Chad

Six charts to understand Chad’s food security crisis

Attachments

FULBERT TCHANA TCHANACLAUDIA NOUMEDEM TEMGOUAABOUDRAHYME SAVADOGOLANDRY KUATE FOTUE

While Chad, a net oil exporter since 2003, saw its GDP per capita double between 1995 and 2014, since then, it has lost about one-fourth of its GDP per capita. A sharp decline in oil prices, climate change, and increase in insecurity and conflicts compounded with political unrest have contributed to it.

The following six graphs narrate the key findings of new World Bank reports highlighting recent economic developments and some of the underlining drivers of the food security crisis.

  1. The country enters its second consecutive year in recession

Driven by a two-month suspension of oil production at its Esso plants, disruptions of economic activity due to sociopolitical insecurity, and liquidity constraints due to delays in debt restructuring, Chad's GDP contracted by 1.2% in 2021—the second consecutive year of recession. As containment measures affecting domestic supply chains were lifted, inflation dropped from 3.5% in 2020 to 1% in 2021. The number of people living in extreme poverty increased from 5.8 to 6.2 million people.

  1. Fiscal deficit remains at 6.7% of GDP, constraining Chad’s ability to improve essential services

Chad posted a 6.7% of GDP fiscal deficit (excluding grants) in 2021 as it increased public spending on security and areas related to the political transition. Despite a significant increase in oil prices, realized oil revenues were low, due to the one-year lag in oil revenue taxation. Moreover, increasing liquidity needs, partly stemming from growing political and security expenses, and high levels of debt service relative to domestic revenue, constrained Chad’s ability to improve essential services and infrastructure delivery. A successful debt restructuring process under the G20 Common Framework would provide substantial relief by helping restore a sustainable fiscal balance.

  1. Nearly one million Chadians are in acute food insecurity

Based on the results of the harmonized framework on the situation in October -December 2021, an estimate of 970,000 Chadians is acutely food insecure. 1.7 million are projected to be in this situation during the June-August lean 2022 season. Drop-in production, high commodity prices, and disruption of supply chains, have increased an already critical state of vulnerability and needs of the population. Food products are becoming scarce in local markets. The government forecasts a 291,000 tons cereal deficit for 2021/2022. The government announced on January 8, 2022, a ban on the export of cereals and groundnuts, except for sesame to address food insecurity and together with UN partners, launched a $510.9 million Humanitarian Response Plan in 2022.

  1. Food prices are on the rise, further aggravating the existing food crisis and poverty

Inflation had an impact on households in 2020-21 and is expected to continue in 2022. A recent survey suggests that 20% of Chadian households experienced high food prices during the last three years before the 2018/19 survey. In addition, cereals are the most consumed food with households allocating 29% of their food budget to these products. Simulations using data from the 2018/2019 national household survey, consumption price index data and a demand system estimation, suggest that the 2020, 2021, and 2022 years of inflation are associated with higher poverty rates While households may have experienced increase in their income thanks to economic growth, their purchasing power declined due to increase in prices.

  1. 88% of Chadian population depends on agriculture for their livelihoods

Chad is facing a worsening food security situation, especially with the Russia-Ukraine war impact. Most rural households rely on the agriculture sector for their livelihoods. Agriculture GDP share has been declining over the last decade, from 42% in 2010 to 38.5% in 2019. The sector employs about three-quarters of the country’s labor force.

  1. Sesame seeds, live cattle, and gum arabic have the potential to increase income in rural areas

Chad’s top three crop exports are gum arabic, sesame seeds, and cotton, although they represent a small share of their respective global markets. Chad also has a solid revealed comparative advantage in sesame seeds and gum arabic, but the country needs to further develop their value chains to fully benefit from their potential. Farmers have increasingly switched from cotton production to sesame. Livestock is a major source of income in the country. Yet, complex livestock value chains and insecurity in the region reduce the gains of producers and the competitiveness of Chadian cattle.