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Indian Ocean Commission CountriesA Flagship Study on Regional Integration
Summary Final ReportDecember 2012
Indian Ocean Commission CountriesA Flagship Study on Regional Integration
Summary Final ReportDecember 2012
Bank’s Future Cooperation with the Indian Ocean Commission
Flagship Study Report
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Copyright © 2013 African Development
Bank Group
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E-mail: [email protected]
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African Development Bank
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(Tunisia)
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The findings, interpretations and conclusions expressed in
this report are those of the author/s and are not necessarily
those of the African Development Bank. In the preparation
of this document, every effort has been made to offer the
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For more information about this report and other
information on the Indian Ocean Commission Member
States, please visit
http://www.afdb.org/en/countries/southern-africa/
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Regional integration of Africa is at the core of the African
Development Bank Group’s mandate. To this end, Regional
Integration Strategy Papers (RISPs) are prepared to
complement Country Strategy Papers (CSPs) as the main
instruments for programming Bank support to Regional
Member Countries (RMCs). The Southern Africa and East
Africa RISPs for 2011-2015 both discuss the specific
challenges faced by countries belonging to the Indian Ocean
Commission (IOC) due to their geographic location, poor
linkages to the continent, small domestic markets, and
vulnerability to climate change.
This Flagship Report analyses the above challenges and
provides a framework for Bank support to and collaboration
with the IOC and its Member States, namely, Comoros,
Madagascar, Mauritius and Seychelles. The study was
commissioned by the Bank and carried out by a consultancy
firm under the supervision of Regional Department South B
and a task team comprising staff from East Africa Regional
Resource Centre (EARC), Regional Department East B
(OREB), Water and Sanitation Department (OWAS) and
NEPAD, Regional Integration and Trade Department (ONRI),
among others. The team reviewed the Bank’s strategic
documents on regional integration and held consultations
with the IOC and its Member States. The specific objectives
of the study were to:
• Analyze the challenges faced by the IOC Member
States, both individually and collectively;
• Identify actual and potential growth drivers in the region;
Recommend ways to strengthen the Bank’s
partnership with the IOC based on the strategic
directions and comparative advantages of both
organizations, while identifying capacity constraints that
need to be addressed; and
• Suggest priority areas for intervention by the Bank and
areas of collaboration with other partners, with the aim
of developing a pipeline of projects.
The major findings and proposed areas of cooperation were
discussed and validated by representatives from the IOC
Member States and the IOC Secretariat at a workshop held
in Port Louis, Mauritius in November 2011. Further
discussions with IOC’s representatives and internally at the
Bank confirmed the main findings and recommendations of
the study.
It is my expectation that this report will form a solid basis for
future regional integration work in the IOC region, and will be
widely used by all stakeholders in the island states to support
the agenda of integration with the rest of the continent.
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Foreword
Zondo SAKALA
Vice President, Country and Regional Programs and Policy
African Development Bank Group
The African Development Bank (AfDB) has always embraced
the vision of an empowered, prosperous and integrated
continent. Regional integration has been part of its Charter
since its establishment in 1964, and has been given priority
in all major Bank strategies. The AfDB’s Strategy for 2013 –
2022 establishes the strategic emphasis on inclusive green
growth, which is to be embodied in all the AfDB’s activities
including interventions and knowledge products.
This Flagship Report analyses the strengths, weaknesses,
opportunities and threats (SWOT) that the IOC Member
States face in the process of regional integration and the
areas in which cooperation among the countries can be
enhanced through targeting key constraints relevant to
infrastructure linkages, institutional capacity and vulnerability
to disasters and pandemics. It aims to inform the ways in
which the AfDB can proceed to strengthen support for the
IOC Member States, whose needs have not been sufficiently
addressed in the existing RISPs.
The preparation of this Flagship Report was based on broad
cross-complex collaboration and coordination. Extensive
stakeholder consultation is another important aspect during
the preparation. The Flagship Report is organized in a way
that, following the statement of purpose of the report,
Chapter 2 presents an analysis of growth and
macroeconomic performance in the IOC region, Chapter 3
covers structural constraints to growth and regional
cooperation, Chapter 4 identifies challenges and
opportunities for regional cooperation, Chapter 5 draws a
framework for strategic cooperation with the IOC Member
States, and Chapter 6 summarizes the conclusions and
recommendations.
Recognizing the need to respond to our clients’ demands
and adapting to a changing environment, the AfDB will
continue to dialogue with the IOC grouping, both at the
regional and country level, to enhance the assistance through
our regional integration efforts.
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Preface
Chiji OJUKWU
Regional Director
Regional Department South B
This report was prepared by the African Development Bank’s
Regional Department South B (ORSB) with assistance from a
Bank-wide task team and a group of consultants. The task
team was led by Ms. Barbara Ramos, Economist (ORSB),
who handed over to Ms. Martha Phiri, Principal Country
Economist (Mauritius Liaison Office) and subsequently to Mr.
Oscar Pitti Rivera, Economist (ORSB) and Ms. Helga Peres,
Country Portfolio Officer (ORSB), who redrafted the final
consultant report. The team received overall guidance from
Mr. Ernest Addison, Lead Economist (ORSB) and publication
of the work was assisted by Ms. Xin Long, Economist (ORSB).
The report benefitted from valuable feedback from staff in
different departments, including Richard Walker, Principal
Regional Economist (EARC); Philippe Trape, Senior Country
Economist (OREB); Abdelkrim Bendjebbour, Resident
Representative (Madagascar Country Office, MGFO); Jean
Marie Vianey Dabiré, Senior Country Economist (MGFO);
Hajavola Rakotondrazaka, Private Sector Field Officer
(MGFO); Bruno Boedts, Chief Operations Officer (MGFO);
Nancy Ogal, Senior Water and Sanitation Engineer (OWAS);
Davies Makasa, Principal Transport Engineer (Transport and
ICT Infrastructure Department, OITC); Maria Mdachi, Senior
Education Analyst (Ethiopia Country Office / Human and
Social Development Department, ETFO/OSHD); El Iza
Mohamedou, Chief Political Analyst (Fragile States Unit,
OSFU) and Mtchera Chirwa, Chief PPP Infrastructure
Specialist (Southern Africa Resource Centre, SARC). Staff
from the AfDB’s NEPAD, Regional Integration and Trade
Department (ONRI) also provided valuable support.
Mr. Aloysius Ordu (the then Vice President, Country and
Regional Programs and Policy, ORVP), Mr. Chiji Ojukwu
(Director ORSB), Mr. Septime Martin (Resident
Representative, Angola Country Office, AOFO) and Mr. Steve
Kayizzi-Mugerwa (Director, Development Research
Department, EDRE), helped to initiate the project and
secured the funding.
The administrative staff of ORSB, Ms. Jacqueline Busumbru,
Ms. Meriem Aloulou, Mr. Kayode Olukayode and Ms. Dorra
Ben Niran have contributed to the successful execution of
the project. Valuable editorial service was provided by
Deborah Davis. It is to acknowledge that the maps and
diagrams used in this publication do not, in any way, imply
recognition of any states or political boundaries by the African
Development Bank or the authors.
Vice President: Zondo SAKALA
Regional Director:Chiji OJUKWU
Lead Economist: Ernest ADDISON
Lead Consultant: Ivan LINHART
Core Task Team: Barbara RAMOS, Martha PHIRI, Helga
PERES, Oscar PITTI RIVERA
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Acknowledgements
ACRONYMS AND ABBREVIATIONS
EXECUTIVE SUMMARY
1. PURPOSE OF THE REPORT
1.1. THE BANK AND REGIONAL INTEGRATION
1.2. REGIONAL INTEGRATION ARRANGEMENTS IN THE IOC REGION
2. GROWTH AND MACROECONOMIC PERFORMANCE IN THE IOC REGION
2.1. THE IOC MEMBER STATES: DIVERSITY AND COMMONALITIES
2.2. GROWTH AND MACROECONOMIC PERFORMANCE
2.3. MACROECONOMIC POLICY AND PERFORMANCE
3. STRUCTURAL CONSTRAINTS TO GROWTH AND REGIONAL COOPERATION IN THE IOC
3.1. REGIONAL TRADE
3.2. PRIVATE SECTOR DEVELOPMENT
3.3. REGIONAL INFRASTRUCTURE
3.4. AGRICULTURE, FISHERIES AND SUSTAINABLE DEVELOPMENT
3.5. SOCIAL COHESION, CIVIL PROTECTION AND SECURITY
4. CHALLENGES AND OPPORTUNITIES FOR REGIONAL COOPERATION
5. A FRAMEWORK FOR STRATEGIC COOPERATION WITH THE IOC MEMBER STATES
5.1. REVIEW OF THE BANK’S INTERVENTION AT COUNTRY AND REGIONAL LEVELS
5.2. INSTITUTIONAL CAPACITY BUILDING OF THE IOC SECRETARIAT, MEMBER STATES AND PRIVATE SECTOR
5.3. REGIONAL INFRASTRUCTURE DEVELOPMENT
5.4. NATURAL DISASTER AND REGIONAL PANDEMICS RESPONSE MANAGEMENT
6. RECOMMENDATIONS FOR PROGRAMMING SUPPORT TO THE IOC
ANNEXES
ANNEX 1: KEY ECONOMIC AND SOCIAL INDICATORS BY REGIONAL MEMBER STATES
ANNEX 2: KEY MACROECONOMIC INDICATORS (EXCLUDING REUNION)
ANNEX 3: CSP PRIORITIES OF COMOROS, MADAGASCAR, MAURITIUS AND SEYCHELLES
ANNEX 4: EASTERN AFRICA RISP
ANNEX 5: SOUTHERN AFRICA RISP
ANNEX 6: PROPOSED ACTION PLAN
REFERENCES
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Table of Contents
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Acronyms and Abbreviations
ABEDAADBADB-BADB-XADFAGOAAICDATSAUCCICESCOMESACOSEPDTAEACEARCECCASEDFEIBEPAEASSyEUFTAHDIIBRDIFINSEEIOCIPPAIPPFICTJICAKFMDGsNEPADOPEPORCEOREBORSBPARDACPIDAPLOsPRIDERECRISRISPRMCESADCSARCSEFASEGASEGANETUCCIIOUNDP
Arab Bank for Economic Development in AfricaAfrican Development BankAutomatic Dependent Surveillance – Model BAutomatic Dependent Surveillance – Model XAfrican Development FundAfrican Growth and Opportunity ActAfrican Infrastructure Country DiagnosisAid for Trade StrategyAfrican UnionChamber of Commerce and IndustryCOMESA-EAC-SADC Tripartite ArrangementCommon Market for Eastern and Southern AfricaEmergency and Civil Protection CentreDouble Taxation AgreementEast African CommunityEast Africa Regional Resource CentreEconomic Community of Central African StatesEuropean Development FundEuropean Investment BankEconomic Partnership AgreementEastern Africa Submarine Cable SystemEuropean UnionFree Trade AreaHuman Development IndicatorInternational Bank for Reconstruction and DevelopmentInvestment FundNational Institute for Economic and Employment Statistics Indian Ocean CommissionInvestment Promotion and Protection AgreementsInfrastructure Project Preparation FacilityInformation and Communication TechnologyJapanese International Cooperation AgencyKuwait FundMillennium Development GoalsNew Partnership for Africa DevelopmentOrganization of the Petroleum Exporting CountriesRegional Department Central Regional Department East BRegional Department South BProject in the agricultural sector based in ComorosProgram for Infrastructure Development in AfricaPermanent Liaison OfficersIntegrated Regional Development Programme for TradeRegional Economic CommunityRegional Integration StrategyRegional Integration Strategy PaperRegional Multi-disciplinary Centre of Excellence Southern Africa Development CommunitySouthern Africa Resource CentreSustainable Energy Fund for AfricaSurveillance Épidémiologique des AlertesSubmarine Extended Gateway NetworkUnion of Chambers of Commerce and Industry of the Indian OceanUnited Nations Development Programme
This Flagship Study was commissioned with the aim of
providing input into the African Development Bank’s (AfDB)
activities in support of integration of the Indian Ocean
Commission (IOC) Member States. In addition to enabling
the Bank to enhance dialogue with the states of the IOC, the
study serves as a knowledge product for policymakers in the
region, Development Partners, officials from the private and
public sectors, and experts involved in the IOC regional
integration process.
