CHAD: An Introduction to General Business Law

Located in the centre of sub-Saharan Africa, the Republic of Chad is a French-speaking country whose economy has historically been based on agriculture, both arable and pastoral. The Republic of Chad joined the ranks of oil-producing countries in 2003 and since then its economy has been heavily dependent on oil.

Growing Foreign Investment 

In defiance of the various political crises that have marked it since independence; the Republic of Chad is, due to its young and flourishing economy, currently one of the most popular destinations for investors from Asia, Europe and North America.

While pastoral agriculture and livestock farming have declined considerably due to the deterioration of climatic conditions in recent decades, the mining and energy sectors have been very attractive for investors. Beyond the availability of raw materials, which are the main source of attraction for investors, the establishment of multinationals in various sectors of the Chadian economy can also be explained by the tax advantages and optimisation granted by the Chadian government.

Furthermore, it should be remembered that due to its membership of the Organisation for the Harmonisation of Business Law in Africa (OHADA) and the Central African Economic and Monetary Community (CEMAC), the Republic of Chad has a legal and judicial arsenal that meets international standards and protects local and foreign investors. The advantages of belonging to these two communities are linked to the harmonisation and unification of business law.

CEMAC Treatment of Digital Assets 

In the CEMAC economic zone, of which the Republic of Chad is a member, crypto-assets and digital asset services are admitted by Regulation No 22/CEMAC/UMAC/CM/COSUMAF dated 21 July 2022 on the Organisation and Operation of the Central African Financial Market.

Digital asset service providers thus become intermediaries in the CEMAC financial market, in the same way as a stock exchange company, a credit institution, a management company, a financial investment advisor or a participatory finance advisor. As such, they must obtain approval from the Central African Financial Market Supervisory Commission (COSUMAF). However, crypto-assets are not the same as cryptocurrencies, which are not legal tender in the CEMAC economic area.

Special Economic Zones 

Apart from the legal frameworks adopted by community institutions such as CEMAC and OHADA, the Republic of Chad has recently taken several initiatives at the national level to promote and attract investment. The the Republic of Chad has adopted a legal framework for Special Economic Zones (ZES) designed to attract foreign and domestic investment. This legal framework consists of:

– Ordinance No 002/PCMT/2022 dated 28 July 2022 establishing the General Framework for the Creation and Governance of Special Economic Zones in the Republic of Chad;

– Ordinance No 003/PCMT/2022 dated 28 July 2022 on the Incentive Scheme Applicable in Special Economic Zones (ZES) in the Republic of Chad; and

– Ordinance No 004/PCMT/2022 dated 28 July 2022 on the Creation of an Agency for the Administration of Special Economic Zones (AAZES).

The Chadian government’s ambition is to revitalise the private sector through investment promotion. The incentive scheme creates a derogatory land and tax regime for investors approved to operate in the Special Economic Zones.

A New Cybersecurity Framework 

Additionally, the Republic of Chad has adopted a legal framework for cybersecurity, cybercrime and cyber defence. This framework includes:

– Ordinance No 007/PCMT/2022 dated 31 August 2022 on Cybercrime and Cyber defence in the Republic of Chad;

– Ordinance No 008/PCMT/2022 dated 31 August 2022 on Cyber security in the Republic of Chad; and

– Ordinance No 009/PCMT/2022 dated 31 August 2022 establishing the National Agency for Computer Security and Electronic Certification (ANSICE).

It should be noted that prior to the adoption of this legislation, cybersecurity and cybercrime issues were dealt with by a single legal framework, namely Law No 009/PR/2015 dated 10 February 2015 on cybersecurity and the fight against cybercrime.

IMF Credit Facility and Problems To Be Overcome 

In late 2022, the Executive Board of the International Monetary Fund (IMF) completed the first and second reviews of its extended credit facility arrangement with the Republic of Chad, providing the country with access to USD149.3 million. This will help put Chad’s economy on a path toward sustainable economic growth and poverty reduction. The Republic of Chad is the first country to reach a debt treatment agreement with official and private creditors under the G20 Common Framework. The agreed debt treatment is consistent with the objectives of the IMF-supported programme that were approved in December 2021. It reduces the risk of debt distress at a time when the global outlook is highly uncertain, and provides protection against downside risks, including lower oil prices.

While high oil revenues have improved the government’s financial position, the Republic of Chad continues to face considerable challenges, including food insecurity, oil price volatility, climate change, and security issues. Continued reform efforts are needed to enhance growth, poverty reduction, and economic resilience. However, the pandemic remains a concern while last year’s poor crop, Russia’s war in Ukraine, and the recent floods have exacerbated food insecurity. The prolonging of the political transition has heightened social tensions while the security situation remains volatile.

In spite of the efforts made by the Chadian government, economic actors continue to encounter difficulties; these are linked to poor political governance, bribery, and the slow development of technological tools and administrative procedures for the approval and the creation of companies. Furthermore, the lack of modern infrastructure necessary to facilitate the opening up of the national territory is a significant brake on progress.

These obstacles can be overcome by transparency and rigour in political and administrative governance, the promotion of administrative technologies, the construction of modern infrastructure and the adoption of a legal framework adapted to the global economic environment.