Economy of Chad

Economy - overview: Landlocked Chad's economic development suffers from its geographic remoteness, drought, lack of infrastructure, and political turmoil. About 85% of the population depends on agriculture, including the herding of livestock. Of Africa's Francophone countries, Chad benefited least from the 50% devaluation of their currencies in January 1994. Financial aid from the World Bank, the African Development Fund[?], and other sources is directed largely at the improvement of agriculture, especially livestock production. Due to lack of financing, the development of the Doba Basin[?] oil fields, originally due to finish in 2000, has been substantially delayed.

In 2000, Chad's nominal GDP was estimated at just over $1.43 billion with per capita income at approximately $188. Cotton, cattle and gum arabic are Chad’s major exports. More than 80% of the work force is involved in agriculture (subsistence farming, herding, and fishing). Like many other developing countries, Chad has a small formal sector and a large, thriving informal sector. Government statistics indicate the following distribution: Agriculture--38% (farming--23%, livestock--12%, fishing--3%); industry--13%; and services--45%. Chad is highly dependent on foreign assistance. Its principal donors include the European Union, France, and the multilateral lending agencies.

Primary markets for Chadian exports include neighboring Cameroon and Nigeria and France, Germany, and Portugal. At present, cotton plays the dominant role, accounting for 40% of total exports in 1999. Rehabilitation of CotonTchad, the major cotton company that suffered from a decline in world cotton prices, has been financed by France, the Netherlands, the European Economic Community (EC), and the International Bank for Reconstruction and Development (IBRD). As of January 2002, the parastatal[?] was undergoing privatization.

The other major export is livestock, herded to neighboring countries. Herdsmen in the Sudanic and Sahelian zones raise cattle, sheep, goats, and, among the non-Muslims, a few pigs. In the Saharan region, only camels and a few hardy goats can survive. Chad also sells smoked and dried fish to its neighbors and exports several million dollars worth of gum arabic to Europe and the U.S. each year. Other food crops include millet, sorghum, peanuts, rice, sweet potatoes, manioc, cassava, and yams.

Chad’s economic performance continues to depend on fluctuations in rainfall and in prices of its principal export commodities, especially cotton. Between 1996 and 1998, the Chadian economy averaged 4.7% growth from. However, unfavorable weather conditions contributed to disappointing harvests in 1999-2000, and GDP grew only by 1% and 0.6% respectively. Inflation was estimated 3.7% in 2000 after prices fell by 8% in 1999.

Since 1995, the Government of Chad (GOC) has made incremental progress in implementing structural reforms and improving government finances under two successive structural adjustment programs. Most state enterprises have been partially or completely privatized, nonpriority public spending has been lessened and the government has gradually liberalized some key sectors of the economy. Liberalization of the telecommunications, cotton and energy sectors is expected to proceed over the next several years. In May 2001, the IMF announced that Chad would qualify for the Highly Indebted Poor Countries (HIPC) debt relief initiative.

The effects on foreign investment of years of civil war are still felt today, as investors who left Chad between 1979-82 have only recently begun to regain confidence in the country's future. By early 1983, the return of internal security and a successful Geneva donors' conference had prompted a number of international business representatives to make exploratory visits to Chad. By far the most important venture to date is the oil extraction project in southern Chad.

Beginning in late 2000, the Doba Basin oil project has stimulated major investments into Chad and it is expected to double government tax revenues by 2004. It is hoped that this project will serve as a catalyst for the entire economy by helping to reduce energy costs and attract additional trade and investment in other sectors. The question remains whether Chad will continue to consolidate its economic reforms and invest its oil revenues wisely in order to encourage a wider range of economic initiatives. Recent political controversy surrounding the contested 2001 presidential election and a continuing rebellion in northern Chad have continued to dampen Chad's economic prospects by exposing the weaknesses in Chad's political institutions.

The International Monetary Fund has projected high growth rates during the next 3 years, as the Doba basin oil project in southern Chad accelerates. The Exxon Mobil-led project will pump oil from reserves in Chad through an underground pipeline to coastal Cameroon, where it will be loaded onto tankers. Following a crucial World Bank financing decision in June 2000, the Doba project officially began its construction phase in October 2000. Between 2000 and 2003, an American-led consortium will invest $3.7 billion into the project, approximately $2 billion of which will be invested in Chad. By the year 2003-04 the consortium plans to produce between 150,000 to 250,000 barrels of oil a day from three fields in southern Chad. The project is expected to provide between $80 and $100 million in annual government revenues during the 25-year production phase.

GDP: purchasing power parity - $7.6 billion (1999 est.)

GDP - real growth rate: 0.6% (1999 est.)

GDP - per capita: purchasing power parity - $1,000 (1999 est.)

GDP - composition by sector:
agriculture: 38%
industry: 14%
services: 48% (1998)

Population below poverty line: NA%

Household income or consumption by percentage share:
lowest 10%: NA%
highest 10%: NA%

Inflation rate (consumer prices): 12% (1998 est.)

Labor force: NA

Labor force - by occupation: agriculture 85% (subsistence farming, herding, and fishing)

Unemployment rate: NA%

Budget:
revenues: $198 million
expenditures: $218 million, including capital expenditures of $146 million (1998 est.)

Industries: cotton textiles, meat packing, beer brewing, natron (sodium carbonate), soap, cigarettes, construction materials

Industrial production growth rate: 5% (1995)

Electricity - production: 100 million kWh (1998)

Electricity - production by source:
fossil fuel: 100%
hydro: 0%
nuclear: 0%
other: 0% (1998)

Electricity - consumption: 93 million kWh (1998)

Electricity - exports: 0 kWh (1998)

Electricity - imports: 0 kWh (1998)

Agriculture - products: cotton, sorghum, millet, peanuts, rice, potatoes, manioc (tapioca); cattle, sheep, goats, camels

Exports: $288 million (f.o.b., 1999 est.)

Exports - commodities: cotton, cattle, textiles

Exports - partners: Portugal 30%, Germany 14%, Thailand, Costa Rica, South Africa, France (1997)

Imports: $359 million (f.o.b., 1999 est.)

Imports - commodities: machinery and transportation equipment, industrial goods, petroleum products, foodstuffs, textiles

Imports - partners: France 41%, Nigeria 10%, Cameroon 7%, India 6% (1997)

Debt - external: $1 billion (1999 est.)

Economic aid - recipient: $238.3 million (1995); note - $125 million committed by Taiwan (August 1997); $30 million committed by African Development Bank

Currency: 1 Communaute Financiere Africaine franc (CFAF) = 100 centimes

Exchange rates: Communaute Financiere Africaine Francs (CFAF) per US$1 - 647.25 (January 2000), 615.70 (1999), 589.95 (1998), 583.67 (1997), 511.55 (1996), 499.15 (1995)
note: since 1 January 1999, the CFAF is pegged to the euro at a rate of 655.957 CFA francs per euro

Fiscal year: calendar year

See also : Chad