Comoros receives a disproportionate amount of capital, given its size. In 2024, just remittances from the diaspora amounted to almost one-fifth of GDP, according to the IMF’s 2025 Article IV Consultation staff report (IMF Country Report No. 26/47, 2026 Feb).
Adding development grants and gross external inflows more than overwhelms what one would typically expect from an economy worth $1.44 billion. What it does not have is a mechanism to transform most of this capital into a large, scaleable private investment. No stock exchange, no corporate bond market, and no vehicle for a domestic PE or venture fund. Perhaps, then, we ought not to ask about how to pull more capital into Comoros, but what happens with the capital we’re already pulling in?
The Union of the Comoros is a three-island nation in the Indian Ocean. the three main islands being Grande Comore, Anjouan, and Moheli. With roughly 866,000 inhabitants, according to the IMF report, its economy is dominated by its geography, an underdeveloped production base, high inter-island transport and logistics costs, and a large diaspora, primarily in France.
The IMF notes starkly that Comoros’s “narrow export and production bases and dependency on imports, remittances, and aid leave it exposed to shocks.”
Below we rank the five channels by which capital moves into and through the Comorian economy, not by total dollar amounts but by how explicitly they reveal where the conversion into private investment falters:
1. Remittances: Comoros’ biggest capital flow is not really investment capital
The clearest evidence of the problem may be the country’s largest external private flow. Remittances are by far the most important external capital inflow into Comoros. IMF balance-of-payments data put net private remittances at 18.9% of GDP in 2024, while World Bank data put the figure at 22.6% in 2023. Either way, Comoros sits among the countries with the highest remittance inflows relative to GDP in sub-Saharan Africa. The IMF expects the ratio to gradually decline as the economy diversifies, reaching roughly 15% by 2027.
These are enormous numbers for a small economy. They also dwarf several other sources of external financing when considered alongside them. But there is an important distinction that often gets lost when discussing remittances: money flowing into the country is not automatically capital available to businesses. The IMF itself makes this distinction in its treatment of remittances. In its analytical framework, remittances primarily support household income, domestic demand, and the trade balance. They are not treated as a source of enterprise capital.
That is the heart of the problem. Comorian diaspora households are clearly sending money home. But there is no obvious financial mechanism turning a meaningful portion of those diaspora savings into equity, patient debt, or other long-term capital available to Comorian businesses. The money arrives. The conversion mechanism does not.
2. Development grants: Large, important, and structurally public
The second major source of external financing is development assistance. According to IMF fiscal data, external financing was expected to account for 6.7% of GDP in 2024 and 6.9% in 2025. This financing is significant, and much of it is doing exactly what development finance is designed to do. The IMF’s reporting on major infrastructure projects points largely to external public-sector institutions such as the African Development Bank, the World Bank, and France’s AFD. Their financing supports projects including the El Maarouf Hospital, airport expansion, and infrastructure associated with the 2027 Indian Ocean Island Games.
There is nothing inherently wrong with this model. In fact, these investments can be essential to building the infrastructure and institutional capacity that a private economy needs. The problem is different. Public development financing and private enterprise capital serve different functions.
A grant can build a hospital. A concessional loan can finance infrastructure. Donor money can strengthen a public institution. But a growing private company needs something else: capital that can absorb business risk, tolerate a longer investment horizon, and participate in the company’s upside. The IMF’s examples of donor financing reaching private-sector institutions are comparatively limited. One example is AFD’s €8 million contribution toward the recapitalization and support of the postal bank. Again, the issue is not that development financing is ineffective. It is that development finance does not automatically create a private investment market.
3. Commercial banks: The private channel is constrained from within
Commercial banking is where Comoros’ capital system begins to reveal a deeper structural problem. The country’s banking system is small and concentrated, with major institutions including BIC-Comores, Exim Bank-Comores, and Banque Fédérale de Commerce, alongside the restructured postal bank, now known as BPC.
The IMF’s latest country report, Country Report No. 26/47, describes a financial system consisting of nine deposit-taking institutions: four commercial banks, four microfinance networks, and the postal bank. The concentration is striking. The three largest banks account for 69% of system deposits and 73% of system assets. Six of the nine institutions reported losses at the end of June 2025, while the system-wide non-performing loan ratio stood at 13.8% in October 2025.
