Street scene in N'Djamena, the capital of Chad

Economic situation High dependence on oil exports

Chad is in the grip of a deep economic crisis. After two years of recession, the economy recovered slightly from 2018 onwards. However, in 2020, gross domestic product (GDP) decreased again by 0.9 per cent as a result of the coronavirus pandemic. For 2022, the International Monetary Fund (IMF) is predicting GDP growth of 3.3 per cent (April 2022 figure).

Comprehensive economic reforms, an expansion of economic activity to new markets and effective measures to combat corruption and nepotism are required in order to reduce poverty, along with improvements in the education system. The government of Chad has put forward a National Development Plan which is aligned to the goals set by the United Nations in Agenda 2030 and the African Union in Agenda 2063. However, it is currently struggling with inadequate financial resources, among other things.

Underinvestment in the economy and infrastructure

Poor economic diversification is a significant problem. A substantial share of government revenue comes from oil production, while other economic sectors are underdeveloped. The country is therefore highly dependent on developments in the global commodities markets.

Chad does not have a functioning market economy and there is a shortage of private investment capital. It has one of the worst road networks in Africa. During the rainy season, large areas of the country are inaccessible by road – which, given Chad’s landlocked position and the long distances to seaports, is a major development constraint.

Around 70 per cent of the population depends on subsistence farming. Agricultural yields fluctuate considerably due to increasingly frequent extreme weather events such as climate change-induced droughts and floods. The increased inflow of people from the Sahel region into the fertile and more temperate south is a source of conflicts over resources such as land and water.

Debt crisis

According to estimates by the World Bank and the IMF, Chad’s risk of debt distress is high. The collapse of oil prices triggered by the coronavirus pandemic put substantial pressure on its public finances. Chad is one of the first countries to have applied to restructure its debt under the G20’s new Common Framework for Debt Treatments beyond the DSSI. A decisive factor for the success of the negotiations, however, is whether the country’s largest private creditor, a European commodity trading company, will be willing to make concessions. Chad’s repayments on the loan take the form of oil deliveries.

The closure of markets and businesses as a result of the coronavirus pandemic led to a further worsening of the economic and social situation.

As at: 04/08/2022