A bold reform in Comoros: Opening up the rice market to increase food security and catalyze private sector growth

For decades, Comoros has grappled with rice shortages, a persistent issue rooted in the state monopoly held over ordinary rice imports by the National Office of Rice Importation and Trading (Office national d’importation et de commercialisation du riz, ONICOR), a cash-strapped state-owned enterprise (SOE). This situation has led to frequent scarcities (e.g., the documented shortages in 2021, 2022, and 2023) as well as rising prices exceeding those recommended by the Government of Comoros. The resulting food insecurity has often posed critical challenges, especially for a population reliant on ordinary rice as a key staple.

Recognizing the urgent need for change, the government, supported by the World Bank, initiated a transformative policy reform that is already showing promising results and unlocking opportunities for private sector growth.

A Gradual Transition to Liberalization: Setting Rules for Market Entry
In a pivotal step under the first operation of the Fiscal Management And Resilient Growth (FIMARG) Development Policy Financing (DPF) series, ONICOR’s monopoly on ordinary (broken) rice imports was ended in 2023 through a Presidential Decree, opening up the sector to private players. This reform was aligned with recommendations from a World Bank study that was conducted to support Comoros’ accession to the World Trade Organization (WTO) in 2024. However, while the legal framework allowed market entry, the absence of clear and transparent rules initially deterred private participation.

To address this issue, the World Bank launched a project of technical assistance funded by the European Union under the ACP Business Friendly Program with the participation of the public and private sectors. This project helped to identify the key principles that should guide the design of transparent and practical criteria to obtain rice import licenses. Based on recommendations from the technical team, an April 2024 Ministerial Order from the Ministry of Economy introduced requirements to ensure both market inclusivity and stability. Key criteria included financial guarantees demonstrating the ability to finance shipments, registration as a commercial entity with proper tax documentation, and compliance with health and environmental standards. Importantly, there was no storage capacity requirement, ensuring the framework did not favor existing large importers and allowing new entrants to compete.

Safeguarding Transparency and Avoiding Monopolies
The measures were designed to foster a competitive and diverse private sector, drawing on lessons learned from countries like Senegal where over 50 new players entered the market in 1996 during the implementation of a similar program. At the same time, the government sought to mitigate the risk of a transfer toward a private monopoly (or duopoly), a potential pitfall in past failed liberalization programs (as observed in West Africa in the 2000s). To this end, the Ministry of Economy published a memorandum in June 2024 establishing a public-private commission to help oversee the licensing process and minimize discretionary decision-making for the authority charged with the issuance of importing licenses. The commission was designed with guardrails to prevent conflicts of interest.

Early Results: Competition and Lower Prices
Since June 2024, 12 private firms have entered the rice import market across the country’s islands, collectively contributing to significant improvements in supply. Preliminary data show that private operators imported approximately 12,000 tons of rice to Comoros from June to November 2024, i.e., 40% of the country’s annual demand.

The benefits of this reform are already being felt in Anjouan, which accounts for more than half of the rice consumption in Comoros, where increased competition has led to improved availability and lower prices. Local media have highlighted these gains, with news outlets such as Al Watwan declaring “the end of shortages” and Comores Infos describing unprecedented competition driving down prices.

Next Steps: Building Capacity for Long-Term Success
As Comoros continues to liberalize its rice market and looks to the private sector to import half of all rice demand by 2026, building supporting infrastructure remains critical. Adequate warehousing capacity is essential for private firms to effectively meet local demand, an issue on which the World Bank is currently assisting the government. Moreover, the World Bank is also looking to support inter-island trade from Anjouan, which is the main port of entry into Comoros and the country’s only deep-sea port. Reducing logistical and administrative constraints for inter-island trade could help ensure that the policy reform’s impact extends to all islands in Comoros, as indicated in complaints from importers in Moheli and Grande Comore. Increasing food security would also require (i) improving ONICOR’s corporate governance in the short and medium term, and (ii) furthering market contestability in the long term as the private sector increases its stake in the sector and shows that the supply chain is strong and effective.

Conclusion
The liberalization of rice imports to Comoros is a testament to the power of well-implemented policy reforms tailored to local contexts to drive tangible change. By addressing systemic challenges and empowering private sector participation, Comoros is improving food security and creating opportunities for economic growth and resilience in the long term. While challenges remain, the early results are encouraging. For Comoros, this is more than just a policy shift—it is a step toward a more secure and prosperous future.

Source: blogs.worldbank.org