75604
                                                                                              November 2011



          PPIAF assistance to the Government of the Union of the Comoros

Technical Assistance for Comoros’ Telecommunications Sector
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The Union of the Comoros (Comoros) is a small archipelago of about 2,235 km with an estimated
population of 798,000. About 52% of the population lives on the largest island, Ngazidja (or Grande
Comore), which is also home to the union capital, Maroni. Comores Telecom, the government-owned
telecommunication company, is the main operator in the market. Its governance had undergone several
changes, specifically under decree September 3, 2007, which amended the organization of the company
by delegating responsibilities to regional authorities and by changing the composition of its Board of
Directors. Despite undertaking major investments, service quality remained poor due to congestion of
several important networks, insufficient network capacity for Internet access, lack of operational
procedures and network maintenance, and the relatively low skill level of employees. One of the priorities
of Comores Telecom was to develop a strategy to improve network maintenance and technical operation
to improve service delivery to the population. This required significant resources including technical
assistance to improve its performance and provide training to build the expertise of its personnel.

In 2009 the government of Comoros requested PPIAF funding for a technical assessment of Comores
Telecom to determine divestiture options. The objectives of the PPIAF-funded work were to contribute to
the reform of the telecommunications sector, improve the quality of service, and analyze restructuring
options for Comores Telecom that may attract the interest of international private operators. The activity
would allow the government to decide on the most appropriate option that would meet sector objectives
and service improvement goals.

The report concluded that the search for a strategic partner would be an appropriate solution to facilitate
the adaptation of the firm to a more liberalized market. It recommended undertaking this search before
the market liberalization to ensure that Comores Telecom can compete with other players. However, the
report also indicated that attracting private operators would require further clarification and additional
inputs to the legal and regulatory framework.

A workshop was held in 2009 with government officials and donors to review strategic options to
restructure the telecommunication company. A presentation was also made to representatives of the
National Assembly to discuss the main recommendations of the PPIAF-funded report. More recently, in
the 2010 International Monetary Fund (IMF) report on Comoros, the government announced that it had
hired external consultants to undertake an audit of year 2009 accounts of Comores Telecom, which would
be followed by an assessment of the equity in the company, with a view to requesting calls for
expressions of interest from potential partners. However, as of November 2011, the government has yet
to announce the results of this audit, or to indicate their position with respect to what proposed structures
they would like to adopt for Comores Telecom.

                Results of PPIAF’s Activity in Comoros’ Telecommunications Sector

Category                            Outputs
Enabling environment reform
                                        Diagnostic and Development Options for Comores Telecom —
Analyses/assessments prepared
                                         Preliminary Technical Report, May 2009
Capacity and awareness building
                                        Workshop with government officials and interested donors to
                                         discuss the strategic options reports, 2009
Workshops/seminars
                                        Presentation made to representatives of the National Assembly
                                         to discuss main findings of PPIAF-funded report, 2009




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Looking Ahead: PPIAF and the Public-Private Partnership Agenda in Comoros

Fragile states such as Comoros present a challenging environment for public-private partnerships as
prolonged political conflicts and fragile institutional stability are constraints to private sector investment.
Since June 2010, Comoros has been identified as eligible for assistance under the IMF and World Bank’s
Heavily Indebted Poor Countries program. This is the first step toward forgiveness of the majority of the
country’s foreign debt. Debt forgiveness would help improve the country’s growth perspectiv e, but would
need to be complemented by other reforms and improvements in many sectors to be able to attract
private investors in a sustainable manner. In particular, there is a strong potential to develop tourism in
Comoros, which would in turn boost the country’s economy, but the development of reliable basic
infrastructure services is an important requirement to achieve this. By supporting the improvement and
expansion of basic infrastructure services in the country, PPIAF could support the government efforts to
develop different economic activities, including the development of the tourism industry.




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