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2013 Investment Climate Statement - Chad


2013 Investment Climate Statement
Bureau of Economic and Business Affairs
April 2013
Report
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Openness to, and Restrictions upon, Foreign Investment

The government of Chad (GOC) officially encourages foreign direct investment (FDI) and there are few formal restrictions on foreign trade and investment. Chad’s investment climate remains challenging, however, due to its geographic isolation, limited infrastructure, a lack of trained workers, high import duties, and corruption. The National Investment Charter of 2008 offers incentives for foreign companies establishing operations in Chad, including three years of tax-exempt status. Chadian law guarantees the rights of foreign and domestic entities to establish and own business enterprises and to engage in remunerative activities, and the National Investment Charter offers the possibility of full foreign ownership for all companies in Chad, with the exception of those affecting national security. In recent years the GOC has fully or partially privatized some state-owned enterprises (SOEs). Foreign companies seeking to invest in former SOEs are afforded the same treatment as Chadian nationals under the Investment Charter. In principal, tenders for foreign investment in SOEs and for government contracts are done through open international bid procedures, but in practice such arrangements are usually made through direct agreements between the GOC and individual companies. Foreign companies desiring to invest in the oil and mining sectors should directly contact the concerned ministries.

There are no official screening mechanisms, such as national content criteria or restrictions, for foreign investments in Chad, although there are requirements for hiring local nationals. Foreign businesses interested in investing in Chad should contact the National Agency for Investment and Exports (ANIE), a one-stop shop for filing the legal forms needed to start a business. The process officially takes 72 hours and is the only legal requirement for investment. In addition, most foreign corporations operating in Chad have taken the extra step of signing contracts directly with the GOC. These contracts are individually tailored to each investment, and often include additional incentives offered by the GOC as well as concessions from companies, such as agreements to work with specific local suppliers. Contracts are often confidential, and the specifics are worked out on a case-by-case basis by the GOC and the interested investors. There have been cases of government ministries attempting change the terms of agreements or apply new laws broadly, even to companies that have preexisting agreements that exempt them. Chad’s judicial system is weak and judicial outcomes, including those relating to contract disputes, are subject to direct influence by the government. There is limited capacity within the judiciary to address commercial issues, including contract disputes. In the absence of an effective judiciary, companies usually try to resolve disputes directly.

A number of new commercial activities and foreign investment projects were launched in 2012 in Chad. Major economic activities included construction of new roads and bridges, government office buildings, and oil infrastructure, including pipelines. Plans for future foreign investment in Chad include the construction of a new international airport, a railway connecting the country to the sea via neighboring countries, and an industrial zone 40 km outside N’Djamena. Despite an increasing number of large-scale projects, the economy remains underdeveloped and the majority of the population works in the informal economy or survives on subsistence agriculture.

Measure

Year

Index/Rating

TI Corruption Index

2012

165 out of 175

Heritage Economic Freedom

2012

166 out of 179

World Bank Doing Business

2013

184 out 185

MCC Government Effectiveness

2013

-0.52 (18%)

MCC Rule of Law

2013

-0.55 (11%)

MCC Control of Corruption

2013

-0.38 (18%)

MCC Fiscal Policy

2013

-4.0 (42%)

MCC Trade Policy

2013

55.6 (10%)

MCC Regulatory Quality

2013

-0.26 (27%)

MCC Business Start Up

2013

0.604 (4%)

MCC Land Rights Access

2013

0.43 (14%)

MCC Access to Credit

2013

28 (61%)

Conversion and Transfer Policies

There are no restrictions on the transfer of funds from and into Chad via banks and international financial intermediaries, but any individual who wishes to transfer money exceeding USD 1,000 out of Chad must provide documentation of the source and purpose of the transfer to the local bank conducting the transfer. Additional requirements exist for companies intending to transfer more than USD 800,000 out of the country. Approvals are routine, although the government has occasionally restricted capital outflows for temporary periods. There were no reports of any such restrictions being levied in 2012. Businesses can obtain approvals in advance for regular money transfers.

