Oil Exploitation and Regional Disparities of Poverty in Chad: An Analysis of the Oil Revenues Redistribution Policy

This study aims to explore local disparities of poverty in Chad within a context of oil exploitation. Firstly, it analyses the regional poverty dynamics between 2003 and 2011 by decomposing poverty trends into growth and redistribution components based on the Shapley value framework. Secondly, the paper assesses the causes of disparities in poverty incidence between counties according to the amounts of oil revenue allocated with respect to their demographic weights. Then, a generalization of the Oaxaca-Blinder decomposition for poverty analysis, based on Yun (2004) approach is employed to decompose inter-county poverty difference into characteristics and coefficient effects. Data used come from the most recent Chad Household Consumption and Informal Sector Surveys (ECOSIT 2 and ECOSIT 3) carried out by the National Institute of Statistics, Economic and Demographical studies (INSEED). Administrative data on the amounts of direct oil revenues allocated throughout the country by the College for Control and Monitoring of Oil Revenues (CCSRP) are also used. Results highlight that high-speed economic growth following the oil boom has not really helped to reduce poverty, not only in Chad on the whole, but also at the regional level where important disparities in poverty dynamics are observed. Also, significant differences exist while comparing poverty incidence between counties in regard to the amounts of oil revenues allocated. The characteristics that explain these inter-county disparities of poverty are mainly education, labour market status and access to public services, especially water and healthcare facilities. Therefore, it is expected that the oil revenue redistribution policy would better promote economic inclusion in Chad if oil revenue allocated by the central government throughout the country would reflect the specific local development needs.