Imports from: South Africa 20 57 190 141 229 Kenya 103 122 150 176 193 UK 180 139 160 141 141 Saudi Arabia 131 93 104 93 104 China (mainland) 38 72 82 71 93 Japan 123 90 119 85 87 India 6976787878 US 36 54 73 55 71

a Based on partners’ trade returns; subject to a wide margin of error.

Source: IMF, Direction of Trade Statistics.

Reference table 23 Balance of payments, IMF estimates (Union) ($ m)

1993 1994 1995 1996 1997 Goods: exports fob 444.6 519.4 682.5 764.1 715.3 Goods: imports fob –1,288.6 –1,309.3 –1,340.0 –1,213.1 –1,164.4 Trade balance –844.0 –790.0 –657.5 –449.0 –449.1 Services: credit 317.9 418.2 582.6 608.1 484.4 Services: debit –717.0 –503.3 –799.4 –953.4 –796.8 Inflows of IPDa 21.9 30.9 31.8 50.3 44.8 Outflows of IPDa –172.9 –153.4 –142.0 –105.4 –168.4 Current transfers: credit 398.7 311.5 370.5 370.9 245.4 Current transfers: debit –30.7 –25.0 –32.3 –32.3 –67.8 Current-account balance –1,048.0 –710.9 –646.3 –510.9 –707.4 Direct & portfolio investment 20.5 50.0 119.9 150.1 157.9 Other investment Liabilities –18.8 –168.8 61.8 –160.4 –159.5 Assets 56.7 11.9 –75.1 20.1 –85.0 Capital-account balance 205.2 262.6 190.9 191.0 463.3 Errors & omissions 209.3 136.6 –10.0 56.1 65.2 Overall balance –575.1 –418.6 –358.7 –254.0 –265.5 Financing Use of reserves 60.5 –122.8 43.3 –195.4 –206.9 Use of IMF credit –6.0 –15.4 –19.6 15.7 53.2 Exceptional financing 520.7 556.8 355.1 433.8 419.2

a Interest, profit and dividends.

Source: IMF, International Financial Statistics.

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Reference table 24 External debt, World Bank estimates (Union)a ($ m unless otherwise indicated; year-end)

1993 1994 1995 1996 1997 Public medium- & long-term 5,830 6,158 6,238 6,121 6,054 Private medium- & long-term 12 12 44 45 50 Total medium- & long-term debt 5,842 6,170 6,282 6,166 6,104 Official creditors 5,433 5,763 5,830 5,738 5,806 Bilateral 3,011 3,093 3,022 2,843 2,866 Multilateral 2,422 2,670 2,808 2,895 2,939 Private creditors 409 407 452 428 298 Short-term debt 750 887 967 1,039 837 of which: interest arrears 689 806 908 912 698 Use of IMF credit 215 212 197 206 246 Total external debt 6,807 7,270 7,447 7,412 7,186 Principal repayments 104 116 146 165 112 Interest payments 107 67 86 104 50 of which: short-term debt 45466 Total debt service 211 184 232 269 161 Ratios (%) Total external debt/GDP 156.3 178.7 141.2 113.7 97.2 Debt-service ratio, paida 26.9 19.0 17.9 18.9 13.0 a Long-term debt is defined as having original maturity of more than one year. b EIU estimate. c Debt service as a percentage of earnings from goods and services.

Source: World Bank, Global Development Finance, 1998.

Reference table 25 Net official development assistance (Union)a ($ m)

1993 1994 1995 1996 1997 Bilateral 650 570 587 605 569 of which: Japan 89 105 124 106 55 Netherlands 55 58 77 75 52 Germany 7264675959 Denmark 8177609164 Norway 69 50 52 54 51 Sweden 91 51 45 65 48 Multilateral 304 392 291 291 392 of which: IDA 137 172 148 121 169 EU 70 87 64 44 64 Total 953 969 882 894 963 of which: grants 1,025 776 717 695 666 a Disbursements net of repayments of aid loans. Official development assistance is defined as grants and loans with at least a 25% grant element, provided by OECD and OPEC member countries and multilateral agencies, and administered with the stated aim of promoting development and welfare in the recipient country. Source: OECD, Geographical Distribution of Financial Flows to Aid Recipients.

Reference table 26 Foreign reserves (Union) ($ m; end-period)

1994 1995 1996 1997 1998 Foreign exchange 317.5 255.3 425.6 608.5 584.8 SDRs 0.0 0.1 0.1 0.1 0.4 IMF reserve position 14.6 14.8 14.3 13.5 14.0 Total reserves 332.1 270.2 440.1 622.0 599.2 Source: IMF, International Financial Statistics.

Reference table 27 Exchange rates (Union) (TSh per unit of currency unless otherwise indicated; annual averages)

1994 1995 1996 1997 1998 $ 509.63 574.76 579.97 612.12 664.67 £ 780.55 907.23 905.77 1,002.46 1,102.68 FFr 91.79 115.14 113.37 104.87 112.66 ¥ 4.98 6.11 5.33 5.05 5.07 Source: IMF, International Financial Statistics.

Reference table 28 Government finances (Zanzibar) (TSh m; fiscal years Jul-Jun)

1992/93 1993/94 1994/95 1995/96 1996/97 Total revenue 8,251 8,377 23,577 19,066 19,808 of which: import taxes 4,582 6,184 15,398 14,965 12,431 Total expenditure 24,361 21,312 64,986 13,983 19,833 Recurrent 10,537 7,978 30,022 13,004 19,073 Development 13,824 13,334 34,964 889 760 Total before grants –16,110 –12,935 –41,409 5,173 –25 Grants 771 4,158 4,929 80 0 Cash adjustments 10,916 –367 –84.3 –29,937 –8,076 Overall balance –4,423 –9,144 –37,323 –24,684 –8,101 Financing Foreign (net) 1,279 113 n/a 968 0 Domestic (net) 3,144 9,031 n/a 23,716 8,101 Source: Bank of Tanzania, Economic and Operations Report.

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Reference table 29 Gross domestic product (Zanzibar) (at factor cost)

1992 1993 1994 1995 1996 Total (TSh m) At current prices 33,817 41,847 52,994 65,771 84,226 At constant (1976) prices 880 910 942 977 1,038 Real change (%) 3.0 3.4 3.5 3.7 6.2 Per head (TSh)a At current prices 46,838 56,246 69,183 83,360 n/a At constant (1976) prices 1,219 1,223 1,230 1,238 n/a Real change (%) 0.1 0.3 0.6 0.7 n/a

a Calculated using population estimates extrapolated from census results.

Sources: Department of Statistics, Zanzibar in Figures; Zanzibar Planning Commission, Second Economic Recovery Programme.

Reference table 30 Gross domestic product by sector (Zanzibar) (% of total)

1992 1993 1994 1995 1996 Agriculture, forestry & fishing 42.9 43.1 37.5 34.2 35.5 Mining & quarrying 0.3 0.3 0.4 0.3 0.4 Manufacturing 1.7 1.7 1.8 2.1 2.0 Electricity & water 1.8 1.7 1.7 1.5 1.5 Construction 10.4 10.6 14.4 17.0 16.5 Trade & tourism 27.9 27.3 30.2 31.1 31.0 Transport & communications 3.1 3.2 3.4 3.3 3.2 Financial & business services 2.7 2.2 1.5 2.4 2.1 Public administration 11.1 10.9 10.6 10.4 9.8 Imputed bank services charges –1.9 –0.9 –1.5 –2.4 -1.9 GDP at (1976) factor cost 100.0 100.0 100.0 100.0 100.0 Source: Bank of Tanzania, Economic and Operations Report.

Reference table 31 Prices (Zanzibar) 1993 1994 1995 1996 1997a Consumer prices (1991=100) 152.7 187.7 241.9 287.5 311.4 % change year on year 23.1 22.9 28.9 18.9 8.3

a January-September.

Source: Bank of Tanzania, Economic and Operations Report.

Reference table 32 Marketed production of principal cash crops (Zanzibar) (tonnes)

1993 1994 1995 1996 1997 Seaweed 1,768 2,542 4,287 4,691 4,252 Cloves 1,843 4,927 1,576 10,339 2,111 Copra 1,304 3,292 2,758 2,223 767 Clove stems 35,249 450 251 1,624 754 Chillies 2.1 1.6 1.1 3.5 0.2 Source: Bank of Tanzania, Economic and Operations Report.

Reference table 33 Tourism trends (Zanzibar)

1987 1988 1989 1990 Visitor numbers 27,842 32,219 35,646 40,018 of which from: Europe 15,494 19,968 23,613 24,441 Asia 5,163 5,087 4,783 6,104 Bednights sold 60,310 49,644 63,737 63,160 Bed occupancy rate (%) 29 32 32 29 Source: Department of Statistics, Zanzibar in Figures.

Reference table 34

Trend of external trade (Zanzibar)a (TSh m)

1987 1988 1989 1990 1991 Exports fob 249 723 3,739 1,555 1,151 of which: cloves 246 715 3,689 1,500 849 Imports cif –1,687 –2,732 –3,248 –5,593 –5,481 of which: food 844 1,269 662 321 167 chemicals 74 145 292 492 222 machinery & transport equipment 401 528 663 762 1,304 Trade balance –1,438 –2,009 491 –4,038 –4,330

a Totals net of trade with the mainland.

Source: Zanzibar Planning Commission, Second Economic Recovery Programme.

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Comoros

Basic data

Land area 1,862 sq km, excluding Mayotte (374 sq km)

Population 700,000 (1996 UN Population Fund estimate, including Mayotte)

Main towns Moroni (capital) (16,000) on Grande Comore Mutsamudu (10,000) on Anjouan Fomboni (4,500) on Mohéli

Climate Tropical; hot and humid, November-May; cooler and drier, May-October

Weather at Moroni Hottest month, March, 24-31°C; coldest month, August, 19-27°C; driest (altitude 59 metres) month, October, 84 mm average rainfall; wettest month, January, 424 mm average rainfall

Languages French, Arabic, Comorian (derived from Swahili and Arabic)

Measures Metric system

Currency Comorian franc (Cfr)=100 centimes. Average exchange rate in 1998: Cfr442.46:$1. Exchange rate on June 25th 1999: Cfr492:$1

Time 3 hours ahead of GMT

Public holidays July 6th (independence day); November 27th (anniversary of President Abdallah’s assassination). Comoros also observes Id al-Fitr, Id al-Adha, Muharram, Ashoura, Leilat al-Meiraj, which are dependent on the Islamic lunar calendar

Political background

The Federal Islamic Republic of Comoros is formed by three islands in the Indian Ocean, 300 km east of Mozambique: Grande Comore (Ngazidja); Anjouan (Ndzouani); and Mohéli (Moili). A fourth island in the archipelago, Mayotte, is a collectivité territoriale under French administration. The army took power in a bloodless coup in April 1999.

Historical background

Comorians, who are of mainly mixed Bantu-Arab descent, are closely related to other Muslim communities along Africa’s Indian Ocean fringe, notably Zanzibar. The main language is Comorian, a mixture of Swahili and Arabic, but French (for government and business) and Arabic are also used.