Bank credit did grow significantly in 2025—around 14% year-on-year in September, according to the IMF. But growth from a very low base should not be mistaken for a deep credit market. There is also no sufficiently reliable, up-to-date public figure for credit stock as a percentage of GDP that would allow us to make a defensible claim about the overall depth of credit here. It is better not to manufacture precision where the underlying data do not support it.
What the evidence does establish is more important. The financial system has faced a lack of a functioning interbank market, undercapitalized institutions working through recapitalization plans, and a central bank that is still strengthening its supervisory and resolution capacity. These are not minor technical issues. They directly affect whether banks are willing and able to provide medium-term financing to businesses that need larger, longer-duration, and higher-risk capital. And this is where an important distinction needs to be made: Bank debt is not the same thing as risk capital. Even if bank lending grows, commercial banks do not automatically become providers of equity or patient growth capital.
A 2019 interview with Jeune Afrique illustrates the problem. BCC Governor Dr. Younoussa Imani attributed weak bank lending partly to high risk aversion in the absence of loan-guarantee mechanisms and noted that banks were holding excess liquidity. The statement is several years old, so it should not be presented as a current measurement. But the mechanism it describes remains relevant: banks can have money without having the confidence, balance-sheet capacity, or risk infrastructure to deploy that money into the businesses that need it. The 13.8% NPL ratio makes that constraint particularly understandable.
4. Microfinance: Real financial depth, but a real ceiling
If commercial banks sit at the top of Comoros’ formal financial system, microfinance reaches much further into the everyday economy. The country’s two major cooperative microfinance networks—the MeCK unions, established in 1997, and Sanduk unions, established in 1991—have historically provided some of the country’s broadest access to formal financial services beyond commercial banking. They are also subject to central-bank oversight. According to the IMF’s 2016 Selected Issues report and sector data referenced by Making Finance Work for Africa, the microfinance sector had an aggregate loan volume of approximately $74 million in 2017, the most recent year for which a fully referenced loan-volume figure was available for this analysis. That represented more than 44% of bank credit volume at the time. That is meaningful financial depth. But it does not solve the growth-capital problem.
Microfinance is designed to serve a different part of the capital ladder. Its strength lies in providing smaller loans to micro-enterprises, merchants, households, and small producers. A formalizing SME that wants to open another location, build inventory, purchase equipment, acquire another company, or scale into a larger market may eventually require financing well beyond what conventional microfinance is designed to provide. That creates a gap between microfinance and commercial bank finance — and another gap between bank finance and equity or institutional investment. It is this middle and upper part of the capital ladder that remains thin.
5. FDI is smaller than the headline numbers suggest
Foreign direct investment exists in Comoros, but its role should not be overstated. An IMF chart in Country Report No. 26/47 places FDI at just 0.4% of GDP in 2024, rising only slightly to 0.6% in 2025 and 2026. That is considerably below estimates of around 1.5% of GDP per year that appear in some other analyses of Comoros. More importantly, the character of the investment matters as much as the volume. The FDI that does arrive tends to be concentrated in relatively specific opportunities—telecommunications, concessions, hospitality, and infrastructure projects where there is a clearly defined contract, license, or strategic asset. That is very different from a functioning private-equity ecosystem in which investors routinely identify growing local companies, take minority or majority stakes, provide growth capital, and eventually exit those investments. Comoros has some foreign investment. What it does not yet have is broad machinery for foreign or domestic private capital to repeatedly invest in local businesses.
The Conversion Gap
Put the five channels together, and a pattern emerges. The largest flows into Comoros are, ironically, the least accessible to private enterprises. Remittances are overwhelmingly household-oriented. Development grants are overwhelmingly public or development-project-oriented. Commercial banks are private but constrained by concentration, risk aversion, weak financial infrastructure, and balance-sheet limitations. Microfinance provides genuine financial access but operates largely at the smaller end of the capital spectrum. And FDI is present, but small and largely project-specific. So the problem is not simply that Comoros lacks money. It is that there is very little institutional machinery for converting money into investable private capital.
