Overview

Country Overview

Since independence from France in 1960, Chad, a landlocked country in Central Africa, has been plagued by instability and conflict arising from tensions between different religious and ethnic factions.

Political Context

President Idriss Deby Itno and his party, the Patriotic Salvation Movement, have dominated Chadian politics since ascending to power in 1990. Deby won the 1996 elections—the first multi-party elections held in Chad—as well as the 2001, 2006, and 2011 elections. The electoral processes during these elections have, however, been controversial. President Deby’s party won the legislative elections of February 2011, with 118 of the 188 seats in the National Assembly (however these results were contested amidst accusations of fraud). The party in power also won the local elections held on January 2012, however opposition parties won the majority of votes in Moundou, the main economic hub of the south, as well as Bebedjia, an important city in Chad’s oil region.

Economic Overview

Chad joined the list of oil-producing countries in 2003, and its economy has become heavily dependent on oil. Prior to the oil era, the Chadian economy was predominately agrarian, with per capita gross domestic product (GDP) estimated at around $220 in 2001-2002—less than half of the average in Sub-Saharan Africa. In 2013, per capita GDP rose to approximately $1,226. The upsurge in revenue from oil production led to a substantial increase in public spending on social programs aimed at reducing poverty and improving health,  however between 2003 and 2011the decline in the poverty rate from 55% to 47%, was more than offset by population growth. Consequently, the total population affected by poverty in Chad increased by 15%.

Throughout 2014, macroeconomic performance remained stable with some acceleration in economic growth despite the government’s temporary suspension of the Chinese National Petroleum Company (CNPC) and delays in oil production. Real GDP increased by 7.3% in 2014, from 5.7% in 2013 mainly due to gains in the oil sector and higher agricultural production following a high rainfall and rural public investments. On the fiscal front, the non-oil primary deficit (NOPD) fell from 20.1% of non-oil GDP in 2012 to 17.5% in 2013 and it is estimated to fall further to 16.4% in 2014 as security spending and oil revenues decline compared to 2013. Fiscal revenue decreased by 5.4% due to the oil price collapse in the second half of 2014. By contrast, non-oil revenue performance was slightly above expectations at 11.4%.

Fiscal stance efforts were accompanied by the International Monetary Fund (IMF) Staff Monitored Program, which began in July 2013 and completed satisfactorily in December 2013. The Extended Credit Facility (ECF) was approved by the IMF Board in August 2014. A satisfactory implementation of the ECF over the following six months remains the main condition to achieving the Heavily Indebted Poor Countries (HIPC) Completion Point and is currently under evaluation.

In 2015, oil revenues are likely to fall further given the full-year effect of low oil prices. The 2015 budget was built on the assumption that the price of a Chadian oil barrel would remain stable at $65 per barrel. Budget forecasts predict a 20% cut in domestically financed investments and transfers, a 50% cut in goods and services expenditures compared with the 2014 Budget Law 2014, and a remaining financing gap of 177 billion CFA.  Less optimistic oil and non-oil revenue projections, however, would suggest a financing gap in 2015 of 217 billion CFA (4% of non-oil GDP). This calculation incorporates the potential savings in debt service when Chad reaches the HIPC completion point in April 2015, but does not include the fiscal impact of Chad’s ongoing military campaign against Boko Haram which is expected to be financed through the United Nations Security Council. To close the residual financing gap, the authorities are trying to obtain an additional rescheduling of oil advance repayments (from a remaining balance of 140 billion CFA) and budget support from donors.

Higher food prices following moderate levels of agricultural production in 2013 and the closure of the border with Nigeria (linked to concerns about Ebola and Boko Haram) led to a slight acceleration of the inflation rate in 2014 at 1.7% against 0.2% in 2013. Public debt indicators in Chad have remained relatively stable in recent years, however the risk of debt distress is still high in light of the fact that in 2014, an advance of $1.3 billion was taken on oil sales to finance the purchase of shares (25%) by the State in the largest oil consortium operating in Chad. Reaching the HIPC Completion Point, which is expected to be achieved this year, will decrease the external debt by about $1 billion.

Social Context

In January 2015, Chadian troops entered Cameroon and Nigeria to combat Boko Haram, the latter threatening to cut most of its export and import trade routes. Parliament subsequently approved legislation authorizing this military intervention in Cameroon. More than 3,400 refugees crossed Lake Chad following Boko Haram’s occupation of the city of Baga in early January, adding to the half a million refugees and internally displaced already registered in the country due to the conflicts in Sudan and the Central African Republic. The deepening crisis in Libya has further strengthened the Boko Haram insurgency in Nigeria with associated spillover to Cameroon, Chad, and Niger. While the Chadian army seems to have achieved some military success, it is extremely difficult to assess how long this campaign will last given the entrenchment of Boko Haram in northern Nigeria and the recent presidential elections.

Growing social resentment turned into protests in Ndjamena, Moundou and Sarh in early November 2014, when citizens and students protested against fuel shortages and high cost of living. They also supported a teachers’ strike that sought to claim the delayed payment of their exam premiums.