Islam is the religion of almost all Comorians. They adhere to the Shafi school of the Sunni faith, which rigorously orders daily life. However, the culture has also been influenced by mainland Sub-Saharan Africa’s slightly more liberal attitude towards the role of women in society. Among the traditional practices is the “grand marriage”, a wedding feast which may often bankrupt the groom. Efforts to ban this practice because of the damage it causes to the income of less well-established families have not had great success.

Early history The archipelago’s earliest inhabitants are thought to have been Melano- Polynesians who arrived from the Far East, probably around AD 500-600. Over the following years the islands attracted settlers from mainland Africa, Madagascar, Indonesia, the Arab world and even Persia. Subsequently, expanding Portuguese and Dutch trading networks made their presence felt before the French finally began formal colonisation in 1843. They brought Indians and even some Chinese. Islam came to the region with Arab traders.

These ties are being perpetuated today with continuing trade and diplomatic links with the Gulf states. Arab influences are strongest in the towns and large villages of Grande Comore and Anjouan, while African cultural influence is greater in the interior and (with Malagasy connections) on Mohéli and Mayotte.

In spite of cultural and climatic variations, the islands were ruled by members of the same family and therefore enjoyed a degree of unity. Moroni in Comoros was the seat of an Arab sultanate. Political and economic development was limited, however, by the island’s location at the southern edge of the Islamic world and by a mountainous terrain that left little land available for agriculture. Grande Comore is dominated by Mount Karthala, a volcanic crater 2,361 metres high.

Colonial rule Mayotte was the first island to come under effective French control. In 1886 Grande Comore, Anjouan and Mohéli acquired protectorate status. By the 1950s Comorian leaders were lobbying for independence, a process that was given extra impetus when most mainland French African possessions gained

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independence at the start of the 1960s. France responded in 1961 by granting internal autonomy: a chamber of deputies was elected and administration was placed in the hands of a Comorian governing council. However, a resident French commissioner retained considerable powers.

Independence France eventually agreed to hold a referendum on independence, but the vote in December 1974 produced a split result: the combined vote of Grande Comore, Anjouan and Mohéli was 96% in favour of independence; but in Mayotte 64% of the votes were against. Paris tried to accommodate this divergence of opinion by proposing a highly decentralised constitution, but this was rejected by the independence movement leader, Ahmed Abdallah Abdérémane, and on July 6th 1975 the chamber of deputies decided to make a unilateral declaration of independence. Two days later Mr Abdallah was elected as the country’s first president. France opted to respect the strength of feeling in Mayotte, which it had ruled for much longer than the rest of the archipelago, and kept this island under its own control. It accepted the independence of the other islands. However, Comorian governments have never been reconciled to the loss of Mayotte and they have continued to lobby, although often without enthusiasm, for the transfer of the island to Comoros’s control. Opinion in Mayotte itself remains firmly against such a move and there is no sign that France would be prepared to impose it, in spite of the considerable public spending costs that its administration incurs.

Ali Soilihi: a brief On August 3rd 1975 Mr Abdallah was deposed in a coup by the Front national experiment in radicalism uni, a moderate alliance enjoying the support of leading families. A French- trained agronomist from a peasant background, Ali Soilihi, emerged to become head of state on January 2nd 1976. He advocated a strongly independent attitude towards France and a radical domestic agenda of reform. This was highly popular and in a 1977 referendum on his leadership Mr Soilihi secured more than 50% support. However, his policies threatened to erode the influence of conservative religious leaders and traditional interest groups and he faced a succession of coup plots. Eventually he was overthrown on May 12th 1978 by a group of French and Belgian mercenaries led by a well-known soldier of fortune, “Colonel” Bob Denard.

Mr Abdallah restores Mr Abdallah, who had helped to finance Mr Denard’s takeover, returned from traditional patronage exile in France. On October 22nd 1978 he was elected president for a six-year term. A new constitution introduced in 1978 made Islam the state religion, although the government continued to operate on broadly secular lines and did not apply strict shari’a (Muslim) law. The constitution provided for elections and limited the president to two terms of office. But gradually Mr Abdallah became more authoritarian, relying on a web of patronage and the military strength of a 300-strong presidential guard trained and led by the mercenaries. Mr Denard became a key figure in the regime, settling in Comoros, building up a range of business interests and marrying a Comorian woman. Through his links with the South African security establishment, Comoros became a conduit for the shipment of arms to Iran and to the Resistência Nacional de Moçambique (Renamo), the rebel movement in Mozambique backed by South Africa. By the mid-1980s popular resentment

against the mercenary presence and the Abdallah regime was on the rise; the poorly equipped army resented the status and supplies enjoyed by the presidential guard.

Mr Abdallah is killed but In 1989 Mr Abdallah managed to stage a referendum victory allowing him to France intervenes run for a third presidential term. France’s then president, François Mitterrand, appeared reluctantly to acquiesce but, supported by the newly reformist president of South Africa, F W de Klerk, stepped up the pressure for change and the replacement of mercenaries with an orthodox French security firm. Mr Denard and his adjutant, Dominique Malacrino, called on Mr Abdallah on November 26th 1989, apparently hoping to dissuade him. The exact course of subsequent events remains to be clarified but at some point Mr Abdallah and his personal bodyguard were killed. Comorian and international opinion blamed Mr Denard. In line with the constitution, the Supreme Court president, Saïd Mohamed Djohar, took over as interim president and called on France to intervene under the Franco-Comorian bilateral defence accord of 1978. French warships were soon offshore and on December 15th Mr Denard handed over control in return for safe passage to South Africa. Eventually he returned to France, where legal moves against him quietly petered out after prominent members of the French security establishment spoke out in his favour in court.

Mr Djohar is elected and a Mr Denard’s departure left most Comorians relieved. After a short interim new constitution approved period, a presidential election was organised in 1990. Mr Djohar emerged as victor with 55.3% of the vote in the second-round run-off, defeating the leader of the Union national pour la démocratie aux Comores (UNDC), Mohamed Taki, who had returned from exile in France. International observers said that the poll had been fair.

The Djohar era is In 1991 Mr Djohar staged a public reconciliation with Mr Taki, appointing him characterised by weak government co-ordinator (de facto prime minister), but this did not last and leadership Mr Taki was dismissed in May 1992 over his appointment of a former mercenary as his investment adviser. Political tensions continued, exacerbated by constant factional arguments and growing resentment of the influence wielded by Mr Djohar’s son-in-law, Mohamed Saïd Abdallah Mchangama. Mr Djohar’s rule was characterised by constant shifts in policy and political alliances, repeated government reshuffles and changes of prime minister, and a failure to set out any clear course of development and economic reform. This contributed to widespread cynicism and disillusion. Discontent was especially intense in Mohéli, which felt neglected by central government. Resentment also spread in the military, evidenced by a brief abortive mutiny in September 1992. After talk of a coup plot Mr Taki fled to his home village, Mbeni (on the north-eastern coast of Grande Comore), while several other alleged plotters were arrested. An election was finally held in December 1993, giving a clear majority to the newly formed pro-Djohar Rassemblement pour la démocratie et le renouveau (RDR). This provoked the opposition to unite in a new alliance, the Forum pour le redressement national (FRN).

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The Mchangama “regency” Throughout 1994 Comoros continued to lurch from one political crisis to the gives way to a reformist next, while the economy struggled to adjust to the 33% devaluation of the prime minister Comorian franc in January 1994 and the associated IMF structural adjustment programme (SAP). Mr Mchangama, who was elected speaker of the National Assembly in breach of promises to appoint a Mohélien, was widely perceived as the real power behind the Djohar presidency. But in April 1995, with donors’ confidence at a low ebb, Mr Djohar acted to restore the credibility of his administration, appointing the reformist former finance minister, Mohamed Caabi El Yachroutu, as premier. Mr El Yachroutu, who was already known and respected by France, the IMF and the World Bank, made substantial progress in overhauling state finances and improving relations with Comoros’s international financial partners.

A new mercenary Mr El Yachroutu had been in office only a few months when Mr Denard intervention unexpectedly staged a fresh mercenary putsch in September 1995, releasing those detained in connection with alleged past coup attempts. Mr Djohar was detained. Mr El Yachroutu, who had taken refuge in the French embassy, eventually persuaded France to intervene, under the bilateral defence accord between Moroni and Paris, and to restore democracy. Paris sent in troops on October 4th; mercenary resistance crumbled and Mr Denard was detained. Mr El Yachroutu and France had hoped the elderly Mr Djohar, flown by the French to Réunion for a medical check, would agree to step down, but he insisted on serving out his term, in a titular capacity, until the scheduled presidential election in March 1996.

Mohamed Taki is elected Fifteen candidates contested the first round of the election. Mr Taki, the UNDC president— leader and a prominent figure in Comorian politics for decades, emerged the leader, with 21.03% of the vote; Abbas Djoussouf, the candidate for the FRN alliance and a close ally of Mr El Yachroutu, came in second, on 15.65%. Mr Taki entered the run-off with pledges of support from 12 of the minor candidates eliminated in the first round, including influential members of the traditional political establishment such as Omar Tamou. It was no surprise when he secured 64.16% of the vote, to achieve a decisive victory over Mr Djoussouf (who was widely respected abroad and among the Moroni middle class, but lacked a strong populist base in the village areas where most Comorians live).

—but soon loses support Mr Taki’s strong leadership was initially regarded as a welcome contrast to the drift and vacillation of the Djohar regime. His conservative line on law and order—the death penalty was reintroduced for murder, and the first execution was held in public in September 1996—found wide public support, while his attempts to bolster the powers of the presidency were regarded as a necessary concomitant of strong government.

However, Mr Taki’s leadership style became increasingly autocratic, and public dissatisfaction was exacerbated by the apparent decline in living standards and the all too apparent contrast with the nearby collectivité territoriale, Mayotte, flush with French subsidies. In July 1997 the islands of Anjouan and Mohéli announced their secession from the republic, followed by a bid for rattachement

to France in the form of the collectivité territoriale status enjoyed by Mayotte. France promptly denied the request, and several botched attempts by the beleaguered Comorian army to bring the breakaway islands back into the fold failed dismally. The failure of military action to prevent the dissolution of the republic jeopardised the incumbency of Mr Taki, who spent much of 1997 and 1998 attempting to divert public attention away from the falling living standards at home to the quelling of the rebellion on Anjouan and Mohéli, and the reabsorption of Mayotte into the union, a struggle which he presented in the most hyperbolic, nationalist terms possible.

Nevertheless, Anjounnais and Mohéliens remained unwilling to negotiate even the broadest political and economic autonomy within the republic, and while the president began talks with the main Moroni-based opposition group, the Forum pour le redressement national (FRN), with a view to forming a government of national unity including opposition politicians, the future of his political career looked to be in serious doubt in late 1998.

The president’s death In November, however, Mr Taki died shortly after returning from an official throws Comoros into chaos visit abroad, becoming the third Comorian president to die while in office since independence in 1975. His death threw Comoros into turmoil again; while there were few signs of public unrest on Grande Comore—and considerable public rejoicing on Anjouan—a bitter power struggle was apparent within days as the interim head of state, Tadjidine Ben Said Massounde, president of the High Council of the Republic, prepared to reshuffle the cabinet.