Somewhere above the banking system, there is no sufficiently developed non-bank layer designed to take duration risk, price private-company risk, provide equity or quasi-equity financing, and eventually create exits for investors. That missing layer matters. Without it, an entrepreneur can move from personal savings to microfinance, and perhaps eventually to a commercial bank loan. But what happens when the company needs equity? What happens when the business needs capital that does not require monthly repayment? What happens when an investor wants to take a stake in a promising Comorian company and hold it for five or seven years before exiting? That is where the capital system becomes thin.
The Counterargument: Perhaps the Market Is Simply Too Small
There is a serious argument against building private-capital vehicles in Comoros. The market may simply be too small. Comoros consists of three main islands, has a small economy, and generates relatively limited deal flow. Due diligence and transaction costs can quickly become disproportionate to the size of potential investments. Traditional private-equity economics are difficult to make work when there are too few companies capable of absorbing institutional-sized tickets.
The IMF itself describes Comoros as a fragile small state with weak state capacity and limited diversification. That is not an obvious environment for a conventional private-equity fund. The historically project-specific nature of FDI reinforces the point. But there is an interesting contradiction here. The same evidence that makes a traditional private-equity model difficult also demonstrates that capital already exists in the system. Remittances are equivalent to almost one-fifth of GDP. Development financing represents a significant share of the economy. Banks hold liquidity. Microfinance reaches a large segment of the population. Foreign investors occasionally enter specific sectors.
The problem, therefore, may be less about the absolute scarcity of money and more about the absence of vehicles capable of converting existing pools of money into productive private investment. That is a different diagnosis. And it leads to a different solution.
What Has to Change First?
Interestingly, some of the financial infrastructure needed for this transition is already beginning to appear. Comoros has started developing a domestic Treasury-bill market. The Ministry of Finance and the Central Bank of Comoros have initiated a running T-bill auction calendar. As of July 2026, four issuances had reportedly taken place, with the latest being a KMF 1.5 billion, 28-day treasury bill auction on July 29, according to returns displayed on the central bank’s website.
This is still a tightly controlled, short-maturity market. But it is a start. The more important question now is whether a functioning sovereign debt market can become part of a broader process of private financial intermediation. Two developments matter particularly.
First: Can government securities become useful collateral?
If banks are able to hold Treasury bills and use them effectively as collateral in refinancing operations, the instruments could potentially strengthen liquidity management and create a bridge between sovereign securities and private credit. That does not automatically create private investment. But it can help build some of the financial plumbing required for a deeper credit market.
Second: Will bank recapitalization actually happen?
The IMF has identified bank recapitalization as an outstanding issue. That matters because undercapitalized financial institutions are naturally reluctant to increase exposure to risky borrowers. A new collateral mechanism is of limited value if the banks themselves do not have sufficient capital or risk capacity to expand lending. The real test, therefore, is not whether Comoros can auction Treasury bills. It is whether those reforms eventually create greater private-sector intermediation.
From Inflows to Investment
This is ultimately the distinction Comoros needs to make. The country does not simply need more money entering its borders. It needs more of that money to change form. Remittances need mechanisms through which diaspora savings can become productive investments.
Development finance needs pathways that help build commercially viable businesses alongside public infrastructure. Banks need stronger balance sheets, better risk infrastructure, and instruments that allow them to lend with greater confidence. Microfinance needs a pathway for successful small businesses to graduate into larger forms of finance.
And foreign investment needs to move beyond isolated concessions and projects toward repeatable investment in local companies. That is the missing market. Because when a country receives capital but lacks the institutions to intermediate it, the money can still circulate through the economy—funding consumption, imports, household expenses, and public expenditure—without necessarily creating a corresponding increase in productive private capital.
The result is a strange form of financial abundance without financial depth. Comoros does not necessarily have a money problem. It has a conversion problem. The next stage of its financial development is therefore not simply about attracting more inflows. It is about building the machinery that can turn the inflows it already receives into equity, patient credit, investable businesses, and, eventually, exits. That is how money entering an economy becomes capital that stays in it.
