Monday, 06 December 2021

In Business

Business Opportunities in Chad

Chad, the Central and North African economy with potential, that many African business people are not paying attention to its opportunities, whilst international investors have much interest in. 

According to the US Government's International Trade Department, Chad's continued development provides opportunities for medium and large projects in the fields of oil exploration, power generation and distribution (especially solar power), mining, livestock, agribusiness, telecommunications, and infrastructure. There are opportunities in niche markets such as gum Arabic and natural products (such as shea butter, spirulina, and moringa), as well as opportunities to develop value-added products, such as meat products and other processed agricultural products.

Despite the many challenges, the success of various foreign investments in Chad shows that this is a business opportunity for experienced, dedicated and patient investors. By 2023, the oil industry will usher in 20 years of operation, and it will be home to several well-known American international oil companies including Exxon Mobil. Olam International entered the Chad cotton market in 2018 and significantly increased domestic cotton production. Chad has abundant natural resources, underdeveloped agriculture and meat processing industries, abundant sunshine, ever-expanding telecommunications coverage, and a rapidly growing population, providing companies of all sizes with opportunities for targeted investment in key industries.

The Government of Chad Investment Charter provides investment incentives for foreign companies operating in Chad, including tax exemption for up to five years. Eligible economic activities are limited to the industrial, mining, agricultural, forestry and real estate sectors. They may not be able to compete with existing companies that are already operating satisfactorily (Articles 16 and 118 of the National Investment Charter). In 2020, the government authorized tax credits for investments in renewable energy, including solar projects. In addition, the National Investment and Export Agency (ANIE) of the Government of Chad has a "one-stop-shop service point" (Guichet Unique) for registered national and international companies. 

A 2018 study of African business people by DHL Express confirms that 41% of African entrepreneurs consider the United States to be the top market for doing business. The company, which has extensive experience in Africa, says that opportunities abound on the continent "but also there are a number of risks involved". And Chad, according to DHL Express is certainly a country where both risks and opportunities exist.

In the country's currency, the CFA franc (XAF), exchange rates fluctuate greatly depending on current events. Currently it is roughly 600 XAF to 1 USD. According to a report from the World Bank (2018), Chad has an average tariff rate of 20%.

Whilst many are still calculating the risks versus the rewards to investing in Chad, there are market intelligent investors like Quaestec Investments' CEO, Charles Fourie. The Energy Resources and Mining business man from South Africa, in partnership with the Chad government has led a lucrative and empowering investment in Chad. In 2017, Quaestec Gold Africa Resources has partnered with the government of Chad to develop the Central African country’s nascent mineral resources sector. Quaestec is a South Africa-based company that is also registered in the United Arab Emirates emirate of Dubai. 

The company’s 60:40 joint venture (JV) with the Chadian government (in favour of Quaestec), Société Nationale de Dévelopement de Minérale (Sonadem), aims to unlock Chad’s diversified mineral resources potential, such as gold, silver, uranium, tin and tungsten.

The JV’s mandate is to formalise Chad’s geological information systems and resource data, develop the country’s mineral resources and establish a national gold refinery in the capital city of N’Djamena. 

Quaestec has since signed contracts with the Chadian government to develop gold mines in Doba, Logone Oriental and Ouaddaï regions. Fourie is considered to be Chad's foremost economic ambassador. He is one of the largest individual investors in Chad’s mineral resource sector, and the Chadian government honoured for his contribution to the country's development that came through his investment. In 2018, Fourie begun the construction of a $100 million refinery gold mine in northern Chad that would give Africa a new tier-one producer. 

Imagine the impact on the economy, of such risktakers, creating not only jobs, but also downstream social development to improve the lives of the Chadians. There are many investment opportunities in Chad that are there for the taking. They can create the necessary wealth to support a new generation of companies along with direct development activities. We need to take better advantage of these opportunities.

Whilst political issues cause capital flight, there is hope in Chad. The Economist reported “Political change is slow but inevitable, and since Buhari came to power in 2015 there has been significant progress on governance reform. We must continue to support the current government, which remains committed to improving governance standards and reforming the petroleum industry." 

Companies interested in investing in Chad should thoroughly research the business, environment, legal, and regulatory frameworks. 

The second biggest economic export activity in Chad is Agriculture. Arable land (% of land area) in Chad was reported at 4.1296 % in 2018, according to the World Bank collection of development indicators, compiled from officially recognized sources. Chad's primary agricultural exports include gum Arabic, sesame, and cotton. 

The Government of Chad prioritized industrialization of agriculture and boosting exports in its 2017 - 2021 national development plan to reduce dependence on oil exports and increase tax revenue. In 2017, the United States was Chad’s main trading partner, followed by France and Côte d'Ivoire. 

Chad's main exports to the U.S. include gold, cotton, textiles and apparel, oilseeds and oilseed products and services. In 2017 U.S exports to Chad were represented by machinery, aircraft parts and other minerals in addition to cotton goods, cereals and soybeans 

In recent years there have been major improvements in Chad's telecommunications infrastructure with mobile cellular subscriptions rising at a rate of over 20% per year, Forbes report. 

Chad is an oil rich country, yet so, there are more opportunities in mining, agriculture, manufacturing, and services. It is a must invest for African business people.

Sources: USITD, Forbes, World Bank

Cabanga Media Group is a media and business services company with interests in Botswana, Nigeria, Kenya, South Africa, Zambia and Zimbabwe.