Chad is a member of the African Financial Community (CFA) and uses the CFA Franc (FCFA) as its currency. The FCFA is pegged to the Euro at a fixed rate; since 2002 the rate has been 655.99 to the Euro. In 2012, the CFA/USD exchange rate fluctuated between 496 and 518 FCFA, as a function of the performance of the USD against the Euro. There are no difficulties in obtaining foreign exchange.

As a member of the Economic Community of Central African States (CEMAC), Chad shares a central bank with Cameroon, the Central African Republic, Equatorial Guinea, Gabon, and the Republic of Congo. Individuals or companies need authorization from the Central African Economic Bank (BEAC) for transfers exceeding USD 800,000, and such authorization may require up to three working days to process at BEAC’s headquarters located in Yaoundé, Cameroon. To request authorization for a transfer, a company or an individual must submit contact information for the sender and recipient, a delivery timetable, and proof of the sender’s identity.

Expropriation and Compensation

The law guaranties that no business will be subject to nationalization or expropriation except in cases where such expropriation is “in the public interest”. There has been no known government expropriation of foreign-owned private property in recent years, and no indications that the GOC intends to expropriate foreign property in the near future. Article 41 of Chad’s Constitution prohibits seizure of private property except in cases of urgent public need. A 1967 Land Law prohibits deprivation of ownership without due process, and stipulates that the state may not take possession of expropriated properties until 15 days after the payment of compensation. There are no laws that force local ownership of property and foreigners may own land. The government is actively working to reform the 1967 law. A new law which is expected to take effect in 2013 would encourage foreign companies to own property instead of renting offices.

Dispute Settlement

Chad’s legal system and commercial law is based on the French Civil Code, though the constitution recognizes customary and traditional law in locales where it is long-established and to the extent it does not interfere with public order or constitutional guarantees of equality for all citizens. In addition, the law is affected by international arrangements among the member states of the CEMAC, CEEAC and the Organisation for the Harmonization of Business Law in Africa (OHADA). OHADA in particular has strongly influenced Chadian business law by promulgating an international court to ensure uniformity and consistent legal interpretations across its member countries. The OHADA Investment Arrangement, with provisions for securities, arbitration, dispute settlement, bankruptcy, recovery and other aspects of commercial regulation, spells out rights for approved creditors in various categories (e.g., the Chadian Treasury, wage earners, etc).

Chad’s court system officially covers commercial disputes, but its ability to do so is highly limited based on lack of capacity and limited expertise of officials in these matters. Judges are appointed by the Chadian President without National Assembly confirmation, making them vulnerable to influence from the executive branch. Monetary judgments are usually awarded in local currency, although they can be awarded in other currencies when disputes concern transactions initially made in a foreign currency.

In 2005, Chad established five commercial tribunals to share information on business law and to settle disputes. The N’Djamena tribunal has dealt with cases brought by foreign companies. Firms not satisfied with judgments in these tribunals have recourse to OHADA’s regional court in Abidjan; several Chadian companies have pursued dispute-settlement through the OHADA mechanism. CEMAC established a regional court in N’Djamena in 2001 to hear business disputes, but this body is not widely used.

Contracts and investment agreements can stipulate arbitration procedures and jurisdictions for settlement of disputes. If both parties are in agreement and provisions do not run counter to Chadian law, Chad’s courts will respect the judgments of U.S. or other foreign courts. In the absence of specification, the accepted principle is that jurisdiction belongs in the nation where a given agreement was drafted. This principle applies to disputes between companies and the Chadian government.

Bilateral judicial cooperation exists between Chad and certain nations. In 1970, Chad signed the Tananarive Convention, covering the discharge of judicial decisions and serving of legal documents, with eleven other former French colonies (Benin, Burkina Faso, Cameroon, CAR, Congo-Brazzaville, Gabon, Cote d’Ivoire, Madagascar, Mauritania, Niger and Senegal.) Chad has similar arrangements in place with France, Nigeria and Sudan. Chad is also a member of the International Center for the Settlement of Investment Disputes (ICSID, also known as the Washington Convention.)

