HomeReportsBureau of Economic and Business Affairs2018 Investment Climate Statements...Chad

# 					2018 Investment Climate Statements: Chad			

 In this section										/

													Executive Summary											

                -  Executive Summary 
                -  1. Openness To, and Restrictions Upon, Foreign Investment   
                -  2. Bilateral Investment Agreements and Taxation Treaties   
                -  3. Legal Regime   
                -  4. Industrial Policies   
                -  5. Protection of Property Rights   
                -  6. Financial Sector   
                -  7. State-Owned Enterprises   
                -  8. Responsible Business Conduct   
                -  9. Corruption   
                -  10. Political and Security Environment   
                -  11. Labor Policies and Practices   
                -  12. OPIC and Other Investment Insurance Programs   
                -  13. Foreign Direct Investment and Foreign Portfolio Investment Statistics   
                -  14. Contact for More Information   

## Executive Summary

Chad is one of Africa’s largest countries, with a land area of 1,284,000 square kilometers that encompasses three agro-climatic zones. Chad is a landlocked country bordering Libya to the north, Sudan to the east, Central African Republic (CAR) to the south, and Cameroon, Niger, and Nigeria on the west (with which it shares Lake Chad). The nearest port, Douala, Cameroon, is 1,700 km from the capital, N’Djamena. Chad is one of six countries that comprise the Central African Economic and Monetary Community (CEMAC), a common market.

Chad’s human development is low according to the Human Development Index (HDI), and poverty continues to afflict a large proportion of the population. Since oil production began in 2003, the petroleum sector has dominated economic activity and has been the largest target of foreign investment. However, agriculture and livestock breeding are important economic activities that employ the majority of the population, and the government has prioritized these sectors in an effort to diversify the economy and to maximize non-petroleum tax receipts in the wake of the drop in global oil prices.

The Government of Chad (GOC) has focused on improving internal economic and social conditions. Unfortunately, its efforts have been constrained by regional instability arising from the continued threat of terrorist attacks by Boko Haram, an influx of refugees along the Chad-Sudan-Central African Republic (CAR) border, and dramatic reductions in oil revenues, which make up 70 percent of government revenue, due to the fall in global oil prices. This triple threat has forced the GOC to adopt a tighter 2017 budget that accounts for both the drop in oil revenues and government austerity measures implemented in the fall of 2016. In 2017, Chad adopted its National Development Plan (NDP), which cost just over USD 9 billion, with a financing gap of USD 6.7 billion. The NDP emphasized the importance of private sector participation in Chad’s development, as well as the need to improve the business environment, particularly in priority sectors such as mining and agriculture.

Chad and Glencore reached a deal after long negotiations. The new terms for the USD 1.45 billion include an extension of the maturity from 2022 to 2030, a two-year grace period on principal payments, and a lower interest rate of Libor plus 2 percent, down from Libor plus 7.5 percent. In addition, the agreement includes a supply guarantee for the Djermaya refinery (40 km north of N‘Djamena). Chad has cut public spending to try and meet the terms of the IMF program, prompting strikes and protests when it halved civil servants’ bonus pay in January. The austerity program has increased social tension in a country where nearly 40 percent of the population lives below the poverty line.

The GOC is favorably disposed to foreign investment, with a particular goal of attracting North American companies. There are opportunities for foreign investment in Agribusiness; Agricultural, Construction, Building & Heavy Equipment; Architecture & Engineering; Automotive & Ground Transportation; Education; Energy & Mining; Environmental Technologies; Food Processing & Packaging; Health Technologies; Industrial Equipment & Supplies; Information & Communication; and Services.

Chad’s business and investment climate remain challenging. Private sector development is hindered by poor transport infrastructure, lack of skilled labor, unreliable energy, weak contract enforcement, corruption, and high tax burdens on private enterprises.

*Table 1*

							1. Openness To, and Restrictions Upon, Foreign Investment					

**Policies Toward Foreign Direct Investment**

The GOC’s policies towards foreign direct investment (FDI) are generally positive. There are few formal restrictions on foreign trade and investment.

