FATF Status

Chad is not on the FATF List of Countries that have been identified as having strategic AML deficiencies

Compliance with FATF Recommendations

The last Mutual Evaluation Report relating to the implementation of anti-money laundering and counter-terrorist financing standards in Chad was undertaken in 2023. According to that Evaluation, Chad was deemed Compliant for 4 and Largely Compliant for 10 of the FATF 40 Recommendations. It was deemed Highly Effective for 0 and Substantially Effective 0 with regard to the 11 areas of Effectiveness of its AML/CFT Regime.

US Department of State Money Laundering assessment (INCSR)

Chad was deemed a ‘Monitored’ Jurisdiction by the US Department of State 2016 International Narcotics Control Strategy Report (INCSR). Key Findings from the report are as follows: -

Chad’s financial services sector is small and relatively underdeveloped. Chad’s economy is predominately cash-based, with relatively few transactions passing through formal financial institutions. Despite measures to process public servant salaries through local banks, only 5 percent of the Chadian population uses formal banking services.

On January 16, 2015, the Parliament approved sending troops to the northern regions of Cameroon to counter Boko Haram. This decision, which received popular support, came amid rising concerns about the economic impact of the siege on the Chadian economy. Chad depends heavily on the import of goods that transit through Nigeria and northern Cameroon. As a result of the August border closure and the continued attacks, the prices of imported goods have increased in the local market. Increased border security significantly reduced incidences of contraband and goods smuggled across the Sahel and borders with Nigeria and Cameroon.

Instability in the Central African Republic (CAR) and the subsequent return of displaced Chadians and the arrival of CAR refugees facilitate trafficking of goods between the two countries. Across Chad’s northern desert and along the Sudan/Chad border in the east, smuggled items include drugs and weapons. Drugs, mainly cannabis and cocaine, are transported via Chad and Sudan to the Arabian Peninsula.

Wildlife poaching in Chad and the related illicit trade in ivory and other wildlife products finance transnational criminal networks and armed rebel groups across Africa. There is no indication that illegally smuggled household goods are related to narcotics trafficking or other illegal activities. However, the trafficking of weapons, wildlife products, and drugs may be linked to organized criminal groups, some of which have links to terrorist groups. Illicit proceeds do not appear to enter Chad’s formal financial system.

Chad’s banking system is supervised by the Bank of Central African States (BEAC), the central bank that serves six Central African countries. BEAC’s Economic Intervention Service harmonizes the regulation of currency exchanges in the six member states of the Central African Economic and Monetary Community (CEMAC).

Rating                                                                           (100-Good / 0-Bad)

Transparency International Corruption Index                           20

World Governance Indicator – Control of Corruption              5

Corruption is a very high risk for companies seeking to invest in Chad. Corruption is systemic and often takes the form of nepotism and cronyism. It pervades all levels of the economy and is perpetuated by a weak rule of law and a lack of security. Chad is one of the world's poorest countries, and the majority of Chadians work outside the formal economy. Key anti-corruption legislation includes the anti-corruption law, which criminalizes active and passive bribery and stipulates harsh penalties. However, enforcement is poor, and prosecutions usually target political opponents of the government. Chad has not signed the United Nations Convention against Corruption. For further information - GAN Integrity Business Anti-Corruption Portal

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Chad’s landlocked location results in high transportation costs for imported goods and dependence on neighboring countries. Oil and agriculture are mainstays of Chad’s economy. Oil provides about 60% of export revenues, while cotton, cattle, livestock, and gum arabic provide the bulk of Chad's non-oil export earnings. The services sector contributes about one-third of GDP and has attracted foreign investment mostly through telecommunications and banking.

Nearly all of Chad’s fuel is provided by one domestic refinery, and unanticipated shutdowns occasionally result in shortages. The country regulates the price of domestic fuel, providing an incentive for black market sales.

