Chad: Selected Issues and Statistical Appendix
Author: International Monetary Fund
Publication Date:
31 Jan 2007
eISBN:
9781451836462
Language:
English
Keywords:
ISCR; CR; Chad; wage; Microfinance institution; oil revenue; military personnel; across-the-board wage; personnel management; wage arrears; timeliness of wage payment; Civil service; Public sector wages; Civil service reform; Labor share; Sub-Saharan Africa; employee wage
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This Selected Issues paper aims at discussing the impact of the oil windfall on Chad, with a focus on growth, poverty, competitiveness, and fiscal policy challenges posed by the oil revenue outlook. The paper discusses the reforms needed to remove structural factors that constraints the non-oil sector growth, in particular on civil and military services and the microfinance sector. The paper argues that Chad’s current growth potential is seriously limited by low levels of both human and physical capitals and by weak institutions and governance.

Abstract

This Selected Issues paper aims at discussing the impact of the oil windfall on Chad, with a focus on growth, poverty, competitiveness, and fiscal policy challenges posed by the oil revenue outlook. The paper discusses the reforms needed to remove structural factors that constraints the non-oil sector growth, in particular on civil and military services and the microfinance sector. The paper argues that Chad’s current growth potential is seriously limited by low levels of both human and physical capitals and by weak institutions and governance.

V. Civil and Military Service Reform in Chad 60

A. Introduction

1. Civil and military service reform in Chad is essential for strengthening public administration, in particular as regard policy formulation and reform implementation capacity, and improving governance. Such reforms would help improve Chad’s reform execution and thus strengthen its macroeconomic performance.61 The military service, which accounts for about 40 percent of public employment, should also be modernized. This paper assesses the implementation of civil and military62 service reforms, describes the main features of the civil and military services, and provides reform recommendations.

2. The main findings of the paper are as follows:

  • Despite being part of Chad’s structural reform agenda since the mid-1990s, civil and military service reforms have made little progress, largely owing to weak government ownership of such reforms, poor coordination among institutions charged with the reform, inappropriate sequencing of related actions, and lack of financing. As a result, the quality of public administration remains poor.

  • The composition of Chad’s public employment is not in line with the government’s poverty reduction strategy. Indeed, education and health staffing as a share of the total population is well below regional standards.

  • Personnel management does not adequately support performance or safequard the quality of public service delivery because recruitment practices, promotion criteria, and the wage structure are not tied to skills or performance, and the civil and military services lack the basic tools needed to manage human resources.

  • The wage bill absorbs a significant share of non-oil revenue and current spending. This absorption of non-oil resources, combined with Chad’s weak and complex financial management system, contributed to the emergence of wage arrears in 2005.

  • To improve the quality of institutions and governance and ensure the sustainability of the fiscal outlook, it is urgent that the government accelerate the implementation of both the civil service statute and its strategic human resources management policies, particularly in education, health, and other priority sectors. In addition, by computerizing and harmonizing the payroll and personnel management systems and implementing military personnel reform, the government would strengthen its cash management practices.

3. This paper is organized as follows. Section B presents the reform strategy and takes stock of its implementation. Section C describes the main characteristics of Chad’s wage bill and civil service management. Section D offers recommendations.

Civil and Military Service Reform Strategy, Implementation

4. The main goals of the civil and military service reform—adopted by the government in 1998—are to:

  • improve government effectiveness and service delivery, particularly in achieving poverty reduction;

  • strengthen civil service management by implementing an integrated personnel management and payroll system and by streamlining pay and career structures;

  • ensure that the wage bill remains consistent with a sustainable framework and that workers receive wages on time; and

  • reform the military’s structure, wage level, and personnel management system to improve security and efficiency.

5. The civil service reform strategy has four pillars: (i) improve the quality of human resources, (ii) provide adequate incentives and a productive working environment, (iii) increase the accountability of staff to beneficiaries; and (iv) establish transparent staff rules, regulations, and records. The reform mandated an audit of ministries, adoption of a new civil service statute, and the development of a computerized system for payroll and personnel management. The World Bank, which has taken the lead in assisting Chad in its civil service reform, is supporting the government’s efforts to strengthen governance and public resources management63 through the Institutional Reform Support Credit approved in November 2004.

6. After the government adopted the strategy in 1998, the authorities implemented a number of actions. An institution in charge of civil service reform implementation (CESRAP) was set up in 1999. A census of civil personnel was completed in 2000. In 2001, the authorities adopted a new civil service statute that applies merit-based criteria to recruitment, promotion, and pay practices, and the government simplified and computerized the payroll tracking system. In 2003, an audit was completed on the institutional organization and personnel management policies of nine key pilot ministries (Box 1). To support the goals of the National Poverty Reduction Strategy (NPRS), the government’s recruitment policy has concentrated on hiring personnel in priority sectors (Table 1), financed in part by using a portion of oil revenues received since 2004.

