For neighboring Cameroon, with dwindling off-shore petroleum reserves, the project would generate important revenues for priority expenditures and help to attract more foreign investment. In determining whether or not to support the project and provide loans to both governments, the Bank takes into account the project's potential to reduce poverty and increase public investments in health, education and basic infrastructure. Background Landlocked in central Africa, Chad, with a population of about 7 million, is one of the poorest countries in the world. Agriculture generates about 40 percent of gross domestic product and provides a meager livelihood for over 80 percent of the population. Livestock in the Sahel and cotton in the Sudanian area are the main agricultural activities and Chad's main exports.
Food production varies widely with seasonal conditions.
Chad is also endowed with important, but to date untapped, natural resources. The industrial sector accounts for nearly 14 percent of GDP and is dominated by Coton-Tchad, the country's largest public sector company, which processes and exports cotton. Nevertheless, economic performance has sharply improved since 1995, when Chad embarked on a structural adjustment program. Growth was 3.5 percent in 1996 and reached 8.1 percent in 1998, driven by a surge in agricultural production, a result of favorable weather and a bumper cotton crop encouraged by a substantial increase in farmers' prices. Inflation, at 10 percent in 1995 and 1996, slowed to less than 1 percent on an end-year basis in 1997.