Chad’s fiscal position is encumbered by declining oil prices, though high oil prices and strong local harvests supported the economy in recent years. Chad relies on foreign assistance and foreign capital for much public and private sector investment. Chad's investment climate remains challenging due to limited infrastructure, a lack of trained workers, extensive government bureaucracy, and corruption. Chad obtained a three-year extended credit facility from the IMF in 2014 and was granted debt relief under the Heavily Indebted Poor Countries Initiative in April 2015.

Agriculture - products:
cotton, sorghum, millet, peanuts, sesame, corn, rice, potatoes, onions, cassava (manioc, tapioca), cattle, sheep, goats, camels

Industries:
oil, cotton textiles, brewing, natron (sodium carbonate), soap, cigarettes, construction materials

​Exports - commodities:
oil, livestock, cotton, sesame, gum arabic, shea butter

​Exports - partners:
US 58.5%, India 13.3%, Japan 11.3%, China 4.1% (2015)

​Imports - commodities:
machinery and transportation equipment, industrial goods, foodstuffs, textiles

​Imports - partners:
France 16.5%, China 14.2%, Cameroon 11%, US 6.4%, India 6%, Belgium 5.7%, Italy 4.8% (2015)

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Investment Climate  -  US State Department

Chad is Africa’s fifth largest country by surface area, encompassing three bioclimatic zones. Chad is landlocked, bordering Libya to the north, Sudan to the east, Central African Republic (CAR) to the south, and Cameroon, Nigeria, and Niger to 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 constitute the Central African Economic and Monetary Community (CEMAC), a common market. Chad’s human development is one of the lowest in the world according to the UN Human Development Index (HDI). Poverty afflicts a large proportion of the population.

The Government of Chad (GOC) actively solicits foreign investment, especially from North America. Opportunities for foreign investment exist in Agribusiness; Agricultural, Construction, Building & Heavy Equipment; Automotive & Ground Transportation; Education; Energy & Mining; Environmental Technologies; Food Processing & Packaging; Health Technologies; Information Technology; Industrial Equipment & Supplies; Information & Communication; and Services. Since oil production began in 2003, the petroleum sector has dominated economic activity and been the largest target of foreign investment, including from U.S. companies. Agriculture and livestock breeding are also important economic activities, employing most of the population. In recent years, the GOC has prioritized agriculture, solar energy production, gold mining, livestock breeding and processing, and information technology to diversify the economy and lessen fiscal dependence on volatile global energy markets.

Chad’s investment climate is challenging. Private sector development suffers from a lack of transport infrastructure, GDP growth, skilled labor, reliable electricity, adequate contract enforcement, good governance, and attractive tax rates. Frequent border closures with neighboring countries complicate trade. The COVID-19 pandemic, and associated restrictions, halted Chad’s modest 2019 economic recovery following several years of recession caused by low global oil prices and disruptive debt payments to Glencore. Overall vaccination rates remain low. Existing IMF and World Bank programs aim to improve governance, increase transparency, and reduce internal arrears. Private sector financing is limited, and low GDP growth constrains government investment. Corruption and historically frequent replacement of senior level government figures present further roadblocks, as does cumbersome French-based labor law. The GOC’s interest in maintaining a stake in investment projects, while facilitating access to key decision makers, also introduces financial and operational risks.

Despite these challenges, the success of several foreign investments into Chad illustrates opportunities for experienced, dedicated, and patient investors. Successful investors typically operate with trusted local partners. The oil sector will mark 20 years of operations in 2023. Singapore-based Olam International entered Chad’s cotton market in 2018. Mindful of the imperative to enact reforms, the GOC operationalized a Presidential Council to Improve the Business Climate in January 2021. With rich natural resources, minimally developed agriculture and meat processing sectors, ample sunshine, increasing telecommunications coverage, and a rapidly growing population, Chad presents an opportunity for targeted investment in key sectors.

Country Links

Banque des Etats de l'Afrique Centrale