Performance Requirements and Incentives

Chad’s National Investment Charter of 2008 provides tax exemptions from five to ten years for foreign investors in areas that could have a significant benefits for Chad’s economy, specifically in rural development. Foreign investors may also ask the GOC for other incentives as part of investment-specific negotiations. Large companies usually sign separate agreements with the government, which contain mutually negotiated incentives and obligations. The possibility of special tax exemptions exists for some public procurement contracts, and a preferential tax regime applies to contractors and sub-contractors in major oil projects. In the past, the government occasionally offered lower license fees in addition to ad hoc tax exemptions. Incentives tend to increase with the size of a given investment, its potential for job creation, and the location of the investment, with rural development being a GOC priority. Investors may address inquiries about possible incentives directly to the Ministry of Commerce.

Chad does not impose any performance, local content or export requirements on businesses. Some conventions signed between the GOC and specific companies, however, may include obligations for purchasing local materials. There is no requirement that technology or proprietary business information be transferred to Chadian companies or the GOC. There are likewise no government-imposed conditions on authorization to invest, such as location in specific geographical area, use of a specific percentage of local content (goods and services) or local equity, substitution for imports, export requirements or targets, legal requirements to use specific employment agencies, technology transfer, or local sources of financing. There is, however, a legal requirement that obliges foreign companies to employ locals for 98 percent of their staff. Firms can formally apply for permission from the Labor Promotion Office (ONAPE) to employ a greater percentage of expatriates than the formally-allowed two percent if they can demonstrate that skilled local workers are not available. Most foreign firms operating in Chad have been able to do this.

Work permits, which need to be renewed annually, are required for all foreign workers in Chad. Prior to 2009, work permit fees for foreign employees were set at the equivalent of USD 1,000 per year. In 2009, Chadian President Idriss Deby Itno signed two decrees raising these fees considerably. The first decree stipulated that work permit fees be equivalent to one month’s salary for foreign workers. The second required firms wishing to hire foreign employees to demonstrate that finding local skilled workers was impossible and to present files of local candidates not selected for given jobs to the GOC for review. Multinational companies protested these measures. In 2010 the Prime Minister made a verbal announcement to other foreign businesses that they did not have to abide by the decrees and could continue paying FCFA 500,000 (USD 1,000) per year per employee for their work permits. In late 2012, the Ministry of Labor reversed this informal agreement and notified foreign firms that they would have to begin paying one month’s salary as a work permit fee for all foreign employees. The Ministry said the new fees would apply even to companies that had special agreements with the government exempting them from such fees. While many foreign companies operating in Chad have since been able to individually negotiate paying lower fees than those described in the presidential decree, the decree remains in place and the government may choose to enforce it again at any time.

There are no tariffs (custom duties) for products entering Chad that are produced within the CEMAC region, besides the 18% of value added tax. Products imported from outside the CEMAC region are subject to customs duties falling under four tariff rate categories:

  • Products of Primary Necessity (e.g. flour, rice, etc.): 5 percent
  • Primary Materials and Equipment: 10 percent
  • Intermediate Goods (e.g. tools, tires, etc.): 20 percent
  • Consumer Goods (e.g. canned foods, electronics, etc.): 30 percent.

In addition to the above regular custom duties, there are also other supplementary taxes, including a tax of 20 percent on luxury products (such as televisions, audiovisual equipment, air conditioners, automobile radios, CD laser discs, home appliances, etc.) and a tax of 51 percent on new automobiles. An 18 percent value added tax is applied to all goods, and a two percent “statistical tax” is applied to all goods entering or leaving Chad, including all exports. In early 2013, companies that had signed contracts with the government alleviating them from paying the statistical tax began reporting that the government is now demanding that they pay the tax. Cover shipping insurance for in-land travel between Douala, Cameroon and the Chadian border is decided upon by agreement between importers and providers.

Right to Private Ownership and Establishment

Foreign and domestic private entities have the legal right to establish and own business enterprises and engage in remunerative activity, as well as to freely establish, acquire, and dispose of interests in business enterprises.