The Bank’s main instrument for programming support to
regional integration are the Regional Integration Strategy
Papers (RISP), which provide the overarching framework
for intervention in the five regions (Center, East, North,
South and West). RISPs also recognize the specificities of
certain groups of countries within each region. The RISPs
for Southern and East Africa, for example, acknowledge
the specific challenges faced by the countries belonging to
the IOC, due to their geographic location, poor linkages to
the continent, small domestic markets, and high
environmental vulnerability. These challenges have been the
subject of discussions between the Bank and the IOC
Secretariat on several occasions, including past missions
of the IOC Secretariat to Tunis, and recently during the last
Bank’s Annual Meetings held in Arusha, Tanzania (May
28th – June 1st, 2012). The discussions focused on the
need for specific interventions and innovative instruments
to support the participation of small island states in regional
programs.
The study proposes that the AfDB should focus its future
cooperation with the IOC on three areas: (a) institutional
capacity building of the IOC, its Member States, and its
private sector; (b) regional infrastructure development; and
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Executive Summary
(c) response management related to natural disasters and
regional pandemics.
1.1. The Bank and Regional Integration
Regional integration is at the core of the African Development
Bank’s mandate for the continent. The Regional Integration
Strategy (RIS) sets regional infrastructure and institutional
capacity building as priorities for each region—west, east,
southern, north and central Africa—and the Regional
Integration Strategy Papers (RISPs) focus Bank support in
each region on the provision of regional public goods,
regional financial integration, and Aid for Trade.
The RIS clearly states that innovative instruments are needed
to help Africa’s small, isolated and environmentally vulnerable
island countries to participate in regional programs.
However, no specific efforts to address the needs of the
island states are included in any of the regional strategies.
This Flagship Report aims to fill that gap by providing a
framework for Bank support to the four African small island
states that comprise the IOC – Comoros, Madagascar,
Mauritius and Seychelles. The study analyzes the challenges
faced by the IOC Member States; identifies growth drivers
and capacity constraints; recommends ways to strengthen
the Bank’s partnership with the IOC; and suggests priority
areas for intervention.
1.2. Regional Integration Arrangements in the IOC Region
The IOC was created in 1984 to promote sustainable
development of its Member States, speak for them in
international fora, and defend their interests with regard to
specific environmental and economic issues. Since 2005,
the IOC has also played an active role in promoting regional
trade and economic cooperation, transport and ICT
infrastructure, human development, and a regional cultural
identity. In 2009, the IOC adopted an Aid for Trade strategy
that prioritized development of a maritime corridor to
facilitate trade, the promotion of renewable energies, and
enhancement of food security. In 2011, the Council of
Ministers approved the establishment of an IOC economic
and trade area to catalyze the development of regional
economic integration programs, instruments and
mechanisms, as a stepping stone to integration with the
continent’s larger economic communities, including the
Tripartite arrangement (COMESA-EAC-SADC, or CES).
Despite the political willingness of Member States, however,
cooperation in the region has been constrained by the
limited institutional capacity of the IOC Secretariat to
implement regional initiatives; and by the absence of a
regional strategy to strengthen economic and trade
cooperation, outline key activities, or identify necessary
financial and human resources. This study provides a
knowledge base and offers guidance for policymakers in
the region, including private and public sector officials and
experts involved in the IOC regional integration process. It
reviews the status of regional cooperation in the areas of
trade, infrastructure, private sector development, social
cohesion and sustainable development; identifies growth
drivers and constraints; proposes areas for Bank support
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1. Purpose of the Report
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to and enhanced cooperation with the IOC; and suggests
an action plan for implementation.
2.1. The IOC Member States: Diversity and Commonalities
The IOC Member States have heterogeneous economies,
geographies, populations, and social indicators. GDP per
capita ranges from around US$430 in Madagascar and
US$810 in Comoros to around US$23,000 in Reunion.
Mauritius and Seychelles rank 52nd and 77th in the Human
Development Index and are classified as middle-income
countries (MICs), while Comoros and Madagascar rank
163rd and 151st, have extremely high poverty rates, and are
unlikely to meet the MDGs for infant and maternal health,
environmental protection, and malnutrition by 2015.
The economies also vary widely in size. Seychelles and
Comoros have nominal GDPs of less than US$1 billion and
very limited national markets; while Madagascar, Mauritius
and Reunion have nominal GDPs above US$1 billion and
relatively well-developed internal markets relative to
population size. Madagascar has a population of almost 20
million, which represents 87 per cent of the total population
of the IOC region and is more than 200 times the population
of Seychelles.
In spite of these differences, regional integration can help all
IOC states to overcome the challenges of isolation and
remoteness, the risk of marginalization in wider regional
groupings, climate vulnerability, and the lack of natural
resources (except in Madagascar). A key issue is to define a
multi-dimensional strategy that can address the differing
needs of these remote island countries while helping the
entire region to integrate with a distant continental
constituency.
2.2. Growth and Macroeconomic Performance
The IOC region has experienced poor economic growth
performance since 2008, as a result of political instability in
Madagascar and Comoros, and poor performance in
Madagascar and Reunion. Madagascar, in particular, has
seen increased economic and social fragility since the
eruption of political instability in 2009. Real GDP for the IOC
states has been well below growth rates on the continent
and in EAC and SADC for the past few years (Figure 1). The
global crisis exacerbated the effects of the region’s insularity
and other structural constraints.
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2. Growth and Macroeconomic Performance in the IOC Region
Figure 1 Comparative Regional Real GDP Growth Rates (2005-2011)
Sources: AEO 2011, EAC Statistical Portal, SADC and INSEE
The services sector accounted for around 60 per cent of the
regional GDP in 2010, compared to 20 per cent each for
industry and agriculture. The main growth drivers are tourism,
construction and public works, agro-food processing, and,
to a minor extent, light industries such as textiles. To enhance
resilience against external shocks and maximize unexploited
potential, further diversification of exports is necessary.
Telecommunications and renewable energy are growing
rapidly, and may become strategic sectors for the region in
the short to medium term. There is also huge potential for
growth in banking and financial services, international
contracting, and business services. However, the full
potential of these sectors remains unexploited due to the lack
of reliable transport and telecommunications infrastructure to
connect the IOC states with the wider CES regional grouping.
Other constraints include the lack of a legal and regulatory
framework for trade in services, and impediments to the free
movement of persons. While there have been efforts to
improve governance and the business environment, much
remains to be done, especially in Madagascar and Comoros.
Growth performance by country
In Comoros, the services sector contributed 45.3 per cent
to GDP in 2010, followed by the agriculture sector at 44 per
cent, and the industrial sector, at only 10.7 per cent of GDP
in 2010. Economic growth in 2010 was negatively affected
by political tensions related to the democratic transition
process, and a shortfall in external demand for the country’s
most important cash crops, ylang-ylang and vanilla (Comoros
is the world’s leading producer of ylang-ylang and the
second world’s producer of vanilla after Madagascar). Long-
term sustainable growth will depend on strengthening
political governance, diversifying exports, improving the
business environment, and providing the infrastructure
necessary for private sector development, including in the
tourism sector. In 2010, Comoros ranked 121st out of 139
countries on the World Governance Index.
In Madagascar, the composition of the economy has not
changed over the past 30 years. The services, agriculture
and industry sectors represent 58, 28 and 14 per cent of
GDP, respectively. Political instability over the past years has
led to the closure of preferential access to the United States
and EU markets for Madagascar’s textile products; a
suspension of development aid; and a freezing of
infrastructure and public works financing. Foreign investors
face a high risk of expropriation and discretionary revision of
concession contracts. The country represents significant
investment opportunities if governance is improved.
Madagascar currently ranks 104th on the World Governance
Index.
In Mauritius, a relatively diversified economy combined with
long-term political stability has resulted in steady growth,
driven by the services sector, particularly real estate and
business activities; transport, storage and communications;
and financial intermediation. The banking and financial
sector, considered by analysts to be mature and healthy,
represents 12 per cent of GDP and has played a critical role
in growth by facilitating access to lower-cost credit for
private sector firms. The traditional sectors of tourism,
fisheries and textiles have nearly recovered from the effects
of the global crisis. However, the economy is highly
dependent on the EU market and remains vulnerable to
external shocks. The challenges are to diversify export
markets, enhance productivity and competitiveness in
traditional sectors, strengthen governance, and improve
transport and communications infrastructure. Mauritius
ranks 30th on the World Governance Index and 1st in Africa
in the Doing Business Indicators.
In Reunion, which is an overseas Department of France,
efforts to diversify the economy include the development of
high-intensity knowledge, renewable energy, and ICT. French
internal transfers (45 per cent of GDP in 2009) and EU
structural development funds (€1.89 billion for the period
2007-2013) have enabled Reunion to develop infrastructure
that connects it with the rest of its national territory (France)
and the African continent. The global financial crisis and
European debt crisis caused real GDP growth to fall in 2009
and 2010. Growth turned slightly positive in 2011, aided by
strong performance in the tourism sector. Challenges include
promoting productive activities oriented toward markets
other than the EU, and increasing the competitiveness of
local production against imports. Local enterprises now
provide only half of consumption needs and a mere quarter
of employment. The development of the local private sector,
in particular small and medium-size (SME) industries, is
critical for economic growth and job creation.
In Seychelles, the services sector represents roughly 73 per
cent of GDP in 2010, compared to 20 per cent for industry
and only 2.4 per cent for agriculture. Tourism has been the
main driver of growth after the global financial crisis, due in
large part to Government efforts to develop new markets,
increase flights to Seychelles, and construct high-end
tourism infrastructure. Other growth drivers are the
construction and ICT sectors, and the positive impacts of the
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Government’s economic reform program. However, growth
remains fragile and subject to structural constraints. The
country ranks 103rd out of 183 countries for ease of doing
business, lack diversification, and imports most food
commodities. The fisheries industry is still suffering from a
lack of infrastructure, declining fish stocks, and increasing
acts of piracy in Seychelles’ waters. The latter also affects
the yachts and cruise ships segment of the tourism sector
and the price of food imports.
2.3. Macroeconomic Policy and Performance
The macroeconomic environment in four out of the five IOC
Member States is relatively stable as a result of prudent fiscal
and monetary policies implemented during the past ten years
(Reunion’s macro policies are not considered here because
they are aligned with France). However, the policies of the
different countries are not convergent due to the lack of a
regional policy and to the structural differences among the
economies.
All four countries have huge structural current account
deficits, reflecting their high import dependency and low
export performance. All are characterized by large budget
deficits except for Seychelles, which shows a surplus as a
result of strict IMF programs during 2008-2011. Reunion,
and to some extent Comoros, have benefited from
remittances and the fixed exchange rate arrangement with
France. Mauritius, Madagascar and Seychelles have an
independent monetary policy framework, with flexible
exchange rate regimes that allow adjustments when
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necessary to restore internal and external equilibrium.
3.1. Regional Trade
Despite the political will and efforts of the IOC Secretariat and
Member States to accelerate economic and trade
cooperation, intra-IOC trade has been very limited –
averaging only 3.2 per cent of total IOC trade for the period
2008-2010 (Table 1).