Chad’s laws and regulations encourage FDI. The National Investment Charter of 2008, a set of guildelines promulgated by the National Agency for Investment and Exports (ANIE, *Agence Nationale des Investissements et des Exports*), an agency of the Ministry of Industrial and Development & Private Sector Promotion, offers incentives to foreign companies establishing operations in Chad, including up to five years of tax-exempt status. Under Chadian law, foreign and domestic entities may establish and own business enterprises. The National Investment Charter permits full foreign ownership of companies in Chad. The only limit on foreign control is on ownership of companies deemed related to national security. The National Investment Charter guarantees both foreign companies and individual’s equal standing with Chadian companies and individuals in the privatization process. In principle, tenders for foreign investment in state-owned enterprises (SOEs) and for government contracts are conducted through open international bid procedures.

**Limits on Foreign Control and Right to Private Ownership and Establishment**

There are no limits on foreign ownership or control. There are no sector-specific restrictions that discriminate against market access for U.S. investors.

**Other Investment Policy Reviews**

The World Trade Organization (WTO) last published a trade policy review for Chad, Cameroon, Republic of Congo, Gabon, and Central African Republic in July 2013.

Neither the Organization for Economic Cooperation and Development (OECD) nor the United Nations Committee on Trade and Development (UNCTAD) has published any investment policy reviews (IPR) of Chad.

**Business Facilitation**

Foreign businesses interested in investing in or establishing an office in Chad should contact ANIE, which offers 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. ANIE’s website (www.anie-tchad.com ) provides additional information. Online business registration is not yet available via the Global Enterprise Registration web site (www.GER.co ) or the Business Facilitation Program (www.businessfacilitation.org ). However, ANIE aims to join these initiatives in the near future.

In 2017, the World Bank ranked Chad 180 out of 190 countries for ease of starting a business.

Contracts are tailored to each investment and often include additional incentives and concessions, such as permissions to import labor or agreements to work with specific local suppliers. Some contracts are confidential. There have been reports where the government has changed the terms of contracts or apply new laws broadly, even to companies that have pre-existing agreements that exempt them. Chad’s judicial system is weak, and rulings, including those relating to contract disputes, are susceptible to government interference. There is limited capacity within the judiciary to address commercial issues, including contract disputes. Parties usually settle disputes directly or through arbitration provided by the Chamber of Commerce, Industry, Agriculture, Mining, and Crafts (CCIAMA) or through an outside entity, such as the International Chamber of Commerce (ICC) in Paris. The Ministry responsible for trade has intervened in a number of out-of-court settlements.

**Outward Investment**

The GOC does not offer any programs or incentives encouraging outward investment, although there no restrictions on domestic investors who might have the means and the interest in investing abroad.

							2. Bilateral Investment Agreements and Taxation Treaties					

Chad does not have a bilateral investment treaty (BIT) with the United States. Chad has signed bilateral investment treaties with Benin, Burkina Faso, China, Egypt, Germany, Guinea, Italy, Lebanon, Mali, Mauritius, Morocco, Qatar, and Switzerland.

Chad has not signed a Free Trade Agreement (FTA) with the United States but is eligible for tariff exemptions under the African Growth and Opportunity Act (AGOA). The GOC created an AGOA oversight committee in 2002. The bulk of Chad’s total exports under AGOA is crude oil. Chad is eligible for the Special Rule for Apparel.

Chad does not have a bilateral taxation treaty with the United States.

							3. Legal Regime					

**Transparency of the Regulatory System**

Chad is currently implementing effective laws to foster competition and establish clear rules based on Uniform Acts produced by the Organization for the Harmonization of Business Law in Africa (OHADA, *Organisation pour l’Harmonisation en Afrique du Droit des Affaires,*www.ohada.com ). However, in the current climate, certain Chadian and foreign companies in some sectors may encounter situations in which competition with other well-established companies is difficult.

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 began using OHADA’s accounting system in 2002, bringing its national standards into harmony with accounting systems throughout the region. Several international accounting firms have offices in Chad. However, while accounting, legal, and regulatory procedures are consistent with international norms, some local firms do not use generally accepted standards and procedures in their business practices.

There are no informal regulatory processes managed by nongovernmental organizations or private sector associations. Proposed laws and regulations are not published in draft form for public comment. The GOC occasionally provides opportunities for local associations, such as the National Council of Employers (CNPT, *Conseil National du Patronat Tchadien*) or the CCIAMA to comment on proposed laws and regulations pertaining to investment.

Chad is not yet listed on www.businessfacilitation.org .

