Can Chad escape the "curse" of oil wealth?

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March 2005

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Can Chad escape the "curse" of oil wealth?
The World Bank-financed attempt to transform oil revenues into poverty reduction in Chad—a country marked by corruption, instability and human rights abuses—is hanging by a thread after the first year of oil exports, according to a report released February 17 by Catholic Relief Services (CRS) and the Bank Information Center (BIC).

With the United States expected to receive as much as 25 percent of its petroleum imports from Africa within the next ten years, Chad's experience as the continent's newest and arguably most precarious petro-state is of particular interest not only to Chadians and to the World Bank, but to prospective consumers of the continent's growing supply of "black gold." The CRS/BIC report reveals that, despite the support received from the World Bank and other donors, the country remains unprepared to manage the complexities of an economy increasingly dominated by oil, adding to concerns about the stability of African oil-exporting countries.

"We and our local partners in Chad want this project to succeed. The several billion dollars in oil revenues that the Chadian government will be receiving represent an important opportunity to reduce grinding poverty in Chad," said report author Ian Gary, CRS strategic issues advisor for extractive industries. "But with billions of dollars falling outside the revenue transparency safeguards, limited government capacity to spend the money effectively and ongoing problems with human rights and the rule of law, we are concerned that poverty reduction objectives may not be achieved."

In Chad's Oil: Miracle or Mirage? Following the Money in Africa's Newest Petro-State, co-authors Gary and Nikki Reisch, BIC Africa program coordinator, identify major weaknesses and loopholes in the management of petroleum revenues.

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