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Financial Sector Overview

Economic Context

The Republic of the Comoros is an archipelago located northeast of Madagascar in the Indian Ocean. The population was estimated at 869,000 inhabitants in 2018, of whom more than 53% aged below 20. The Comorian economy is not very diversified and is mainly based on agriculture, which accounted for 36% of GDP in 2017 and employed about 80% of the active population. The private sector is very small and has limited access to bank resources. Its development is also hampered by weak infrastructure, particularly in the energy sector. Economic growth rate averaged 2.1% between 2014 and 2018, with GDP close to USD 738 million and per capita income of USD 870 in 2018. According to World Bank projections, the tourism and telecommunications sectors are expected to drive economic activities in years to come. The country also has a structural trade balance deficit: exports accounted for 17.5% of GDP in 2017 against 58% for imports. Monetary stability is guaranteed by the the local currency, the Comorian Franc (KMF), being pegged to the Euro and through mechanisms put in place by the central bank to contain money supply and inflation. Furthermore, migrants’ remittances, estimated at 24% of GDP in 2017, help to contain the current account deficit, improve the level of the country's foreign exchange reserves and contribute significantly to domestic consumption expenditure.  Strong social inequalities persist and nearly 18% of the population live below the international poverty line set at $1.9 per capita per day. The business environment has improved in recent years, with the country ranking 164th (out of 190 countries) in the 2019 Doing Business Index. This marks a 12-spot gain over 2015.

Overview of the Financial Sector

The Comorian financial sector is small, underdeveloped and does not have a stock exchange. It is regulated and supervised by the Central Bank of the Comoros, and as of 31 December 2017 was run by ten (10) institutions, including four commercial banks, three mutual microfinance institutions (MFIs) known as decentralised financial institutions (DFIs) and three financial intermediaries, including the National Postal and Financial Services Company (SNPSF) and two money transfer companies. The local financial system remains dominated by banking and microfinance services, as there is neither a national insurance market nor a capital market. However, there is a pension fund established in 1963 covering civil servants and private sector employees. The combined assets of the Comorian financial system represented about 47% of GDP in 2015, or approximately USD 277 million, and the country's three largest financial institutions accounted for 57% of the sector's combined assets. Within the framework of the monetary agreements with France, the Republic of the Comoros is a member of the Franc zone, alongside the countries of the WAEMU (West African Economic and Monetary Union) and CEMAC (Economic and Monetary Community of Central Africa) zones. In this system, France provides a guarantee for the currency in exchange for a right of oversight over the governance of the Comorian central bank and monetary system.

The Banking Sector

Structure of the Banking Sector - At end-2017, the banking sector comprised four (4) commercial banks with assets of KMF 126 billion (Comorian Franc) or USD 307 million, equivalent to 47% of GDP in the same year. Between 2012 and 2017, assets increased from KMF 87.8 billion (USD 213.8 million) to KMF 126 billion (USD 307 million), i.e. an increase of 43.5% over the observation period mainly due to the constant and significant increase in credit granted and deposits collected by banks between 2012 and 2016. Between 2016 and 2017, bank assets increased by only 2%. The Comorian government is also strongly represented in the shareholder structure of 2 banks, with 37.5% shares in Banque de Développement des Comores (BDC) and 34% in Banque pour l’Industrie et le Commerce (BIC-Comores).

Structure of Loans and Deposits - Total credits to the economy increased by 63.8% between 2012 and 2017, rising from KMF 42.01 billion (USD 102.3 million) to KMF 68.8 billion (USD 167.5 million ), while deposits received by banks increased by 41.6% over the same period, from KMF 69.5 billion (USD 169.2 million) to KMF 98.4 billion (USD 239.6 million).  Loans to individuals and private companies accounted for most of the credit, with respective shares of 51.7% and 41%. The volume of bank loans to the public sector accounted for only 2.9% of the total volume of credit to the economy. As of 31 December 2017, there were 64,771 deposit accounts and 63,783 bank account holders in the Comoros, representing about 8% of the population. During the same year, only 6,628 people (0.8% of the population) borrowed from local banks.

Financial Strength of the Banking Sector - The significant increase of lending volumes to the economy between 2012 and 2017 correlated positively with the increase in bad debts. Such debts had more than doubled from KMF 8.5 billion in 2012 to KMF 19.2 billion in 2017 and represented 23.6% of the credit portfolio in 2017 (against 17.8% in 2012). In 2015, credit for trade and to households accounted for more than two-thirds of new non-performing loans. According to the central bank's 2017 report, the overall performance of the banking sector was negative, although losses declined. Banking regulations on dividend payments led to capital consolidation and an improvement in the overall solvency of the banking system.

Financial Inclusion

The Comoros has no formal national financial inclusion strategy. However, an Inclusive Finance Master Plan (SD-FIC) was implemented in 2011 as part of the Support Programme for Inclusive Finance in the Comoros (PAFIC), in collaboration with international development partners. The country has made significant progress in terms of access to financial services. The number of branches of financial institutions established increased from 73 in 2008 to 124 in 2017.  The SNPSF (the postal bank) has the best coverage (25.8% of branches) and microfinance institutions (MFIs) account for just under two thirds (62.9%) of branches.  The number of Automated Teller Machines (ATMs) also increased from 4 in 2008 to 24 in 2017.

The domestic financial inclusion rate based on the number of account holders in MFIs and banks, was 45.7 percent (of the adult population) in 2017, slightly above the average for sub-Saharan Africa (42.6 percent).