The composition of this trade is much more diverse than
trade with the rest of the world. While intra-regional exports
are dominated by limited amounts of manufactured
products / intermediates and raw materials (textile semi-
finished, fiber, paper, soap, lumber, animal feed, fish and
shellfish, nuts, vegetables), exports to the rest of the world
(mainly the EU) are mostly primary products (vanilla, ylang-
ylang, minerals).
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3. Structural Constraints to Growth and RegionalCooperation in the IOC
Member StatesIntra-Regional Trade (percent of total trade)
2008 2009 2010 Average 2008-2010
Comoros 3.6 4.0 2.9 3.5
Madagascar 2.4 4.5 3.3 3.3
Mauritius 2.3 3.2 2.2 2.5
Reunion 4.4 4.3 4.2 4.3
Seychelles 5.2 4.5 1.5 4.1
TOTAL 2.9 4.0 2.9 3.2
Constraints to intra-regional trade include inadequate
maritime and aviation infrastructure, absence of an effective
trading regime, lack of progress in creating an integrated
economic and commercial zone, and the limited movement
of persons and professionals. Added to these are the
Secretariat’s weak institutional capacity for setting standards
and resolving trade disputes.
The IOC authorities and Member States are aware that
strengthening economic and trade cooperation within the
region is strategically essential to unleash the potential of a
broader regional market. To that end, Comoros, Madagascar,
Mauritius, and Seychelles have signed an interim Economic
Partnership Agreement (EPA) with two of their closest
neighbors on the continent, Zambia and Zimbabwe.
Negotiations on the final agreement are still ongoing, and are
focused on (a) harmonized regional market access rules for
EU exports to the region; (b) rules and commitments on
services and investment; (c) trade facilitation and cooperation
on technical barriers to trade, sanitary and phytosanitary
standards and rules of origin; and (d) issues such as
intellectual property rights, competition, transparency in
government procurement, and sustainable development.
The IOC has also joined the CES Tripartite process, launched
by the Heads of States of member countries with a view to
implementing a free trade agreement (FTA) among the three
regional economic communities (RECs) by 2012. The main
purpose of the CES Tripartite agreement is to harmonize the
commitments of the three RECs. This process aims to (a)
create a single market “from Cape to Cairo”; (b) minimize the
challenges of multiple memberships and accelerate the
process of regional and continental integration; and (c)
establish a Tripartite FTA within the CES.
Other efforts toward integration include (a) the adoption of
an Aid for Trade Strategy (ATS), which aims to increase food
security and promote integration with COMESA; and (b) the
creation of an economic and trade area among Member
States aimed at boosting the regional integration process as
a vector of development, and preparing the region and its
economic actors to meet the challenge of globalization. This
new economic and trade space is designed to be coherent
with the Tripartite process, with the four IOC states (all except
Reunion) expected to work together to implement the
Tripartite initiative roadmap, while reserving their rights to
Source: International Trade Centre (ITC); Annuaire sur la Coopération de la Reunion 2011.
Table 1 Share of intra-IOC trade in total trade of the IOC
apply the principle of “variable geometry” in areas such as
liberalization of services, which remains a very important area
for the IOC. The IOC economic and trade area will build on
already initiated actions aimed at:
• Lowering transport and communication costs, including
through more competitive broadband connectivity;
• Developing a regional tourism strategy and industry
using “Vanilla Islands” branding, based on private sector
ventures and the complementary tourism assets and
attractions of the different islands;
• Developing regional agro-industry subsectors.
Madagascar, with its vast agro-industry potential, will
become the region’s main source of food staples, as
per the Regional Food Strategy. With the IOC region
now a net importer of staple food products, there is also
an opportunity for the IOC states to set up regional joint
ventures in food production, and mechanisms to
facilitate intra-regional trade of agricultural and agro-
industrial products.
3.2. Private Sector Development
There are different levels of private sector development in the
region, as reflected in the states’ business environment
rankings. While Mauritius is classified 23rd out of 183
countries, according to the 2012 World Bank Doing Business
Indicators, Comoros ranks 157th, and Seychelles and
Madagascar rank 103rd and 137th, respectively.
Aside from Reunion, which benefits from its interaction with
major French companies and French government investment
in infrastructure and renewable energy, the region attracts a
low level of foreign investment compared to other RECs. FDI
flows to the IOC were US$1.67 billion in 2010, compared to
US$2.1 billion and US$4.6 billion to EAC and CEMAC.
Madagascar attracts most of the FDI in the region (51.5 per
cent of the total in 2010). However, Mauritius is the largest
investor in other IOC Member States, and its private sector
has an exceptional presence and dynamism in the region,
due in large part to its proactive pursuit of bilateral trade
agreements. Major investments by Mauritian firms are
targeted towards tourism (hotel construction) in Seychelles;
and to the telecom, financial, and manufacturing (mainly
textiles and sugar) sectors in Madagascar.
Despite these important signs of progress, private sector
development in the region continue to be constrained by
difficult access to credit, and by:
• Low availability of regional infrastructure, particularly
maritime and aviation infrastructure, which hinders the
movement of goods and increases the cost of
transport. In Madagascar, the poor state of road
networks and the lack of electricity also hinder the
effective exploitation of the potentials in agricultural
sector;
• Lack of policy harmonization, rules of origin, andFL
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mechanisms for resolving trade disputes, which makes
it difficult for companies to establish themselves and
develop strategic partnerships across the region;
• Lack of a private sector development strategy or an
entity that specializes in removing constraints that
hinder private sector development;
• High cost of inputs, due to high transport, energy and
labor costs.
The IOC has identified the following areas of private sector
development as critical for the region: (a) food security and
agribusiness; (b) ICT; (c) tourism; (d) finance; and (e) maritime
trade, including port services. Particular importance has been
placed on tourism (the “Vanilla Islands” concept) and
agribusiness (particularly in Madagascar), both of which have
high growth potential and offer huge opportunities for
economic cooperation. Cross-cutting efforts in the areas of
capacity building and knowledge transfer are also needed to
encourage regional collaboration.
Member States have also created structures for advancing
public-private dialogue and improving the business
environment. At the regional level, the Union of Chambers of
Commerce and Industry of the Indian Ocean (UCCIIO) was
organized to strengthen regional economic integration
through trade promotion and inter-island productive
investment. The UCCIIO also aims to promote strategic
networks and facilitate the establishment of private sector
partnerships in growth-driving sectors.
3.3. Regional Infrastructure
The African Infrastructure Country Diagnosis (AICD) and the
Program for Infrastructure Development in Africa (PIDA) do
not consider the IOC Member States to be a regional
grouping of countries, and therefore do not provide the
region with the same type of support for its integration efforts
that is provided to COMESA, SADC and EAC. Instead, most
support is provided to individual states by individual
development partners (Table 2).
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Member StatesDevelopment Partners
Energy (renewable) ICT Transport
ComorosEU, AFD*, Moroccan
Fund*, ABEDA*AFD*, Moroccan Fund*,
ABEDA*EU, AFD*, Moroccan Fund*,
ABEDA*
MadagascarEU, AFD, WB, ADB,
ABEDAAFD, WB, JICA, ADB, KF, EIB,
ABEDA, OPEP OPEC
Mauritius AFD, Arab Bank, KF IBRD
Reunion EU, AFD EU EU
Seychelles ADB, EIB
IOC AFD, EU AFD
Infrastructure constraints by sector
The development of regional infrastructure in the IOC is
constrained by lack of financing, limited private sector
participation, limited human resources, and lack of policy
coordination and harmonization. The region also lacks an
integrated approach to creating synergies and spillover
effects among sectors. For example, trade facilitation cannot
be addressed if infrastructure and private sector
development are not included in the Aid for Trade Strategy
(ATS). Similarly, infrastructure development, trade facilitation
and private sector participation are required to address food
security and increase tourism. The key constraints in each
infrastructure sectors are described below.
Maritime transport. The region faces major constraints in
regional maritime transport infrastructure, which undermine
the potential of the key sectors of tourism and agro-industry,
and hinder efforts to integrate with the continent. There is no
regional maritime transport infrastructure development
strategy, and the three international ports that could serve as
regional hubs (Port Louis, Port Reunion and Port of
Toamasina) remain largely in the hands of public authorities.
There is little private sector activity, except in the shift toward
private sector handling of container cargo and some tourism
transport. The lack of effective regional shipping services
adds, on average, 30 to 40 per cent to the cost of imports
and exports. Private shipping firms have not been successful
Table 2 Key Partners and Respective Interventions in the Infrastructure Sector
(*) Unspecified infrastructure sector
because of the limited size of markets, long distances, and
limited food production in Madagascar, which until now has
not realized its potential to meet the food security needs of
the entire region. Finally, increasing acts of piracy against
private cruise ships harms high development potential of
tourism’s yacht and cruise subsector, which now accounts
for only 0.37 per cent of the global market.
Air transport. The ability of the region’s air transport sector
to connect the islands is hindered by exorbitant freight costs
and limited air traffic rights. In addition, some national airlines
do not meet minimum safety standards, and have lost the
right to operate in Europe. The UCCIIO is very involved in
regional discussions to find solutions to these issues. In the
meantime, there are ongoing negotiations with the EU to
encourage EU airlines to service the region. Efforts are also
underway to improve security in the sector through regional
harmonization of air surveillance. The latest generation air
surveillance system, Automatic Dependent Surveillance
(ADS-X), has been tested by Reunion, Madagascar and
Seychelles. These countries are now ready to replace their
individual country air surveillance systems with the
harmonized ADS-X approach.
Road infrastructure. The poor quality of aging domestic
road networks increases the costs associated with maritime
shipping, and negatively affects investment in maritime
infrastructure. Compounding this is the monopoly of certain
road transport carriers, which makes it difficult to enforce
safety standards. The projected investments in the Port of
Ehoala and in road infrastructure leading to the port are likely
to facilitate trade by improving access to the southern regions
of the country.
Renewable energy. Renewable energy contributes to the
generation of electricity and energy in all Member States –
an estimated 15 per cent in Comoros, 23 per cent in
Mauritius, 36 per cent Reunion, 5 per cent in Seychelles,
and 60 per cent in Madagascar, which is highly dependent
on renewable energy because of its low level of
electrification. There are numerous regional and bilateral
initiatives underway in the sector, notably the bilateral
partnership between Reunion and Mauritius to develop
electricity from renewable energy sources (in particular
bagasse) and protect the environment through waste
management and sustainable consumption of electricity.
Reunion has also been investing in research and
development aimed at bio-ethanol production from micro
algae and electricity generation from ocean currents. In the
region as a whole, however, growth of the sector is
constrained by lack of financing, inadequate legal and
regulatory frameworks for private sector participation, lack
of mechanisms for dispute resolution, limited knowledge
sharing, lack of policy harmonization, and the absence of
centers of excellence to provide skilled labor for the sector.
ICT. Most IOC countries have reasonably well-developed
national ICT backbones on their main island, but few
connections on secondary islands. International
connections to the region are limited and very expensive.
Mauritius and Reunion are currently served by the South
Africa Far East (SAFE) network. The Lower Indian Ocean
Network (LION) provides a second link to Madagascar, with
a planned link connecting Mayotte (an island state not in the
IOC) to Mombasa, Kenya. None of the submarine cable
networks in the eastern part of the continent includes all the
IOC Member States. The region lacks the fiber optic
networks needed for reliable high-speed internet, which is
a prerequisite for expanding tourism and international trade.
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Despite efforts at reform, an unfavorable regulatory
environment constrains development of the broadband
market. A regional effort to put in place a common fiber
optic network has been slow to materialize.
To address these constraints, the future regional strategy
for the IOC will incorporate sector programming tools, in
particular for multi-sectoral regional infrastructure. There are
also efforts to strengthen cooperation in research and
development, particularly for renewable energy; to develop
and harmonize sector regulations; and to facilitate
knowledge sharing and technology transfer.
3.4. Agriculture, Fisheries and Sustainable Development
The agriculture and fisheries sectors represent both a real
potential for sustainable economic development and the
achievement of food security in the IOC Member States.