Protection of Property Rights

Property rights are protected by the Chadian Civil Code, but the GOC has a limited capacity to enforce them. OHADA arrangements put into place in 1998 improved existing property laws, including those dealing with mortgages, making them consistent with French commercial law. The office of "Direction de Domaine et Enregistrement" in the Ministry of Finance is responsible for recording property deeds and mortgages. In practice, this office only asserts authority in urban areas; rural property titles are managed by traditional leaders who apply customary law. Chadian courts frequently deal with cases of multiple or conflicting titles to the same property, indicating that problems of corruption exist with the title registration system. In cases of multiple titles, the earliest title issued usually has precedence. Fraud is common in property transactions. By law, all land for which no title exists is owned by the government, and can only be given to a separate entity by Presidential decree. There have been incidents in which the government reclaimed land for which individuals held titles which were given to them by government officials without the backing of Presidential decrees. As part of the Chadian government’s anti-corruption efforts initiated in mid-2009, the Ministry of Infrastructure has put in place a computerized system designed to help detect false property titles. The Ministry is currently working on a new project to modernize property titles management. Launched in 2012, the project is expected to be implemented over five years by a French firm, and will significantly reduce the powers of traditional leaders to manage property titles.

Chad is a party to the 1958 Paris Convention and the 1977 Bangui Agreement on Intellectual Property Rights (IPR). The Bangui agreement groups together 16 other francophone African nations in the African Intellectual Property Rights Organization (OAPI). The GOC adheres to OAPI rules within the constraints of its limited administrative capacity. The Ministry of Trade and Industry has established an office to register copyrights, as well as a branch office of OAPI to process patent applications (valid in all OAPI states). In 2000, Chad's National Assembly adopted a 1999 OAPI standard on IPR designed to bring member states into compliance with the WTO's Trade-Related Aspects of Intellectual Property Rights (TRIPS) agreement, which specifies protections for software, literary works, sound recordings, and industrial patents.

Although legally prohibited, counterfeit watches, sports clothing, footwear, jeans, audio materials, cosmetics, perfumes, and other goods are readily available on the Chadian market. These products are not produced locally, and are generally imported through informal channels. Due to limited resources, Chadian customs officials make occasional efforts to enforce copyright laws, including by seizing counterfeit medicines, CDs, and mobile phones. Chad signed the WTO TRIPS agreement on October 19, 1996 and the WIPO treaty in November, 1963 but it has not signed the WIPO Internet treaty.

Transparency of the Regulatory System

In the past, bureaucratic procedures for opening a business were cumbersome and slow for both Chadians and foreigners, consisting of as many as 15 steps and visits to several agencies and ministries. In 2010, the GOC created a National Investment Agency for Investment and Exportation (ANIE) to streamline the process and provide a single point of contact for foreign businesses and investors. Officially operational as of September 2011, the agency acts as a one-stop shop for all required approvals across the government. Anyone seeking to establish a new company can fill out forms at the Documentation Center at the Chamber of Commerce which are then forwarded to ANIE for processing within 72 hours. In 2012, an American investor completed the procedure and confirmed it took less than three days. ANIE is also in the process of putting in place a one-stop shop to streamline procedures for exporting Chadian products.

Formal sector businesses frequently complain about excessive taxation, which includes both high tax rates and at times duplicative or complex tax structures. The heavy tax burden has served to discourage investment and creates an unfair advantage for some informal businesses, particularly informal enterprises involved in small scale commercial activities. Labor laws tend to be restrictive and highly favorable to workers, making it difficult to fire employees. Efforts are being made in regional institutions and via technical assistance from the international financial organizations and EU towards simplifying tax laws and streamlining government procedures.

Chad was accepted on 16 April 2010 as a Candidate Country for the Extractive Industry Transparency Initiative (EITI). On October 15 2012 Chad applied and obtained an extension of its deadline for completing EITI validation. It submitted its first report to the EITI Board in October 2012. Though considered as a Candidate country that is “Close to Compliant”, Chad has until May, 2013 to complete the remedial actions needed to achieve compliance. The Board retains the right to require a new validation process if the remedial actions are not completed on time.

