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Quick Facts
- Population:
- GDP (PPP):
- $28.6 billion
- -3.1% growth
- 1.0% 5-year compound annual growth
- $2,344 per capita
- Unemployment:
- Inflation (CPI):
- FDI Inflow:
Chad’s economic freedom score is 49.9, making its economy the 159th freest in the 2019 Index. Its overall score has increased by 0.6 point, with improvements in fiscal health, labor freedom, and monetary freedom exceeding declines in business freedom and trade freedom. Chad is ranked 36th among 47 countries in the Sub-Saharan Africa region, and its overall score is well below the regional and world averages.
After a deep economic contraction, economic growth in Chad resumed slowly in 2018 as higher global prices drove rising oil production. Modest economic recovery in Nigeria, an important trading partner, also provided a slight boost for external demand, as did partial privatization of the cotton parastatal. The burden of servicing the external debt remained particularly heavy in 2017 at around 40 percent of fiscal revenue. The state’s presence in the economy is still considerable. The weakness of the overall regulatory and legal framework hinders private-sector development.
Background
A former French colony, Chad endured three decades of civil war and invasions by Libya before the restoration of peace in 1990. A rebellion in northern Chad flares up sporadically, and Chad remains locked in combat with the Islamist terrorist group Boko Haram, based in neighboring Nigeria. President Idriss Déby, who seized power in 1990, won a fifth term in 2016, touching off large protests. In 2018, a new constitution expanded presidential power and restored term limits, but they will not be retroactive so will not apply to Déby. Landlocked Chad pays dearly for imported goods, and oil accounts for approximately 60 percent of export revenues. Cotton, cattle, livestock, and gum arabic provide the bulk of nonoil exports.
Protection of private property is undermined by the lack of titles or deeds. Fraud in property transactions remains common, and the costs to register property are high. The rule of law is weak, and the judiciary lacks real independence. Corruption is endemic at all levels of government, from the siphoning off of the nation’s oil wealth by the presidential cabinet to petty corruption by local officials.
The top individual income tax rate is 60 percent, and the top corporate tax rate is 45 percent. Other taxes include value-added and property taxes. The overall tax burden equals 5.3 percent of total domestic income. Over the past three years, government spending has amounted to 15.9 percent of the country’s output (GDP), and budget deficits have averaged 2.4 percent of GDP. Public debt is equivalent to 52.5 percent of GDP.
The absence of modern commercial regulations imposes considerable costs on businesses, as do such other institutional deficiencies as a lack of access to financing. The labor market is mostly informal, and the workforce remains mostly unskilled. The government subsidizes inefficient state-owned enterprises, and the country’s economy is distorted by heavily subsidized oil.
The combined value of exports and imports is equal to 73.5 percent of GDP. The average applied tariff rate is 16.4 percent. There are few formal restrictions on trade and investment, but the overall investment environment remains challenging because of various burdens on private enterprises. Chad’s capital market is underdeveloped. Less than 10 percent of personal and small-business financial transactions passes through formal banks.