Country Brief

Chad is among the ten poorest countries of the world, ranking 170 of 179 countries in the United Nations 2008 Human Development Index. Poverty is widespread, and social indicators are well below the average for sub-Saharan Africa. The incidence of poverty (defined as the proportion of households with annual spending below what is necessary to meet minimal needs) is estimated at 56 % according to a 2003 household survey; an estimated four-fifths of the population of about 8.8 million is living on less than a dollar a day. Of the population older than 15 years, more than 73 % (and 76 % of women) are illiterate. Access to potable water has improved in past years, but is still limited to one of three people. Less than two % of the population has access to electricity. In this sprawling country twice the size of France, a total of only 1,160 kilometers of roads has been paved.

Recent progress in the fight against poverty has been mixed in Chad. Access to education has improved, especially for girls, going beyond the objectives established by the country’s poverty reduction strategy. But progress has been slower in improving sanitation conditions. While access to clean water and vaccines has improved, rates of infant and juvenile mortality have remained the same since the 1990s. Worse yet, maternal mortality and infant malnutrition have increased. Even though efforts have been made to increase the number of health centers, the lack of trained staff and means to keep the centers functioning continue to be a major obstacle to improving the access to, and reducing the costs of, health services.

More generally, while budget allocations to social sectors have increased thanks to oil revenue availability, numerous institutions remain under-financed. Also, access to land and water is developing slowly, which could hinder agricultural growth in many regions of the country.

Since 1994, Chad has generally maintained a satisfactory macroeconomic track record:

Gross domestic product (GDP) growth averaged 5.2% between 1994 and 2003. Since 2001, it grew at 9% a year due to investments in the petroleum sector. In 2004, it reached a record level of 30% when petroleum revenues started flowing in. Growth plummeted to below 5% in 2005 and 2006, after a drop in petroleum production and because of serious difficulties in the cotton sector.

GDP decreased in 2007 (0.2%) and 2008 (1.6%) and overall economic activity was sluggish. . Oil production is estimated to have declined 11.8% from 2007 to 2008 to hit 127.000 barrels a day and 46.5 million for the whole year. Still, high international oil prices have yielded major benefits for Chad through lofty revenues in 2008 estimated at $1.9 billion from $1.2 billion in 2007. Yet, conflicts between the government and rebel forces in 2008 affected to a significant extent economic performance in the non-oil sectors. The economic loss deriving from the rebel attack was significant, estimated at about 7 % of non-oil GDP over the first half of the year. The decline in investment that accompanied the fall in overall real GDP growth was largely owed to lower private sector investment in the oil sector. While the government stepped up investment spending to rehabilitate public buildings and repair roads, public investment remained slightly lower than its 2007 level. With worldwide oil prices’ steep decline from $145 in summer 2008 to $40 in December 2008, there are real concerns about Chad's ability to maintain its current level of public spending and to weather the ongoing financial crisis.

Inflation, measured as the variation in the Consumer Price Index, has remained moderate over the last few years. The annual average index of consumer prices was 8.3% in 2008, compared to -7.4% in 2007, an increase attributed to the rise in the price of foodstuffs despite a negative agricultural outlook in 2007/2008.

Challenges ahead

The government’s objectives and policies are based on the second version of the National Poverty Reduction Strategy (NPRS II), approved by the High-Level Supervision Committee in April 2008. The rural sector, good governance, and investment in human capital and in infrastructure are the main priorities. The new strategy emphasizes, more than the previous version, the importance of growth to poverty reduction. The strategy particularly stresses the need to improve the business climate, develop infrastructure, and strengthen rural development as the main pillars of more robust growth, given the need to improve the quality of public spending. To implement effectively the NPRS II, the government also adopted a Priority Action Plan for 2008–11. This plan establishes a list of the actions needed to attain the objectives of the NPRS II and is being integrated into the program budgets of the ministries and into the medium-term expenditure framework (MTEF).