**International Regulatory Considerations**

As indicated above, Chad is a member of OHADA. It is also a member of the Central African Economic and Monetary Community (CEMAC, *Communaute Economique et Financiere de l’Afrique Centrale,*www.cemac.int ) and OHADA. Chad is currently implementing business and economic laws and regulations based on CEMAC standards and OHADA Uniform Acts. Chad’s banking sector is regulated by COBAC (*Commission Bancaire de l’Afrique Centrale*), a regional agency.

**Legal System and Judicial Independence**

Chad’s legal system and commercial law are based on the French Civil Code. The constitution recognizes customary and traditional law if it does not interfere with public order or constitutional rights. Chad’s judicial system rules on commercial disputes in a limited technical capacity. The Chadian President appoints judges without National Assembly confirmation, and thus the judiciary may be subject to executive influence. Courts normally award monetary judgments in local currency, although it may designate awards in foreign currencies based on the circumstances of the disputed transaction.

Chad’s commercial laws are based on standards promulgated by CEMAC, OHADA, and the Economic Community of Central African States (CEEAC, *Communaute Economique des Etats de l’Afrique Centrale,*http://www.ceeac-eccas.org ). The Government and National Assembly are currently in the process of adopting legislation to comply fully with all these provisions.

Specialized commercial tribunal courts were authorized in 1998 but not operational until 2004. These tribunals exist in five major cities but lack adequate technical capacity to perform their duties. Firms not satisfied with judgments in these tribunals may appeal to OHADA’s regional court in Abidjan, Ivory Coast which ensures uniformity and consistent legal interpretations across its member countries and several Chadian companies have done so. OHADA also allows foreign companies to utilize tribunals outside of Chad, generally in Paris, France, to adjudicate business disputes. Finally, 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 agree and settlements do not violate Chadian law, Chadian courts will respect the decisions of courts in the nations where particular agreements were signed, including the United States. This principle also applies to disputes between foreign companies and the Chadian Government. Such disputes can be arbitrated by the International Chamber of Commerce (ICC). Foreign companies frequently choose to include clauses in their contract to mandate ICC arbitration.

Bilateral judicial cooperation is in effect between Chad and certain nations. In 1970, Chad signed the Antananarivo 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.

**Laws and Regulations on Foreign Direct Investment**

The National Investment Charter encourages foreign direct investment. Chad is a member of the Central African Economic and Monetary Community (CEMAC, *Communaute Economique et Financiere de l’Afrique Centrale,*www.cemac.int ) and the Organization for the Harmonization of Business Law in Africa (OHADA, *Organisation pour l’Harmonisation en Afrique du Droit des Affaires,*www.ohada.com ). Chad is currently implementing business and economic laws and regulations based on CEMAC standards and OHADA Uniform Acts.

Foreign investors using the court system are not generally subject to executive interference. In addition, the OHADA Treaty allows foreign companies to utilize tribunals outside of Chad, e.g., the ICC in Paris, France, to adjudicate any disputes. Companies may also access the OHADA’s court located in Abidjan, Cote d’Ivoire.

**Competition and Anti-Trust Laws**

Regulation of competition is covered by the OHADA Uniform Acts that form the basis for Chadian business and economic laws and regulations. The Office of Competition in Chad’s Ministry of Industrial and Commercial Development & Private Sector Promotion reviews transactions for competition-related concerns.

**Expropriation and Compensation**

Chadian law protects businesses from nationalization and expropriation, except in cases where expropriation is in the public interest. There were no government expropriations of foreign-owned property in 2017. There are 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, stipulating that the state may not take possession of expropriated properties until 15 days after the payment of compensation. The government continues to work on reform of the 1967 law. A draft law encourages foreign companies to own property instead of leasing.

**Dispute Settlement**

*ICSID Convention and New York Convention*

Chad has been a signatory and contracting state of the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (“ICSID Convention”) since 1966.

Chad is not a contracting state of the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (“New York Arbitration Convention”).

*Investor-State Dispute Settlement*

Chad is signatory to an investment agreement among the member states of CEMAC, CEEAC, and OHADA. The OHADA Investment Arrangement, with provisions for securities, arbitration, dispute settlement, bankruptcy, recovery, and other aspects of commercial regulation, has defined the commercial rights of several economic stakeholders, e.g., the Chadian Treasury, and provides for the enforcement of foreign arbitral awards. Chad has no Bilateral Investment Treaty (BIT) or Free Trade Agreement (FTA) with an investment chapter with the United States.