The analysis on growth drivers clearly illustrates the
importance and contribution, for instance, of the agriculture
sector to GDP in these countries. Both sectors are
important for the Bank to promote the Inclusive Growth
Agenda through job creation and poverty reduction. In
addition, the two sectors are closely related to the
environmental sector, henceforth requiring a sustainable
development approach to growth under environmental
safeguard for the IOC Member States.
Agriculture
The agriculture sector remains underdeveloped and subject
to multiple common constraints, including, among others:
limited land surface under the pressure of population
growth, climatic conditions exposing crops and livestock to
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health risks, high dependence on imports of agriculture
inputs, and limited access to international market. For
instance, Madagascar, which is the basket of food supply
for the region, faces many challenges that often threat this
crucial role, such as: (i) lack of financing – the share of the
agriculture sector in the state budget decreased to around
20 per cent in 2010 compared to the pre crises period1, (ii)
insufficient infrastructure as shown by the 2010 African
Infrastructure Development Index (AIDI)2, (iii) low productivity
resulting from lack of mechanization and modernization of
agriculture technics, (iv) poor business environment
especially in terms of difficult access to land and credit for
agriculture activities, and (v) lack of research and
development while the sector is particularly vulnerable to
plagues and crops’ diseases. Despite the willingness and
engagement of the IOC Members States in developing
sustainable agriculture to enable food security, it should be
noted that gaps exist for meeting this challenge. An
example is the limited number of active regional projects or
initiative aimed at promoting agriculture development. As of
end 2012, there is only one active project – the “Regional
Initiative for the Adaptation of Small-scale Agriculture to
Climate Change in the Islands of the Indian Ocean” –
financed with the support of the EU.
Fisheries
In spite of its potential that could be capitalized with the
improvement of maritime transport, development of the
fisheries sector in the IOC Member States has been proven
to be much complex when compared to other sectors. Poor
infrastructure and knowhow, limited access to international
markets, primarily the European and USA due to non-
compliance with and respect of rules of origins, health
sanitary measures and environmental adherence, and weak
reporting system with regard to illegal and unregulated
fishing, have been indicated as the main handicaps affecting
the sector’s development. Compounding the challenges is
the act of piracy that affects both the security of fishing fleet
and the economic viability of the fishing activity. To address
these development constraints, significant efforts have been
made to ensure sustainable management of species, to
comply with health sanitary regulations and traceability, and
to improve the security in Indian Ocean. Among others the
following actions have been recorded: (i) adoption in 2010
of a regional strategy for fisheries and aquaculture, (ii)
training of independents and accredited experts and
establishment of laboratories and relevant institutions to
proceed with necessary certifications (excluding in Comoros
and to a minor extent in Madagascar), (iii) establishment of
fishing ports equipped with cold storage in all of the IOC
Member States (to a minor extent in Comoros and
Madagascar), and (iv) increasing presence of patrol vessels
using high technologies (e.g., radar, satellites) to deter illegal
fishing and act of piracy.3
Environment and Sustainable Development
Protecting the population from the effects of natural
disasters and global warming is of paramount importance
to the IOC. Efforts to strengthen regional capacity in these
areas over the past five years have included (a) formalization
of the Mutual Assistance Network and reinforcement of
regional capacity in terms of civil protection, with the
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1 The share of the agriculture, fisheries and forestry sectors in the 2010 state budget was only 11.6 percent according to the World Bank’s Revue des Dé-penses Publiques Madagascar: Politique budgétaire et investissement public en période d’instabilité politique. (September 2011).
2 AIDI is a composite of five indicators: (i) net electricity generation (kilowatt-hours per capita); (ii) total mobile and fixed-line telephone subscribers (percentageof total population); (iii) paved roads (percentage of total roads); (iv) access to water (percentage of population); and (v) access to sanitation (percentage ofpopulation). In 2010, Madagascar’s AIDI score was 14.38 out of 100, ranking 48th out of 53 countries; and the country has the lowest AIDI within the fourAfrican IOC Member States.
3 In the framework of the Regional Plan for Fisheries Surveillance (PRSP), 28 joint surveillance missions representing over 800 days of sea patrols, 700 hours ofair patrols have been carried out. Twenty offences were identified and seven boarding and inspections were ordered (see annex 5 for details on the project).
support of the French Cooperation; and (b) a pilot Regional
Program on Prevention and Management of Risk of Natural
Disasters, aimed at reducing the human and economic
impact of natural disasters, supported by the AFD. In
addition, the EU’s 10th EDF is providing between €170,000
and 250,000 over 2011-2014 to finance alert systems,
strengthen disaster resistance in post-disaster
reconstruction projects, and promote awareness of climate
change-related risk among the local authorities and
population. At the country level, Comoros has integrated
risk management by the Emergency and Civil Protection
Centre (COSEP) into its national growth and poverty
reduction strategy, with the support of UNDP; Madagascar
has developed a national strategy for disaster management,
also in partnership with UNDP, which focuses on long-term
national capacity building as well as regional and
international cooperation; Mauritius has established a
National Centre for Disaster Management, to complement
the existing initiatives such as the National Committee of
Natural Disasters; and Seychelles coordinates its disaster
responses through the National Committee for Disaster
Management.
3.5. Social Cohesion, Civil Protection and Security
Social and human developments are priorities for the IOC
Secretariat and the individual Member States. The Secretariat
aims to minimize disparities in health, education, social
welfare, and disaster preparedness among the states by
aligning national strategies with regional strategies and
leveraging the states’ capacity to contribute to programs at
the regional level. This is particularly important for
Madagascar and Comoros, which have suffered from political
instability and frequent natural disasters.
Health and Regional Cooperation
The region has achieved significant progress in terms of
health sector development, but the states show substantial
discrepancies in some health indicators. Mauritius and
Seychelles allocate more than 20 per cent of their national
budgets for health expenditures, and display levels of health
relatively close to those of developed countries. Comoros
and Madagascar allocate 8 and 9 per cent, and their health
indicators are close to Sub-Saharan Africa averages.
Development is threatened by pandemics associated with
poverty and natural disasters, particularly rabies, polio,
measles, and malaria. HIV/AIDS is also a persistent problem.
Given the IOC’s prospects for increased trade and tourism,
strengthened mechanisms and alert protocols are essential
to prevent the spread of disease across the region. To that
end, the IOC has partnered with other institutions to launch
three main programs: (a) URSIDA, a partnership with the
Ministry of Foreign Affairs of France, aimed at training
approximately 100 medical personnel in emergency services;
(b) AIRIS, in cooperation with the Bank and UNAIDS, aimed
at improving the quality of life of people living with HIV/AIDS,
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and increasing screening in remote areas; and (c)
RSIE/SEGA, a joint initiative of the IOC and the African
Development Fund, aimed at minimizing the risk of epidemics
across the states through the regular exchange of sanitary
information.
Education and Regional Cooperation
The region has made significant progress in improving
access to education and training, but lacks a critical mass of
professionals in key areas such as disaster risk management,
food security, renewable energy, maritime infrastructure,
tourism, and health and sanitation. To address these
shortcomings, the IOC plans to develop exchange programs
among the region’s universities and research centers, as well
as centers of excellence to train a network of technical
experts. The IOC is already benefitting from the work of the
Regional Multidisciplinary Centre of Excellence (RMCE) in
Mauritius, led by COMESA, which represents one of the few
initiatives in the education and research sector supported by
the development partners in the region. The RMCE promotes
exchanges between the universities of the IOC Member
States and those in the rest of Africa, Asia and Europe, with
the aim of strengthening the capacity of IOC experts to
efficiently manage regional integration processes and
challenges.
Civil Protection and Maritime Security
The IOC promotes information sharing and best practices
among Member States in the areas of security, governance,
and combatting trafficking and fraudulent activities. The
Convention on Regional Security, signed by the states in
March 2006, promotes exchanges in the areas of judicial
policy, administrative and public order, and security police. The
region also benefits from an EU-funded €23 million maritime
security program that aims to reinforce national and regional
capacity to arrest, transfer, and detain pirates, and to mitigate
the negative economic impact of piracy on Member States.
Other initiatives include (a) the IOC Regional Security Platform
(2007-2008), which facilitates information sharing among the
national security services in areas such as trafficking, terrorism,
illegal fishing, and financial malpractice; and (b) the IOC
Regional Judiciary Platform, which facilitates regional
cooperation on judicial matters. Most assistance provided by
development partners to address security-related challenges
is channeled through the African Union. The French army also
has bilateral and multilateral privileged liaisons with both the
IOC and SADC Member States, aimed at providing support
to the AU African Standby Force (ASF), and developing the air
force and navy in the concerned countries. Other bilateral
exchanges between Member States entail information sharing
between Mauritius and Seychelles in the fields of air force and
naval expertise; and between Reunion and, respectively,
Mauritius, Seychelles and Madagascar on the development of
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their police departments.
Regional integration in the IOC is a multidimensional
process, involving a complicated mix of economic,
commercial, political, cultural and social challenges and
opportunities for cooperation.
Challenges include:
Structural constraint of insularity. Small economic size,
long distances from the continent and between islands of
the same country, lack of natural resources (except for
Madagascar), and vulnerability to natural disasters require
that the IOC’s regional integration strategy evolve in parallel
with national integration strategies.
Fragility. Political instability in Comoros and Madagascar
has hampered economic development in the region and
deprived the people of those nations of access to social
basic services. Both countries are also frequently hit by
tropical storms, which impact both human and physical
capital. But while Comoros has access to Fragile State
Facility to aid in reconstruction efforts, Madagascar is not
considered a fragile state according to the Bank’s
classification.
Limited connectivity and lack of regional infrastructure.
Long distances and lack of regional infrastructure constrain
intra-regional trade and movement of people, which makes
it difficult for the IOC states to compete in the global
market. There is no specific strategy to develop regional
infrastructure within the IOC; and the IOC’s maritime and
ICT infrastructure needs are largely neglected in other
continental and regional programs.
Limited capacity to implement regional initiatives. The
IOC lacks capacity for strategic planning across countries
and sectors. It also lacks qualified staff to deal with specific
issues such as trade, environment, or maritime regional
infrastructure; as well as reliable regional data and statistics.
In addition, there is lack of coordination between the
Secretariat and the states, despite the existence of the
Council of Ministers and the permanent liaison officers
(PLOs) representing each country in the Secretariat.
Heterogeneity of member states. The states’ different
geographies and levels of socio-economic development
make it difficult to define common objectives and regional
projects that could reduce shipping costs and increase
economies of scale. The fragmented markets, high costs
of doing business, and lack of start-up capital are also
major constraints to private sector development and
expansion in the region.
Risk of marginalization in wider regional groupings. The
risk of being marginalized by regional strategic frameworks
is compounded by the CES Tripartite Arrangement, which
creates a semi-continental integrated group of 26 countries
on the continent, with a total population of close to 600
million and a cumulative GDP of more than US$850 billion.
Participation of Reunion in IOC regional initiatives.
Reunion’s participation in regional initiatives may require the
establishment of new regional policies, which implies a
possible conflict between IOC and EU legal and regulatory
frameworks, particularly for trade. In cases where policies
cannot be reconciled, Reunion might be forced to opt out
of the IOC framework.
Risk of natural disasters and climate change effects. A
key challenge for the region is to consolidate efforts to
strengthen the capacity of national and local authorities to
limit the impact of natural disasters and to provide post-
crisis assistance across the five island states.
Piracy and maritime insecurity. The national police, justice,
and defense services of the IOC Member States lack
sufficient resources to combat drug trafficking, clandestine
immigration, falsification of documents, terrorism, maritime
piracy, illegal fishing and sexual tourism. They also lack the
resources to fulfill regional security objectives and
consolidate peacebuilding.
