Chad - Economy

Water-resource limitations are the critical factor influencing the Chadian economy. Much of the country is desert suitable only for very limited agriculture and livestock production, while the remainder is threatened by periodic drought. Petroleum and natron are the principal mineral resources. Key industry is centered on cotton processing. Periodic civil war has compounded Chad's chronic negative trade imbalance. It was estimated that the Chadian GDP grew by approximately 0.6% during 2000 and was forecast to grow considerably after oil from the Chad-Cameroon pipeline was expected to begin flowing in 2004.

Services was Chad's primary sector, accounting for 45% of GDP in 2000, but agriculture employs the majority of Chadians. Approximately 85% of the population engages in farming and livestock, accounting for 38% of the GDP in 2000. Sorghum, millet, and groundnuts are the principal food crops, while cassava, rice, dates, maize, and wheat augment domestic consumption. While most groundnut production is consumed locally or turned into oil, Chadian groundnuts also make their way to Central African markets. Chad also has a successful sugar production agroindustry. Cotton is a principal export commodity, but the sector suffered considerably from a variety of ills. The 75% state-owned cotton company was reorganized in 1986, but a steady decline in international prices for cotton reduced foreign exchange earnings in the late 1980s. Cotton's share of total exports fell from 80% in 1990 to 40% in 1999.

Livestock production accounted for 12% of exports in 2000. Much of the industry is conducted following seasonal rain patterns and, as a result of the extended drought, is increasingly centered in the south.

In January 1994 France suddenly devalued the CFA franc, causing its value to drop in half overnight. Immediately, prices for almost all imported goods soared, including prices for food and essential drugs, like those to combat malaria. The devaluation, long expected in the investment community, was designed to encourage new investment, particularly in the oil sector, and discourage the use of hard currency reserves to buy products that could be grown domestically. In 1999, an American-led group (Exxon, Shell, and Elf) planned to produce 150,000 to 250,000 barrels of oil per day from fields in the Doba region in the south of Chad, from reserves estimated at one billion barrels. A pipeline was planned through Cameroon to refineries in that country. Smaller oil reserves north of Lake Chad were slated to be used by the government for power generation.