In the event, Mr Tadjidine appointed Abbas Djoussouf, the defeated presidential candidate in 1996, as prime minister, and charged him with forming a “government of public salvation”.

The new administration As the largest party in parliament, the Rassemblement national pour le angers the RND— développement (RND) demanded nine of the 13 ministerial portfolios. It received only four, as Mr Djoussouf kept the key positions for members of his own FRN , and awarded three portfolios to smaller opposition groupings. Ordinary Comorians appeared to welcome this consensual, cross-party approach, but the RND was furious. Former ministers urged party followers not to co-operate with the new government, and threatened a vote of no- confidence in the National Assembly on the grounds of the regime’s inexperience—most new cabinet members had not served as ministers before— and apparent breach of a constitutional requirement that the existing administration be kept in place during a presidential interregnum.

—and the army More worryingly, the appointment of a government perceived to be ready to appease Anjouan secessionists exacerbated discontent in the military, already running at high levels because of the Taki administration’s failure to pay soldiers’ salaries. Thus the Djoussouf regime’s honeymoon period was short- lived. Public concern about extravagance and ineptitude increased in the first few months of 1999, while the opposition parties helped orchestrate a destabilising campaign of virulent anti-Anjouanese and anti-Mohélian sentiment.

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Important recent events

March 1996: Mohamed Taki wins decisive victory in the presidential election, and quickly pushes through constitutional reforms to enhance his own powers.

December 1996: The opposition Forum pour le redressement national (FRN) boycotts the parliamentary election. Turnout is estimated at just 20%.

July 1997: The islands of Anjouan and Mohéli announce their secession from the republic, and seek to emulate neighbouring Mayotte’s collectivité territoriale status with France. Military action fails to return them to the fold.

December 1997: Peace accord signed under the aegis of the Organisation of African Unity. However, relations rapidly deteriorate again.

May 1998: Mr Taki uses a cabinet reshuffle to bring a prominent Anjouan politician, Abdou Mmadi, back into government, while releasing Ahmed Charikane, number two in the secessionist movement, from detention. The aim appears to be to divide the secessionists, with gestures of reconciliation to seduce the moderates and leave hardliners isolated. It has no noticeable effect.

November 1998: Mohamed Taki dies unexpectedly. The interim head of state appoints opposition leader Abbas Djoussouf as prime minister, and tells him to form a “government of public salvation”. His administration sidelines the previously dominant Rassemblement national pour le développement (RND).

April 23rd 1999: Representatives of the three islands meet in Madagascar. Those from Grande Comore and Mohéli sign up to the Antananarivo accords, which give the islands much greater autonomy; the Anjouan delegation insists that it must consult islanders first. The developments provoke three days of rioting on Grande Comore. Up to 1,000 Anjouannais flee to their island.

April 30th 1999: The army chief-of-staff, Azali Assoumane, takes power in a bloodless military coup.

An agreement of sorts is Amid increasing tension, the Djoussouf administration pursued attempts to reached with the islands— secure a political solution to the secession crisis, urged on by an increasingly impatient Organisation for African Unity (OAU). In February the OAU issued a 12-point statement that proposed the convening of an inter-island conference, and issued thinly veiled threats of “security measures”—taken to mean OAU military intervention—if co-operation was not forthcoming. Two months later, on April 23rd, delegates from the three islands met in Madagascar, and moved some way towards a deal. The representatives of Grande Comore and Mohéli accepted an agreement granting partial autonomy to all three islands, with each having its own parliament and local government, and establishing a system whereby the presidency of the Comorian federation would rotate between the three every three years. However, the delegation from Anjouan did not immediately commit themselves to the accord, insisting that they would have to consult the islanders first.

—but is immediately The so-called Antananarivo agreement, and Anjouan’s failure to accept it, thrown off course by a sparked violent demonstrations in Grande Comore, and the Anjouanese coup— community on the island came under sustained attack. On April 30th, after three days of violence, the Comorian army ousted Mr Tadjidine and the Djoussouf administration in a bloodless coup. The army immediately dissolved the constitution and all state institutions, while the chief-of-staff, Colonel Azali Assoumane, proclaimed himself president, prime minister and defence minister.

Colonel Assoumane stated that he took power to prevent Comoros “sliding into anarchy” and put a stop to the victimisation of Anjouannais on Grande Comore, and pledged to hand over power to an elected successor in April 2000. However, there was considerable speculation as to the army’s real motivation— prior to the coup it conspicuously failed to protect the Anjouannais on Grande Comore, while conservative politicians had repeatedly called on islanders to oust the “illegitimate” Djoussouf government—and scepticism about the likelihood of its relinquishing power.

—although it may yet Inevitably, the coup seriously compromised the Antananarivo agreement. succeed Shortly after taking power Colonel Assoumane affirmed his commitment to the deal, and pledged to hold a referendum on the autonomy arrangements in October, with legislative elections on all three islands to follow early in 2000 if the population approved the deal. However, Anjouanese separatists must first be persuaded to engage in dialogue and sign the agreement, and as of mid- 1999 there were few signs that their intransigence on the independence issue had abated.

Planned transition timetable

October 1999: Referendum on the constitutional deal under which Grande Comore, Anjouan and Mohéli will each have their own local parliament—sending deputies to the federal legislature—and the presidency will rotate between the islands every three years.

January-March 2000: Subject to a yes vote, legislative elections are held on each of the three islands, and for the federal parliament.

March 2000: The federal parliament elects a new president to take over from Azali Assoumane.

April 14th 2000: Colonel Assoumane hands over power to his elected successor.

Political forces

Comorian politics has always been characterised by a large number of political factions and parties, most based mainly on community or personal loyalties, and to some extent on economic interests, rather than ideology. In October 1996 President Taki tried to break with this tradition by creating a single ruling party, the RND, comprising Mr Taki’s own UNDC and 24 pro-government

groupings including Udzima (the one-time ruling party of Mr Abdallah), Uwezo, Maecha Bora, and the RDR, founded by Mr Djohar’s son-in-law, Mr Mchangama. The RND, mainly representative of the traditional clan interests and the business families that dominate the local trading economy, was largely excluded from power when Mr Djoussouf formed his “public salvation” government after President Taki’s death, and the group openly welcomed the coup in April 1999. Colonel Assoumane has stated, however, that he did not take power to restore the old guard; indeed, it seems likely that the old political elite will be marginalised as far as possible.

The FRN, led by Mr Djoussouf, held power for six months after President Taki’s death. Its efforts to revive the economy and tackle corruption were welcomed by the international community, but it was subject to a destabilisation campaign fostered by opposition groups, and its failure to prevent chaos was the ostensible reason for the military coup.

Thus the prime political force in Comoros is now the army. Although generally dishevelled—and publicly humiliated by its failure to reverse the secession in Anjouan and Mohéli—it filled a political vacuum when it seized power, and has thus far proved popular with ordinary Comorians. Its prime aims appear to be the maintenance of law and order and damping down of anti- Anjouanese/Mohélian sentiment.

Constitution and institutions

A new constitution, designed primarily by President Taki, was approved by referendum on October 20th 1996. The new framework retained the fundamental principles of multiparty democracy and free speech enshrined in the previous (1992) document. However, it significantly enhanced the powers of the president and reduced the scope for new opposition parties to evolve or for individual islands to develop their own policies within the federal framework. It was largely this innovation that angered Anjouannais and Mohéliens, who have long felt neglected by Moroni-based governments. The innovation that presidents were no longer limited to two terms of six years and retained the sole right to propose changes to the constitution also angered the republic’s two smaller islands.

This constitution was suspended when the army took power in April 1999. Under the charter endorsed at his inauguration ceremony, Colonel Assoumane has sweeping legislative and executive powers. In addition, the president is also prime minister and minister of defence and has surrounded himself with relatively inexperienced civilian politicians. However, while this suggests that the head of state is keen to retain centralised power, he also appears committed to a greater degree of autonomy for the islands, with all three having separate parliaments and sharing the presidency of the Comorian federation on a rotation basis. This constitutional arrangement—foreseen in the Antananarivo agreement—is due to be put to a national referendum in October.

International relations and defence

Relations with France Relations with France remain central to foreign and economic policy (the Comorian franc is guaranteed by the French Treasury, making Comoros a de facto member of the African Franc Zone). Although these ties have traditionally been close, the running dispute over the future of Mayotte has hampered relations, and links between Moroni and Paris took a marked turn for the worse in mid-1997 after Anjouan and Mohéli implored France for rattachement. France’s main concern is to safeguard the territorial integrity of Comoros, and to see a stable government that will maintain good bilateral relations and not indulge in diplomatic adventures with countries such as Libya or Iraq. While not favouring Mr Taki as a candidate for the presidency, France was careful to remain neutral during the campaign and, after the result, to build a reasonable working relationship with the new head of state. It condemned the coup that removed the Djoussouf administration but ruled out an intervention, adding to local speculation that it was involved in some capacity. French military advisers seconded to the Comorian army are said to have been active on the morning of the coup, while the regime has reportedly sought frequent advice from the French ambassador in Moroni since the takeover.

Regional and Middle Two other trends dominate Comorian foreign policy: the development of ties Eastern ties with the Arab world; and regional co-operation with Madagascar, Mauritius and Seychelles within the framework of the Indian Ocean Commission (IOC). The latter is important in practical economic and trading terms: there is a significant expatriate Comorian community in north-west Madagascar and at times large parts of Madagascar’s vanilla exports have been channelled through Comoros (as dealers are paid in Comorian francs, which is effectively hard currency). In symbolic international political terms, however, the importance of Arab connections has been emphasised in recent years. Comoros has cultivated ties with conservative Arab states and was admitted to the Arab League in 1993; it hopes that the Gulf states will become major aid donors, although it may be making these efforts rather late in the day (Arab donors have cut back foreign aid in recent years). Significantly, the Arab League took a noticeably more moderate position on the April coup than the rest of the international community, stating that it would “reserve judgement” on the Assoumane regime until after a joint fact-finding mission with the OAU returned.

The country is a also member of the OAU and the Common Market of Eastern and Southern Africa (Comesa), although relations with the former deteriorated in the wake of the coup, when the new foreign minister, Mohamed Souef El- Amine, was expelled from a mid-May meeting and the organisation withdrew its military advisers from the islands.

The Mayotte question

Since its separation from the newly independent federal republic in 1974, Mayotte has been represented in Paris by a deputy and a senator who participate fully in French politics. Mayotte’s peculiar status poses a constant problem for France, which is frequently rebuked in international regional forums for its role on the island. Mayotte also remains the most important issue in Comorian foreign policy. A series of French leaders have offered the promise of department status to the island’s power brokers in exchange for short-term electoral gains, but no French government has been able to buy back or entirely shrug off its pledge of integration with France.

Mayotte continues to be a collectivité territoriale particulière (a special case), although Jacques Chirac, when he was prime minister, came closer than the presidents François Mitterrand or Valéry Giscard d’Estaing to acknowledging the islanders’ French nationality. In 1986 he announced a FFr1bn ($145m) development programme for the island. French aid has raised the living standards of its people, the Mahorais, far beyond those of the Comorians. The principal political party, the Creole-led Mouvement populaire mahorais (MPM), has lobbied hard for departmental status like nearby Réunion and has so effectively mobilised opinion that whenever France holds a referendum on the island’s future, as it is committed to doing, only a handful of voters are likely to dissent from the party’s francophile line.

