Country Brief

Chad is among the ten poorest countries of the world, ranking 171 of 177 countries in the United Nation’s 2006 Human Development Index. With a per capita income of under $250 a year, and 55% of the population living in poverty, Chad also struggles with low social indicators: more than half of the population over the age of 15 is illiterate, and there is only one doctor for every 28,170 inhabitants. Access to sources of potable water is limited to three out of every ten people; electricity is accessible to only 1 percent of the population; and there are only 1,100 km of paved roads in a country more than twice the size of France.

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, 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:

• Chad’s 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 coming in. Growth slowed to 5% in 2005 and 2006, after a slow in petroleum production and because of difficulties in the cotton sector.
• The construction of the Chad Cameroon Pipeline finished one year ahead of the original schedule. Oil production began in July 2003, and Chad started to collect oil revenues in late November 2003. After a pique in production of 200,000 barrels a day in 2004, production dropped quickly to about 150,000 barrels a day in 2005 because of higher-than-expected water content in the wells. In contrast, government revenues from the sale of petroleum were higher than expected in 2006 and 2007 thanks to the high price of oil on the international markets.
• 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 8.1% in 2006, compared to 7.9% in 2005, an increase attributed to the rise in the price of foodstuffs despite a positive agricultural outlook in 2006/2007.

However, Chad faces recurring issues in financial management since 2004. The previous arrangement concluded with the IMF under its Poverty Reduction Growth Facility (PRGF) was not completed, which had implications on budgetary support from other donors. The current arrangement with the IMF, concluded on February 25, 2005, has not yet led to PRGF disbursement. Meanwhile, in December 2005 Chad modified the contractual underpinning of its agreement with the World Bank on the management of oil revenues, in order to overcome difficulties it was facing in public finances. The agreement reached between the World Bank and Chad in July 2006 opened the way to put the PRGF program on track. The Chadian government als developed a Public Financial Management Action Plan, designed in close collaboration with the World Bank, IMF and other development partners.

Challenges ahead

The government is currently working from a poverty reduction strategy approved in 2003. The main objectives of this strategy are: good governance, strong and durable economic growth, investment in human capital, improvements in the living conditions of vulnerable groups and rehabilitation and protection of ecosystems. The strategy takes into account the Millennium Development Goals.

The poverty reduction strategy is currently being revised and is expected to be completed by the end of 2007. It will take into account the results of a household and poverty evaluation survey that took place in 2003, as well as new estimates in oil revenues. The key challenge will be to ensure rational use of petroleum revenues in order to guarantee a sustainable economic policy that aims to reduce poverty. Petroleum revenues give Chad a unique opportunity to establish a strong basis for sustainable economic growth and a poverty reduction, at a time when the population are looking for the immediate benefits.

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 230,000 people from Sudan’s Darfur region and 40,000 from the Central African Republic have sought refuge in Chad. Attacks by rebel groups have intensified since the end of 2005, and the security situation in the east of the country is tenuous. The number of internally displaced people has increased to 150,000. However, the government reached reached an accord with the principal rebel group in December 2006, which has held, and is engaged in discussions in Libya with armed opposition groups. President Déby has given his agreement to the deployment around the refugee concentrations of a combined police and armed military force provided by the European Union (a precise timetable has not yet been produced), and it is hoped that this will have a significant impact in reducing violence. Meanwhile, the accords of August 13, 2007 with political opposition parties has also provided hope for a defusing of social tensions.

The World Bank Country Assistance Strategy (CAS) approved by the Chadian Government in December 2003 covered fiscal years 2004 to 2006. It seeks to support the priorities identified in the poverty reduction strategy and identifies the following development challenges facing Chad:

• Institutional and governance weaknesses that have accentuated with the arrival of oil revenues
• the fact that certain gains, such as those in the education sector, are not sustained
• the pressing need to develop the private sector beyond the oil sector, as a driver for growth.

World Bank assistance to Chad

The World Bank Country Assistance Strategy (CAS) aims to help Chad make the best possible developmental use of its new oil revenues (and public resources more broadly) as it strives to attain the  Millennium Development Goals. The CAS has two main pillars:

• Strengthen governance, including institutional arrangements for public resource management and service delivery, the rule of law, and environmental and social safeguards for oil exploitation
• Enhance non-oil economic opportunities while reducing sources of vulnerability, notably for the poor, in part by ensuring a conducive macroeconomic framework and alleviating infrastructure constraints.

As of September 2007, the World Bank portfolio comprised ten active projects with commitments of US$301.8 million.

Of total commitments,

• 22 percent are in the social sectors 
• 55 percent are in transport and energy
• 19 percent are in agriculture and local development; and
• 3 percent are in governance and public financial management

In 2007, the World Bank’s Board approved the Urban Development Project ($15 million), the Public Financial Management Capacity Building Project ($10 million) and the Economic Community of Central African States (CEMAC) Transport-Transit Facilitation Project ($30 million for the Chadian portion of the project).

The International Finance Corporation (IFC), the World Bank’s 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 SMEs, 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 (FODEP for its French acronym) in a desire to improve the business climate of the country and help attract private investment to the country.

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

Ms. Mary Barton-Dock
Country Director
World Bank Street 1.792, No.186, Ekoudou-Bastos
Yaoundé, Cameroon
Tel. (237) 22-20-38-15/ 22-20-16-36
Fax: (237) 22-21-07-22
Email: mbarton@worldbank.org

Mr. Geoffrey Bergen
Country Manager, Chad
The World Bank
BP 146, N’Djamena
Tel (235) 52 33 60 or 52 32 47
Fax (235) 52 44 84
E-mail : gbergen@worldbank.org

Ms. Marie Francoise Marie-Nelly
Sr. Program Manager (Chad Cameroon Pipeline)
Tel. +1-202 473 6264
Fax: +1-202 473 5452
Email: mmarienelly@worldbank.org

Mr. Gérard Kambou
Sr. Economist
Tel: +1-202-473 2386
Fax: +1-202-473-8466
Email: gkambou@worldbank.org

Mr. Emmanuel Noubissié
Sr. Country Officer ( Chad Cameroon Pipeline)
Tel: +1 – 202 458 5325
Fax: +1-202 473 5452
Email: enoubissie@worldbank.org

Ms. Katrina Sharkey
Sr. Operations Officer
Tel: +1-202-473 6288
Fax: +1-202-473-5452
Email:  ksharkey@worldbank.org

Ms. Nellie Sew Kwan Kan
Country Program Assistant
Tel: +1-202-473-4756
Fax: +1-202-473-5452
Email: nsewkwankan@worldbank.org

Ms. Kathryn Hollifield
Country Program Coordinator
Tel: +1-202 458 1731
Fax: +1-202 474 5452
Email: khollifield@worldbank.org