Geopolitical Risks in Chad’s Resource Sectors: A High-Stakes Investment Landscape

Chad’s political transition since the death of longtime leader Idriss Déby Itno in 2021 has created a volatile environment for its extractive industries, which form the backbone of its economy. With oil accounting for 60% of government revenue and gold and uranium adding critical export value, the country’s resource sectors are now caught in a web of instability, corruption, and regional conflict. For investors, this is a high-risk, high-reward scenario—where geopolitical turbulence could either crush returns or create asymmetric opportunities.

The Political Transition: A Dynastic Shift with Far-Reaching Consequences

Mahamat Déby’s consolidation of power after his father’s death has been marked by repression, ethnic marginalization, and institutional decay. Post-election protests in 2022 led to over 128 deaths, while ongoing ethnic tensions between northern elites and marginalized southern groups threaten to destabilize regions rich in oil and minerals. The BTI 2024 report notes that poverty has surged to 36.5%, exacerbated by inflation and natural disasters.

The political climate is further poisoned by corruption. The Chadian Hydrocarbons Company (CTH), a state entity, has been implicated in embezzlement scandals, such as the Idriss Youssouf Boy case, where funds were diverted without accountability. Such governance failures deter foreign investors, who require transparency and stability to justify multi-billion-dollar projects.

Security Threats: Boko Haram, Sudan’s Spillover, and Military Fractures

Chad’s extractive industries face existential risks from Boko Haram, which operates in the Lake Chad region where oil infrastructure is concentrated. Attacks have forced population displacements and disrupted local economies. Meanwhile, Chad’s involvement in Sudan’s civil war—supplying arms to the Rapid Support Forces (RSF) via UAE-backed deals—has deepened regional tensions. Over 600,000 Sudanese refugees now strain resources in eastern Chad, fueling intercommunal violence.

Internal military fractures also loom large. The extrajudicial killing of opposition figure Yaya Dillo in 2024 exposed patronage struggles within the Zaghawa clan. If these tensions erupt into open conflict, oil fields and pipelines could become collateral damage.

Geopolitical Alliances: Balancing East and West

Chad’s foreign policy is a precarious tightrope walk. While it hosts 3,000 French troops and U.S. special forces for counterterrorism, Mahamat Déby has pivoted toward non-Western allies. A $1.5 billion loan from the UAE—equivalent to 80% of Chad’s state budget—and rumors of Russian interest highlight the risks of geopolitical overreach.

Economic Vulnerabilities: Overreliance on Oil and Fiscal Collapse

Chad’s economy is a cautionary tale of resource dependency. Oil revenue volatility, combined with systemic corruption, has stifled diversification. The 2023 floods displaced hundreds of thousands and worsened food insecurity, while inflation hit 7% due to fuel price hikes. The government’s nationalization of ExxonMobil’s assets in 2023—meant to block a sale to Savannah Energy—has alienated foreign partners, leaving the state ill-equipped to manage its own resources.

The Investment Play: Navigating the Risks

For investors, Chad’s resource sectors are a test of nerve. Here’s how to capitalize:

1. Short-Term Plays in Uranium: Uranium prices are rising globally, and Chad’s untapped reserves in the south could attract miners willing to tolerate political risk. Companies like Areva (FR0000120065) or Energy Resources of Australia (ASX: ERA) may see opportunities here.

2. Hedging with Gold: Gold’s stability as a safe haven asset makes Chad’s reserves a strategic bet. Barrick Gold (ABX) or AngloGold Ashanti (AU) could explore partnerships, though due diligence on local corruption is critical.

3. Oil Sector Turnaround: If Mahamat Déby’s regime stabilizes—and Western sanctions against Russia-led deals don’t materialize—investors could profit from undervalued oil assets. Glencore (GLEN) or TotalEnergies (TTE) may revisit projects, but only after geopolitical risks subside.

Conclusion: A Gamble with Asymmetric Rewards

Chad’s resource sectors are a geopolitical minefield, but they also harbor asymmetric upside. Investors who can navigate its instability—by focusing on short-term, high-margin plays in gold or uranium, or waiting for a stabilization of its oil sector—could reap outsized returns. However, the stakes are high: misjudge the political calculus, and losses could be catastrophic.

The question remains: Can Chad’s leadership transition from a patronage state to one that attracts sustainable investment? For now, the answer is a resounding no—but that’s precisely why bold investors might find value in its chaos.