The election of the conservative Mr Chirac as French president in 1995 had little concrete effect on French policy, although it brought a subtle change of tone. As a Gaullist, Mr Chirac is unlikely to hand the island over to Comorian rule against the wishes of its inhabitants. In the tight budgetary climate now reigning in Paris, officials are likely to advise Mr Chirac to be cautious about swiftly granting full departmental status; this would almost certainly mean a boost to already high levels of French development and subsidy spending on the island. However, as a placatory move, in late 1996 France introduced the metropolitan French penal code and public-service employment structures into Mayotte.

As political turmoil intensified in neighbouring Comoros in 1997 and 1998, and French policy came under increasing international scrutiny, rumours gained credence that France would be only too happy to withdraw from Mayotte and the local political quagmire. It has not done so, but there is little doubt that French enthusiasm for the Mahorais cause is at a fairly low ebb.

Resources and infrastructure

Population

Recent estimates of Comoros’s population show significant variations. This may be partly due to the return of some emigrants following the end of the Abdallah regime. However, it may also be explained by the fact that some estimates appear to include the inhabitants of French-ruled Mayotte in the total.

Comoros’s last census, in 1991, reported a population of 446,817 inhabitants, divided between Grande Comore (233,533), Anjouan (188,953) and Mohéli (a mere 24,331). The French national statistics agency, INSEE, estimated the population of Mayotte at 94,410 at that time. The most recent World Bank estimate (for mid-1994) puts Comoros’s population at 485,000. The Franc Zone secretariat, drawing on French and Comorian official sources, gives a 1994 figure of 530,000. It reports a population growth rate of 3.7% a year, at a time when the average for Sub-Saharan Africa is only 2.7%. The UN Population Fund (UNFPA) has published a 1996 estimate of 700,000, a figure that presumably includes Mayotte.

With an average of 269 inhabitants per sq km (in 1991), Comoros is more densely inhabited than many other countries in the developing world, a situation that imposes considerable strains on its limited resources of farmland, water and firewood. The problem is especially acute on Anjouan, where the average density reaches 446 inhabitants per sq km, and the economy is still based largely on subsistence farming. Moreover, much of Comoros is mountainous and unsuitable for farming: only 48% of the land area is cultivable and the UNFPA estimates that there are 398 people for every hectare of arable land, a ratio surpassed in Africa only by Rwanda and Egypt.

The shortage of land appears to be driving a growing proportion of Comorians into the towns, the largest of which are Moroni, the capital, which has about 16,000 people, and Mutsamudu, the main town on Anjouan (10,000). The UN estimates, however, that the urban population is growing by 5.6% per year. Over the next few years the proportion of Comorians living in urban areas seems certain to rise well above the 31% recorded in 1995.

There is a Comorian community of about 40,000 in France, particularly Marseille, and a large Comorian population in north-west Madagascar.

Education

For a small country heavily dependent on its ability to make the most of human rather than mineral or industrial resources, Comoros has a poor educational base. The islands have no university or other tertiary education and training facilities are limited. Morale at the country’s sole higher education institute, the Ecole nationale d’enseignement supérieur, is low because spending and investment constraints have limited the job opportunities for the teachers and managers that it trains. Moreover, Comoros has failed to develop close educational links with neighbouring francophone states which could provide teaching facilities.

To add to the sector’s problems, strikes by both teachers and pupils are common. With pay arrears averaging 15 months, teachers stage frequent protests and strikes, prompting lycée pupils to take their own action in pursuit of a “normal” academic year. Pupils’ discontent is understandable: an estimated 70% are three or more years behind in their studies for the baccalauréat, which is the passport to higher-education opportunities abroad.

Inevitably, the situation is particularly difficult on Anjouan, where the authorities lack central government support.

Basic education services are in better shape: according to World Bank statistics, some 79% of children enrol in primary school; and the government school system is complemented, as in many other Muslim countries, by Koran schools, which give children a basic knowledge of Arabic, religious training and an introduction to the notation of written, literary culture, at least in a simplified form. According to World Bank estimates, 43% of adult Comorians are illiterate. Some 20% of boys and 14% of girls progress to enrol in secondary school.

Health

Life expectancy in 1995 was 56.5 years, according to the UN Development Programme (UNDP). However, poor levels of reproductive healthcare continue to impose a strain on women’s health. There were an average of 83 deaths for every 1,000 live-born infants in 1996, and maternal mortality rates were worse than in Equatorial Guinea and Tanzania. Some 82% of Comorians have access to basic healthcare. There are 166 births for every 1,000 women in the 15-19 age group: marriage at a young age remains common and contraceptive use relatively low. Poor hygiene and the high number of inhabitants per square km are also factors in disease. In mid-1998, for example, a cholera outbreak infected some 4,000 people on Grande Comore.

Anjouan remains highly dependent on expatriates for high-level healthcare; the end-1998 withdrawal of UNDP personnel—including the island’s only gynaecologist, as well as a surgeon and the head of its health services—was thus a serious blow.

Natural resources and the environment

Relatively lush and with regular rainfall, Comoros does not appear to be a country with serious environmental problems. Its coastal waters are rich in marine wildlife, notably the coelacanth fish, which until 1938 was thought to have become extinct 60m years ago. However, Comoros’s natural environment is under serious threat: the search for farmland to feed the growing population has led to the clearing of large areas of forest and consequently to soil erosion, damage to watercourses and even the danger of extinction for some species. Total forest cover has fallen from 31,000 ha in 1950 to just 8,000 ha in the 1990s, according to the government, and World Bank figures indicate that the decline was 3.1% per year during the 1980s, the third highest rate of deforestation in Africa. The erosion effects are particularly damaging in such a hilly landscape. Even this rate of forest clearance has failed to increase the amount of farmland to keep pace with population growth; the average of 0.4 ha of arable land per person in 1965 had fallen to just 0.18 ha by 1990. Farmers are consequently forced to overuse the soil as there is little spare land to leave fallow; eventually soils may become exhausted of nutrients and fertility, causing a drop in productivity.

Moreover, the government reports that settlements are expanding without any formal planning or the provision of proper sewerage and waste-disposal networks. This is further polluting both landscape and watercourses. Water reserves are already fragile, especially on Grande Comore where the soil is volcanic and extremely porous; water shortages are chronic, leaving most of the population dependent on cisterns during the dry season. Moroni is the only town on the island with a permanent supply.

The marine environment is also at risk, as excessive amounts of coral and sand are being removed for construction. The 1994-97 fishing accord with the EU cut the number of European boats operating in Comorian waters from 42 to 37, in the hope of conserving fish stocks, but the provisional 1998-2001 accord appears to allow for 44 EU tuna seiners and 16 surface longliners catching 4,500 tonnes of fish. This threatens to deplete stocks including those of the coelacanth, which although a protected species is at risk because it is caught in the nets of fishermen seeking other species. A Swiss survey found that the number of coelacanth found in the deep-sea caves where they live had slumped from an average of 20.5 per cave in 1991 to 6.5 in 1994.

Environmental damage could have serious economic consequences, not least because one of the main potential attractions of Comoros as an upmarket tourist destination is the beauty of its scenery and richness of its wildlife. That said, Comoros also desperately needs foreign investment, and job opportunities for local people. It is a delicate balance, but in March 1999 the government reportedly sought to break a contract granting Gibraltar-based interests exclusive five-year rights to fish, shellfish and molluscs in return for the establishment of refrigeration and canning facilities, and the recruitment of local workers. There was concern that the deal allowed the signatories to sell these rights to a third party that would not have been subject to the same investment obligations or government regulations. However, the administration was overthrown before it could abrogate the deal.

Transport and communications

Improved internal transport links will be vital to Comoros’s chances of developing a broader, more viable, economic base and of expanding its tourism industry or attracting light manufacturing. But domestic transport systems are also underdeveloped, limiting the growth of local trading and adding to the costs faced by farmers taking their crops to market.

A programme of road The past few years have seen a rolling programme of work to upgrade roads improvements throughout the country and improve links to rural communities. This has been financed by a mix of government funds and foreign aid. Comoros has no railway system.

Ports are upgraded Both domestic and international shipping services are poorly developed. However, aid donors are now funding improvements to the inter-island ferry service.

Because of the small size of the local market, most international shipping lines serving the East African market do not bother to make direct calls at Comoros; in any case, the coral reefs surrounding the islands make them inaccessible to large vessels. (Mutsamudu harbour, on Anjouan, offers the deepest water and can accept vessels up to 25,000 tonnes.) Freight bound for Comoros is often routed via South Africa, or via Réunion and Mauritius, from where the Comorian port authority, the Société comorienne de navigation, operates shallow-draft services. However, in recent years several improvement schemes, usually donor-funded, have been launched. The European Development Fund (EDF) began to finance the construction of a quay on Mohéli that would, for the first time, allow seagoing ships direct access to the island. However, in the wake of Mohéli’s bid for secession in mid-1997 it is highly unlikely that this project will be completed. Studies of sediment in Mutsamudu harbour, which has already been dredged, were also in preparation in late 1996, but again are unlikely to materialise in the short to medium term because of political uncertainty. There are also plans to extend Moroni’s port facilities.

A slowly growing pattern The country’s main international gateway is Hahaya airport on Grande of air links Comore. There are domestic airports on Anjouan (Omani airport) and Mohéli (Bandar el Salaam). Inter-island links and services to regional destinations such as Zanzibar were operated by the national carrier, Air Comore, until it was crippled by a disastrously botched attempt at privatisation. The company’s place has been filled temporarily by charter operators, but the government has asked a French travel group, Nouvelles frontières, to help set up a new national airline. The privately owned Réunion Air Services operates a regular service to Mayotte (whose international passengers travel via Réunion). Air Madagascar operates weekly flights to Nairobi and Antananarivo. There are also flights from South Africa, mainly carrying tourists to the hotel at the Galawa resort on Grande Comore. The principal long-haul air link was to Paris, a route operated until late 1996 by Air France, now taken over by Corsair. Air France ended its services to Moroni in late 1997. Emirates Airways already operates a scheduled service to Dubai (en route from Johannesburg).

A growing demand for Insufficient modern telecommunications capacity has inhibited business telephones development, but the state post and communications company, the Société nationale des postes et télécommunications (SNPT), is making serious efforts to upgrade both local and international connections. Over 1994-96 it increased the number of main telephone lines by 22% to 5,508 and extended the network to cover the north-eastern districts of Moroni and several smaller communities. Some 30 public cardphones were installed, mainly in rural areas. But demand is rising; the waiting list of would-be subscribers increased by about 50% to reach 2,689 by the end of 1994. New investments planned include the creation of an international transit centre (mainly EDF-financed), an extension to the existing ground station and the installation of radio links for rural areas and marine users, while the SNPT’s post and telecommunications operations are due to be separated during 2000 with a view to privatisation.

The SNPT has also financed a $200,000 project, carried out by France Cable Radio, a subsidiary of France Télécom, to link companies to the Internet. The service is open to individuals, although the cost—a $19 connection charge and $12 monthly subscription—is likely to prove prohibitive for most Comorians.