Thefluid political and security environment continues to pose a threat to development results. The impacts of armed challenges from Chadian rebel groups and the spillover into Chad of the Darfur conflict continue to take their toll on Chad’s social and economic development. Nearly 250,000 refugees from the Darfur region of Sudan and 48,000 more from the Central African Republic are hosted in Chad, whereas 180,000 Chadians have been displaced internally as a result of the conflicts in neighboring countries. Chad has also been the subject, in recent years, of periodic attacks by armed groups. The most serious attack broke out in February 2008, causing considerable damage, particularly in the capital N’Djamena, and temporarily disrupting its structures. The most recent attack in May 2009 required important deployment of troops to defeat and repel these armed groups. The deployment of a United Nations peacekeeping force numbering about 5,000 and the signing and then the implementation of a multiparty agreement on electoral reform now provide an opportunity for economic development in which the government is fully committed.

Politically, an important step was taken in the context of the implementation of political agreements of August 13, 2007 linking the ruling party to the opposition coalition called Coordination des Partis Politiques pour la Défense de la Constitution (CPDC). Through these agreements sponsored by the European Union and United Nations Development Program (UNDP), an Independent National Electoral Commission (CENI) was established, by consensus, in July 2009, and a charter regulating the functioning of political parties in Chad was passed by the National Assembly. The establishment of this structure opens the way to elections in 2010 and 2011 in the country. Meanwhile, a general census of population and housing launched May 20, 2009 and ended two months later. These major political developments have somewhat overshadowed the security and military situation. After the recent (May 2009) attempted and failed attacks of the rebellion) in the eastern part of the country, the security situation, though fragile, remains calm. However, mutual accusations of military aggression between Chad and Sudan continue..

World Bank assistance

The World Bank Country Assistance Strategy (CAS) approved by the Chadian Government in December 2003 covered fiscal years 2004 to 2006. It was designed to support the government priorities identified in the poverty reduction strategy. It aimed to help Chad make the best possible developmental use of its new oil revenues (and public resources more broadly) as the government strives to meet the Millennium Development Goals. The oil revenue program and associated operations which represented the bulk of the Bank portfolio did not yield the expected development results. This situation led to a disruption in the Chad- Bank relations amid dispute over the use of petroleum revenue for developmental purposes.

The Bank closed its offices in Chad on February 1, 2008 following a rebel attack on Ndjamena. The office remained closed as the Bank ended its engagement in the petroleum pipeline project. In September 2008, at the request of the World Bank, Chad fully prepaid both the International Bank for Reconstruction and Development ( IBRD) and the International Development Association (IDA) for pipeline-related financing.

The Bank partially reopened its Chad office in January 2009 to enable close supervision of its portfolio of projects directly benefiting the poor in Chad. The partial reopening further facilitated dialogue with authorities and stakeholders towards an inclusive development program that will be key to overcoming poverty, assisting displaced people, and improving education, health, infrastructure, agriculture/rural development and governance.

As of September 2009, the World Bank portfolio comprised eight active projects with commitments of US$185.8 million. Of total commitments,

• 12 % are related to social development
• 16 % to transport sector
• 8 % to urban development
• 05 % to public sector governance
• 36 % to environment
  

The International Finance Corporation (IFC), the World Bank affiliate that finances projects in the private sector, invested $100 million of its own account in the Chad-Cameroon Pipeline and Development Project. In addition, it mobilized $100 million in syndicated loans. To accompany this investment, the IFC launched a program to support small and medium enterprisess, whose central feature is the Enterprise Development Center (EDC) housed in Chad’s Chamber of Commerce. The EDC is a model of partnership between the IFC, the oil consortium and the Chamber of Commerce and has three main objectives: strengthen the technical and financial capacity of small and medium entrepreneurs, expand firms’ access to finance via private financial institutions, and promote commercial opportunities that exist between the oil consortium and potential outsourcing companies. In addition to the EDC, the IFC also supports the Forum of Dialogue between the State and Private Sector in an attempt to improve the country business climate and thus help attract private investment.

There are many synergies between Bank Group assistance and other donor interventions (see the results-based framework in Annex 1 of the CAS), including close interaction / collaboration with the International Monetary Fund (IMF) on the macroeconomic program.

Contacts

For contacts, click here.