Financial Crime World

Chadian Finance Sector Faces Challenges in Due Diligence

As Chad’s economy continues to grow, international investors are increasingly looking to tap into its vast natural resources and business opportunities. However, navigating the country’s financial system can be a daunting task, particularly when it comes to due diligence.

A Cash-Based Economy

Chad remains a largely cash-based economy, with credit cards and checks not widely accepted as methods of payment. While some hotels and restaurants are starting to accept international credit card payments, traditional financial instruments such as letters of credit, collections, and funds transfers are still the norm.

Banking System Limited

The country’s banking system is limited in size and available services, with only ten commercial banks operating in Chad. Financial instruments available to the private sector include:

  • Letters of credit
  • Short-term and long-term loans
  • Foreign exchange operations
  • Some long-term savings instruments

Credit is available from commercial banks on market terms, which average 16 to 25 percent for short-term loans.

Regulation and Oversight

The banking sector in Chad is regulated by Commission de Banque de l’Afrique Centrale (COBAC), a regional banking agency. The country is also a member of the CFA zone and the Central African Monetary Union (CEMAC), which guarantees the convertibility of the Central African CFA Franc (FCFA) into Euro at a fixed rate.

Foreign Exchange Controls

While there are no restrictions on transferring funds into Chad, several restrictions apply to money departing the country. These include:

  • Individuals transferring more than $1,000 out of Chad must provide documentation of the source and purpose of the transfer.
  • Transactions of $10,000 or more for individuals and $50,000 or more for companies are automatically notified to COBAC.

U.S. Banks with Correspondent Banks in Chad

There are no U.S. banks currently operating in Chad, but several local banks have correspondent banks in the U.S. and Europe that can facilitate international transfers. These banks include:

  • Société Générale des Banques
  • Banque Commerciale du Chari
  • Ecobank Tchad
  • Orabank
  • Commercial Bank Tchad
  • Banque Agricole et Commerciale
  • Banque Sahelo Saharienne pour L’investissement et le Commerce (Tchad) S.A.
  • United Bank for Africa (UBA) Tchad

Conclusion

While navigating the financial system in Chad can be challenging, it is essential for international investors to exercise due diligence when doing business in the country. Understanding the local banking system, foreign exchange controls, and regulations will help ensure a smooth and successful investment experience.