Energy provision

Electricity consumption continues to rise, and the further development of modern provision for heat and light power is vital in order to reduce the strain on already depleted fuelwood resources. In 1994 electricity output rose by 7.4% to 30.3m kwh; the vast majority, 24.1m kwh, was consumed on Grande Comore, where there are around 8,460 users. Anjouan has 3,776 users but much lower levels of consumption (5.7m kwh) because it lacks the business and government consumption of Moroni. Consumption by Mohéli’s 652 users was a mere 500,000 kwh.

Electricity use has been rising most rapidly on Grande Comore, partly because of the extension of the network to a number of small communities that were previously not covered. The government has announced an ambitious programme of further extensions on all three islands. In 1988 there were five power stations, with a generating capacity of 8,850 kw; another has opened on Anjouan and there are plans to acquire a further 2,000-kw generating set for the Voidjou power plant. The main generating fuel is petroleum, backed up with some limited hydroelectric capacity.

The 1998 sale of the local power company to France’s Sogéa has helped improve the reliability of services. Increasingly frequent power cuts eventually led to the complete breakdown of the supply on Grande Comore, but after several months in charge Sogéa was able to restore 24-hour power supplies.

Primary energy balance, 1998 (m tonnes oil equivalent)

Elec- Oil Gas Coal tricity Other Total Primary production 0.000 0.000 0.000 0.001 0.085 0.086 Imports 0.022 0.000 0.000 0.000 0.000 0.022 Exports 0.000 0.000 0.000 0.000 0.000 0.000 Primary supply 0.022 0.000 0.000 0.001 0.085 0.108 Net transformationa –0.011 0.000 0.000 0.002 0.000 –0.009 Final consumption 0.011 0.000 0.000 0.003 0.085 0.099

a Transformation input and output, plus energy industry fuel and losses. b Output basis.

Source: Energy Data Associates.

The economy

Economic structure

Main economic indicators, 1997

Real GDP growth (%) 0.0 Consumer price inflation (av; %) 2.5 Current-account balance ($ m) –13.4 Foreign debt ($ m) 206a Exchange rate (Cfr:$; period av) 437.8

a 1996.

Source: EIU.

Agriculture and trading are at the heart of the Comorian economy, whose small dimensions are well illustrated by the fact that exports in 1997 were worth a mere $8.8m. The country has been spared extreme mass poverty of the kind that characterises countries such as Ethiopia or Malawi; its GNP per head in 1996 was $460, in the upper rank of the world’s least-developed economies. However, economic growth and development have been tightly constrained by geographical isolation, the small size of the domestic market, an absence of minerals and most other high-value raw materials, and a shortage of fertile land. Moreover, sectors such as fishing and marine trade that have made major contributions to other small coastal economies have been neglected. Fundamental to the working of the Comorian economy is its currency system: the Comorian franc has a fixed parity (Cfr75:FFr1) against the French franc and, since January 1st 1999, the euro, a fact that helps to control inflation but can impose cost penalties.

Agriculture, which accounts for some 40% of GDP, remains the main source of livelihood for most Comorians. More than 70% of the active population work in rural areas, mainly as subsistence farmers. Fishing is underdeveloped. The industrial sector is small, as is the formal services sector. The civil service and public services dominate formal-sector employment. In addition, Comoros’s small size and geographical isolation have limited the scope for informal crossborder trading of the kind so important to small West African countries.

Comparative economic indicators, 1998a

Comorosb Mauritius Seychelles Madagascar South Africa Real GDP growth (%) 0.0 5.3 2.3 3.9 0.1 Consumer price inflation (av; %) 2.5 6.8 1.5 5.5 6.5 Current-account balance ($ m) –13 –63 –63b –470 –2,360 Exports of goods ($ m) 9 1,836 115b 796b 28,664 Imports of goods ($ m) 46 2,330 339b 1,083b 27,142 Population (m) 0.7 1.2 0.8 16.0 41.4 a EIU estimates. b Data are for 1997.

Source: EIU.

As World Bank figures show, the relative importance of agriculture has declined slightly in recent years. This may be the result of the problems affecting the traditional cash crops of vanilla and cloves rather than any fundamental shift away from peasant farming.

Of all the East African island economies, Comoros is by far the most narrowly based and least successful in developing itself as an offshore financial services centre. In many ways it has more in common with Cape Verde, São Tomé or even Equatorial Guinea than with Seychelles, Mauritius or Madagascar.

Economic policy

An oligarchy of vested The management of economic policy in Comoros has been a haphazard affair interests under since independence. The country never seriously implemented the quasi- Mr Abdallah socialist parastatal management systems that characterised its mainland neighbours in the 1970s and 1980s. However, the public sector still played a large role; almost inevitably in such a tiny market, government operations and services accounted for a high proportion of economic activity. During the era of the former president, Ahmed Abdallah Abdérémane, private-sector business was dominated by a small oligarchy of influential families and trading interests, a pattern not dissimilar to the smaller Gulf states. Vested interests were not open to challenge in a system ruled by authoritarian patronage and backed by mercenary military muscle. During the 1990s this pattern has not fundamentally changed, although trade liberalisation has allowed new competitors to emerge in a few commodity sectors.

Structural adjustment: a Change began during the closing years of the Abdallah regime. Comoros was stop-start process in financial difficulties and therefore forced to comply with the requirements of donors. France began to take a much tougher line, linking aid with readiness to engage in the “structural adjustment” measures advocated by the IMF and the World Bank, namely liberalisation of the economy and tighter control of public finances. (An historical breakdown of government finances is given in Reference table 1.)

The implementation of adjustment policies accelerated between 1990 and 1995 under the president, Saïd Mohamed Djohar, but gradually ground to a halt under Mohamed Taki Abdulkarim. For example, while Comoros pursued an IMF staff-monitored programme—which emphasised fiscal reform, greater control of public-sector wage costs and the privatisation of state-owned enterprises—for most of 1997, attempts at reform were rapidly derailed by the secession of Anjouan and Mohéli. President Taki became increasingly preoccupied with the separatist crisis, neglecting economic issues and, more seriously, failing to support those officials and ministers who did attempt to reform state finances. Efforts to boost revenue collection, always somewhat half-hearted, slackened, while spending controls collapsed and defence expenditure in particular increased sharply because of the (unsuccessful) attempts to reintegrate the islands forcibly.

If anything, the situation worsened during 1998. There was effectively no central control of expenditure, enabling presidential cohorts to divert funds for their own personal enrichment, and no attempt to reform or privatise key parastatals. The likelihood of an accord with the IMF—a crucial factor in attracting other donor funds and foreign investment—thus receded still further.

Mr Djoussouf’s government Things took a turn for the better with the advent of the Djoussouf makes some progress— administration. While political instability persisted, Abbas Djoussouf sought to tackle some of the core reform issues. Most importantly, he took significant steps to improve basic economic management, starting a drive to boost customs revenue which brought in additional government income and allowed the administration to start paying at least some public-sector salaries— in some cases running up to 18 months in arrears—on time. Mr Djoussouf also pledged to audit the public-sector payroll, rethink some of the “unusual” contracts entered into by its predecessor (see Economic sectors: Agriculture, forestry and fishing) and make progress with privatisation, of the country’s fuel parastatal (Société comorienne des hydrocarbures) and port operations particularly.

—but the coup seems set to Such reform measures were beginning to get the attention of the donors and reverse this Bretton Woods organisations, to the extent that the IMF held Article IV consultations in December 1998 and assisted in the preparation of Comoros’s reasonably credible 1999 budget. However, the possibility of a more formal enhanced structural adjustment facility and renewed inflows of donor funds has again receded with the April coup. Not only have key donors such as the EU threatened to review aid, but there is justifiable concern that the Assoumane administration will simply let the economy drift. As of mid-June the government had yet to formulate any economic policy statement, and there was substantial doubt that it would be prepared to risk the necessary monetary and fiscal belt-tightening.

The 1999 budget

The 1999 budget, presented in parliament in April—less than six months after the 1998 measure was passed—and prepared with IMF assistance, assumed revenues of FFr190m ($30.4m), broadly similar to the previous year’s level. Expenditure was set at FFr233m, with public-sector wages accounting for 54% of the total. However, while the measure was being debated MPs agreed to cut the wage total from FFr126m to FFr119m, and to reduce expenditure on goods and services by one-fifth to FFr47m. The new regime has yet to announce whether it will stick to these targets.

Comoros’s ongoing failure to put itself in a position to attract all possible aid funds has exacerbated strain on the weak public finances resulting from the islands’ narrow economic base. However, there has been one area of notably strong performance: central banking, monetary policy and statistics. The Banque centrale des Comores (BCC, the central bank), like the west and central African Franc Zone central banks, bases its monetary policy on that of the

Banque de France (the French central bank). This has kept a tight rein on inflation, except for the one-off price rise induced by the sharp devaluation of the currency in January 1994 (see Foreign reserves and the exchange rate). The bank has also developed highly efficient reporting and statistical services, producing figures of a consistency and detail not matched by many other countries of similar size and poverty. (Figures on money supply are given in Reference table 2.)

Economic performance

A weak agricultural base and the failure to create a stable and secure political and economic climate for investors have had serious consequences. Economic performance has been sluggish over the past few years, with GDP contracting by an average 1.2% over the 1993-97 period according to World Bank figures, and there seems little likelihood of any marked change until Comoros attracts new investment from outside, probably in tourism, enabling it to capitalise on devaluation. (Figures on GDP are given in Reference tables 3 and 4.)

The sharp decline in services output reflects the disruption caused by the mercenary coup and subsequent political disputes of late 1995. The performance of agriculture, taking food and cash-crop output together, has been feeble during the 1990s. This is the sector upon which most Comorians depend for their livelihood. Industry’s performance is hard to evaluate because the sector is so small.

Gross domestic product, 1997a (% change)

Agriculture 3.5 Manufacturing 3.5 Public administration 3.5 Banking & financial services 3.5 Other services 3.5 GDP at factor cost 3.5

a Provisional.

Source: Banque centrale des Comores (BCC), Rapport annuel.

Consumer spending and government expenditure have been weak, reflecting both widespread poverty and the poor state of government finances. Investment has fluctuated wildly, as have exports, partly, of course, because Comoros is only a microeconomy. Events or trends that are small even in African economic terms have a large proportional impact on the statistics. (Figures on GDP by expenditure are given in Reference tables 5 and 6.)

Tourism has not grown in the mid-1990s. Hopes that it would were dashed by the violence associated with the Anjouanese and Mohélian secessionist movements in mid-1997 and the April 1999 coup. This has largely thwarted efforts by holiday companies in the UK and other markets to promote Comoros as a destination. The country is “sold” as a tropical beach holiday

with a distinctive cultural touch that should appeal to the more discerning traveller. The bulk of package tourism is currently accounted for by South Africans and some more adventurous Réunionnais.

The impact of devaluation Analysis by the central bank suggests that the impact of the 1994 shock devaluation of the Comorian franc by 33% was absorbed quite quickly: most traders opted not to increase local retail prices for imported goods by the full 33%. (For price movements for basic goods and services, see Reference table 7.)

Economic sectors

Agriculture, forestry and fishing

The production economy is dominated by agriculture, for both local food consumption and the production of export cash crops.

