Previous Quarterly Editions
Expropriation Risk: 65 66 68 67 ▼ Political Violence Risk:68 68 68 68 ►Terrorism Risk:55 57 57 55 ►Exchange Transfer and Trade Sanction Risk: 64 73 73 73 ►Sovereign Default Risk:75 83 83 83 ►
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Protest intensity in 2022 and Q1 2023* 2022 Q1 2023Cost of living : Low LowAll protest: Low Low
Cost-of-living protest risk in 2023*Wage protest: - Food/fuel policy protests: -
Chad’s economy received a boost from the high oil prices last year, driven by the impacts of the Russia/Ukraine crisis since February 2022. The country’s 2023 budget, adopted in December 2022, projects 5.1% GDP growth as against 4.6% in 2022. This projection differed from the IMF’s which forecasted 2.5% and 3.5% economic growth for 2022 and 2023 respectively. This modest positive economic outlook is a welcome development given the country’s economy’s contractions since 2015, with a recession in 2020 and 2021. Nevertheless, it remains to be seen whether the green shoots in 2022 will turn out to be either an outlier or a turning point in Chad’s economic growth.
*Note: Protest intensity is calculated based on ACLED. Risk levels are calculated by WTW. Where data are missing no risk level will be displayed. For details of calculations, see the introductory essay.
The military government projects a headline inflation rate of 4.2% in 2023 and a fiscal deficit of 5%, as was the case in 2022. The sustained contraction of the economy over the past years has resulted in a protracted austerity policy, leaving limited public funds for social spending and for investment in local food production. Consequently, the poor economic performance has exacerbated the country’s socioeconomic situation.
Economic hardship has led to a steady increase in the national poverty rate with 20% of Chadian children likely to die before their fifth birthday, and 40% of children suffer from stunting, the impaired growth and development children experience from poor nutrition, repeated infection and inadequate psychosocial stimulation. Due to high food inflation, Chad officially declared a “food and nutrition emergency” on June 1, 2022. The World Bank projects Chad’s per capita GDP growth will remain negative or relatively modest in the next couple of years, despite the country’s oil windfall and resumption of growth in 2022.
In October 2022, President General Mahamat Déby extended the political transition for 24 months. He is likely to use this period to increase social and infrastructural spending with the aim of boosting his electability in the presidential race in 2024, likely between August and September. Funds for extra spending will likely come from Chad’s oil windfall and new loans. The government has already launched a 100 billion Central African franc bond to finance certain projects including electrical and solar infrastructures, completion of major public building sites, construction of urban roads, water pipes, and public lighting in the capital, N'Djamena.
Chad’s tough economic situation and heightened political tensions will continue to drive anti-government protests and unrest in the country such as the violent protest in October 2022 that left more than 50 people dead and saw 600 arrested.
TREND ▼
Chad’s operating environment is beset with a variety of obstacles including the common practice of awarding public contracts without competitive bidding, the lack of equality before the courts, breach of contracts, a lax approach to combatting corruption, insufficient skills, and the severe delay in addressing – or the non-settlement of – domestic debt.
Chad’s decision on March 23, 2023, to nationalise all assets belonging to Esso Exploration and Production Chad, a former subsidiary of ExxonMobil, underscores the unpredictability of the country’s operating environment. The nationalization of Esso Chad’s assets, which were bought by UK-based Savannah Energy, was carried out despite an arbitration on January 7, 2023, by the International Chamber Commerce (ICC) in Paris, in favour of Savannah Energy. The government said its objection to the sale of the oilfield to Savannah and its right of pre-emption were ignored.
Chad’s expropriation risk will remain high under the military administration and this risk is likely to affect mainly the energy and telecom sectors, which are vital to public finances. The administration is likely to use expropriation in other sectors as political instrument to go after individuals or businesses perceived to be against the government.
Political tensions are likely to persist in Chad in the course of transition period, which has been extended to October 2024. In October 2022, the extension provoked a large-scale violent protest in many parts of the country including N’Djamena, as noted above.
The military administration’s justification of the use of excessive force against protestors was to deem the protest a violent insurrection to overthrow the government. The military administration is almost certain to continue to crack down on anti-government elements, adopting heavy-handed approach.
The inclusive national dialogue that followed the Doha peace agreement between the government and some rebels and political groups has not led to peace and reconciliation. The rebel group FACT (Front for Change and Concord) continues to pursue its armed struggle to unseat Mahamat, who also is no longer seeking to make peace with FACT.
In March 2023, a court handed down life imprisonment to an undisclosed number of the 400 rebels put on trial behind closed doors on charges of terrorism and other treasonous acts, including the killing of Mahamat’s father, Idriss Déby Itno. These developments will likely trigger renewed hostilities between the military and FACT.
Chad’s security and humanitarian situations are under pressure as the military battles the escalating jihadist violence in the Sahel and the Lake Chad Basin region. Chad has had many attacks from the Nigeria-based jihadist groups Boko Haram and its offshoot Islamic State of West Africa Province (ISWAP).
Moreover, the security situation in Lake Chad is showing no sign of abating despite the death of prominent jihadist leaders – Abubakar Shekau of Boko Haram in May 2021, and Abu Musab Al-Barnawi and Malam Bako of ISWAP in September and October 2021 respectively, as well as the defection of hundreds of jihadist fighters to the Nigerian army. The violence is worsening amid the internal fighting between Boko Haram and ISWAP over territorial control in the Lake Chad region.
In addition to jihadist attacks, the country faces communal and interethnic tensions, with recurring clashes taking place. These tensions are largely common in Chad’s central, southern, and northern regions. Intercommunal violence is increasingly being caused by disputes over water and land resources. The devastating effects of climate change are therefore likely to exacerbate these intercommunal disputes as water resources and arable lands deplete.
The risk of trade sanctions on Chad is low as the military government has the full backing of Western governments including the U.S. and France, the latter being Chad’s former colonial power. As a sign of Chad’s good relations with the West, Mahamat was the only military leader invited to the United States-Africa summit in Washington in December 2022 and inaugurated in February 2023 the Chadian embassy in Israel.
Also, as a member of the Central African Economic and Monetary Community (CEMAC), Chad’s foreign reserves are regulated by the bloc’s Bank of Central African States (the French acronym is BEAC). Consequently, exchange transfer risk largely emanates from the monetary policy of the BEAC.
Chad’s public debt is expected to decline from 56% of GDP in 2021 to around 40% of GDP in 2024, according to the IMF. The country’s sovereign default risk further improved when it became the first country to reach a debt restructuring agreement in November 2022 with private creditors under the debt reduction programme established by the G20 major economies and known as the Common Framework. The debt agreement paved the way in December 2022 for the IMF’s approval of the disbursement of funds to Chad.
According to IMF, high oil prices in 2022 coupled with the lifting of COVID-19 pandemic containment measures have strengthened the external position and gradual post-pandemic recovery of CEMAC countries, including Chad. The oil windfall bodes well for public revenue, lowering the risk of a sovereign default. Furthermore, an ongoing United Nations project will help Chad upgrade its debt management system and improve its capacity to record, monitor, and report on public finances.
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