Efficient Capital Markets and Portfolio Investment

Due to its low level of economic development, Chad's financial system is limited in size. There are no capital markets or money markets in Chad, and no sophisticated financial products are available. A limited number of financial instruments are available to the private sector, including letters of credit, short- and medium-term loans, foreign exchange operations and some long-term savings instruments. Credit is allocated on market terms and foreign investors are able to get credit on the local market, however rates tend to be very high. Most foreign investors seek credit outside of Chad given the lack of local financial markets.

Chad’s banking sector improved after undergoing internal reforms beginning in 1990 to streamline lending practices and reduce the volume of bad debt. Three of Chad’s largest banks have been privatized: ECO BANK (formerly BIAT), Société General Tchad (formerly BTCD) and CBT (formerly BDT). Another bank, Orabank, is majority owned by an American investor. Two Libyan banks are established in Chad: BCC (formerly la Banque libyenne) and BSCIC, along with one Nigerian Bank (UBA). A number of European banks have long maintained offices in Chad. Credit is available from commercial banks on market terms, which are expensive, often at rates of 16 to 25 percent for short-term loans. Medium-term loans are difficult to obtain, as lending criteria are rigid. Most large businesses maintain accounts with foreign banks. There are ATMs in some major hotels and in some neighborhoods of N’Djamena.

Regulations and financial policies generally do not impede competition in the financial sector. Legal, regulatory and accounting systems pertaining to banking are transparent and consistent with international norms. Chad’s banking sector is regulated by COBAC (Commission Bancaire de l'Afrique Centrale), a regional agency. Chad began using OHADA’s accounting system in 2002, bringing its national standards into harmony with accounting systems throughout the region. Several internationally-known accounting firms have personnel in Chad. There is no effective regulatory system to encourage or facilitate portfolio investments.

Although there is no stock market in Chad, there are two nascent stock markets in the region. A small regional stock exchange, known as the Central African Stock Exchange, in Libreville, Gabon, was established by CEMAC countries in 2006. Cameroon, a CEMAC member, launched its own market in 2005. Both exchanges are poorly capitalized, and Chadian companies are not listed on either.

Competition from State-Owned Enterprises (SOEs)

The GOC operates SOEs in a number of sectors, including electricity, petrol, water, cement, agriculture and telecommunications. There were no reports of discriminatory action taken by SOEs against the interests of foreign investors in 2012, and some foreign companies operated in direct competition with SOEs. Chad’s Public Tenders’ Code (PTC) provides some preferential treatment for domestic competitors, including SOEs; however the GOC is in the process of reviewing and removing provisions that conflict with WTO obligations.

SOEs are subject to limited government financing under the national budget law, however in practice the budget is not respected. The state takes a direct hand in the management of SOEs, and state and company funds are not always separated in practice. All Chadian SOEs operate under the umbrella of government Ministries. Each SOE is managed by a Board of Directors and an Executive Board. The heads of SOE Boards of Directors are appointed by the President of the Republic, and have in the past included relatives of the President. Executive Boards are managed by CEOs who are also appointed by the President. The Boards of Directors give general directives over the year and the Executive Boards develop management strategies through general guidelines set by the Boards of Directors. Some Executive Directors consult with their respective Ministries before making business decisions but others do not.

Corporate Social Responsibility (CSR)

Most Western firms operating in Chad are aware that they bear a burden for social responsibility, given extremely low local health, safety and environmental standards compared to those that prevail in their countries of origin. Western firms are generally committed to extensive staff training efforts, purchasing of local goods where possible, and donating excess equipment to charity. While work safety and environmental protection regulations exist, they are not always enforced by the government or adhered to by companies. There are a variety of local NGOs, particularly in the southern oil producing regions, which monitor safety and environmental protection in the oil sector, and have held government and private companies publically accountable in the past.

