© 2003 International Monetary Fund July 2003 IMF Country Report No. 03/209 Chad; Poverty Reduction Strategy Paper Poverty Reduction Strategy Papers (PRSPs) are prepared by member countries in broad consultation with stakeholders and development partners, including the staffs of the World Bank and the IMF. Updated every three years with annual progress reports, they describe the country's macroeconomic, structural, and social policies in support of growth and poverty reduction, as well as associated external financing needs and major sources of financing. This country document for Chad, dated June 2003, is being made available on the IMF website by agreement with the member country as a service to users of the IMF website. To assist the IMF in evaluating the publication policy, reader comments are invited and may be sent by e-mail to [email protected]. Copies of this report are available to the public from International Monetary Fund • Publication Services 700 19th Street, N.W. • Washington, D.C. 20431 Telephone: (202) 623-7430 • Telefax: (202) 623-7201 E-mail: [email protected] • Internet: http://www.imf.org Price: $15.00 a copy International Monetary Fund Washington, D.C. ©International Monetary Fund. Not for Redistribution REPUBLIC OF CHAD. Unity - Work - Progress MINISTRY OF PLANNING, DEVELOPMENT AND COOPERATION PRSP Steering Committee National Poverty Reduction Strategy Paper N'Djamena - June 2003 ©International Monetary Fund. Not for Redistribution 1 ©International Monetary Fund. Not for Redistribution PREFACE Poverty is just as much a challenge today as it ever was, as the recent improvement in Africa's economic situation is still insufficient and the continent remains relegated to the sidelines of the world economy, Most reports produced recently stress the specificities of sub-Saharan Africa where the number of poor in absolute terms continues to increase, whereas progress has been made in other regions of the world. Indeed, it seems that minimum growth rates of 5-8 percent will be needed to have an effective impact on economic and social development. Chad's main objective is to implement an economic policy rhat will bring about lasting and sustainable development, particularly in the oil era. This development must involve high growth rates holding steady over a relatively long period. The PRSP has proven to be the instrument of choice in attaining this objective. This exercise is not new, the Government of Chad had already submitted a paper to the Geneva IV Round Table in 1998 outlining the key strategic options for development based on "poverty reduction.71 The Government wanted the preparation of the National Poverty Reduction Strategy (NPRS) to be participatory. For this reason, it set up a steering committee in April 2000 comprising some 30 members from the public sector, private sector, civil society associations (NGOs, women's organizations, youth organizations, the public and private media, etc.) and the National Assembly. For three years, the steering committee worked tirelessly on the paper so that it would better reflect the concerns of the Chadian population. A number of different activities were carried out: » a launching seminar (April 25 -27, 2000), • a study on the perceptions of well being and poverty (April-June 200G); • 10 thematic and sectoral studies (May-July 2000), • a civil society forum (November 2000), • country-wide participatory consultations (December 2000-January 2001), • an assessment of typical intervention through some existing projects (February- March 2001); • a national seminar to define strategic areas and priority actions"(May 8-12, 2001); • regional seminars to re-establish strategic areas and priority actions and adopt performance indicators and a monitoring/assessment mechanism (March 19-21, 2002). All these components progressively refined the various versions of the PRSP, which was also enhanced with the input of Chad's development partners, particularly the United Nations System, World Bank, IMF, European Union, France, and GTZ. 2 ©International Monetary Fund. Not for Redistribution Having adopted the Millennium Development Goals {MDG}, Chad shares the opinion of the rest of the world that the PRSP is, first and foremost, a strategy that reflects the expectations of the general population and the resources that the Government must deploy to enable that population to increase its standard of well-being. It is possible that some data presented in this report may be incomplete or partial, however the strategic issues and priority actions are consistent overall, and the Government and its partners are adhering to them. Subsequent revisions of the document will provide the opportunity to adjust certain