The biggest challenges to U.S. companies operating in Chad include the country’s dependence on global oil prices, low consumer purchasing power, difficult business and investment climate, and underdeveloped capital market.
Government spending and consumer purchasing power are highly dependent on global commodity prices. Chad’s economy remains heavily reliant on oil production and agriculture and is highly vulnerable to external factors, such as global oil and food prices and drought. Chad has struggled to build economic momentum since oil prices fell in 2014. The COVID-19 pandemic halted Chad’s modest economic recovery following a 2016-2017 recession caused by low global oil prices and onerous debt payments.
Chad’s business and investment climate is challenging. Private sector development is hindered by poor transport infrastructure, lack of skilled labor, minimal and unreliable electricity supply, limited telecommunications infrastructure, government bureaucracy, weak contract enforcement, corruption, and high tax burdens on private enterprises. Frequent border closures with neighboring countries, exacerbated by COVID-19 restrictions, complicate international trade. Recurring rotations of key ministers and overzealous customs inspectors present further roadblocks. Skilled labor is extremely limited and companies that try to bring experts for projects face strict limits on the employment of foreigners. Article 31 of the 2020 Finance Law requires companies to provide a reimbursable deposit of up to 0.5 percent of expected annual revenue to the GOC to complete registration.
Chad’s capital market is underdeveloped. Less than 10 percent of personal and small business financial transactions pass through formal banking systems. Private sector financing is limited, and low GDP growth constrains government investment and private sector spending.