Microfinance

MFIs play an important role in strengthening financial inclusion in the Comoros. In 2017, there were more than 162,399 depositors (compared to 63,783 for banks) and 170,870 deposit accounts in Comorian MFIs (compared to 64,771 bank accounts). Microfinance represents a major source of financing for the Comorian economy. MFIs granted loans to more than 20,646 borrowers (compared to 6,628 bank loan beneficiaries). The sector is led by three (3) mutual benefit institutions, namely the Union des MECK (Mutuelle d'Epargne et de Crédit ya Komori) (U-MECK), the “Union régionale des Sanduk d'Anjouan (URSA)” and the “Union régionale des Sanduk de Mohéli (USM)”. The Sanduk and MECK are mutual savings and credit unions operating in rural and urban areas in the Comoros. The Sanduk network was launched in 1991, while the first MFIs known as MECKs were established in 1997. The MFI loan portfolio as well as the number of borrowers increased by 12.4% and 9.1% respectively between 2016 and 2017, with the volume of loans attaining KMF 30.5 billion (USD 74.3 million) in 2017, equivalent to 44.3% of the volume of credit granted by banks in the same year.

Mobile Money and Digital Finance

Mobile phone-based financial services (mobile money) are relatively new in the Comoros. A regulatory framework was adopted by the central bank in 2017 to govern mobile money services in the country.

A private mobile operator (MTO) launched a mobile money product, Mvola, in April 2019, marketed indirectly through agents outside MTOs and retailers. The MCTV (Maison Comorienne de Transferts et Valeurs) also launched financial services for money transfers and payments in 2017, accessible by mobile phone and the Internet. This innovative, diversified and improved offer of financial services should improve access to financial services, particularly in urban, rural and semi-urban areas. Currently, the coverage rate per 100,000 inhabitants is 0.04% in terms of ATMs, 1.85% for bank card payments and 0.02% for digital payment terminals.

A World Bank study conducted under the Regional Communication Infrastructure Programme (RCIP4) recommends interoperability among ATMs and better collaboration between the central bank and the telecommunications regulatory authority (ANRTIC) for the sector to develop rapidly.

The Insurance Sector

The Republic of the Comoros is a signatory state of the CIMA (Inter-African Conference on Insurance Markets) zone treaty since 1992, together with 14 other African countries. However, the Comorian government has to date not ratified the treaty. Although a few private insurance companies provide coverage in the country, the domestic insurance market is still in its infancy.

The government plans to establish a Generalised Health Insurance (AMG) system in 2021 for all social strata in the country to have enhanced access to health services. The law establishing universal health coverage was adopted in 2016 and the programme will be managed by the National Solidarity and Social Security Fund (CNSPS).

The Social Security System

The Comorian pension system operates through the CNSPS, which manages (pay-as-you-go) pension schemes for civil servants and private sector workers. The CNSPS was established in 1963 and by 2015 had more than 18,000 members in the domestic pension system, including 12,000 from the civil service and 6,000 from the private sector. Retirement pension levels range from KMF 13,000 (about USD 30) to KMF 300,000 (USD 666), and the contribution rate is 14% for civil servants (including 4% for the worker) and 11% for private sector employees (with 4% for the worker and 7% for the employer). To improve the pension coverage, the CNSPS has been working for several years to integrate informal economic stakeholders into the national pension system and review the pension regulatory framework, including an adjustment of the retirement pension that took place a few years ago. Since 2010, when the fund's liabilities to pensioners were fully cleared, the problem of arrears in terms of retirement benefit payments resurfaced, with delays of more than four months in 2015. The situation reveals major difficulties, including issues with CNSPS governance and a structural fiscal imbalance due in part to the size and recurrence of arrears in the government's contribution to the domestic pension scheme.


Contact details Information of Banks operating in Comoros - 2018

BANKS

ADDRESS

PHONE

EMAIL

WEBSITE

BANQUE POUR L'INDUSTRIE ET LE COMMERCE

 Place de France - Moroni - Union des Comores
R.C. 176 b 81 MORONI

  (+269) 773 02 43

bic@bnpparibas.com

http://www.bci-banque.com

BANQUE FEDERALE DE COMMERCE

Moroni, Place de France

  (+269) 773 88 80

 

www.bfcbanque.com

BANQUE DE DEVELOPPEMENT DU COMORES

Place de France, B.P 298 Moroni

   

http://www.bdecash.com

CAISSE NATIONALE D'EPARGNE

Place de France B.P 5000, Moroni

  (+269) 73 06 10

   

EXIM BANK

Place de France, Moroni
Union des Comores
B.P. : 8298

  (+269) 77 39 40

arpitp@eximbanktz.com

https://www.eximbank-km.com

TOTAL

5

     
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Source

At a Glance

At a Glance Source
Population in thousands (2017): 813.91
GDP per capita (current US$) 2017 - World Average 10,721.61: 1312.33
Account (%) age 15+) - (2014 vs 2017): 22% (2011)
Agriculture Orientation Index - Credit ( Agriculture, Forestry and Fisheries share of GDP) (2015 vs 2016): n/a
Financial Inclusion Strategies: • Schéma directeur de finance inclusive aux Comores (2011-2013) FR• SADC Financial Inclusion Strategy 2016-2021
Domestic credit provided by financial sector (% of GDP) 2017: 18.34
Made or received digital payments in the past year (% age 15+) (2014 vs 2017): n/a
Remittances % of GDP for 2017: 0.21
Mortgage Interest Rate / Mortgage Term (years): 11% | 10

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