The patchy performance of the agricultural sector highlights the need for Comoros to diversify the base of its economy. The country remains dependent on imports of food and its three main export crops are vulnerable to different world market conditions. The government has tried to encourage the amalgamation of small plots into larger, more viable units, alongside the development of co-operatives and a more active local marketing system. But there is a limit on what can be achieved given the shortage of land and the damage caused by recent forest clearance.

Food output, 1997a (tonnes unless otherwise indicated)

Paddy rice 2,900 Maize 3,800 Tubercules Taro 8,500 Cassava 50,700 Others 5,100 Legumes 8,760b Bananas 57,600 Coconuts (‘000) 74,000 Vegetables 1,980b Fruit 3,180 Meat Poultry 200 Beef 900 Sheep/goat 160 Fish 13,600 Milk (‘000 litres) 950 Eggs (‘000) 4,500

a Estimates. b 1996.

Source: Banque centrale des Comores, Rapport annuel.

Although production of food goods such as tomatoes and potatoes rose by a respective 33% and 22% in 1997—thanks largely to the introduction of new cultivation techniques—food self-sufficiency seems out of reach and Comoros relies heavily on imported supplies of rice, which is a key staple. In 1997 rice imports were, on their own, worth substantially more than all the main exports (vanilla, cloves and ylang-ylang). However, output of the main food crops has been rising slowly, partly, perhaps, because of a shift back into food production by farmers discouraged by the poor market for export cash crops (see below). Yet the cash crops that replaced food crops are failing to produce the foreign exchange that the economy needs. The World Bank has suggested diversification into alternative cash crops such as pepper, cardamom and fruit, but this likely to have an impact only at the margin.

Comoros’s main export crops are vanilla, cloves and ylang-ylang. During the 1980s a major programme of coconut development was initiated and by 1994 some 50,000 trees had been planted, half of which had come into production. However, the world market for copra is depressed and export sales have been minimal. Many farmers have preferred to concentrate on producing trimbo, an alcoholic drink made from coconut juice.

Small quantities of cocoa, coffee, cinnamon, patchouli, tuberose and flowers of clove are grown for sale abroad. The most important and, by and large, reliable export crop is vanilla, of which Comoros is a major world exporter. Historically, productivity has been on the low side, each plant producing an average of just 100 g of vanilla, compared with 500-800 g per plant on the French island of Réunion. World prices are undermined by cheap Indonesian exports; however, these are low in vanillin content, allowing Comoros to win market share through quality. The vanillin content of its crop was a satisfactory 2% in 1995. Penalised by high CFA franc-based production costs, the islands have been struggling in recent years to compete, and exports have fluctuated wildly. Market and producer price reforms introduced in 1991 boosted export output in that year to 237.8 tonnes from 127.4 tonnes in 1990. Export figures include an unknown element of vanilla smuggled in by Malagasy producers anxious to benefit from producer payments in the easily convertible Comorian francs.

Vanilla exports

1995 1996 1997 Quantity (tonnes) 159.5 91.4 161.8 Value (Cfr m) 2,320 1,035 1,120 Average sale price (Cfr/kg fob Moroni) 14,546 n/a n/a Sources: Banque centrale des Comores, Rapport annuel; Direction générale des douanes; Secrétariat du comité monétaire de la Zone franc, La Zone franc, rapport annuel 1995, 1996 and 1997.

After the devaluation of 1994 output fell back again in 1994 and 1995. In 1995 farmers were discouraged by the government’s decision to set producer prices at the old pre-devaluation level of Cfr1,250/kg, some 37.5% less than the price of Cfr2,000/kg set for 1994. The government lowered the price because of the problems it already faced in disposing of surplus stocks left from 1994. Heavy rain also had an impact. The actual harvest in 1995 was only 150 tonnes, compared with 190 tonnes the previous year. Of course, the combination of

low prices and poor harvests depressed farm incomes; ironically, the quality of the crop was high, with vanillin content at 1.9%, not far off the optimum 2% level. The 43% drop in exports from 160 to 91 tonnes between 1995 and 1996 once again raised concern about the future of the vanilla sector, but reduced stocks on global markets and clever marketing—such as making the best of the sector’s low-tech production methods by labelling some of the crop “organic vanilla”—helped boost exports by some three-quarters to 162 tonnes in 1997.

Clove exports

1995 1996 1997 Quantity (tonnes) 483 822 1,583 Value (Cfr m) 134 210 360 Average sale price (Cfr/kg fob Moroni) 277 n/a n/a Sources: Banque centrale des Comores, Rapport annuel; Direction générale des douanes; Secrétariat du comité monétaire de la Zone franc, La Zone franc, rapport annuel 1995, 1996 and 1997.

A significant recovery in the clove industry took place in 1994 as Comoros benefited from the improved competitiveness bestowed by devaluation. Indeed, the positive trend had begun in late 1993, before the exchange-rate change, and appears to have persisted. Harvests in recent years had been around 1,200 tonnes, but have been rising, to a reported 1,500 tonnes in 1995. In 1997 strong demand for cloves, and world stocks, helped boost exports by an impressive 92.5% in volume and 71.3% in value terms.

Ylang-ylang exports

1995 1996 1997 Quantity (tonnes) 43 37 42 Value (Cfr m) 855 645 716 Average sale price (Cfr/kg fob Moroni) 19,696 n/a n/a Sources: Banque centrale des Comoros, Rapport annuel; Direction générale des douanes; Secrétariat du comité monétaire de la Zone franc, La Zone franc, rapport annuel 1995, 1996 and 1997.

Ylang-ylang, an essence used in the manufacture of perfume, is the one product for which Comoros is consistently the top world producer. Prices for higher-grade crops have been rising, but this factor has been offset by competition from cananga, a rival product from Asia which is substantially cheaper, particularly in the wake of Asian devaluations following the financial crisis in the region. Other problems are the increasing age of plantations and the shortage of wood for the distillation of the essence, on Anjouan particularly. Ylang-ylang output fell significantly below the 50-tonne mark in 1996, hit by a softening of prices, although it returned to around 60 tonnes in 1996-97. Export sales were slightly down in 1995 and again in 1996, but recovered somewhat to 42 tonnes the following year despite the build-up of global stocks. Production of other essences remains dismal.

Fishing Production of fish has risen gradually during the 1990s, but the sector remains underdeveloped. French experts believe the country’s waters could guarantee sustainable fish output of around 85,000 tonnes/year. At present, however, local inshore fishermen, using canoes (galawas), catch only about 13,000 t/y. The European Development Fund and Japan have supported development of a

stronger local industry, but improved processing or storage facilities are needed. Other fish is caught by European boats under a fishing agreement with the EU; this is not included in the national output total. Comoros is actually a net importer of fish, in spite of its extensive economic territorial waters. About 8,000 people fish full-time or part-time, but most lack modern equipment that would allow them to venture far offshore. Production could potentially reach 20,000 t/y if boats ventured up to 50 km offshore. There is a fisheries training centre on Anjouan.

Manufacturing

A limited Manufacturing accounts for only around one-tenth of Comoros’s economic manufacturing base output. Development has been hampered by the high cost of services and imported supplies, as the country has few raw materials. The small size of the home market limits sales opportunities and Comoros’s ability to export industrial goods is tightly circumscribed by the high cost of transport to other markets. Business development has also been hindered by the high cost of water and power, and by the difficulty of getting credit. There had been some hope that, like Madagascar, Comoros would benefit from an overspill of labour-intensive, low-tech industry from Mauritius (where costs have risen in recent years), but there is little sign of any such trend.

Industrial employees number about 1,000. There are around 20 sawmills, a printing plant, a soft-drinks bottling plant, a plastics plant, facilities for processing vanilla, ylang-ylang and copra, and a few small food or garment producers. Development of the production of essential oils from high-value crops such as ylang-ylang has suffered from the cost of power and the age of existing distilleries. However, the Banque de développement des Comores helped to finance the launch or extension of a medical test laboratory, a cold store, fish-processing plants, a mineral-water plant and a hotel. The government hopes to attract investors from the Gulf states to finance new ventures. The other major industrial activity is the construction of public works and development projects. The UN Development Programme has also been supporting development of new private enterprises in services and agriculture-related activity.

Financial services

The banking sector is composed of the Banque centrale des Comores (BCC, the central bank), the Banque de développement des Comores (BDC, which focuses on development lending) and the Banque pour l’industrie et le commerce des Comores (BIC).

The BIC is linked to France’s Banque nationale de Paris and provides full international trade finance as well as local personal and business banking services. During 1994 the bank had to cope with an outflow of funds caused by fears of a second devaluation, but eventually confidence in the Comorian franc recovered and by the end of the year deposits were back up to the December

1993 level; indeed, the amounts held in savings accounts actually rose by 21.5%. Lending rose by 10.8% to Cfr8.58bn ($19m). However, this was due to a massive 178% rise in loans to the public sector, which had to finance a huge rise in the Comorian franc costs of fuel imports; lending to the private sector actually fell.

Activity at the BDC recovered markedly in 1994 after two years of decline. New loans, up 89% to Cfr583m, went to borrowers principally in the following sectors: industry and transport (Cfr278m); “social property” (presumably housing, Cfr109m); hotels and tourism (Cfr59m); the liberal professions (Cfr50m); and fisheries (Cfr50m).

Often supported by donors, Comoros has also developed a number of other small savings and credit schemes designed to promote small business and support artisans and farmers with affordable funding or guarantees. Recent launches have included: the Centre d’appui au secteur privé; the Fonds d’assistance au secteur privé; Projet Sanduk (which has set up nine local credit and savings operations, using French aid money); and the Projet d’appui aux initiatives économiques de base en milieu rural (supported by the International Fund for Monetary Development). So far, these schemes seem to be performing well, delivering affordable funds without accumulating bad debts. Projet Sanduk institutions report that, up to the end of 1994, between 98% and 100% of the loans they made had been repaid.

Other services

Tourism Comoros’s attraction for tourists is the combination of lush island scenery and tropical beaches with a rich Islamic cultural heritage similar to that of Zanzibar. The government has also been trying to boost ecotourism, in 1997 obtaining Ecu27.5m ($24.3m) of financing from the EU for the construction of a “coelacanth park”, for example. Until the early 1990s South Africa was a crucial source of visitors, but this business may diminish in importance because the end of apartheid means that South Africans can travel freely to other, nearer, African states, notably Mozambique. Europe is also an important market, especially for higher-spending tourists with cultural interests who are looking for an off-beat alternative to Seychelles or Kenya. In the future, the Gulf states could also be a source of visitors—Gulf nationals would feel comfortable culturally and also enjoy the physical environment. Comoros’s main tourism facility is the 194-room Galawa Sun resort hotel on Grande Comore; the foreign partner in the enterprise is the business built up by a South African entrepreneur, Sol Kerzner. The government has been trying to privatise other hotels, owned by the parastatal Comotel; some deals have been agreed, but these smaller properties are mainly not of great significance to the industry.

