Street scene in N'Djamena, the capital of Chad

    Economic situation High dependence on oil exports

    In 2016, Chad slid into a deep economic crisis when oil prices fell. After two years of recession, the economy recovered slightly from 2018 onwards. However, in 2020, gross domestic product (GDP) decreased again as a result of the COVID-19 pandemic. The International Monetary Fund (IMF) is predicting GDP growth of 3.3 and 3.4 per cent for 2022 and 2023.

    Comprehensive economic reforms, an expansion of economic activity to new markets and effective measures to combat corruption and nepotism are required along with improvements in the education system in order to reduce poverty. The government of Chad has put forward a National Development Plan which is aligned to the goals set by the United Nations in its 2030 Agenda and the African Union in its Agenda 2063. However, there is not enough political commitment so far and funding is insufficient to successfully implement this plan. According to the 2022 SDG Index, which assesses the progress made towards achieving the 17 Sustainable Development Goals, Chad ranks 161st out of 163 countries.

    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. Given Chad’s landlocked position and the long distances to seaports, this 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. Existing conflicts over soil and water are being exacerbated.

    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 COVID-19 pandemic put substantial pressure on its public finances. Chad is the first country to have applied to restructure its debt under the G20’s new Common Framework for Debt Treatments beyond the DSSI. In late 2022, an agreement was reached that paves the ground for further funding being provided by the International Monetary Fund. However, an increase in oil prices has led to a postponement of debt restructuring. Germany is not one of Chad’s creditors.

    As at: 18/04/2023