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Republic of Chad Country Strategy Paper 2015-2020

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AFRICAN DEVELOPMENT BANK AFRICAN DEVELOPMENT FUND REPUBLIC OF CHAD COUNTRY STRATEGY PAPER 2015-2020 REGIONAL DEPARTMENT CENTRE (ORCE) September 2015 Translated Document M. KANGA Regional Director ORCE M.C. DJIENA WEMBOU Resident Representative TDFO C. N’KODIA Country Economist TDFO H. BEN BARKA Political Economist ORTS Appraisal Team M. TANGARA Country Programme Officer TDFO J. NGUESSAN KOUASSI Chief Transport Engineer OITC AMADOU Principal Macro-economist OSGE S. M. ASSYONGAR Senior Financial Economist ONEC S. O. MAOULOUD Financial Management ORPF Specialist T. DJOGOYE Socio-Economist OSHD D. TILENGAR Procurement Officer ORPF L. MILAMEN Disbursement Officer FFCO E. Y. DIRABOU Investment Officer OPSM A. LAOKOLE Rural Development Specialist OSAN Peer Reviewers M. DIAWARA Principal Risk Officer GCRD D.KORKA Chief Country Programme ORWA Officer D. NDOYE Country Economist - Benin ORWA G. V. MOUGANI Chief Economist, Regional Integration ONRI/SNFO A. A. KONATE Country Economist - Mali MLFO S. BLAZYK Principal Results Officer ORQR N. GAHUNGA Chief Gender Officer OSAN Table of contents ACRONYMS AND ABBREVIATIONS .............................................................................................. i EXECUTIVE SUMMARY .................................................................................................................. iv I. INTRODUCTION ...................................................................................................................1 II. COUNTRY CONTEXT AND PROSPECTS .......................................................................1 2.1. POLITICAL, ECONOMIC AND SOCIAL CONTEXT ......................................................................1 2.2. STRATEGIC OPTIONS ...............................................................................................................7 2.3. RECENT DEVELOPMENTS IN AID COORDINATION ................................................................10 2.4. THE BANK’S POSITIONING IN CHAD .....................................................................................10 2.5. MAIN LESSONS LEARNED BY THE BANK FROM CSP 2010-2014 ..........................................11 III. BANK GROUP STRATEGY FOR CHAD 2015-2020 ......................................................13 3.1. JUSTIFICATION FOR BANK GROUP INVOLVEMENT ................................................................13 3.2. PROPOSED PILLARS ...............................................................................................................13 3.3. PROPOSED ASSISTANCE PROGRAMME ..................................................................................16 3.4. EXPECTED OUTCOMES AND TARGETS ..................................................................................17 3.5. MONITORING AND EVALUATION OF THE STRATEGY ............................................................18 3.6. DIALOGUE .............................................................................................................................18 3.7. RISKS AND MITIGATION MEASURES .....................................................................................18 IV. CONCLUSIONS AND RECOMMENDATIONS ..............................................................18 4.1. CONCLUSION .........................................................................................................................18 4.2. RECOMMENDATIONS .............................................................................................................18 List of Annexes Annex 1: CSP 2015-2020 Results Framework Annex 2: Chad - Indicative ADF 13 and 14 Operational Programme Annex 3: Key Data on Ongoing AfDB Portfolio Operations Annex 4: Bank’s Financial Strategy Annex 5: Comparative Economic and Social Indicators Annex 6: Progress Towards Achieving the Millennium Development Goals Annex 7: Note on Chad’s Eligibility to TSF Window 1 Resources Annex 8: Summary Note on the Environmental and Climate Change Study in Chad Annex 9: Summary Note on Chad’s Resilience Capacity to Fragility and Conflicts List of Tables Table 1: Chad - Impact of the Oil Price Decline on the Chadian economy Table 2: Chad - Business Environment Assessment Table 3: Chad - Cost of Transport as a Percentage of Export Value in 2011 Table 4: Major Difficulties Encountered in Portfolio Management and Performance Improvement Measures Table 5: Key Lessons from Implementing CSP 2010-2014 and IDEV and CODE Recommendations List of Text Boxes Box 1: The Different Access Routes to Chad by Sea Box 2: Key Data on Energy Sector Performance LIST OF GRAPHS Graph 1: Real GDP Growth Rate in % Graph 2: Current Account Balance Graph 3: Sector Distribution of Projects ACRONYMS AND ABBREVIATIONS ABEDA Arab Bank