Chad's Governance Crisis: A Looming Threat to Foreign Investment and Regional Stability

Chad's political and judicial landscape has become a minefield for foreign investors, with systemic instability and institutional bias eroding confidence in the country's governance. From 2023 to 2025, the nation has witnessed a consolidation of power by interim President Mahamat Idriss Déby, a flawed electoral process, and a judiciary that lacks independence. These factors, compounded by economic fragility and regional security challenges, have created a high-risk environment for foreign direct investment (FDI) and threaten to destabilize Central Africa's already precarious economic ecosystem.

Political Instability: A Relentless Deterrent to FDI

Chad's transition from the 30-year rule of Idriss Déby Itno to his son Mahamat has been marked by prolonged uncertainty. The 2024 presidential election, in which Mahamat Déby secured 61% of the vote, was widely criticized for its lack of transparency. Opposition candidates were disqualified, and security forces were implicated in violent crackdowns, including the fatal shooting of 11 civilians during victory celebrations. Such events underscore a regime that prioritizes control over democratic norms, deterring investors who require predictable and stable environments.

The nationalization of ExxonMobil's oil assets in 2023 further exemplifies the risks. While framed as a move to prevent foreign divestment, the government's lack of technical expertise and financial capacity to manage these assets has raised concerns about long-term viability. Oil production, which peaked at 140,000 barrels per day in 2024, is projected to decline to 128,000 barrels by 2025, compounding economic vulnerabilities.

Judicial Bias and Impunity: Erosion of Rule of Law

Chad's judiciary has become a tool for political repression rather than a guardian of rights. The Constitutional Council, dominated by the ruling Patriotic Salvation Movement (MPS), has systematically rejected opposition candidates, including 10 from northern and central regions—key electoral battlegrounds. A 2023 amnesty law granted impunity to security forces for the October 2022 protests, which left 128 dead, and blocked justice for victims. The unresolved death of opposition leader Yaya Dillo in February 2024, allegedly an extrajudicial execution, highlights a system where accountability is nonexistent.

These failures have eroded public trust and created a climate where investors fear arbitrary legal actions. The lack of an independent judiciary means contracts, property rights, and dispute resolution mechanisms are unreliable, deterring long-term commitments in sectors like infrastructure and agriculture.

Economic and Regional Implications

Chad's economic reliance on oil (77.5% of exports) and its inability to diversify have left it vulnerable to market fluctuations. The government's fiscal mismanagement—exemplified by the suspension of the IMF's Extended Credit Facility in 2023 due to overspending—has exacerbated a widening fiscal deficit. Meanwhile, the influx of 650,000 Sudanese refugees since 2023 has strained resources, diverting funds from development projects to emergency aid.

Regionally, Chad's instability has spillover effects. The country's role as a transit hub for Russian and UAE military assets during the Sudan conflict has introduced geopolitical volatility, while intercommunal violence in the south and Boko Haram attacks in the Lake region threaten cross-border trade and security. Neighboring economies, such as Cameroon and Niger, face heightened risks of destabilization, undermining regional integration efforts.

Investment Advice: Navigating the Risks

For investors, Chad presents a paradox: a resource-rich nation with strategic regional significance, yet plagued by governance failures. Here's how to approach the market:

1. Due Diligence on Political Risk: Prioritize investments in sectors with short-term horizons or partnerships with international multinationals that can leverage diplomatic protections. Avoid long-term commitments in oil and infrastructure without robust legal safeguards.
2. Diversify Regional Exposure: Consider neighboring countries like Gabon or Equatorial Guinea, which, despite their own challenges, offer more stable governance frameworks.
3. Engage with International Institutions: Support initiatives by the African Development Bank or World Bank to strengthen Chad's judicial and electoral systems, which could indirectly improve the investment climate.
4. Monitor Debt Sustainability: Chad's public debt, rescheduled with commercial creditors like Glencore, remains a ticking time bomb. Track fiscal reforms and debt-to-GDP ratios closely.

Conclusion: A Call for Prudence

Chad's governance crisis is not an isolated issue but a symptom of deeper regional fragility. Until the government addresses judicial independence, electoral transparency, and economic diversification, FDI will remain a high-risk proposition. For now, investors must tread carefully, balancing strategic opportunities with the reality of a nation teetering on the edge of authoritarianism and chaos. The path to stability lies not in short-term gains but in sustained political will—a commodity in short supply in N'Djamena.