Political Violence

Chad has been politically unstable for much of its post-independence history. It suffered its most recent period of instability from 2005 to 2008, in connection with the Darfur crisis in neighboring Sudan. During this period the governments of Chad and Sudan fought a proxy war by supporting rebel movements in each other’s territory. In 2006 and 2008, Chadian rebel fighters entered the capital of N’Djamena but were repelled by the Chadian military after intense fighting. In 2009, Chadian rebels clashed again with the Chadian national army in eastern Chad. In January 2010, an agreement between the governments of Chad and Sudan committed the two nations to ceasing support for respective rebels and to ending the proxy war. The resulting peace has ushered in one of the most stable periods in Chad’s history. Domestic tensions between the ruling party and opposition groups increased in 2012, however, following a series of elections in which President Deby’s ruling MPS party maintained control of the government. Although there were few incidents of violent protest, 2012 was marked by several months of strikes by public sector workers, the arrest of union leaders and journalists by the government, and increasing public dissatisfaction with rising living costs. Although itself a poor country, Chad continues to host a significant number of refugees from neighboring countries, including approximately 250,000 refugees from Sudan. There have been no reported incidents over the past few years involving politically motivated damage to projects and/or installations, although kidnapping and banditry are persistent threats, particularly in rural areas.

Corruption

Chad has not ratified either the UN Convention on Preventing and Combating Corruption or to the OECD anti-bribery convention. Despite a February 2000 anti-corruption law stipulating penalties for corrupt practices, corruption continues to exist at all levels of government, and is consistently described by businesses as one of the largest obstacles to operating in Chad. As in other developing countries, low salaries for most civil servants, judicial employees, and law enforcement officials, coupled with a weak state system and culture of rent seeking, have contributed to corruption. Corrupt practices include bribery, non-transparent selection in public procurement, and embezzlement of public resources.

In 2011, the GOC launched a campaign to investigate and prosecute corruption cases at all levels of government. This campaign led to the arrest of several high ranking officials, including the Minister of Good Governance. President Deby, in many public addresses to the nation throughout 2012, pledged to continue the campaign to eliminate corruption from Chadian public life and promised prosecution of those who accepted kickbacks or demanded bribes. In May 2012 the GOC launched “Operation Cobra”: a nationwide anti corruption campaign which has succeeded in recovering around USD 50 million in embezzled funds. Despite these efforts and expressions of commitment, charges against those indicted for corruption are routinely dropped without explanation, and the individuals accused are sometimes promoted or reinstated in different government positions.

Bilateral Investment Agreements

The U.S. has neither an investment treaty nor a bilateral tax agreement with Chad. Chad has signed bilateral investment treaties with approximately a dozen countries, most of them in Europe, Africa and the Middle East. These agreements include:

COUNTRY

AGREEMENTS

Algeria

- Trade Agreement, signed on February 9,1990

- Friendship and Cooperation Protocol Agreement, signed on March 27, 1990

Cameroon

- Cooperation Agreement on Economic and Customs matters, August 20, 1970

Canada

- Economic and Technical Cooperation Agreement

Central African Republic

- Economic Cooperation Agreement, December 10, 1980

Czech Republic

- Trade Agreement, signed on February 13, 1997

Democratic Republic of Congo

- Economic, Scientific, Social and Cultural Cooperation Agreement, signed November 18, 1987

- Trade Agreement, signed on November 16, 1987

Egypt

- Trade Agreement, October 14, 1994

- Convention on Promoting and Protecting investments, no date

France

- Multiform Agreements (trade and assistance)

Iran

- Agreement on creating a Mixed Commission for Cooperation, signed on July 17, 1997

Iraq

- Trade, Economic and Scientific Cooperation Agreement, August 21, 1989

Morocco

- Trade and Tariff Convention, December 4, 1997

Niger

- Cooperation Framework Agreement November 9, 1976

- Agreement on creating a Mixed Commission for Cooperation, no date

Nigeria

- Economic, Scientific, and Technical Agreement Cooperation, December 10, 1986

- Framework Agreement on Trade, April 9, 1971

Republic of Congo

- Air Transport Agreement signed on October 19, 1988

- Transport and Cultural and Scientific Cooperation Agreement, signed on October 19, 1988

Romania

- Trade Agreement, signed on November 5, 1969

Russia

- Economic and Technical Cooperation Agreement, signed on February 17, 1968

South Africa

- Trade Agreement, signed in 1994

The Netherlands

- Assistance Cooperation Agreement, signed on August 8, 1988

Tunisia

- Framework Agreement on Economic, Scientific,Cultural and Technical Cooperation, October 9, 1998