Opportunities include:
Ease of achieving consensus. The small number of
member states makes it easier to achieve consensus than
in larger regional groups, such as SADC (15 members) or
COMESA (19), when regional-level intervention is necessary
to address both common and country-specific challenges.
Membership of France/Reunion in the IOC regional
grouping. The France/Reunion membership has significant
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4. Challenges and Opportunities for RegionalCooperation
potential to strengthen the region’s economic and political
profile, given its specialized institutions in agri-business and
biotechnology and its ability to attract French and EU
private sector investment.
Expansion of market and economies of scale. The limited
size of the IOC economies presents an opportunity to
expand possibilities for intra-regional trade, which could lay
the foundation for sectoral specialization and export market
diversification, including towards African countries and
emerging economies.
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5.1. Review of the Bank’s Intervention at Country and Regional Levels
Given its limited resources in relation to the needs of the IOC
region, the Bank will focus its efforts on areas where it has a
clear comparative advantage and expects to make a
substantial contribution to addressing the structural
constraints to growth. The guiding principles of Bank support
are elaborated in Box 1. Identification of specific interventions
will be based on the commitment and ownership of key
stakeholders (regional and national institutions, private sector,
civil society), and their political will to translate Bank
assistance into concrete actions. To promote ownership, the
local partners will fully participate in the design and
implementation of projects, and actively participate in
monitoring and evaluation activities.
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5. A Framework for Strategic Cooperation with the IOC Member States
Box 1 Guiding Principles to Accelerate Trade and Economic Cooperation within the IOC
Trade and economic cooperation within the IOC could be accelerated through a package of measures and reforms aimed
at achieving five main strategic objectives:
1. Elimination of all Unnecessary Tariff and Non-Tariff Barriers to Trade:
- Eliminating or drastically reducing quotas, embargoes, permits, import licenses, TBTs such as norms, SPS,
and other prohibitions placed on imports;
- Simplification of rules of origin; and
- Reduction of tariffs barriers/measures according to an agreed target and timeline.
2. Promoting Trade in Services:
- Establishment of a mobility regime for professionals (such as contractual services suppliers and independent
professionals, e.g., financial professionals, legal experts, and engineers, etc.), notably through visa facilitation/
elimination; and
- Liberalization of trade in services, in particular in transport, telecommunications and financial services.
3. Improving the Business Regulatory Framework:
- Improving the IOC Member States’ ranking in the Ease of Doing Business;
- Improving the states’ ranking in the Corruption Perception Index;
- Improving perceptions of governance;
- Implementing Double Taxation Avoidance Agreements and Investment Promotion/Protection Agreements; and
- Facilitating the flow of capital and creating a networking of agreements to attract investments to the region.
4. Improving Trade Facilitation and Logistics Performance Index:
- Reducing costly delays at entry and exit ports; and
- Enhancing customs facilitation and transit regimes critical for maritime shipping and logistics.
5. Capacity Building through Peer Learning and Support:
- Public-private partnerships;
- Trade and investment facilitation; and
- Research and development.
Source: Concluding outcomes of the seminar, “Mauritius Experience – Deepening Cooperation with the African Development Bank and its Regional MemberCountries”, Tunis, Tunisia, September 2012.
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These guiding principles address the most immediate
structural needs to support integration. Other sectors of
equal importance for the region, such as human capital
development, transport infrastructure, environment
protection, food security, and mobility of professionals, will
be addressed in future programs. The three main areas of
cooperation derived from these principles are shown in
Figure 2.
The first set of interventions, Area of Cooperation N°1, will
seek to incentivize the IOC Secretariat to go beyond its
functional responsibilities and embrace a strategic role in
designing and implementing regional projects and programs
for trade facilitation and investment promotion. Area of
Cooperation N°2 will support regional transport for which
political willingness of Member States, and effective
commitment from development partners, are in place or in
the process of being mobilized. Area of Cooperation N°3 will
support natural disaster response management, consistent
with the Sustainable Regional Development pillar of the IOC’s
new strategic guidelines.
5.2. Institutional Capacity Building of the IOC Secretariat, Member States and Private Sector
Strengthening the capacity of the IOC Secretariat, Member
States and non-governmental partners, particularly the
private sector, is a precondition for pursing any other
strategic objective. The IOC has been essentially functioning
as repository of grants, with a limited role in designing and
implementing regional initiatives. The organization needs to
be institutionally strengthened so it can play its necessary
role in promoting and supporting integration within the IOC,
and eventually integrating the IOC into COMESA, SADC
and the Tripartite CES. The IOC also aims to play a more
prominent role in promoting public-private partnerships
(PPPs), especially in the area of infrastructure financing. This
requires developing a regional platform for public-private
dialogue, and enhancing the capacity of the UCCIIO and its
member Chambers of Commerce to participate in defining
regional trade facilitation and investment programs and
PPPs.
Figure 2 Proposed Bank’s Future Areas of Cooperation with the IOC
The first Area of Cooperation will focus Bank support on:
• IOC Secretariat: The creation of a Strategic Planning
and Economic Trade Division housing three specialized
units focused on (a) strategic planning and resource
mobilization; (b) economics and trade; and (c) planning
and technical support for regional infrastructure
development. This agency would play a proactive role
in implementing key reforms to accelerate trade and
economic cooperation;
• National institutions in charge of trade and investment
promotion: Strengthening the capacity of national
institutions to (a) implement decisions made at the
regional level aimed at promoting intra-regional trade
and investment; (b) promote and mobilize investment
for PPPs; and (c) support exchanges of experiences
and best practices on PPPs and improving the
business environment; and
• Private sector institutions / associations: Efforts by the
UCCIIO and national Chambers of Commerce to: (a)
foster dialogue on opportunities for private sector
participation in the regional integration process; (b)
develop knowledge networks focused on sharing best
practices and identifying opportunities for trade and
investment in the region; (c) promote the development
of results-based PPP initiatives, and develop
dedicated PPP funds in close collaboration with local
governments and private sector representatives; and
(d) promote partnerships between the public and
private higher learning/training institutions, and
between the educational system and industry, in order
to meet labor market demands and enhance the
mobility of skilled workers among the Member States.
5.3. Regional Infrastructure Development
The proposed second Area of Cooperation aims at
addressing the region’s infrastructure gaps. Due to the
enormity of the infrastructure needs, technical and financial
cooperation with other development partners will be of
paramount importance. As the development of transport
infrastructure will require a political decision to establish a
regional port, a maritime shipping system and settle the
internal barriers in Madagascar (political crisis, restructuring
of the agricultural sector, internal transportation), the Bank
will focus its support in the near term on developing energy
infrastructure and telecommunications.
The second Area of Cooperation will focus Bank support
on:
• The energy sector: (a) preparation of a strategy,
blueprint and investment plan for the sector; (b)
establishment of a facility, housed in the Bank’s Energy
Department, to co-finance investments in renewable
energy and facilitate technical and financial
partnerships with the private sector; (c) establishment
of a regional observatory on best practices in
renewable energy to allow investors and professionals
to access information on existing companies and
renewable energy projects; (d) creation of a regional
university program aimed at strengthening links among
universities, and relying in particular on the “Ecole
Polytechnique de Madagascar,” which trains water
engineers; and (e) provision of technical and financial
assistance to carry out studies on: (i) the renewable
energy potential in each Member State; and (ii) regional
harmonization of sectoral policies, legislation and
regulatory procedures; and
• The ICT sector: (a) preparation of a harmonized
Regional Master Plan for the sector, covering issues
such as access doors, available bandwidth capacity,
pricing policies, and access to information for
investors; (b) improved coordination between
regulators and private sector operators to strengthen
monitoring of the sector liberalization process; (c)
capacity building programs for private operators and
regulators in partnership with universities, following the
example of the Academy of ICT in Mauritius; and (d)
establishment of a working group to oversee
preparation of projects in the ICT sector. The working
group will comprise the IOC Secretariat, along with
representatives of relevant Ministries of Member
States, the private sector, and technical and financial
partners. It will be supported through the Bank’s
Infrastructure Project Preparation Facility (IPPF) and
other available instruments and frameworks.
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5.4. Natural Disaster and Regional Pandemics Response Management
Bank assistance in disaster response management will
support:
• Capacity building in response management of relevant
regional and national institutions;
• The creation of a regional centre of excellence focusing
on environment and management of risk of natural
disasters; and
• Reconstruction of social and productive infrastructure
destroyed by natural disasters.
Bank assistance in pandemic response will support:
• Establishment of a regional response coordination
mechanism; and
• Creation of regional centre of excellence for infectious
diseases. This action will be part of the “Support
Capacity Building Project for Achieving the MDGs in
Related Areas of Health in the IOC Member States,”
for which the Bank is currently mobilizing resources.
The RISPs for Eastern and Southern Africa are presently the
two strategic frameworks governing the Bank’s support to
the IOC regional grouping. However, neither addresses the
challenges and priorities of the IOC. If the RISPs remain the
strategic framework for the Bank’s regional operations in
the IOC, it will be important to ensure that their mid-term
reviews explicitly take the main proposed actions for the IOC
into account, and specify how they will be implemented.
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While a mid-term adjustment of the RISPs would be a
positive step, it would be preferable for the IOC to have a
dedicated regional integration strategy paper; however, it
would be preferable if a dedicated regional integration
strategy paper were prepared for the IOC region, in view of
the specific challenges facing the IOC Member States as a
result of their insularity, and of the risk of marginalization of
IOC priorities within broader regional groupings. In addition,
within the current Bank’s configuration, each of the IOC
Member States belongs to a different regional department:
Comoros to OREB, Madagascar to ORCE, Mauritius to
ORSB, and Seychelles to EARC. This could hamper the
Bank’s future intervention by affecting coordination and
impeding synergies between projects/activities.
Another option for the strategic framework for the Bank’s
regional operations could be the establishment of a new
dedicated regional strategic program for the IOC regional
organization. This will enable the Bank to specifically target
the IOC Member States by providing a dedicated assistance
taking into account the challenges of island states.
The overarching objective of this study is to identify areas
where the Bank can provide support to the IOC, given its
mandate and available financial and technical resources. With
a view to fast tracking the implementation of identified
actions, it is recommended that the proposed areas of
cooperation be broken down into concrete projects and
programs. Following approval of the study by Bank
management, a multi-sector mission should be conducted
to identify key projects and programs. The mission, to be led
by relevant Bank Departments and the IOC Secretariat,
should also hold discussions with Member States on key
implementation issues, including the need to establish a
dedicated working group for each regional initiative and
project identified.
Upon identification of potential projects and programs, the
next step will be to mobilize resources through the Bank’s
various financing instruments and from technical and financial
partners. To promote private sector participation in the
financing of regional infrastructure, it is recommended that a
facility be established to co-finance regional projects, as well
as to provide additional resources to ongoing projects to
ensure their financial and operational viability.
For activities for which resources are already available (such
as the Fragile State Facility to support capacity building of
the IOC Secretariat) or are in the process of being mobilized
(such as ongoing discussions regarding grants for a health
sector project and a research and innovation project), it is
proposed that implementation begin as soon as the
resources are mobilized, even before the relevant study is
finalized. Thereafter, these activities could become part of the
institutional capacity building activities identified by the study.
For the purpose of ICT regional infrastructure, it is
recommended that the Bank establish a dedicated regional
working group for project preparation and resource
mobilization, and provide technical support to the group for
the duration of project preparation. Upon the identification of
financing resources, the working group would be replaced
by the Strategic Planning and Technical Support for Regional
Infrastructure Development Unit, housed in the Secretariat
which would be responsible for implementing the project.
Another recommendation is related to the objectives of the
IOC Member States to fully integrate with COMESA, SADC
and the CES Tripartite process, and be connected to the
African continent. To help further these objectives, the Bank
could encourage the NEPAD Secretariat and the AU to
consider expanding the Program for Infrastructure
Development in Africa (PIDA) – the main programmatic
instrument to promote connectivity within the continent – to
include the IOC region.
