Lex Africa Guide 2012 Full - Afrer.org

States (ECCAS), the Central African Economic and MonetaryCommunity (CEMAC) and the Central African Customs andEconomic Union (UDEAC).AgricultureAgriculture provides employment for 80% of the country’slabour force with most farming taking place at a subsistencelevel. Cotton and livestock are the two most important products—both earn significant foreign revenue for the country. Theeffective development of the agricultural sector is hampered byharsh environmental conditions and a lack of infrastructure.Trade and InvestmentOil and mineral reserves (gold, natron and marble) have nowattracted interest from investors. Spirulina, shea trees andsesame seed oil are potential areas of investments.Labour RelationsAccording to the Africa 2010 survey, over 80 percent of theworkforce is engaged in unpaid subsistence farming, herdingand fishing. A unionized labour code has been drawn up inconjunction with the World Bank. Mandatory allowances forworkers include transportation, health, indemnity, bonuses, andvacation pay.Significant Issues for Investors to ConsiderChad is handicapped by its landlocked position. Trade, includingexports and imports, must pass through Cameroon wherecorruption is a problem. Energy prices in Chad are among thehighest in the world and variable rainfall causes frequent deficitsin food production. Heavy taxes, corruption, and the lack of anindependent judiciary have discouraged foreign investment.Economic DevelopmentsChad’s first oil company, Société des Hydrocarbures du Tchad,was formed in 2006 to give Chad greater control over its energyreserves. This was followed by tensions between thegovernment and multinational oil firms like Chevron andPetronas over unpaid taxes. Both Libya and France haveprovided generators to increase the Chadian electricity supply.Road and TransportTransport infrastructure within Chad is generally poor, especiallyin the north and east of the country. There are no railways andriver transport is limited to the south-west corner. Roads aremostly untarred and are likely to be impassable during the wetseason, especially in the southern half of the country. In thenorth, roads are merely tracks across the desert and land minescontinue to be a danger. Draft animals (horses, donkeys andcamels) remain important in much of the country. There are 59airports/airfields.WaterChad’s cities face serious difficulties in municipal infrastructure:only 48% of urban residents have access to potable water andonly 2% to basic sanitation.EnergyChad’s energy sector has suffered from years of mismanagementby the parastatal Chad Water and Electric Society (STEE), whichprovides power for 15% of the capital’s citizens and covers only1.5% of the national population. Most Chadians burn biomassfuels such as wood and animal manure for power.TelecommunicationsThe telecommunication system is basic and expensive, withfixed telephone services provided by the state telephonecompany Sotel Tchad. Only 14 000 fixed telephone lines serve allof Chad, one of the lowest telephone density rates in the world.Trade and IndustryChad’s most important export products include cotton, cottontextiles and livestock. It exports these products to countries suchas Nigeria, South Africa, Costa Rica, France, Portugal, Germanyand Thailand. Foodstuffs still constitute most of the country’simports. Other imported products include machinery andtransportation equipment and industrial goods.MiningThe mining sector in Chad remains largely undevelopedalthough preliminary studies suggest that there is muchpotential. Highly promising areas for gold, bauxite, uranium,silver and alluvial diamonds have been identified. The 1995Mining Code regulates the sector.OilExxonMobil leads a consortium of Chevron and Petronas thathas invested US$3.7 billion to develop oil reserves estimated atone billion barrels in southern Chad. Oil production began in2003 with the completion of a pipeline (financed in part by theWorld Bank) that links the southern oilfields to terminals on theAtlantic coast of Cameroon. As a condition of its assistance, theWorld Bank insisted that 80% of oil revenues be spent ondevelopment projects. In January 2006 the World Banksuspended its loan programme when the Chadian governmentpassed laws reducing this amount. On 14 July 2006, the WorldBank and Chad signed a memorandum of understanding underwhich the Government of Chad commits 70% of its spending topriority poverty reduction programmes.In 2004, Chad had 550 km of tarred roads and 33 133 km ofuntarred roads. With no railways of its own, Chad dependsheavily on Cameroon’s rail system for the transport of Chadianexports and imports to and from the seaport of Douala inCameroon.In terms of waterways, most rivers flow intermittently. On theChari, between N’Djamena and Lake Chad,transportation is possible year round. Totalwaterways cover 4 800 km, of which 2 000 kmare navigable all year round.24