There is no formal record of the government’s handling of investment disputes. Some U.S. and other foreign investors have been involved in disputes with the GOC, particularly over issues regarding taxes and duties, though there are no official statistics. Investment disputes involving foreign investors are frequently arbitrated by an independent body.

*International Commercial Arbitration and Foreign Courts*

In addition to independent courts, such as the ICC, Chad’s constitution recognizes customary and traditional law as long as it does not interfere with public order or constitutional rights. As most businesses operate in the informal sector, customary and traditional law function as alternative dispute resolution (ADR) mechanisms when parties are from the same tribe or clan and express their desire to settle outside of the formal court.

Specialized commercial tribunal courts were authorized in 1998 and became operational in 2004. These tribunals exist in five major cities, but lack adequate capacity to perform their duties. The Commercial Tribunal N’Djamena has heard disputes involving foreign companies.

Foreign investors using the court system are not generally subject to executive interference. In addition, the OHADA Treaty allows foreign companies to utilize tribunals outside of Chad, e.g., the ICC in Paris, France, to adjudicate any disputes. Companies may also access the OHADA’s court located in Abidjan, Cote d’Ivoire.

**Bankruptcy Regulations**

Chad’s bankruptcy laws are based on OHADA Uniform Acts. According to Section 3, Articles 234 – 239 of OHADA’s Uniform Insolvency Act, creditors and equity shareholders may designate trustees to lodge complaints or claims to the commercial court collectively or individually. These laws criminalize bankruptcy and the OHADA provisions grant Chad the discretion to apply its own sentences.

The World Bank’s 2018 Doing Business Report ranks Chad’s ease of resolving insolvency at 150 of 189. This is decrease of four positions over 2017. The report is available at http://www.doingbusiness.org/data/exploreeconomies/chad/#resolving-insolvency .

							4. Industrial Policies					

**Investment Incentives**

The Chadian tax code (CGI, *Code General des Impots*) offers incentives to new business start-ups, new activities, or substantial extensions of existing activities. Eligible economic activities are limited to the industrial, mining, agricultural, forestry, and real estate sectors, and may not compete with existing enterprises already operating in a satisfactory manner (Articles 16 and 118 of the National Investment Charter). Under these conditions, operators can obtain a five-year exemption from the following taxes and charges: company tax (IS), in March 2015 reduced from 40 percent to 35 percent; personal income tax (IRPP), which was revamped in the 2018 Finance Law to increase personal income tax rates from 10 percent up to 30 percent on a graduated scale; real estate levies on developed land; real estate levies on undeveloped land; tax on the rental value of professional premises; the flat rate levy (*taxe forfaitaire*) and the apprenticeship levy; self-employment tax for small businesses; and the minimum fiscal levy.

Foreign investors may also ask the GOC for other incentives through 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 for major oil projects. The government occasionally offers 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 Industrial and Commercial Development & Private Sector Promotion, or the Ministry of Petroleum and Energy.

**Foreign Trade Zones/Free Ports/Trade Facilitation**

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.

**Performance and Data Localization Requirements**

Chad does not follow forced localization, the policy in which foreign investors must use domestic content in goods or technology.

Foreign companies are legally required to employ Chadian nationals for 98 percent of their staff. Firms can formally apply for permission from the Labor Promotion Office (ONAPE) to employ more than two percent expatriates if they can demonstrate that skilled local workers are not available. Most foreign firms operating in Chad have obtained these permissions. Foreign workers require work permits in Chad, renewable annually. Companies must present personnel files of local candidates not hired to the GOC for comparison against the profiles of foreign workers. Multinational companies and international non-governmental organizations routinely protest these measures. The Ministry of Labor applies the new fees to companies with previously-established special agreements with the government that exempt them from such fees. However, many foreign companies operating in Chad have individually negotiated paying lower fees than those prescribed in those presidential decrees.

There are no requirements for foreign IT providers to turn over source code and/or provide access to surveillance (backdoors into hardware and software or turn over keys for encryption). There are no rules on maintaining a certain amount of data storage within Chad. The GOC has enacted four laws covering cybersecurity and cyber-criminality.

							5. Protection of Property Rights					

**Real Property**

The Chadian Civil Code protects real property rights. Since 2013, landowners may register land titles with the One-Stop Land Titling Office (*Guichet Unique pour les Affaires*Fonciere). However, enforcement of these rights is difficult because a majority of land owners do not have a title or a deed for their property.