There are only 294 hotel rooms graded as being of international tourism standard in the entire country, together with about 90 in small family pensions, which have now been officially registered. In 1990 Comoros attracted only 7,600 visitors, but the traffic has been growing. In 1994 the number of foreign visitors rose 14.3% to reach 27,061; the peak months are July, August and

September (winter in southern Africa, summer in Europe). Some 68% of the visitors came from Europe—two-thirds of these from France—and some 29% from Africa, mainly South Africa. By 1997, however, the number of visitors had fallen back to 26,000, and continuing political instability in the Comoros is likely to deter visitors in the short to medium term.

The government has a modest promotional budget and exhibits at the international travel industry exhibitions in Paris, Berlin and London. Tourism is a significant source of employment: the Galawa resort has 350 staff and is thus the largest non-government formal-sector employer in a country where formal-sector jobs are in short supply.

The external sector

Trade in goods

Comoros has run a substantial deficit in visible trade in recent years. In 1994 the gap widened sharply, measured in Comorian franc terms. This reflected the coincidence of a weak world market for the islands’ exports and the January 1994 devaluation, which injected an automatic 33% increase into the Comorian franc price of most imports. The trend was exacerbated by the strength of world prices for some key import commodities and the strength of the dollar (in which many import commodity prices are set). Comoros is particularly vulnerable to these trends because of its heavy reliance on imports in most sectors.

Trends in trade (Cfr m)

1996 1997 Exports fob 2,417 3,865 Imports fob 18,840 20,228 Balance –16,422 –16,363 Source: Secrétariat du comité monétaire de la Zone franc, La Zone Franc, Rapport annuel.

The impact of weak commodity prices has been most notable in the cloves sector, where exports in volume terms in 1994 were more than double those of 1989. But the decline in world prices meant that the total export revenue from cloves was actually lower in nominal as well as real terms in 1994 than it was five years previously. Prices for ylang-ylang have also fallen from the peak levels of 1992; vanilla prices staged a recovery in 1994, only to fall sharply the following year. These difficult world market conditions are set to persist and it seems unlikely that Comoros will ever achieve a significant and durable improvement in export performance until it diversifies into new product areas, such as light manufacturing.

Meanwhile, import costs have surged ahead, because of devaluation and world price shifts. In 1994 purchases of rice actually fell slightly, to 28,517 tonnes, but prices in Comorian franc terms were up by 70.3%, pushing the overall bill

for rice imports up by 58.4%. Rice imports skyrocketed in 1995, to 41,650 tonnes, but fell back considerably to 34,323 tonnes in 1997. Similar trends led to a 64.3% rise in the cost of cement imports; the cost of such imports rose 136% between 1996 and 1997, but in volume terms the increase was even greater, at 144%. The cost of petroleum product imports fell by 13.6% in 1997, chiefly because volumes were also down, while that of vehicle imports rose by a marginal 4% despite another slump in the volume of vehicle purchases.

Overall, imports by volume in 1997 were 27% up on the 1996 total, although the import bill rose by just 6.5% in Comorian franc terms. The major items were rice (at Cfr3.9bn), meat and fish (Cfr2.5bn), petroleum products (Cfr2.8bn), cement (Cfr2.1bn) and vehicles (Cfr1.9bn).

Comoros’s main export markets remain France, which took almost half of all exports in 1997, Germany and the US. France buys almost all Comoros’s ylang- ylang. The US has been a major buyer of vanilla, but has been purchasing substantially less since the mid-1990s, with the result that its share of Comorian exports fell from 46.2% in 1993 to just 18.2% in 1997; France’s share rose from 41.7% to 45.5% over the same period, while Germany’s share doubled from 9% to 18%. Canada, the Netherlands and Singapore increased their share.

On the import front, France is the leading supplier by far. Its market share has increased from 40.8% in 1993 to 60% in 1997. Some 28% of Comoros’s imports come from its regional neighbours. South Africa’s share has risen from 6.3% to 16.5% since the country made the transition to majority rule and trade sanctions were lifted.

Invisibles and the current account

Balance of payments, 1997 (Cfr bn)

Merchandise exports fob 3.9 Merchandise imports fob 20.2 Trade balance –16.4 Net services –5.2 Net transfers 15.7 Current-account balance –5.8 Source: Secrétariat du comité monétaire de la Zone franc, La Zone franc, rapport annuel 1997.

In spite of a weak trade performance and a substantial services deficit, Comoros managed to keep its overall current-account deficit below $10m in 1991, the last year for which detailed IMF figures are available. Owing mostly to substantial flows of aid in the following three years this trend has been broadly maintained, although France and international sources sometimes disagree. (Historical balance-of-payments data are given in Reference table 8.)

Current-account balance (Cfr m)

1996 1997 Current-account balance 6,501 5,188 Source: Banque centrale des Comores, Rapport annuel.

Capital flows and foreign debt

Comoros’s hopes of attracting substantial foreign investment are almost invariably disappointed because of two factors:

• The small size of the economy and the high level of dependence on imports. These mean that there is little for a new investor to build upon.

• Political instability and weak government. The mercenary coup attempt of September 1995 and the secessionist movement since mid-1997 are obviously the sort of events that deter investors. Equally damaging has been the inability of Comorian democracy over the past five years to maintain a stable government with a clear, durable parliamentary majority and well-thought-out programmes.

Comoros’s foreign debt, which totalled $206m at end-December 1996, is, by African standards, not enormous in per-head terms, at just under $375, but the absence of a clear medium-term debt-management strategy makes it more of a practical impediment than it needbe. The country would probably benefit from more debt relief than at present if it commanded wider confidence among aid donors and the Paris Club of its official bilateral creditors. Government data show that debt-service payments were Cfr2bn ($4.4m) in 1993 and Cfr3.6bn in 1994, although total arrears have proved difficult to contain since the late 1980s. Rescheduling brought net benefits of Cfr1.5bn in 1993 and Cfr2.7bn in 1994. (Historical data on external debt are given in Reference table 9.)

Arrears on long-term debt ($ m)

1995 1996 Interest 10.1 9.5 Principal 26.8 33.0 Total 36.9 42.5 Source: World Bank, Global Development Finance.

A net inward transfer The high level of grant aid means that, at the least, the net flow of funds of funds between Comoros and donors is heavily in the islands’ favour. Total grant aid in 1994 was almost $32m (of which about half went to fund new investment and development projects); in 1995 grant aid climbed slightly to $34.1m, allowing an increase in aid-funded project spending. However, in 1996 the figure fell back to $33.4m, and it declined by almost one-quarter, to $25.1m, in 1997, largely because donors cut back funding in the wake of the secession of

Anjouan and Mohéli. There is little prospect of significant increases in grant aid following the April 1999 coup—indeed, the EU and France have threatened to halt aid flows entirely.

Comoros’s major aid donors are France; the World Bank, on concessional International Development Association terms; the EU; the UN Development Programme; and the African Development Bank group. Hopes that Arab states would become major donors and investors have been largely disappointed so far. (Historical data on net aid are given in Reference table 10.)

Foreign reserves and the exchange rate

Net foreign reserves increased by more than one-third during 1994, from Cfr11.76bn ($26.1m) to Cfr16.38bn, according to government data. This is mostly because of a re-evaluation of the assets of the Banque centrale des Comores (BCC, the central bank) after devaluation as the holdings of the commercial banking sector actually fell by Cfr692m. The government’s position was further cushioned by the release of a Cfr818m tranche of IMF structural adjustment aid after devaluation. According to the IMF, foreign- exchange reserves continued to climb until 1996, when they reached $49.7m, but have since slumped back almost one-quarter to $38.4 in 1998. (Historical data on reserves are given in Reference table 11.)

Comoros’s exchange rate is dictated by that of the European single currency, to which it is tied because of its link with the French franc. The link with the franc has caused Comoros problems in the past—during the 1980s the French unit strengthened steadily against the dollar just as Comoros’s terms of trade went into a sharp reverse and, like all members of the Franc Zone, the country was eventually forced to devalue against the franc—although in Comoros’s case the devaluation was limited to 33% in recognition of its extreme dependence on non-Franc Zone imports—and similar difficulties could arise if the euro hardens against the US dollar. (Historical data on the exchange rate are given in Reference table 12.)

Appendices

Regional organisations

For the Organisation of African Unity, the Lomé Convention and the Southern African Development Community, see Tanzania and Zanzibar appendices: Regional organisations.

The Franc Zone Although the Franc Zone evolved in the colonial era, its current form was shaped by treaties signed by its principal members in the early 1970s. The zone governs the credit, foreign-exchange and monetary relations between France and 13 former French colonies in Africa and Equatorial Guinea, as well as between France and its overseas departments and territories and Monaco.

In November 1972 Cameroon, the Central African Republic, Chad, Congo and Gabon signed an agreement redefining their monetary co-operation. Relations in this field with France were restated in a treaty which was signed at the same time. Equatorial Guinea became the sixth African signatory to these accords in 1984. The principal elements of co-operation are a regional central bank based in Yaoundé (Cameroon), the Banque des États de l'Afrique centrale (BEAC), and a common currency, the CFA (Coopération financière en Afrique centrale) franc. The BEAC is governed by a monetary committee composed of the six Central African states and a joint monetary committee comprising the six members plus France. A regional customs grouping formed in 1966, the Union douanière des États de l'Afrique centrale (UDEAC), also groups the six states.

A similar series of events unfolded in francophone West Africa. In November 1973 Côte d'Ivoire, Dahomey (now Benin), Niger, Senegal, Togo and Upper Volta (now Burkina Faso) signed a treaty redefining their monetary co- operation in the Union monétaire ouest-africaine (UMOA), which had been founded in 1962. A convention with France followed in December 1973, and Mali became a party to both agreements in 1984. As with the Central African members of the Franc Zone, the UMOA was based on a common issuing central bank, the Banque centrale des États de l'Afrique de l'ouest (BCEAO, based in Dakar), and a common currency, the CFA (in this case, Communauté financière africaine) franc. The UMOA became the Union économique et monétaire ouest-africaine (UEMOA) in January 1994. Its Council of Ministers formulates credit and monetary policies and controls the BCEAO. The council also has responsibility for the regional development bank, the Lomé-based Banque ouest-africaine de développement (BOAD). A seventh country, Guinea- Bissau, joined the UEMOA in March 1997 and became a member of the Franc Zone one month later.

Comoros has a similar arrangement, having signed a convention with France. The issuing and central bank is the Banque centrale des Comores, and the currency is the Comorian franc (Cfr).

The principal features of the Franc Zone are freedom to transfer funds throughout the zone, convertibility of the different currencies and fixed exchange rates. The Banque de France (the French central bank) guarantees the money issued by the regional central banks, which in turn are required to maintain a minimum of 65% of their reserves in French francs with the French Treasury. The much praised unlimited convertibility of the CFA franc was restricted in August 1993, largely because of massive capital flight, but was restored shortly after a devaluation in 1994.

Each regional bank holds an operations account (compte d'opérations)—a current account denominated in French francs—with the French Treasury. This is the principal payments mechanism in the zone. Its stability is founded on tight monetary and credit discipline underpinned by two specific safeguard measures: central banks are required to maintain 20% foreign-exchange cover of their sight liabilities, and governments are not allowed to draw from their regional bank's central funds more than 20% of the previous year's budget receipts (although some enterprising governments have found ways to circumvent this requirement).