quantitative indicators in light of new data from current surveys, in particular ECOSIT (survey of informal sector consumption), EDST (demographic and health survey), and the census. The document that the Government has just adopted will be submitted to the donor community in the coming months for them to sign on. Until then, the steering committee and the sectoral ministries (with the support of partners represented on the ground) will undertake a thorough evaluation of projects and programs by sector of activity. The implementation and follow-up of the PRSP will once again call for a more decentralized and participatory consensus-building approach. In the interest of transparency and good governance, the structures to be created will work in conjunction with regional and local governments to ensure that the expenditure executed within the framework of the PRSP will actually reach the targeted beneficiaries. The Government, for its part, will spare no effort to ensure that this strategy truly reduces poverty by 2015. N'Djamena, June 5, 2003 /s/ Djimrangar Dadnadji Minister of Plan, Development and Cooperation 3 ©International Monetary Fund. Not for Redistribution TABLE OF CONTENTS Introduction , 10 Chapter 1 Background and Process for Preparation of the PRSP 11 1.1 The International, Regional and National Background 11 1.1.11 The International and Regional Context 11 1.1.22 The National Context 12 1.2 Presentation of the Participatory Process 15 1.2.1 The Steering Committee in Chare of the Strategy Preparation Process 15 1.2.22 The Strategy Preparation Process 16 Chapter 2 Diagnostic Assessment of Poverty in Chad 18 2.1 Profile of Poverty in Chad , 19 2.1.11 Quantitative Analysis of Poverty 19 2.1.22 Qualitative Analysis of Poverty 23 2.1.2.1 Poverty and Weil-Being as Perceived by the Population 23 2.1.2.2 Lessons Drawn from Participatory Consultations 24 2.1.33 Typification of Poor Households 28 2.2 Vulnerable Social Groups 32 Chapter 3 Determinants of Poverty and Opportunities in Chad 36 3.1 Determinants of Poverty 36 3.1.1. Governance 36 3.1.2. Modest Economic Growth 38 3.1.2.1 Low Productivity in the Primary Sector 38 3.1.2.2 A Practically Nonexistent Processing Sector 40 3.1.2.3 A Largely Unproductive Tertiary Sector 41 3.1.33 Highly Deficient Human Resources and Living Conditions 41 3.1.3.1 Education, Training, and Literacy Classes 41 3.1.3.2 Inadequate Health Care Coverage and Hypothetical Nutrition 42 3.1.3.3 HIV/AIDS 44 3.1.3.4 Status of Women in Chad 44 3.1.3.5 Lack of Social Protection 44 3.1.4 Inappropriate and Dilapidated Basic Economic Infrastructure 44 3.1.4.1 The Road Network 44 3.1.4.2 Energy 45 3.1.4.3 Telecommunication 45 3.1.4.4. The Banking System and Microfinance 46 3.1.5. Other Obstacles to Poverty Reduction 46 3.1.5.1 Debt 46 3.1.5.2 Demographic Factors 47 3.1.5.3 Explosive Remnants of War, Factors Exacerbating Poverty 47 3.2 Chad's Strengths 49 3.2.1 Opportunities 49 3.2.2 The Long-Term Outlook for Growth and Development 51 3.2.2.1 The Oil Boom Era 51 3.2.2.2 The Highly Indebted Poor Countries (HIPC) Initiative 51 4 ©International Monetary Fund. Not for Redistribution Chapter 4 The Overall Outlook for Development Through 2015 52 4.1 An Integrated Vision of Poverty Reduction Combined with the Preparation of the Post-Oil Boom Era . 52 4.2 Poverty Reduction Targets from 2003 to 2015 54 4.2.1 Promote Good Govemance 54 4.2.1.1 Consolidation of the Rule of Law 55 4.2.1.2 Role of the State, the Private Sector, and Civil Society 55 4.2.1.3 Efficient and Transparent Management of Public Affairs 60 4.2.2 Ensure Strong and Sustained Economic Growth 60 4.2.2.1 Exploitation of the Sources of Growth 61 4.2.2.2 Promotion of the Private Sector 61 4.2.2.3 Development of Basic Infrastructure and Support for Growth 62 4.2.2.4 Achieve a Sustainable Increase in Rural Output 64 4.2.3 Improving Human Capital 66 4.2.3.1 Education, Training, and Literacy Campaigns 66 4.2.3.2 Health 68 4.2.3.3 HIV/AIDS 68 4.2.4 improving the Living Conditions of Vulnerable Groups 68 4.2.4.1 Integrated Urban Development 68 4.2.4.2 Support for Microenterprises, SME, and Employment 69 4.2.4.3 Social Protection 70 4.2.5 Restoring and Safeguarding Ecosystems 70 4.2.5.1 Strengthen the Regulatory Framework and Natural Resource Management Capabilities 71 4.2.5.2 Improvement of Household Energy Management 71 Chapter 5 Macroeconomic Framework 72 5.1 Sources of Economic Growth 72 5.2 Conditions Necessary to Growth and Poverty Reduction 74 5.2.1 Macroeconomic Stability 75 5.2.1.1 Objectives 75 5.2 1.2 Economic Policies 77 5.2.1.2.1 Fiscal Policies 77 5.2.1.2.2 Monetary and Financial Sector Policies 84 Chapter 6 Implementation of the PRSP 87 6.1 Stages of implementation .