The office of Domain and Registration (*Direction de Domaine et Enregistrement*) in the Ministry of Finance and Budget is responsible for recording property deeds and mortgages. In practice, this office asserts authority only 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. 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 has reclaimed land for which individuals held titles, which government officials granted to individuals without the backing of Presidential decrees. Many of these individuals have filed legal cases that are currently under adjudication.

The GOC does not provide clear definitions and protections of traditional use rights of indigenous peoples, tribes, or farmers.

The World Bank’s 2018 Doing Business Report ranks Chad 159 of 189 in ease of registering property. The report cites the high cost of property value plus other associated costs for registering property as the major impediment. Time and number of procedures are on par with the rest of Sub-Saharan Africa.

**Intellectual Property Rights (IPR)**

Chad is a member of the African Intellectual Property Organization (OAPI) and the World Intellectual Property Organization (WIPO). Chad ratified the revised Bangui Agreement (1999) in 2000 and the Berne Convention in 1971. The GOC adheres to OAPI rules within the constraints of its administrative capacity.

Within the Ministry responsible for trade, the Department of Industrial Property and Technology, addresses IP issues. This department is the National Liaison Unit (SNL) within the OAPI, and is the designated point of contact under Article 69 of the TRIPS Agreement. As of 2012, the unit has received about 90 deposits of different IP instruments.

Counterfeit pharmaceuticals and artistic works, including music and videos, are common in Chad. Counterfeit watches, sports clothing, footwear, jeans, cosmetics, perfumes, and other goods are also readily available on the Chadian market. These products are not produced locally, and are generally imported through informal channels. Despite limited resources, Chadian customs officials make occasional efforts to enforce copyright laws, normally by seizing and burning counterfeit medicines, CDs, and mobile phones.

Chad does not regularly track and report on seizures of counterfeit goods. Occasionally, Chadian authorities will announce such a seizure in the local press. Customs officers have the authority to seize and destroy counterfeit goods *ex officio*. The Government pays for storage and destruction of such goods.

Chad is not listed on the USTR’s 2017 Out-Of-Cycle Review of Notorious Markets, or in the 2018 Special 301 Report. For additional information about treaty obligations and points of contact at local IP offices, please see WIPO’s country profiles at http://www.wipo.int/directory/en/ .

For additional information about national laws and points of contact at local IP offices, please see WIPO’s country profiles at http://www.wipo.int/directory/en/ .

							6. Financial Sector					

**Capital Markets and Portfolio Investment**

There are no capital markets or money markets in Chad. A limited number of financial instruments are available to the private sector, including letters of credit, short- and medium-term loans, foreign exchange services, and long-term savings instruments.

Credit is available from commercial banks on market terms, often at rates of 12 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 and borrow money outside of Chad. There are ATMs in some major hotels, N’Djamena airport, and in some neighborhoods of N’Djamena.

There is no effective regulatory system to encourage or facilitate portfolio investments.. 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.

**Money and Banking System**

Chad’s banking sector is small and continues to streamline lending practices and reduce the volume of bad debt. Chad’s four largest banks have been privatized. The former Banque Internationale pour l’Afrique au Tchad (BIAT) became a part of Togo-based Ecobank; the former Banque Tchadienne de Credit et de Depot was re-organized as the Societe General Tchad; the former Financial Bank became part of Togo-based Orabank; and the former Banque de Developpement du Tchad (BDT) was reorganized as Commercial Bank Tchad (CBT), in partnership with Cameroon-based Commercial Bank of Cameroon. There are two Libyan banks in Chad, BCC (formerly Banque Libyenne) and Banque Sahelo-Saharienne pour l’Investissement et le Commerce (BSCIC), along with one Nigerian bank (UBA, United Bank for Africa).

Chad shares a common central bank system with the members of the CEMAC – the Banque des Etats de l’Afrique Centrale (BEAC).

The only restriction on a foreigner’s ability to establish a bank account is the establishment of legal residency.