Finally, the Bank’s support to the IOC should be evaluated
prior to starting a new implementation phase of projects and
programs, in order to draw lessons learned from the Bank’s
current interventions – including at country level – and to
measure the impact of the Bank’s support to regional
integration within the IOC.
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6. Recommendations for Programming Support to the IOC
Annexes
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Indicator Comoros Madagascar MauritiusReunion /France
Seychelles
Surface Area (Km²) 1,860 587,000 1,866 2,504 454
Population (millions) 0.65 19 1.3 0.8 0.09
GDP/GNP (US$ billions, 2009) 0.5 8.5 8.0 18.71 0.750
GDP/GNP per Capita (US$, 2009) 810 410 7,250 23,163(a) 8,450
Poverty Rate (%) 45 77 <1.5 - <0.5
HDI Ranking 163 151 77 - 52
Under-Five Mortality Rate (/1,000) (2010) 85.6 62.1 15.1 4.1 13.5
Maternal Mortality Ratio (/100,000 livesbirths) (2008)
340 440 36 - 0.4
Urban Population with Access to Impro-ved Sanitations Facilities (%, 2008)
50 15 93 97 100
Literacy Rate (2009) 74 64 88 - 92
School Enrollment on Primary (% net) 78 79 93 99 95
ANNEX 1 KEY ECONOMIC AND SOCIAL INDICATORS BY REGIONAL MEMBER STATES
ANNEX 2 KEY MACROECONOMIC INDICATORS (EXCLUDING REUNION)
Source: World Human Development Report 2011, UNDP, World Bank Development Indicators; (a) Data for 2008.
Source: AEO, 2012.
Indicators 2008 2009 2010 2011 (Estimation) 2012 (Projection)
COMOROS
Real GDP rate (%) 0.6 1.1 2.1 2.5 3.2
Inflation (%) 4.8 4.8 2.9 3.0 2.8
Budget balance (% of GDP) -2.6 0.6 4.1 -3.1 -3.6
Current account (% of GDP) -11.6 -7.6 -10.2 -11.7 -12.2
External debt (% of GDP) 49.7 51.9 39.5 34.9 31.6
MADAGASCAR
Real GDP rate (%) 7.1 -3.7 0.5 0.6 2.4
Inflation (%) 9.2 9.0 9.2 10.1 9.8
Budget balance (% of GDP) -1.9 -2.5 -1.6 -1.3 -1.2
Current account (% of GDP) -20.6 -21.1 -9.7 -3.4 -4.4
External debt (% of GDP) 24.2 27.0 29.2 26.3 25.0
MAURITIUS
Real GDP rate (%) 5.5 3.1 4.1 4.0 4.1
Inflation (%) 9.7 2.5 2.9 3.0 3.9
Budget balance (% of GDP) -2.1 -6.6 -4.7 -4.4 -4.3
Current account (% of GDP) -9.9 -7.4 -7.9 -9.2 -9.0
External debt (% of GDP) -4.8 15.1 12.8 15.7 17.7
SEYCHELLES
Real GDP rate (%) -1.3 0.6 6.0 4.0 4.5
Inflation (%) 37.0 31.7 -2.4 2.5 2.9
Budget balance (% of GDP) -3.4 5.1 2.5 3.8 -0.2
Current account (% of GDP) -48.8 -30.3 -22.7 -21.8 -22.2
External debt (% of GDP) 102.8 140.1 84.0 82.0 45.6
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Cou
ntry
CSP
Duration
Pillars
Main compon
ents
On-go
ing or proposed
projects/activities
4
Com
oros
2011
-201
5
-Develop
men
tof th
e Ene
rgy Sec
tor in
supp
ort to Eco
nomic
Diversification
-Enh
ance
d private sector com
-pe
titiven
ess an
d ec
onom
ic diversifica-
tion
-Stren
gthe
ning
eco
nomic go-
vernan
ce th
roug
h su
pport for struc
tural
reform
s, pub
lic fina
nce man
agem
ent
and im
prov
emen
t of the
bus
iness en
vi-
ronm
ent
-Drin
king
Water and
San
itatio
n Project (o
n-go
ing)
-Cap
acity Building Project Sup
port (o
n-go
ing)
-Ene
rgy Sec
tor Project Sup
port (p
ropo
sed)
-Bud
get s
uppo
rt (p
ropo
sed)
-ESW (p
ropo
sed): G
rowth Driver Diagn
osis (2
nd pha
se); Tourism M
as-
ter Plan; Sec
tor Reh
abilitation of Crash
Crops
; Private Sec
tor Profile
-Rural You
th Enterprises Project Sup
port (p
ropo
sed)
-Bas M
ango
ky Exten
sion
Project (p
ropo
sed)
-Gov
erna
nce Institu
tiona
l Sup
port Project (prop
osed
)-
Roa
d RN9 Project
Mad
agascar
2006
-200
9;Tw
o exten-
sion
s: 201
0-20
11;
2012
-201
3
-Im
prov
e the
quality of rural infra
-structure
-Im
prov
e Go-
vernan
ce
-Agriculture infra
structure
-Acc
ess to drin
king
water and
sanitatio
n infra
structure
-Tran
sport infrastructure
-PPP and
private sector deve-
lopm
ent p
romotion
-Man
agem
ent o
f pub
lic fina
nce
-Project Sup
port fo
r Fish
ing Com
mun
ity of Tuléa
r (on-go
ing)
-Irrigation Sch
eme Reh
abilitation Project of M
anom
bo (o
n-go
ing)
-Lo
wer M
ango
ky Rice Sch
eme Reh
abilitation Project (o
n-go
ing)
-Figh
t aga
inst STD
and
HIV/AIDS (o
n-go
ing)
-Roa
d of Tuléa
r (on-go
ing)
-Program
for Drin
king
Water Sup
ply an
d Rural San
itatio
n (on-go
ing)
-Amba
tovy Cob
alt-Nicke
l Private Mining Project
Mauritius
2009
-201
3
-Red
ucing
structural bottlene
cks
to com
petitiven
ess an
dtrad
e -
Enh
ancing
pu-
blic sec
tor efficienc
yan
d so
cial service
deli-
very
-Enh
ance
com
petitiven
ess an
dim
prov
e investmen
t clim
ate
-Con
solidate fisca
l perform
ance
and im
prov
e pu
blic sec
tor efficienc
y-
Widen
the circle of o
pportunity
throug
h pa
rticipation, soc
ial inc
lusion
and su
staina
bility
-MIC G
rant Deb
t Man
agem
ent C
apac
ity Building (on-go
ing)
-MIC G
rant Sup
port to
Pub
lic Sec
tor Efficien
cy (o
n-go
ing)
-MIC G
rant Sew
age/Water Plan (iden
tification stag
e)-
MIC G
rant Hea
lth Sec
tor Strateg
y (on-go
ing)
-CPSE Bud
get S
uppo
rt (o
n-go
ing)
-Con
tainer Exp
ansion
(ide
ntifica
tion stag
e)-
East-Coa
st Trunk
Roa
d (iden
tification stag
e)-
Plaines W
ilheims Stage
(OWAS to
com
plete PCR fo
r Ju
ne 201
2)
Seychelles
2011
-201
5
-Stren
gthe
ning
Private Sec
tor Develop
-men
t and
Eco
nomic
Com
petitiven
ess
-Infra
structure de
velopm
ent
-Ena
bling finan
cing
and
regu
la-
tory enviro
nmen
t-
Hum
an cap
acity develop
men
t
-Fe
asibility Study
for Water Sup
ply in M
ahe (on-go
ing)
-Policy Based
Partial C
redit G
uarantee
(on-go
ing)
-Seych
elles Sub
Marine Cab
le Project (o
n-go
ing)
-Water Sup
ply Im
prov
emen
t Project (p
ropo
sed)
-Line
of C
redit to SMEs (propo
sed)
-PPP Framew
ork (propo
sed)
-Infra
structure Action Plan (propo
sed)
-Hum
an Resou
rce Develop
men
t Plan (propo
sed)
-Institu
tiona
l Sup
port Project (p
ropo
sed)
-Statistical Cap
acity Building Program
(on-go
ing)
ANNEX 3 CSP PRIORITIES OF COMOROS, MADAGASCAR, MAURITIUS AND SEYCHELLES
4Excluding
emerge
ncy assistan
ce (g
rant).
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ANNEX 4 EASTERN AFRICA RISP
ANNEX 5 SOUTHERN AFRICA RISP
Pillar 1: Regional Infrastructure Pillar 2: Capacity Building
Broad Areas of
Focus
• Regional Transport/Trade Facilitation
Infrastructure
• Regional Energy Development (clean
energy and interconnectors)
• Information and Communications
Technology (ICT)
• Development of Shared Water Re-
sources
• Support to the CES Tripartite Arrangement
• Support to infrastructure, trade facilitation,
statistical and legal frameworks for PPPs capacity
building
• Strengthening institutions (RECs/IGOs,
continental organisations, special utilities and natio-
nal implementing units)
• Enhancing the financial and technical ca-
pacity of regional multilateral institutions and agen-
cies that invest in regional infrastructure and private
enterprises
RPGs/Cross-
cutting Issues
• Regional Public Goods – Climate Change, Management of Shared Water Resources and
Trans-boundary Animal Diseases Control
• Cross-cutting Issues: Gender and Environment
• Knowledge Management and Networking
Pillar 1: Regional Infrastructure Pillar 2: Capacity Building
Areas of Focus
• Regional Transport/Trade Facilitation
Infrastructure
• Regional Energy Development
• Information and Communications
Technology
• Support to the CES Tripartite Arrangement
• Institutional Strengthening
• Trade and Transport Facilitation and Aid for
Trade
Cross-cutting
Issues
• Regional Public Goods: Gender, Environment and Climate Change
• Knowledge Management and Networking
• Macroeconomic Convergence
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Area of
Coo
pe-
ration
Com
po-
nent
Action
Description
Potential sou
rce
of fu
nding
at Bank level
Potential P
art-
nership
Proposed
Ti-
meline
1.1. IO
CSec
retaria
tca
pacity
building
Action 1
Sup
port th
e establish-
men
t of a
unit s
pecifically
dedica
ted to strateg
icplan
ning
, mon
itorin
g &
evalua
tion (M
&E) a
nd re
-so
urce
mob
ilization -
Strateg
ic Plann
ing an
dResou
rce Mob
ilization
Unit.
Strateg
ic plann
ing an
d M&E are particularly im
portan
t for im
plem
entin
gregion
al program
s an
d projec
ts but also to im
prov
e the ca
pacity of the
IOC in m
obiliz
ing reso
urce
s an
d pred
ictin
g external aid. In ad
ditio
n, th
eun
it will also
con
tribute to prepa
re, implem
ent a
nd m
onito
r the IOC re
-gion
al integration strategy. It s
hould be
noted
that th
e availability of m
e-dium
/long
term
strateg
y with
action plan
, multi-year bud
get a
nd M
&E
system
is essen
tial to attaining the eligibility status
for the EU Agree
-men
ts Con
tribution. This will en
able th
e IOC to
acc
ess ad
ditio
nal re-
source
s fro
m th
e EU and
other develop
men
t partners for the
implem
entatio
n of re
gion
al projects/prog
rams.
FSF / Reg
iona
l Dep
art-
men
ts (R
D) / The
matic
Trus
t Fun
dEU / W
B / AFD
2013
-201
5
Action 2
Sup
port th
e establish-
men
t of a
n Eco
nomic and
Trad
e Unit.