In the mid-1980s it was argued that the CFA franc was greatly overvalued. Falling world prices for the zone's principal exports (oil, coffee, cocoa and cotton) contributed to a sharp fall in the zone's terms of trade, estimated by the French government at 45% in 1985-93. Income per head in the zone shrank by about 20% in the same period. These factors, together with French reservations about funding the budget and current-account deficits of zone members, finally brought major changes. January 1994 saw the first devaluation after 46 years, to CFAfr100:FFr1 (and Cfr75:FFr1). This promptly led to new IMF money for zone members.

Despite rumours of a new devaluation with the advent of European economic and monetary union, the CFA franc's peg was automatically switched from the French franc to the euro in January 1999 at a fixed rate of CFAfr656:¤1. At the same time France renewed its pledge to support the currency. However, there are still fears that the CFA franc may be overvalued, compared with the soft currencies of major competitors from Latin America and Asia, thus hindering export prospects for the zone's producers.

Sources of information

National statistical sources The major domestic source of information for Comoros is the annual report of the Banque centrale des Comores (BCC, the central bank), the timely and professional presentation of which reflects the curious dichotomy between a factionalised and financially incompetent politico-dynastic elite and a professional, accomplished central bank and statistical staff. The BCC is arguably more adept at issuing useful and relevant material with minimum delay than are either of the mainland African Franc Zone central banks. However, whereas the Banque centrale des états de l’Afrique de l’ouest and the Banque des états de l’Afrique centrale have to track the economics and finances of seven and six states respectively, the BCC has only one island microsociety to deal with.

Francophone and As with other Franc Zone countries, there is a certain amount of disagreement international statistical between the various international authorities. The major all-Franc Zone sources statistical record is La Zone Franc, rapport annuel, issued annually by the Banque de France’s Franc Zone secretariat. Paradoxically, given the islands’ economic insignificance, their unique position within the zone guarantees coverage in depth in the report. The French Ministry of Co-operation has in recent years issued its own statistical analysis of the countries (not all francophone) falling within its purview, entitled Les Etats d’Afrique, de l’océan Indien et des Caraïbes, containing a post-devaluation update. Figures for the domestic economy sometimes diverge in these two sources, both of which are also capable of disagreeing completely with runs of data from the World Bank in its publications, World Tables and Trends in Developing Economies. Where the external account is concerned, francophone and “Anglo-Saxon” sources are equally liable to inconsistency, frequently stemming from greatly differing accounting methodologies. In addition, the IMF’s most up-to-date figures for the balance of payments refer to 1991. Where debt and aid flows are

concerned, the standard sources are the World Bank’s Global Development Finance and the OECD’s Geographical Distribution of Financial Flows to Aid Recipients.

Select bibliography H Chagnoux and Ali Harilou, Les Comores, Presses universitaires de France, Paris, 1980

Reference tables

Reference table 1 Government finances (Cfr bn)

1993 1994 1995 1996 1997 Total revenue & grants 21.6 23.7 20.9 18.6 21.0 Domestic receipts 10.9 11.1 11.5 11.3 12.8 External grants 10.8 12.6 9.5 7.3 8.2 Total expenditure 19.6 29.6 27.3 23.4 23.3 Recurrent 16.5 20.1 21.5 18.2 17.8 of which: salaries 8.1 6.9 7.7 8.3 8.6 interest 0.6 0.9 0.8 0.8 1.2 Capital expenditure 5.3 8.0 5.5 5.1 5.6 Other expenditure (net loans) –2.3 0.4 0.0 0.0 0.0 Balancea 0.5 –5.7 –3.4 –1.7 –1.8

a Cash basis, after movements in arrears; figures may not add due to rounding.

Source: Secrétariat du comité monétaire de la Zone franc, La Zone franc, rapport annuel 1995, 1996 and 1997.

Reference table 2 Money supply (Cfr m unless otherwise indicated; year-end)

1994 1995 1996 1997 1998 Currency in circulation 5,100 5,672 5,639 5,433 5,418 Money (M1) 12,714 12,040 13,021 10,603 10,015 M1 growth (%) 9.8 –5.3 8.1 -18.6 5.5 Quasi-money 5,910 5,442 6,167 7,771 5,758 Money (M2) 18,624 17,482 19,188 18,374 15,773 M2 growth (%) 7.3 –6.1 9.8 -4.2 -14.2 Source: IMF, International Financial Statistics.

Reference table 3 Gross domestic product (Cfr bn unless otherwise indicated)

1993 1994a 1995a 1996a 1997a Total (Cfr bn) At current prices 74.6 77.4 80.3 81.9 84.7 Real change (%) 3.8 –5.3b –3.9b –0.1b 0.0 Per head ($)c At current prices 610 490 440 410 400

a EIU estimates. b Actual. c Calculated according to Atlas Method.

Source: World Bank, World Tables; African Development Indicators.

Reference table 4 Gross domestic product (% change)

Annual average 1992 1993 1994 1995a 1985-95 Agriculture –0.8 –0.7 1.3 1.5 2.0 Industry 21.5 10.3 0.1 1.0 1.3 of which: manufacturing 5.6 3.6 1.0 1.0 4.2 Services –0.1 0.9 –5.6 –6.3 0.6 GDP 1.6 1.3 0.8 n/a n/a

a EIU estimates.

Source: World Bank, Trends in Developing Economies.

Reference table 5 Gross domestic product by expenditure (CFA bn at constant 1987 prices)

1989 1990 1991 1992 1993 Private consumption 46.8 48.5 48.7 48.8 49.2 Government consumption 16.7 15.6 14.9 13.8 13.8 Gross domestic investment 11.0 11.6 8.0 11.4 8.8 Exports of goods & services 8.7 7.0 11.2 10.8 13.1 Imports of goods & services –23.6 –22.6 –21.5 –22.5 –21.8 GDP at market prices 59.6 60.1 61.4 62.4 63.1 Source: World Bank, World Tables.

Reference table 6 Gross domestic product by expenditure (% change)

1992 1993 1994 1995 1985-95 Private consumption 0.6 0.7 –8.6 0.3 2.1 General government consumption –7.3 0.0 0.5 –4.2 –3.4 Gross domestic investment 40.7 –27.0 –23.2 –3.4 –4.9 Export of goods & services –4.0 20.6 12.0 11.2 4.0 Import of goods & services 4.3 –5.9 –16.5 8.6 –1.8 Source: World Bank, Trends in Developing Economies.

Reference table 7 Price movements for basic goods and services (Cfr)

1996 1997 Dec Jun Sep Dec Food Grain & flour 1,398 1,375 1,369 1,401 Fruit & vegetables 1,150 1,528 1,288 1,229 Milk products 1,241 1,240 1,252 1,340 Meat & fish 1,245 1,312 1,281 1,254 Groceries 1,511 1,301 1,497 1,329 Others Cigarettes & tobacco 1,426 1,675 1,662 1,744 Clothes 1,617 1,652 1,652 1,624 Transport/communications 1,296 1,333 1,333 1,370 Source: Banque centrale des Comores, Rapport annuel, 1997.

Reference table 8 Balance of payments (Cfr bn)

1993 1994 1995 1996 1997 Merchandise exports fob 6.1 4.5 4.3 2.4 3.9 Merchandise imports fob 14.0 18.7 20.0 18.8 20.2 Trade balance –7.9 –14.2 –15.8 –16.4 –16.4 Net services –4.8 –6.5 –5.4 –3.9 –5.2 of which: interest –0.7 –0.9 –0.8 –0.8 –1.2 Net transfers 15.4 15.9 13.5 13.0 15.7 Public 12.4 12.9 10.2 7.9 10.5 Private 3.0 3.0 3.3 5.1 5.2 Current-account balance 2.7 –4.8 –7.7 –7.3 –5.8 Source: Secrétariat du comité monétaire de la Zone franc, La Zone franc, rapport annuel 1995 and 1996.

Reference table 9 External debt, World Bank estimates ($ m unless otherwise indicated; debt stocks as at year-end)

1992 1993 1994 1995 1996 Total external debt 188.3 184.9 192.3 203.7 205.6 Long-term debt 175.2 169.6 179.0 190.3 192.9 Short-term debt 11.8 14.1 9.9 10.1 9.5 of which: interest arrears on long-term debt 11.7 13.1 9.9 8.1 9.5 Use of IMF credit 1.2 1.2 3.3 3.3 3.2 Public & publicly guaranteed long-term debt 175.2 169.6 179.0 190.3 192.9 Official creditors 175.2 169.6 179.0 190.3 192.9 Multilateral 122.9 128.6 141.4 152.8 155.5 Bilateral 52.3 41.0 37.7 37.5 37.4 Private creditors 0 0 0 0 0 Total debt service 5.7 2.2 2.8 1.0 1.4 Principal 3.2 1.6 2.0 0.4 0.8 Interest 2.5 0.6 0.8 0.6 0.6 of which: short-term debt 0 0 0 0 0 Ratios (%) Total external debt/GNP 70.3 65.7 95.7 87.0 89.4 Debt-service ratioa 8.4 3.0 4.8 1.6 2.3 Short-term debt/total external debt 6.3 7.6 5.2 4.9 4.6 Concessional long-term loans/long-term debt 89.3 87.9 89.1 89.6 89.5

Note. Long-term debt is defined as having a maturity of more than one year. a Debt service as a percentage of earnings from exports of goods and services.

Sources: World Bank, Global Development Finance.

Reference table 10

Net official development assistancea ($ m)

1993 1994 1995 1996 1997 Bilateral 28.9 20.0 20.6 22.4 15.2 of which: France 19.1 13.7 15.3 19.6 14.8 Japan 5.6 1.6 4.3 0.3 0.4 Multilateral 21.2 22.2 21.8 18.0 12.8 of which: IDA 4.6 7.3 9.2 6.0 4.8 EU 8.9 7.7 4.7 6.2 3.1 Total 50.2 42.2 42.4 40.4 28.0 of which: grants 46.3 32.0 34.1 33.4 25.1

a Disbursements net of repayments of aid loans. Official development assistance is defined as grants and loans with at least a 25% grant element, provided by OECD and OPEC member countries and multilateral agencies, and administered with the stated aim of promoting development and welfare in the recipient country.

Source: OECD, Geographical Distribution of Financial Flows to Aid Recipients.

Reference table 11 Foreign reserves ($ m unless otherwise indicated)

1994 1995 1996 1997 1998 Foreign exchange 43.2 43.6 49.7 39.6 38.4 SDRs 0.05 0.11 0.05 0.13 0.01 IMF reserve position 0.8 0.8 0.8 0.7 0.8 Total reserves excl gold 44.0 44.5 50.6 40.5 39.1 Golda 0.2 0.2 0.2 0.2 0.2 Total reserves incl gold 44.2 44.7 50.8 40.7 39.3 Memorandum item Gold (‘000 fine troy oz) 1 1 1 1 1

a Valued at 75% of fourth-quarter average London price.

Source: IMF, I.

Reference table 12 Exchange rates (period averages)

1994 1995 1996 1997 1998 Cfr:$ 416.4 374.4 383.7 437.8 442.5 Cfr:SDRa 585.3 546.3 564.8 606.0 593.7

a End-period.

Source: IMF, International Financial Statistics.

Editor: Noah Beckwith All queries: Tel: (44.171) 830 1007 Fax: (44.171) 830 1023