**Foreign Exchange and Remittances**

*Foreign Exchange*

Chad, as a CEMAC member, shares a central bank with Cameroon, Central African Republic, Republic of Congo, Equatorial Guinea, and Gabon – the Central African Economic Bank (BEAC, *Banque des Etats de l’Afrique Centrale*), headquartered in Yaounde, Cameroon. The government does not restrict converting funds associated with an investment (including remittances of investment capital, earnings, loan repayments, lease payments, royalties) into a freely usable currency at legal market-clearing rates. There are no restrictions on repatriating these funds, although there are some limits associated with transferring funds. Individuals transferring funds exceeding USD 1,000 must document the source and purpose of the transfer with the local sending bank. Companies and individuals transferring more than USD 800,000 out of Chad need BEAC authorization to do so. Authorization may take up to three working days. To request authorization for a transfer, companies and individuals must submit contact information for the sender and recipient, a delivery timetable, and proof of the sender’s identity. There were no reports of other capital outflow restrictions in 2017. Businesses can obtain advance approval for regular money transfers.

Chad is a member of the African Financial Community (CFA) and uses the Central African CFA Franc (FCFA) as its currency. The FCFA is pegged to the Euro at a fixed rate of one Euro to 655.957 FCFA exactly (100 FCFA = 0.152449 Euro). In 2017, the CFA/USD exchange rate fluctuated between 590 and 650 FCFA as a function of the performance of the USD against the Euro. There are no restrictions on obtaining foreign exchange.

*Remittance Policies*

There are no recent changes to or plans to change investment remittance policies. There are no time limitations on remittances, dividends, returns on investment, interest, and principal on private foreign debt, lease payments, royalties, or management fees.

Chad does not engage in currency manipulation.

Chad is a member state of the Action Group against Money Laundering in Central Africa (GABAC), which is in the process of becoming a Financial Action Task Force (FATF)-style regional body. On the national level, the National Financial Investigation Agency (ANIF) has implemented GABAC recommendations to prevent money laundering and terrorist financing.

**Sovereign Wealth Funds**

The GOC does not currently maintain a Sovereign Wealth Fund. In 2016, it indicated intentions to create a “stabilization fund” funded by additional taxes on diesel fuel and Jet A-1 fuel. However, to date there has been no progress on establishing the fund.

							7. State-Owned Enterprises					

All Chadian SOEs operate under the umbrella of government ministries. SOE senior management reports to the minister responsible for the relevant sector, as well as a board of directors and an executive board. The President of the Republic appoints SOE boards of directors, executive boards, and CEOs. The boards of directors give general directives over the year, while the executive boards manage general guidelines set by the boards of directors. Some executive directors consult with their respective ministries before making business decisions, but others do not.

The GOC operates SOEs in a number of sectors, including Energy and Mining; Agricultural, Construction, Building and Heavy Equipment, Information and Communication, in water supply and cement production. The percentage SOEs allocate to research and development (R&D) is unknown; however, it appears to be less than private sector competitors.

There were no reports of discriminatory action taken by SOEs against the interests of foreign investors in 2017, and some foreign companies operated in direct competition with SOEs. Chad’s Public Tender Code (PTC) provides 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 not subject to the same tax burden and tax rebate policies as their private sector competitors, and are often afforded material advantages such as preferential access to land and raw materials. SOEs receive government subsidies under the national budget; however, in practice do not respect the budget. State and company funds are often comingled.

Chad is not a party to the Agreement on Government Procurement within the framework of the WTO. In addition, Chadian practices are not consistent with the OECD Guidelines on Corporate Governance for SOEs.

The GOC aims to privatize a number of SOEs, but wishes to remain a major player in extractive industries.

**Privatization Program**

Foreign investors are permitted and encouraged to participate in the privatization process. There is a public, non-discriminatory bidding process. Having a local contact in Chad to assist with the bidding process is important. Foreign investors should also be aware that corruption remains common in Chad. To combat corruption, the GOC has recently hired private international companies to oversee the bidding process for government tenders. Despite the GOC’s willingness to privatize loss-making SOEs, there remain several obstacles to privatization.

Chad is still considering privatization of companies in the following sectors:

- Agribusiness ( Cotontchad)
- Information & Communication (SOTEL Tchad)
- Food Processing & Packaging (juice, meat processing)
- Travel (Air Toumai Tchad)

The GOC has not published a timeline for these privatizations.