Development Challenges

Chad is ranked 184 out of 187 countries according to the 2014 United Nations Development Program (UNDP) Human Development Index (HDI). Despite improvements in school attendance and access to potable water, many Chadians still face severe deprivation and most of the Millennium Development Goals will not be met by 2015. Between 2003 and 2011, Chad achieved moderate but significant progress in overall poverty reduction, with the national poverty rate falling from 55% to 47% during the period. However, the extreme poverty rate in Chad, using $1.25 per day poverty line, has significantly decreased during this period from 61.3% to 36.1%. Progress on non-monetary poverty has been modest. In fact, despite improvements in school attendance and access to clean drinking water, many Chadians still face severe deprivation across a range of basic needs.

Last Updated: Apr 15, 2015

World Bank Group Engagement in Chad

Chad joined the World Bank in 1963. Since then, the World Bank has financed more than 50 development projects, supporting the country’s efforts to achieve sustainable economic growth while reducing poverty.

The World Bank Group’s engagement in Chad in the past decade has largely taken the form of support for the Chad-Cameroon Pipeline Project (CCPP). The Bank contributed to the financing of the pipeline through three credits subject to an agreement on the use of the oil revenues. In 2010, the World Bank’s Executive Board approved an Interim Strategy Note (ISN) for Bank engagement in Chad covering the period of June 2010 to June 2012. The main objectives were to re-establish fruitful collaboration and dialogue between state and non-state actors, and expand the Bank’s knowledge base for stronger engagement in the future.

Following implementation of the 2010-2012 Interim Strategy Note, the Government prepared a National Development Plan (NDP) for the 2013-2015 period. The Bank provides financing for projects that fall within the framework of this plan and also helped with the organization of a Donor conference in Paris in June 2014 that sought to mobilize funds in order to bridge the financing gap of the 2013-2015 NDP.

A Systematic Country Diagnostic (SCD) was conducted from December 4-5, 2014, consisting of a series of consultations that gathered around 70 representatives from civil society, non-governmental organizations, and parliament  located in N’Djamena and surrounding regions. Separate meetings with donors and the private sector were also held, and the Internationl Finance Corporation (IFC) strongly contributed to the organization of the consultations. The goal of the SCD was to determine the factors impeding poverty reduction and shared prosperity in Chad in order to better define the priority areas of the new Country Partnership Framework (CPF).

The World Bank Group portfolio consists of nine national International Development Association (IDA) operations totaling $181 million, three trust funds totaling $10.2 million, and two regional operations totaling$39 million. An $18 million emergency operation in support of refugees from the Central African Republic was delivered on time in October 2014 and two regional operations, the Regional Pastoral Livelihoods Program for the Sahel and the Sahel Women’s Empowerment & Demographics Project, are under preparation. As of January 7, 2015, the undisbursed balance is $116.7 million and the disbursement ratio stands at 11.8%.

International Finance Corporation (IFC)

IFC exposure in Chad stands at $26.9 million. IFC is teaming up with the World Bank to support in developing a programmatic approach to improving the investment climate.

Last Updated: Apr 15, 2015

Education Reform

The second phase of the Chad Education Sector Reform Project (PARSET), approved in June 2013, aims to improve teaching and learning conditions in primary and secondary schools in selected areas. The following are the results obtained during the first phase:

  • 400 classrooms were built and equipped;
  • 2,606,300 textbooks were procured and distributed to schools;
  • 20,000 people (60% of whom are women) were taught to read and write;
  • 11,700 community teachers were trained; and
  • A new national center for curriculum development was created, and the overall rate of children attending school increased from 87% in 2003/2004 to 96% in 2007/2008.

Local Development

The second phase of the Local Development Program Support Project (PROADEL), which aims at improving access to basic infrastructure and social services in targeted districts, was approved in October 2011. It has produced the following satisfactory results:

  • 257,000 people have access to clean potable water;
  • More than 100,000 heads of cattle have continual access to water points;
  • 123 community-based ecosystem management micro-projects were approved and are in the process of being implemented;
  • 71 community-based ecosystem management micro-projects were fully completed;
  • More than 135,000 hectares of land were protected against deforestation, land degradation, and bush fires in the targeted areas; and
  • More than 40,500 hectares of land benefited from soil fertility improvement techniques in the targeted areas.

Last Updated: Apr 15, 2015

The World Bank Group is an active member of the Financial and Technical Partners Committee (Comité des Partenaires Techniques et Financiers CPTF), which includes all United Nations agencies represented in Chad as well as the African Development Bank (AfDB), the European Union, the Swiss Agency for Development and Cooperation, and the ambassadors of France, Germany, and the United States. This committee holds monthly meetings and has established thematic groups that conduct studies on specific development issues relevant for Chad. Members of the committee share information about upcoming missions and convene in order to hold briefing sessions with visiting heads of the institutions it represents.

 

Last Updated: Apr 15, 2015


LENDING

Chad: Commitments by Fiscal Year (in millions of dollars)*

*Amounts include IBRD and IDA commitments