This unit w
ill ha
ve th
e man
date to
: (a) diagn
ose, inform
and
com
mun
i-ca
te on ec
onom
ic develop
men
ts in th
e region
; (b) sup
port and
coo
rdi-
nate th
e Mem
ber States in trad
e ne
gotiatio
ns and
implem
entatio
n of
agreem
ents trad
e in th
e region
, inc
luding
trad
e services agree
men
t(CES Trip
artite, EPA
, WTO
, etc.); (c
) produ
ce statistical inform
ation, in-
clud
ing region
al trad
e an
d investmen
t; (d) c
ondu
ct fe
asibility stud
ies
and diag
nostic studies on trad
e an
d investmen
t; an
d (e) sup
port th
eim
plem
entatio
n of re
gion
al fram
ework or strateg
ies su
ch as the STS
.
FSF / RD / The
matic
Trus
t Fun
dEU / W
B / AFD
/ UNCTA
D20
13-201
5
Action 3
Sup
port th
e de
velopm
ent
of cap
acity of the
IOC
Sec
retaria
t in region
al in-
frastructure plan
ning
throug
h the crea
tion of a
dedica
ted Unit o
f Plan-
ning
and
Tec
hnical Sup
-po
rt fo
r Reg
iona
lInfra
structure Develop
-men
t.
This unit w
ill be
resp
onsible in defining for ea
ch infra
structure sector a
blue
print, inform
ation tools includ
ing ca
rtog
raph
y (SIG) a
nd a fram
e-work for region
al collabo
ratio
n in th
is area. It w
ill also
see
k at stren
g-then
ing pa
rtne
rship with
nationa
l, region
al (e
.g., RIA du COMESA, o
rthe Investmen
t Fun
d of COMESA) a
nd con
tinen
tal ins
titutions
ope
ra-
ting in th
e infra
structure sector. F
urthermore the Unit w
ill play a critical
role to
stren
gthe
n co
llabo
ratio
n with
region
al (D
BSA) a
nd con
tinen
tal
developm
ent b
anks (A
DB) a
s well as de
velopm
ent p
artners in promo-
ting region
al infra
structure.
FSF / RD / The
matic
Trus
t Fun
dEU / W
B20
13- 20
15
1.Institutional capacity of theIOC, Member States and Private Sector
ANNEX 6 PROPOSED ACTION PLAN
FL
AG
SH
IP S
TU
DY
IN
DIA
N O
CE
AN
CO
MM
ISS
ION
S
um
ma
ry F
ina
l R
ep
ort
Area of
Coo
pe-
ration
Com
po-
nent
Action
Description
Potential sou
rce
of fu
nding
at Bank level
Potential P
art-
nership
Proposed
Ti-
meline
1.2.
Nationa
l re-
levant insti-
tutio
ns /
depa
rt-
men
ts in
charge
of
trad
e an
dinvestmen
tprom
otion
Action 1
Implem
entatio
n of dec
i-sion
s mad
e at re
gion
allevel aim
ing at promoting
intra-region
al trad
e an
dinvestmen
t.
The expe
cted
sup
port is to
improv
e the ca
pacity of m
embe
r co
untries
to coo
rdinate at nationa
l level th
e im
plem
entatio
n of agree
men
ts esta-
blishe
d at re
gion
al level. Th
is sup
port cou
ld be the establishm
ent o
f ade
dica
ted structure at nationa
l level (o
r tech
nica
l assistanc
e su
pport to
the structure alread
y existin
g) to
dea
l with
gov
ernm
ent c
oordination on
region
al integration issu
es. A
system of track
ing im
plem
entatio
n of re
-gion
al dec
isions
cou
ld sou
gh in m
onito
ring the prog
ress and
effe
ctive-
ness of the
region
al agree
men
ts m
ade an
d iden
tifies co
nstraints
towards
libe
ralizing trad
e an
d investmen
t reg
imes acros
s the IOC re
-gion
. A sup
port cou
ld be prov
ided
to re
levant nationa
l ins
titutions
toim
prov
e da
ta collection on
trad
e an
d investmen
t. Fina
lly, tec
hnical and
finan
cial assistanc
e to im
plem
ent a
n exch
ange
exp
erienc
e an
d be
stprac
tices program
on PPP sho
uld also
to be co
nsidered
.
FSF / RD / O
NRI / The
-matic Trust Fun
dEU / AFD
2013
-201
5
Action 2
Sup
port trad
e ne
gotia-
tions
, inc
luding
the EPA
san
d internationa
l trade
nego
tiatio
ns
All the IOC m
embe
rs cou
ntrie
s co
nclude
d an
Interim
EPA
with
the EU,
but three
out of fou
r sign
ed th
e EPA
(excluding
Com
oros
) and
only tw
o(M
auritius an
d Seych
elles) started
its im
plem
entatio
n. Sup
port is nee
-de
d for effective im
plem
entatio
n of th
e EPA
signe
d an
d for prep
aring
next ro
und ne
gotiatio
ns of E
PAs (includ
ing trad
e facilitation an
d co
ope-
ratio
n on
tech
nica
l barrie
rs to
trad
e, san
itary and
phytosanitary stan-
dards an
d rules of orig
in).
ONRI / RD
WB / EU /
UNCTA
D20
12-201
3
Action 3
Cap
acity building of na-
tiona
l ins
titutions
inch
arge
of the
promotion
of PPP to
acc
omplish
their mission
.
Besides th
e training
of p
ublic age
nts, te
chnica
l assistanc
e sh
ould be
prov
ided
to coo
rdinate po
licies on
PPP and
facilitate syne
rgies at re
-gion
al level throu
gh increa
sing
pub
lic-private po
licy dialog
ue. Tec
hnical
assistan
ce is also expe
cted
to put in place
app
ropriate legislation an
dstrategy
to PPP.
ONRI / RD / O
PSM
WB / AFD
/ EU
2013
-201
5
1.Institutional capacity of theIOC, Member States and Private Sector
FL
AG
SH
IP S
TU
DY
IN
DIA
N O
CE
AN
CO
MM
ISS
ION
S
um
ma
ry F
ina
l R
ep
ort
Area of
Coo
pe-
ration
Com
po-
nent
Action
Description
Potential sou
rce
of fu
nding
at Bank level
Potential P
art-
nership
Proposed
Ti-
meline
1.3.
Private sec-
tor institu
-tio
ns /
asso
cia-
tions
Action 1
Sup
port th
e CCI a
nd th
eUCCIIO
in th
eir efforts to
prom
ote trad
e an
d in-
vestmen
t in the region
.
Suc
h su
pport c
an con
sist in organ
izing regu
lar private-pu
blic fo
rums
dialog
ues arou
nd sub
jects related to th
e private sector participation in
the region
al integration proc
ess. A con
crete exam
ple is th
e lead
ersh
ipof th
e UCCIIO
in promoting the co
ncep
t of “Iles Va
nille" in re
latio
n to
the tourism sec
tor. In add
ition
to th
at, the
private sector sho
uld be
invi-
ted to participate in trad
e an
d investmen
t protoco
l neg
otiatio
ns. A
tech
nica
l sup
port can
be given to private sector assoc
iatio
ns in th
eprep
aration of pap
ers / do
cumen
ts as a co
ntrib
ution fro
m th
em to
these co
mmercial and
trad
e ne
gotiatio
ns. T
his is im
portan
t to sh
ow th
eview
of the
private sector in a struc
tured man
ner an
d effectively co
ntri-
bute to
wards
pub
lic-private dialog
ue. F
urthermore, in order to
mee
t the
labo
r marke
t nee
ds in areas suc
h as IT
C, ren
ewab
le ene
rgy, agricul-
ture, m
ining an
d en
terprise de
velopm
ent, it is propo
sed to sup
port th
ecrea
tion of partnersh
ips be
twee
n the pu
blic and
the private high
er lear-
ning
/training institu
tion as w
ell as indu
stry of the
IOC M
embe
r States
and ad
voca
te fa
cilitating mov
emen
t of p
rofessiona
ls acros
s the region
.
Them
atic Trust Fun
d /
OPSM / RD / Reg
iona
lPub
lic G
oods
(RPG)
WB / EU / AFD
2013
-201
5
Action 2
Sup
port coo
rdination ef-
forts be
twee
n na
tiona
lIPA and
CCI.
This w
ill co
nsist o
f the
estab
lishm
ent o
f networks fo
r kn
owledg
e, best
prac
tices and
exp
erienc
e sh
aring in promoting trad
e an
d investmen
t.Th
e ne
twork will serve also
to disseminate inform
ation on
trad
e an
d in-
vestmen
t opp
ortunities in th
e region
. Tec
hnical and
fina
ncial assistanc
ewill be
nec
essary to
put in place
a re
gion
al portal tha
t cou
ld be ho
sted
by th
e UCCIIO
.
Them
atic Trust Fun
d /
OPSM / RD
WB / EU / AFD
2014
-201
5
Action 3
Promote an
d su
pport the
developm
ent o
f results-
based PPP initiatives.
Sim
ilarly to
other RMCs, th
e ob
jective is to
develop
in close collabo
ra-
tion with
the loca
l Gov
ernm
ents and
private sector re
presen
tatives of
the IOC M
embe
r States, and
PPP ded
icated
fund
s. Selec
ted projec
tswill be
requ
ired to dem
onstrate th
e de
velopm
ent o
utco
mes of the
re-
source
s co
mmitted
, suc
h as inco
me an
d em
ploy
men
t creation while
simultane
ously co
ntrib
uting to th
e co
mpa
nies’ g
rowth. T
he Ban
k ca
nalso
leverage
its role as a lead
ing finan
cial institu
tion in Africa
to assist
loca
l com
panies in id
entifying
other fo
rms of PPP program
s, suc
h as in
the area
of tec
hnical sup
port and
cap
acity building.
Them
atic Trust Fun
d /
OPSM / RD
WB / EU / AFD
2013
-201
5
1.Institutional capacity of theIOC, Member States and Private Sector
FL
AG
SH
IP S
TU
DY
IN
DIA
N O
CE
AN
CO
MM
ISS
ION
S
um
ma
ry F
ina
l R
ep
ort
Area of
Coo
pe-
ration
Com
po-
nent
Action
Description
Potential sou
rce
of fu
nding
at Bank level
Potential P
art-
nership
Proposed
Ti-
meline
2.1.
Ren
ewab
leEne
rgy
Action 1
Prepa
ratio
n of a strateg
y,blue
print a
nd investmen
tplan
for the rene
wab
leen
ergy
sec
tor.
This includ
es providing
tech
nica
l and
fina
ncial assistanc
e to develop
thos
e instrumen
ts and
organ
ize a region
al ro
undtab
le of d
evelop
men
tpa
rtne
rs.
Them
atic Trust Fun
d /
OPSM / RD / SEFA
20
14-201
5
Action 2
Estab
lishm
ent o
f an ob
-servatory on
region
al best
prac
tices in th
e field of
rene
wab
le ene
rgy.
The ob
servatory will allow investors an
d profession
als to acc
ess inform
a-tio
n of existing co
mpa
nies and
rene
wab
le ene
rgy projec
ts (h
ydro, g
eo-
thermal, w
ind, bioga
s, hyd
ro tu
rbines, m
arine, biofuels, etc.). This
initiative will also
improv
e kn
owledg
e of best p
ractices and
facilitate the
establishm
ent o
f tec
hnical and
fina
ncial p
artnersh
ips with
in th
e private
sector. G
iven
the finan
cial con
straints, s
uch initiative co
uld be
don
ethroug
h a PPP project, c
ombining
, und
er th
e au
spices of the
IOC, the
participation of th
e UCCIIO
, Cha
mbe
rs of C
ommerce
, Ind
ustry an
d Agri-
cultu
re of the
Mem
ber States an
d the Ene
rgy Age
ncy of Reu
nion
.
Them
atic Trust Fun
d /
ONEC / O
NRI / RD /
SEFA
UE / AFD
/UNDP
2014
Action 3
Estab
lishm
ent o
f a fa
cility
to fina
nce region
al re
ne-
wab
le ene
rgy projec
ts.