							8. Responsible Business Conduct					

There is general awareness of Responsible Business Conduct (RBC) among firms in Chad. Most Western firms operating in Chad engage in RBC, particularly those in the petroleum and telecommunications sectors. For example, Esso Exploration and Production Chad, Inc. (EEPCI), the main oil producer, has implemented Environmental Management Plans (EMP), a rigorous program that espouses, *inter alia*, prioritizing hiring local residents and local purchase of goods and services, establishing international safety standards, and protecting biodiversity. A critical part of EMP has been the Land Use Management Action Plan (LUMAP) that compensates individuals and communities for land used by the project. To date, LUMAP has distributed approximately USD 1.7 million in cash, in-kind goods, and training. EMP’s efforts are also complemented by the ExxonMobil Foundation, which supports projects to improve girls’ education and fight malaria.

Many foreign firms commit to extensive local staff training efforts, purchase local goods, and donate excess equipment to charities or local governments. Internet companies Airtel and Tigo, as well as some banks, continue to engage in RBC focused on public awareness campaigns countering violent extremism, and promoting social cohesion.

While work safety and environmental protection regulations exist, the government does not always enforce, and companies do not always adhere to, these regulations. There are a number of local NGOs, particularly in the southern oil-producing regions, which monitor safety and environmental protection in the oil sector, and which have held government and private companies publically accountable. EEPCI adheres to U.S. Occupational Safety and Health Administration (OSHA) guidelines for recording accidents and injuries, and implements a rigorous program of safety procedures and protocols.

							9. Corruption					

Corruption in Chad remains a significant deterrent to U.S. persons and businesses interested in investing in Chad. Corruption is most pervasive in government procurement, award of licenses or concessions, dispute settlement, regulation enforcement, customs, and taxation.

There is an independent Court of Auditors (*Cours des Comptes*), equivalent to a supreme audit institution (SAI), to enhance independent oversight of government decisions, although its members are nominated by Presidential decree. Concurrently, the GOC had created a General Inspectorate for State Control within the Presidency to oversee government accountability. No reports have been published, however. In addition to these bodies, the National Assembly’s Finance Committee carries out verifications of the GOC’s annual financial statement. No audits have been made publicly available during the reporting period.

A February 2000 anti-corruption law stipulates penalties for corrupt practices. 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. Charges against those indicted are often dropped for “lack of evidence.” President Deby, in public addresses to the nation, has pledged to continue the campaign to eliminate corruption from Chadian public life, criticized the practice of taking liberties with public goods, and promised prosecution of those who accept kickbacks or demand bribes.

In 2017, the Ministry of Finance and Budget set up a toll-free number (700) to fight corruption and embezzlement. According to the Minister of Finance and Budget the toll-free number 700 allows each economic operator or any other individual to alert the Inspectorate General of Finance to denounce any unscrupulous agent who seeks to be corrupted in the context of the issue of administrative paper or the payment of a tax. The initiative was part of the consolidation of public finances to fight against the misappropriation of funds generated by the various financial authorities.

A prominent local NGO, the Alternative Group for Petroleum Research and Monitoring – Chad (GRAMP-TC, *Groupe Alternative de Recherche et de Monitoring de Petrole – Tchad*) tracks government expenditures of oil revenue. There are no indications that anti-corruption laws are enforced more or less stringently against foreign investors than against Chadian citizens.

Chad is not a signatory country of the UN Convention Against Corruption (UNCAC). Chad is not a party to the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions (“the OECD Anti-Bribery Convention”).

*Resources to Report Corruption*

Government agency contact responsible for combating corruption:

Inspection General d’EtatMinistry of Finance and Budget toll free number 700Presidence de la RepubliqueNdjamena, Chad+235 22 51 51 39 / 22 51 44 37

Contact at watchdog organizations:

Gilbert MaoundonodjiCoordinatorGRAMP-TCPo Box 4021, N’Djamena, Chad+235 22 51 95 55maogilmagi@gmail.com

							10. Political and Security Environment					

Chad has enjoyed political stability since 2008. There have been no reported incidents in recent years involving politically-motivated damage to projects and/or installations. The latest national Presidential election occurred in April 2016 and parliamentary elections are scheduled for November 2018. Socio-economic conditions occasionally spark demonstrations and protests against the government. Notably, in 2017, protests and strikes focused on non-payment of salaries to public functionaries and failure to pay student stipends, as well as austerity measures imposed to reduce government spending, including cuts to net public sector compensation. In most cases, the government either denied permits for demonstrations, or suppressed them using tear gas, arresting participants and organizers.