for Economic Development in Africa ADF African Development Fund AfDB African Development Bank AGTF Africa Growing Together Fund AMU Arab Maghreb Union ARMP Public Procurement Regulatory Authority BDEAC Development Bank of Central African States CAPP Central African Power Pool CEMAC Central African Economic and Monetary Community CODE Committee on Operations and Development Effectiveness (AfDB) COJO Bid Opening and Analysis Commissions COMESA Common Market of Eastern and Southern Africa CSP Country Strategy Paper CTFP Committee of Technical and Financial Partners DGCI General Directorate for International Cooperation DWSSP Drinking Water Supply and Sanitation Project EADI African Development Institute (AfDB) ECCAS Economic Community of Central African States ECOSIT Survey on consumption levels and the informal sector in Chad ECOWAS Economic Community of West African States EITI Extractive Industries Transparency Initiative EPA Economic Partnership Agreement FSF Fragile States Facility FYP Five-year Plan GDP Gross Domestic Product HIPCI Heavily Indebted Poor Countries Initiative IDEV Independent Development Evaluation Department ILP Indicative Lending Programme IMF International Monetary Fund INSEED National Institute of Statistics and Economic and Demographic Studies IsDB Islamic Development Bank LOLF Organic Law on Budget Acts NDP National Development Plan OCMP Public Procurements Authority OPEC Organization of Petroleum Exporting Countries PACADET Business Environment and Economic Diversification Support Project for the Chadian Economy PAFICOT Textile Cotton Sector Support Project PAIBLT Lake Chad Basin Initiative Support Project PARFIP Public Finance Reform Support Programme i PBA Performance-based allocation PCBAC Biodiversity Conservation Programme in Central Africa PDCT-AC Central African Consensual Transport Master Plan PGRN Natural Resource Management and Development Project PIRPT Rural, Pastoral and Transhumance Infrastructure Project PMU Project Monitoring Unit PNSA National Food Security Programme PPIP Portfolio Performance Improvement Plan PRODEBALT Lake Chad Basin Sustainable Development Programme PRODEPECHE Fisheries Development Project REP Regional Economic Programme RGE General Livestock Census RISP Central African Regional Integration Strategy Paper RWSSI Rural Water Supply and Sanitation Initiative SADC South African Development Community SME /SMI Small- and Medium-sized Enterprises/Industries TFP Technical and Financial Partner TSF Transition Support Facility TSH Trans-Saharan Road Project (Chad-Niger-Algeria) UA Unit of Account UNDP United Nations Development Programme ii Fiscal Year 1 January – 31 December ----------------------------------------------------------------------------------------------------------------- Currency Equivalents June 2015 UA 1 = SDR 1 UA 1 = EUR 1.26755 UA 1 = USD 1.39050 UA 1 = CFAF 831.458 ----------------------------------------------------------------------------------------------------------------- iii EXECUTIVE SUMMARY 1. Country Context After over four decades of armed conflict and socio-political instability, Chad is experiencing peace again. This positive development and the implementation of measures and reforms under economic and financial programmes supported by the international community have helped the country to achieve remarkable economic and financial results. Chad achieved compliance with EITI standards in October 2014 and reached the HIPC initiative completion point in end-April 2015. Nevertheless, there are still major challenges rooted in persistent economic and climatic fragility. Real GDP, driven essentially by the oil and agricultural sectors, practically doubled from 4.5% in 1990-2003 to 9.4% in 2004-2012 on average, and stood at 6.2% in 2015. This level of growth will be hard to maintain in 2015 due to the general weakening of economic activity attributable to the sharp decline in oil prices. This growth is also not evenly distributed and has not yielded much progress in social terms. The hotspots of conflict along the country’s borders and the attendant harmful consequences are likely to compromise this new- found stability. Nonetheless, it is worth stressing the fact that the apparent general consensus around the introduction of biometry in the counting of votes within the framework of negotiations between the Government and the opposition, under the auspices of the UNDP and the support of technical and financial partners, should allow for the organisation of transparent presidential, legislative and municipal elections in 2016. Hence, this consensus will contribute to strengthening the peaceful climate and favour the smooth implementation of the Bank’s assistance strategy in Chad over the 2015-2020 period. 2. Development Challenges Chad is plagued by situations of fragility, including:
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