Chad

Economic Overview

The Republic of Chad is a large, landlocked country at the crossroads of North and Central Africa, facing profound economic, security, and climate-related challenges. The economy is highly undiversified and dominated by the oil sector, which, while a major source of government revenue and exports, has not translated into broad-based development. The 2025-2026 outlook is highly uncertain, contingent on the volatile security situation, political stability, and global oil prices.

GDP Size & Growth Trajectory

Chad's economic growth is erratic, closely following the fortunes of its oil sector and the impacts of climate on its agricultural base. After a period of recession, the economy has seen a modest recovery. The IMF projects real GDP growth to be around 3.5% in 2025. However, this growth is from a very low base and is insufficient to make a significant impact on the country's high poverty rates.

Sector Composition

• Agriculture: This sector is the primary source of livelihood for over 80% of the population but contributes only about 50% of GDP (including livestock). It is dominated by subsistence farming and livestock rearing, and is extremely vulnerable to drought and desertification. Key cash crops include cotton and gum arabic.

• Industry: The industrial sector, contributing roughly 15% of GDP, is almost entirely dominated by oil production. Oil accounts for the vast majority of export earnings and government revenue. The lack of a significant manufacturing base is a key structural weakness.

• Services: The services sector accounts for about 35% of GDP and consists mainly of informal trade and public administration.

Inflation Trends

Inflation has been volatile, driven by high import costs for food and fuel, and supply chain disruptions caused by internal and regional insecurity.

Fiscal & Monetary Policy Stance

• Monetary Policy: As a member of the Economic and Monetary Community of Central Africa (CEMAC), Chad's monetary policy is managed by the regional central bank, the BEAC. The currency, the Central African CFA franc (XAF), is pegged to the Euro.
• Fiscal Policy: The government is heavily reliant on oil revenues and international aid. Fiscal space is extremely limited, with a large portion of the budget dedicated to security spending.

Debt Sustainability Indicators

Chad is in debt distress. The country has been undergoing a complex debt restructuring process under the G20 Common Framework, involving negotiations with its official creditors and, crucially, with private commodity trading firms that provided oil-backed loans.

Table 1: Key Macroeconomic Indicators (2023-2026F)

Market Size & Demand Potential

The domestic market is extremely limited due to widespread poverty and low purchasing power.

Population Size and Demographics

Chad has a population of over 19 million people, which is young and growing rapidly. However, the country faces a severe humanitarian crisis, hosting one of the largest refugee populations in Africa, particularly from neighboring Sudan, which places immense strain on its limited resources.

Urbanization and Consumer Hubs

The country is sparsely populated, with the capital city, N'Djamena, being the only major urban center and the hub of all formal economic and administrative activity.

Business Environment

The business environment in Chad is exceptionally challenging, ranked among the most difficult in the world.

Ease of Doing Business & Regulatory Reforms

Insecurity, political instability, endemic corruption, and a weak legal framework create a high-risk environment for investors. While a national investment promotion agency exists, its effectiveness is limited.

Political Stability & Governance

Chad has been characterized by long-standing political instability and authoritarian rule.

Political Environment

The country has been governed by a transitional military council following the death of its long-time president in 2021. The political situation is fragile, marked by a delayed transition to civilian rule and ongoing internal and external security threats.

Rule of Law & Investor Protection

The rule of law is weak, and contract enforcement is unreliable. The judicial system is not independent, and there is little effective protection for foreign investors.

Infrastructure Readiness

Infrastructure is extremely underdeveloped, a major impediment to any form of trade or economic development.

Transport and Logistics

As a vast, landlocked country, Chad is entirely dependent on long and difficult transport corridors through Cameroon to the port of Douala for its external trade. The road network is poor and largely unpaved, making transport slow, expensive, and often impossible during the rainy season.

Energy Sector

Access to electricity is among the lowest in the world, with coverage limited to a small fraction of the population in the capital. The country has significant, untapped solar energy potential, but the security and financial barriers to large-scale projects are prohibitive.

Sector-Specific Opportunities

Given the extreme political, security, and operational risks, investment opportunities are minimal and largely confined to sectors supported by development finance institutions or those with a very high tolerance for frontier risk.

1. Oil Exploration

The oil sector remains the only significant area of foreign investment, though it is dominated by a few major players.

2. Agriculture (Gum Arabic)

Chad is one of the world's largest producers of gum arabic. There is potential to formalize and expand this sector for export.

3. Livestock

Livestock is a cornerstone of the rural economy. There are long-term opportunities in improving the value chain for meat and leather exports, but this is constrained by a lack of infrastructure and market access.