Regional violent extremist organizations continue to threaten Chadian and Western interests. Boko Haram’s violence has choked off vital trade routes with Nigeria and the road between Douala, Cameroon, the principal port serving Chad, and N’Djamena. This has increased costs for imports and decreased exports due to border closures.

For up-to-date information on political and security conditions in Chad, please refer to the Consular Affairs Bureau’s Travel Warning and Country Specific Information at http://www.travel.state.gov. The Embassy encourages all U.S. Citizens visiting Chad to register with the Embassy upon arrival or online via the STEP program.

U.S. businesses and organizations in Chad are also welcome to inquire at the Embassy about joining the Overseas Security Advisory Committee (OSAC).

							11. Labor Policies and Practices					

Chad has a shortage of skilled labor in most sectors. 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. Eighty percent of the Chadian labor force is estimated to be engaged in subsistence activities including fishing, farming, and herding. Unskilled and day laborers are readily available. Few Chadians speak English, although an increasing number of university graduates and business professionals have English skills. Acceptable translators and interpreters are available. Some government ministries and SOEs provide job-related trainings to their employees.

Chad has ratified all eight Fundamental Conventions of the International Labor Organization. International labor rights such as freedom of association, the elimination of forced labor, child labor employment discrimination, minimum wage, occupational safety and health, and weekly work hours are recognized within the labor code. However, gaps remain in law and practice. Chadian labor law derives from French law and tends to provide strong protection for Chadian workers; priority is given to Chadian nationals. Labor unions operate independently from the government and, in fact, often challenge the government. The 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, are the most influential, and have been instrumental in persuading the GOC to engage in social dialogue regarding the 2016 to 2017 austerity measures. Most Chadian businesses operate in the informal economy. The Ministry of Labor, Employment, and Social Dialogue is in the process of reviewing the current labor code, which will include provisions for the informal economy, although no progress was reported in 2017.

The labor court is the labor dispute mechanism in Chad. In case of a dispute, the aggrieved party contacts a labor inspector directly or through the labor union to settle the dispute or lodge a complaint with the labor court.

Labor unions practice collective bargaining, and the labor code monitors labor abuses, health, and safety standards in low-wage assembly operations. The lack of training and awareness impacts the effectiveness and consistency of code enforcement; most disputes are based on contract termination. Child labor remains a problem. Approximately 53 percent of children in Chad are engaged in child labor, particularly in domestic service, cattle herding, and agriculture. Chadian cattle are included on the U.S. Government’s List of Goods Produced by Child Labor or Forced Labor.

The GOC may provide incentive for foreign businesses, but no laws are waived to attract or retain investment as the Chadian labor law strongly supports workers.

							12. 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 (OPIC) has provided political risk investment insurance to U.S. companies in Chad. The French investment guarantee agency Compagnie Française d’Assurance pour le Commerce Exterieur (COFACE) has also guaranteed a number of investments in Chad. The annual average exchange rate is approximately 590 – 655 FCFA = 1 USD. Given that the FCFA is pegged to the Euro, devaluation or depreciation of the rate reflects changes in the Euro/USD rate.

							13. Foreign Direct Investment and Foreign Portfolio Investment Statistics					

*Table 2: Key Macroeconomic Data, U.S. FDI in Host Country/Economy*

*Table 3: Sources and Destination of FDI*

Data not available.

*Table 4: Sources of Portfolio Investment*

Data not available.

							14. Contact for More Information					

Economic and Commercial OfficerU.S. Embassy N’Djamena,Rond Point Chagoua BP 413N’Djamena, Chad+235 2251-5017 Ext 24408NDjamena-Commerical@state.gov

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### On This Page

                    -  Executive Summary 
                    -  1. Openness To, and Restrictions Upon, Foreign Investment   
                    -  2. Bilateral Investment Agreements and Taxation Treaties   
                    -  3. Legal Regime   
                    -  4. Industrial Policies   
                    -  5. Protection of Property Rights   
                    -  6. Financial Sector   
                    -  7. State-Owned Enterprises   
                    -  8. Responsible Business Conduct   
                    -  9. Corruption   
                    -  10. Political and Security Environment   
                    -  11. Labor Policies and Practices   
                    -  12. OPIC and Other Investment Insurance Programs   
                    -  13. Foreign Direct Investment and Foreign Portfolio Investment Statistics   
                    -  14. Contact for More Information   

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