CHAD: ‘The potential to be an emerging nation’
Chad has been blessed by the discovery of oil and the construction of a pipeline through Cameroon to the African coast for its export. However, as with other countries that have come across sudden new riches, managing the funds has been a challenge for Chad, and cause for some dissatisfaction among the population.
Chad’s ambassador to Washington, Mahamoud Adam Bechir, recently met with Diplomatic Traffic and explained how his country is managing oil revenues, and some of the policies it is pursuing to help Chad overcome poverty and the difficulties inherent in being a landlocked country in Africa.
He said that the new income from oil, “has definitely had a positive impact.” He noted that oil “has always been a concern for developing countries,” and that “in most places, oil didn’t serve the real development needs of the country, alleviating poverty or, in general, going to the right people.”
That concern has been addressed in Chad by, first of all, earmarking almost all the oil revenue for priority sectors. Eighty percent of the revenue goes to education, health, rural development and infrastructure. Ten percent goes to future generations. Five percent goes to regions that are oil producers, leaving five percent for the general budget.
And to minimize corruption in the use of oil revenues, Chad has set up an independent commission of nine people that oversees the usage of oil revenues. It includes representatives of civil society and unions, two members of the national assembly, two members of the government (the director of the national bank and the head of the Treasury) and a Supreme Court judge. The ambassador noted that, “Currently the commission is headed by a congressman who is a leader of an opposition party.”
He says the distribution of oil revenue is “completely transparent.” The accounts are on a web site, as are the projects which are funded by the oil revenue. And all of this is overseen by the commission.
The ambassador said that Chad started pumping oil in October 2003, so there have been two budget years with oil revenue. As evidence of the success of the commission, the ambassador said that its latest report had serious criticism of the way some of the projects are being executed. “This shows that the system is working,” he said.
Ambassador Bechir said that there have been some difficulties in putting the system for oil revenue distribution in place, because many in Chad expected quick benefits from the sale of oil. “They wanted to have their salaries on time, and that is not happening because the money is going to earmarked projects, and not to the national budget to cover shortfalls,” he explained.
But coming into new riches can have a number of problems. One is that former donor countries no longer are as willing to provide assistance, even though last year Chad got only $143 million from oil sales, based on exports of some 250,000 barrels per day. The ambassador pointed out that right now Chad gets only 12.5 percent of the gross oil revenues, as the investor, ExxonMobile, gets back the cost of building the pipeline.
“One of the ‘funny’ problems we have is that we are building new schools and hospitals with oil money, but then the doctors and teachers, who get their salaries from the general budget, have not been paid for three months,” the ambassador said.
Nevertheless, he said, “Definitely in the long term, oil is going to affect the life of the Chadian people.” All the investments in infrastructure, education and health will pay off. Education is free in Chad, and in some cases students are paid to study. “For health we have only symbolic fees, with hospitals and medicines subsidized by the government. With the new funds from oil, we will recruit new doctors and provide services to local areas, where there are very few hospitals.” This and the development of schools are part of a 15-year plan, which also includes poverty reduction.
He noted that Chad is primarily an agricultural country, with a major livestock sector, “and we are not neglecting these two sectors, just because we became an oil producing country.” He added that, “We are very well aware of the risk of neglecting our traditional economy.”
Chad has suffered from civil war and war with Libya, which occupied part of Chad. “Fortunately, all these impediments to development are over now,” the ambassador said, “and Chad adopted democratic and western standards for itself in the 1990s.” He said, “The starting point for any nation is that you have to give the people their freedom, so that they can think freely and interact.” Only in this way can the government be confident it has the support of the people.
When president Idriss Deby came to power (in 1990), he adopted freedom of press, the multiparty system, free unions with the right to strike, etc. And presidential elections were held in 1996 and 1997. A free market economy was also established.
“We have challenges in Chad, but these are opportunities at the same time,” the ambassador said. “We are geopolitically in the center of Africa, surrounded by six countries. We are composed of many ethnic, cultural and religious entities. About half the population is Muslim, and a similar percentage Christian. There are about 100 tribes. What’s more, many of these groups have their origins in neighboring countries, connecting us through our people to those countries.”
He continued: “Linguistically, we have been influenced through Arabic by Libya and Sudan, through French from the former French colonies (Chad is one) and through English from Nigeria. There is a lot of diversity surrounding and inside Chad,”
he said. “This provides some leverage and challenges for Chad.”
“We have to be vigilant about our territory being used by terrorists; we have Darfur next door, which has had a heavy impact on Chad’s economy,” he said. “So far we have 200,000 refugees from Darfur. Chad has not only been host to the refugees, but also a mediator in the conflict.” The ambassador believes that resolving the Darfur problem should be relatively easy compared with resolving the 20-year north-south civil war in Sudan, and that, “The involvement of the international community is very important.”
“We have less than 10 million people on a huge area of land, about three times the size of California. We have desert in the north; we have forest in the south; we have a lot of diversity and are very rich in terms of natural resources,” he said. “Chad has the potential to become an emerging nation.”
Speaking of its resources, the ambassador said, “We have all kinds of minerals, including gold and uranium, especially in the northern part of the country.” But there are also many areas of the north still littered with landmines, from Chad’s war with Libya.
“With the United States we have very good relations,” he said. “Chad has never had problems with the United States, in fact we had strong support from Washington to deny Libya’s efforts to annex part of Chad.” Also, the US lobbied hard for World Bank funding for the pipeline, a $4 billion project, the largest in Africa.
Chad has also collaborated with Washington in working to prevent terrorists from getting a foothold on their territory. Chad captured a group of Salafist terrorists that left Algeria and passed through Mali and Niger before entering Chad. “We have a very fruitful area of training with US Special Forces to deal with the terrorist threat,” the ambassador said. Darfur is another area of cooperation with Washington.
The ambassador said it was “one of my primary missions” to seek additional investment from the United States, to help diversify Chad’s economic development. “There is a general policy towards West Africa that represents a revolutionary change by this US administration: the Millennium Challenge Account, AGOA, etc. With this support, I try to encourage US investors, but it is a challenge for them to go to a country with limited infrastructure. This not only blocks investment, but also encourages our intellectuals to leave. That is why we are investing in infrastructure.”
However, he stressed that, “We are on the right track.” A recent business delegation visited Tennessee and signed deals to build affordable housing in Chad.