- Agreement creating Mixed Commission for Cooperation, September 9, 1998

Turkey

- Trade, Economic, Scientific and Technical Cooperation Agreement, signed on October 14, 1999

OPIC and Other Investment Insurance Programs

Chad is a member of the Multilateral Investment Guarantee Agency (MIGA), and the U.S. Overseas Private Investment Corporation has issued political risk investment insurance to U.S. companies in Chad. The French investment guarantee agency, COFACE, has also guaranteed a number of investments in Chad. The annual average exchange rate is approximately 500 FCFA = 1 USD. Given that the FCFA is fixed to the Euro, any devaluation or depreciation of the rate is illustrative of changes in the Euro/USD rate. At the average rate of 500 FCFA/USD, the US Embassy purchased FCFA worth approximately USD 6 million in 2012.

Labor

Chad has a shortage of skilled labor in most sectors due to weaknesses in the education system. Although there is an increasing pool of university graduates able to fill entry-level management and administrative positions, skilled workers still represent a very small percentage of the total labor pool. About 80 percent of the labor force is engaged in subsistence activities such as fishing, farming, and herding, and the majority of the population is illiterate. Unskilled and day laborers are readily available. Very few Chadians speak English, although a small but increasing number of university graduates and business professionals have English skills. Acceptable translators and interpreters are available.

Chadian labor law derives from French law and tends to include greater protections for workers than U.S. law. Labor unions exist and operate independently from the government. There are two main labor federations, the “Confederation Libre des Travailleurs du Tchad” (CLTT) and the "Union des Syndicats Tchadiens" (UST), to which most individual unions belong. Most Chadian businesses operate in the informal economy, where labor laws are widely ignored.

Foreign Trade Zones/Free Ports

There are currently no foreign trade zones in Chad. The Chadian Agency for Investment and Exportation (ANIE) is currently examining the possibility of creating a duty-free zone.

Foreign Direct Investment Statistics

The onset of greater peace and stability following the 2010 peace accord with Sudan has seen a substantial increase in Foreign Direct Investment (FDI) into Chad. FDI increased over 300 percent between 2008-2011, from USD 234 million in 2008 to USD 1.8 billion in 2011, according to the United Nations Conference on Trade and Development (UNCTAD). In 2011, FDI inflows constituted approximately 18 percent of Chad’s total GDP of USD 9.5 billion. Private Chadian investment overseas remains negligible.

By far the largest source of FDI in Chad is the Chad-Cameroon Oil Development Project. The project is funded by a consortium including two American oil companies, Exxon Mobil and Chevron, and a Malaysian company, PETRONAS. The project began producing oil in the Doba region of southern Chad in 2003 and transporting it via a 1,000 km pipeline to the coast at Kome, Cameroon for export. The consortium has invested over USD 3.0 billion in maintaining oil production levels and employs over 6,000 local staff. Since its inception the project has resulted in over USD 7.4 billion in revenues for the GOC, representing on average over 60% of the annual GOC budget.

Other major examples of FDI include an oil refinery constructed and operated by a 40/60 joint venture between the GOC and China National Petroleum Company (CNPC). The refinery, which began operations in July 2011, can refine up to 20,000 barrels per day, principally from the CNPC drilling project located in southern Chad. Chinese companies are also involved in constructing roads throughout the country, and a Chinese cement factory is currently being operated as an SOE by the GOC. Canadian companies are also finding their way in the oil sector, with one firm expected to begin exporting crude oil in 2013 and two others in the exploratory stage.

Major foreign hotel brands in N’Djamena include the Meridian (American), Novotel (French), and Kempinski (the N’Djamena branch of which is Libyan owned). A new five-star Hilton hotel is being built by an American company and is scheduled to open in late 2013. International restaurants owned by expatriates in N’Djamena include French, Lebanese, Chinese, and Ethiopian restaurants. There are currently no international franchise restaurants or retail chains in Chad, but some local businesses have expressed interest in franchising opportunities with U.S. companies.



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