A fa
cility co
uld be
estab
lishe
d which
wou
ld aim
at fac
ilitating the finan
cing
of re
newab
le ene
rgy projec
ts in private sector and
calls fo
r prop
osals for
PPPs. The
facility co
uld also
be tapp
ed by the IOC M
embe
r States, w
howou
ld like
to see
more inno
vative projec
ts in th
eir resp
ective co
untries.
The sp
ecific arrang
emen
ts fo
r the establishm
ent o
f suc
h a facility remain
to be de
fined
. During the ph
ase of re
source
mob
ilization (see
Ann
ex 9
below), the IOC and
the Ban
k will toge
ther exp
lore in detail the
imple-
men
tatio
n of suc
h an
instrumen
t.
Them
atic Trust Fun
d /
ONEC / RD / Fac
ility to
be created
UE / AFD
/UNDP
2013
Action 4
Sup
port re
gion
al univer-
sity program
.
The ne
ed fo
r training
and
upg
rading
tech
nica
l skills is one
of the
fund
a-men
tal p
roblem
s facing
the en
ergy
sec
tor. An initiative co
uld be
develo-
ped throug
h a region
al university program
, stren
gthe
ning
link
s be
twee
nun
iversities an
d relying in particular on the “Eco
le Polytec
hnique
de Ma-
daga
scar”, w
hich
trains
water eng
inee
rs. M
oreo
ver, training
in alternation
remains
to be de
velope
d for the training
of tec
hnicians
.
ONRI / O
NEC / RD /
RPG
UE / AFD
/ W
B20
14-201
5
Action 5
Provide
tech
nica
l and
fi-
nanc
ial assistanc
e to
carry ou
t ESW.
Two main stud
ies are targeted
:-
Study
to develop
a m
apping
of the
poten
tial o
f the
rene
wab
leen
ergy
for ea
ch of the
IOC M
embe
r States. The
study
will seek
to ans
-wer, a
mon
g othe
r qu
estio
ns: W
hat k
ind of ene
rgy proc
essing
gen
eration
is th
e mos
t ade
quate?
Wha
t are th
e estim
ated
cos
ts? Th
is study
will
build on the da
taba
ses be
ing de
velope
d with
in th
e region
as the ge
othe
r-mal poten
tial o
f Reu
nion
and
the da
taba
ses of re
gion
al re
source
s for
wind an
d so
lar to be de
velope
d un
der the su
pport p
rogram
for rene
wa-
ble en
ergy
(EU / IO
C).
-Study
on the region
al harmon
ization of sec
toral p
olicies, legisla-
tion an
d regu
latory proce
dures.
ONRI / O
NEC / RD
UE / AFD
/ W
B20
13-201
4
2.Regional Infrastructure Development
FL
AG
SH
IP S
TU
DY
IN
DIA
N O
CE
AN
CO
MM
ISS
ION
S
um
ma
ry F
ina
l R
ep
ort
Area of
Coo
pe-
ration
Com
po-
nent
Action
Description
Potential sou
rce
of fu
nding
at Bank level
Potential P
art-
nership
Proposed
Ti-
meline
2.2.
ITC Sec
tor
Action 1
Prepa
ratio
n of a Reg
iona
lMaster Plan for the ITC
sector.
The Reg
iona
l Master Plan (RMP) for th
e ITC sec
tor to be prep
ared
will in-
clud
e, amon
g othe
rs, a
region
al integrated
app
roac
h de
aling with
issu
esof acc
ess do
ors, listing the available ba
ndwidth cap
acity (d
omestic and
internationa
l), and
pric
ing po
licies ac
cess inform
ation to investors. It w
illbe
presented
to develop
men
t partners an
d the private sector during a re-
gion
al ro
undtab
le. T
he Ban
k’s su
pport is expe
cted
for bo
th th
e prep
ara-
tion of th
e RMP and
the realization of th
e region
al ro
undtab
le.
ONRI / O
ITC / RD / RPG
WB / UE / AFD
2013
-201
4
Action 2
Improv
e co
ordina
tion be
t-wee
n regu
lators and
pri-
vate sec
tor op
erators.
Estab
lishm
ent o
f a re
gion
al con
sultatio
n/co
ordina
tion structure invo
lving
private op
erators an
d pu
blic re
gulators w
ith th
e aim of d
ealing with
the
grad
ual liberalization of th
e sector and
the im
plem
entatio
n of IT
C-PEP.
This w
ill allow id
entifying
investmen
t projects to be includ
ed in th
e Reg
io-
nal M
aster Plan for the ITC sec
tor.
ONRI / O
ITC / RD
WB / UE / AFD
2014
Action 3
Develop
cap
acity building
prog
rams for the private
operators an
d the regu
la-
tors in th
e teleco
mmun
i-ca
tion sector.
Spe
cifically, th
e Ban
k ca
n assist th
e IOC in coo
rdinating be
twee
n the is-
land
s an
integrated
app
roac
h of training
s throug
h: (a
) digital university (a
ssu
ggested by
the Mau
ritius Cha
mbe
r of Com
merce
); (b) p
artnersh
ips
betw
een un
iversities su
ch as the pa
rtne
rship be
twee
n the Aca
demy of
ICT an
d the ICC O
TAM in M
auritius or th
e Master in TNSI5foun
ded in
2005
in partnersh
ip w
ith th
e scho
ol and
GOTICOM PIC of M
adag
asca
r.
ONRI / O
ITC / RD
WB / UE / AFD
2014
Action 4
Provide
tech
nica
l and
fi-
nanc
ial assistanc
e to
carry ou
t ESW.
-Kigali p
rotoco
l Implem
entatio
n Progress Study
in th
e IOC re
gion
.-
ITC lega
l and
regu
latory harmon
ization stud
y in th
e IOC re
gion
.Th
e stud
y will establish a scen
ario fo
r the segm
entatio
n of th
e ITC m
arke
tan
d the scop
e of th
e ha
rmon
ization of th
e lega
l and
regu
latory fram
e-works (m
ostly in te
rms of pric
ing an
d regu
latio
n).
-Revisit the situation an
d the feasibility stud
y for the SEGANET
projec
t.-
Prepa
ratio
n of th
e SEGANET projec
t and
fina
ncial p
ropo
sal.
ONRI / O
ITC / RD
WB / UE
2014
-201
5
Action 5
Sup
port th
e establish-
men
t of d
edicated
wor-
king
group
for projec
tprep
aration prop
osals.
For ea
ch project selec
ted, a w
orking
group
(com
posed by
the IOC,
Mem
ber States, dom
estic private sector and
the Ban
k) w
ill set u
p an
d will
discus
s an
d work in th
e prep
aration of PPP projects. The
Ban
k’s/NEPA
DIPPF initiative will be
the main instrumen
t to tech
nica
lly and
fina
ncially as-
sist th
e prep
aration of re
gion
al IT
C projects.
ONRI – IP
PF / Th
ematic
Trus
t Fun
d / OITC / RD
WB / UE / AFD
2013
- 20
15
2.Regional Infrastructure Development
5Th
e Tech
nologies New
System In
form
ation (TNSI) trains
ann
ually aroun
d thirty en
gine
ers fro
m various
scien
tific fields
suc
h as com
puter scienc
e, m
athe
ma-
tics or physica
l scien
ces. To ac
hieve this M
aster, lesson
s are mad
e in part b
y the University and
partly by private sector eng
inee
rs.
FL
AG
SH
IP S
TU
DY
IN
DIA
N O
CE
AN
CO
MM
ISS
ION
S
um
ma
ry F
ina
l R
ep
ort
Area of
Coo
pe-
ration
Com
po-
nent
Action
Description
Potential sou
rce
of fu
nding
at Bank level
Potential P
art-
nership
Proposed
Ti-
meline
2.3.
Tran
sport
sector
3.1.
Natural di-
sasters
3.2.
Reg
iona
lpa
ndem
icdiseases
Action 1
Provide
tech
nica
l and
fi-
nanc
ial assistanc
e to
carry ou
t ESW
The following stud
ies may be co
nduc
ted as a prerequ
isite to
furthe
r su
p-po
rt th
e region
al tran
sports infra
structure:
-Tran
sport m
aritime co
rridors stud
y (as stated
in th
e Sou
thern
Africa
RISP).
-Reg
iona
l air tran
sport re-orga
nizatio
n stud
y in re
latio
n to th
e “Iles
Vanilles” con
cept (p
ut in place
com
mon
itineraries for serving the island
s,low cos
t promotion prod
ucts, p
ossibility to com
bining
tran
sports, e
tc.).
-Inter-island
maritime tran
sport s
tudy
to id
entify the ad
equa
te:
tran
sport c
hain, m
ulti-mod
al tran
sportatio
n sche
me, port tariffs, trad
e fa-
cilitation mea
sures, non
-tariff barrie
rs, s
cope
of d
iversification of traffic
(passeng
ers, agricultural foo
d co
mmod
ities).
ONRI – IP
PF / Th
ematic
Trus
t Fun
d / OITC / RD /
RPG
WB / UE
2014
-201
5
Action 1
Sup
port re
levant nationa
linstitu
tions
in pos
t crises
resp
onse m
anag
emen
tan
d risk mitiga
tion for na
-tural d
isasters situ
ations
.
To date, th
e Ban
k assistan
ce in th
e region
was based
on a ca
se by ca
sesu
pport, which
is provide
d after the na
tural d
isaster ha
s oc
curred
. It is
strong
ly sug
gested
the establishm
ent o
f a ded
icated
fund
for po
st crises
resp
onse m
anag
emen
t following oc
curren
ce of n
atural disasters. S
uch a
fund
will prim
arily ta
rget th
e reco
nstruc
tion of critical infra
structure, m
ainly
road
s, and
ens
uring ba
sic urge
nt nee
ds to
pop
ulations
. Sup
ports fro
mothe
r so
urce
s of fina
ncing sh
ould sup
port th
e establishm
ent o
f a ded
ica-
ted ce
nter of e
xcellenc
e de
aling with
enviro
nmen
t and
man
agem
ent o
frisk of natural disasters.
OSHD / Clim
ate Cha
nge
Facility / RPG
AFD
/ EU /UN
Age
ncies/
WB/JICA/
EIB/IA
D
2013
-201
5
Action 1
Improv
ing region
al coo
rdi-
natio
n to re
spon
d to pan
-de
mic disea
ses.
Put in place
/ope
ratio
nalize mec
hanism
for region
al coo
rdination resp
onse
to th
e threat of p
ande
mics diseases. S
uch a mec
hanism
of c
oordination
shou
ld allow th
e Mem
ber States to sha
re inform
ation in re
al time an
d im
-plem
ent p
rotoco
l actions
rap
idly. It is also prop
osed
to exten
d the pre-
viou
s finan
cial assistanc
e to prevent and
figh
t aga
inst HIV/AIDS and
enlarge the su
pport to the co
ntrol o
f other disea
ses su
ch as malaria.
Suc
h a finan
cial instrumen
t may be flexible en
abling the Ban
k to interven
ein situ
ations
of n
atural disasters w
ith risk of propa
gatio
n of disea
ses wi-
thin th
e region
. In ad
ditio
n, it is propo
sed the establishm
ent o
f mec
ha-
nism
s of coo
rdination an
d the crea
tion of one
region
al cen
ters of
exce
llenc
e for infectious
disea
ses.
OSHD / RPG
AFD
/ EU / UN
Age
ncies/
WB/JICA/
EIB/IA
D
2012
-201
5
3.Response management to natural disasters and regional pandemics
2.Regional Infrastruc-ture Development
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Contact:Avenue du GhanaAngle des Rues Pierre de Coubertinet Hedi NouiraBP 323Tunis-Belvedere 1002TunisiaInternet: www.afdb.org