World Bank Group
World Bank Group
10/27/2021 | Press release | Distributed by Public on 10/27/2021 16:24
Chad’s economic and poverty outlook in 10 charts
Chad made progress in reducing poverty, from 47 % in 2011 to 42 % in 2018. But the COVID-19 crisis has threatened economic and social gains, pushing the country into recession and hundreds of thousands of Chadians into extreme poverty. A series of new World Bank reports - including the latest Chad country economic update, the 2021 poverty assessment, and the gender economics report - provide a 360 view on the latest development trends in the country. These charts highlight some of the main challenges and opportunities for reforms to promote a resilient and inclusive recovery.
1. A second economic recession in five years
After a short recovery from the 2015-16 crisis, Chad fell back into recession in 2020. While the country experienced economic recovery in 2018 and 2019 mainly due to an increase in oil production, COVID-19 and the decline in oil prices changed this trajectory. In 2020, the economy contracted by 0.9%. Therefore, the recovery will be gradual and modest.
Chart 1. Chad -- sector contribution to GDP
Source: Chad Economic Update, 20212. The pandemic has constrained households' access to essential services and increased poverty
Chad has made progress in poverty reduction during the last decade, with the poverty rate moving from 47 % in 2011 to 42 % in 2018. However, the loss of income reduced domestic transfers and remittances. In addition, higher inflation decreased households' consumption and increased the share of individuals living below the national poverty line by 5.5 percentage points in 2020. The school closure affected children's education outcomes as close to 90% of students were at home without any engagement with educational activities. School closure is estimated to have increased the dropout rates and gender gap in education.
Chart 2. Impact of Covid-19 on Households' total income (in 2020)
Source: Chad Economic Update, 20213. Most households suffer from severe food insecurity, especially in rural areas.
About three out of four Chadians are food insecure. Food insecurity is more prevalent in rural areas than in urban areas and tends to disproportionally affect households in southern regions compared to northern and central regions. This is explained by the fact that the largely agro-pastoral population of northern and central Chad raises livestock for both food and cash income, while households in the south primarily rely on precarious crop production, including staple foods like millet and rice and cash crops like cotton.
Chart 3 : Food Insecurity among Rural and Urban Households
Source: Chad Poverty Assessment, 20214. Recurrent shocks make households vulnerable to poverty
More than half of Chadians are vulnerable to poverty, including 60% in rural areas and 29% in urban areas. Persistent drought has accelerated desertification, reduced the size of agro-pastoral areas, and spurred a southward shift in transhumance patterns. Such population displacement has heightened tensions between farming and herding communities. Furthermore, chronic family hazards such as severe illness, injury, or death of a family member have threatened households' livelihood, relying on family labor during farming activities.
Chart 4. Vulnerability rates, in % of household
Source: Chad Poverty Assessment, 20215. Smallholder agriculture and pastoralism remain the main sources of livelihoods
According to the 2021 Poverty Assessment, about 67% of rural households are engaged in crop and livestock production. Yet, irrigation networks cover less than 1% of agricultural land. As a result, the agricultural sector performs far below its potential. More than 80 % of farms cultivate fewer than two hectares on only 6% of the country's arable land. Farmers and pastoralists have the potential to accelerate diversification by increasing value addition in existing production chains. Enhancing the productivity of smallholder farming, increasing market connectivity, and enabling households to have access to effective coping mechanisms are crucial to support rural income growth.
Chart 5. Rural household Income Composition (%)
Source: Chad Poverty Assessment, 20216. Only 50% of women participate in the labor force
Only 50% of women participate in the labor force, in contrast to 73% of men. Moreover, women are less likely to join the formal labor force and work for pay. They do not have access to the same work opportunities as men, or when they do, are more likely to work part-time. As a result, women are less productive and earn less than men. All this leads to substantial gender gaps in earnings and productivity, which decreases women's bargaining power and voice and their ability to negotiate their productive work.
Chart 6. Female labor force participation rate (% of female population aged 15-64), 2019
Source: Chad Gender Economics report, 20207. Gender inequality starts at school
While gender gaps in school attendance are closing, Chadian girls still have lower educational levels and poorer learning outcomes than boys. Chad's overall education levels are much lower than the Sub-Saharan African average. The Human Capital Index estimates that a girl starting school at the age of 4 can expect to complete 6.2 years of school while a boy will complete 7.7 years. Child marriage, early childbearing, and female genital mutilation and excision are acute compared to regional peers. About 67% of women are first married before age 18.
Chart 7: Educational attainment, by age group and gender
Source: Chad Gender Economics report, 20208. Decline oil revenue calls for bold structural reforms to create fiscal space for social spending
Oil revenues have been volatile and downward trending, declining from 16% of GDP in 2012 to 3% in 2016. At 9% of GDP in 2021, it remains low and constrains Chad's fiscal space, leading to a decline in capital expenditure, slow economic growth, and recessions. Therefore, bold actions are needed to reverse this course and to spur economic growth. According to the 2021 Economic Update, the government could:
- Remove bottlenecks to livestock exports, integrating the livestock market into the light meat and leather processing industry.
- Adopt business-friendly reforms.
- Strengthen fiscal administration and policy for better revenue collection.
- Improve the efficiency of public investment spending public spending in health and education.
Chart 8. Oil Revenue, expenditure, and real GDP 2012-20
Source: Chad Economic Update, 20219. Reducing the gender gap in productivity and human capital could increase GDP per capita by 13.5%
According to the Gender Economics Report, implementing a pro-gender policy to reduce the productivity gap in agriculture and accelerate the demographic transition could increase per capita GDP by 13.5% by 2050. In addition, the government would benefit from focusing on reforms that reduce early marriage and pregnancy and improve girls' learning and adult women's productivity.
Chart 9. Economic benefits of gender equality on per capita GDP by 2050
Source: Chad Gender Economics report, 202010. Strengthening social protection will reduce poverty and improve household resilience.
According to the high-frequency phone survey implemented in July-August 2020, 63 % of households receive help from family or friends, and 47 % use savings to manage shocks' impact. Moreover, following an adverse event, about 38 % of poor households reduce their consumption. To enable households to protect their physical, financial, and especially human capital, policymakers should develop adaptive social protection systems that can:
- Swiftly provide income support and essential information during shocks and crises.
- Facilitate access to education, healthcare, nutrition, and other critical services.
- Ensure equal access to productive resources and economic opportunities.
- Support the development of skills that generate greater labor-market returns.
- Build delivery platforms for coordinated multisectoral initiatives.
Chart 10. Households' coping mechanism in an event of shock
Source: Chad Poverty Assessment, 2021