Table 1:

Chad: Recruitments in selected priority sectors, 2000-06

(In number of staff, unless otherwise indicated)

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Sources: Chadian authorities

Central government, excluding defense.

Chad: Main Conclusions of the Audit of Nine Key Ministries

In 2003, an institutional and organizational audit of nine key ministries (Finance; Planning, Development, and Cooperation; Education; Higher Education; Health; Social Action and Welfare; Agriculture; Livestock; and Justice) revealed:

(i) institutional conflicts between ministries, owing to a lack of clear organizational responsibilities (e.g., between the Ministry of Finance and the Ministry of Planning on public investment roles);

(ii) weak ownership over sector strategies and Poverty Reduction Strategy measures;

(iii) a lack of human resources management policies and tools; and

(iv) lack of a performance-based management system.

7. However, reform implementation has been slow and uneven, reflecting three factors: poor coordination among the institutions in charge of implementing the measures, inappropriate sequencing of actions, and weak government ownership of the reforms. Most of the implementation decrees of the new statute have not yet become effective, so that many features of the 1986 civil service statutes have prevailed. 64 Wages and recruitment are still determined by ad hoc procedures, and some civil servants are recruited on a contractual basis. The new three-level performance-based wage structure is not yet operational, as civil servant unions have blocked operational regulations. The computerized personnel and payroll system could not be finalized before the census was completed and thus draws on outdated census data. Moreover, the computerized system itself has no reliable back-up procedures and is not properly maintained. Finally, the CESRAP, as a purely “technical body,” lacks political support for implementing the reform. In the context of high unemployment and corruption,65 rent-seeking behavior has hindered reform implementation.

8. A reform of the military personnel management prepared in 1996 could not be implemented until 2005 because of financing shortfalls. By addressing issues related to wages, personnel structure, and status, the reform would help improve security, a goal identified as a priority for poverty reduction under the NPRS. Indeed, in the past, some demobilized military personnel were not smoothly reinserted into society and contributed to domestic insecurity. Therefore, provision of an adequate remuneration package to military personnel was identified as key to security and political stability. As shown in Table 2, civil service wages at the end of 2004 were estimated to be two to three times higher than military wages under the lump-sum system. The military personnel structure, which has a disproportionate share of high-ranking officers, does not reward performance, and ethnic imbalances in the composition of army staff have sparked tensions.

Table 2:

Chad: Civil and military personnel wages

Estimated average monthly wage in thousands of CFA francs in 2004

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Sources: Chadian authorities; staff estimates.

Chad: Structure of military personnel

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9. A General Assembly of the Army in April 2005 designed a new statute and discussed issues pertaining to the management of military personnel. Objectives of the reform include limiting the army to 25,000 staff, increasing wages and benefits, establishing a more merit-based promotion system, and ensuring the reinsertion of demobilized officers.66 Given the government’s financing constraints, the reform has not yet been fully implemented, though the replacement of the lump-sum system with a pay-scale system in January 2005 more closely aligned military wages with those of the civil service. Both France and the World Bank are expected to provide technical assistance to help the authorities finalize their security sector reform program, including through a demobilization program. However, it will be difficult to implement a comprehensive security reform program in the current insecurity context.

Main Characteristics of Chad’s Civil and Military Service

10. Chad’s public employment is small compared with that of other sub-Saharan African and low-income countries, and its composition differs markedly from peer-group countries’ (Table 3). Public employment in Chad only accounts for 0.81 percent of the total population, below the averages for both sub-Saharan African countries (1.5 percent) and low-income countries (2.6 percent). However, armed forces (police and defense) as a share of the total population (0.4 percent) is higher than the average in sub-Saharan countries, and staffing in such priority sectors as health and education is much lower than the sub-Saharan average (Table 4), a gap that contributes to poor service delivery. Civil service workers also tend to be heavily concentrated in urban areas (60 percent work in N’Djamena, where just 10 percent of the total population live), not in rural areas, where most of the poor live. There are few incentives to work in provinces, where poor infrastructure, security concerns, and late wage payments create challenging working conditions. Recruitment in priority sectors has improved somewhat in recent years, with priority sector staffing accounting for a rising percentage of the total population. However, the quality of service delivery in priority sectors still remains very low (see Box 2).

Table 3.

Chad: Public sector employment and wages, 1996-2000

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Source: World Bank, Fund staff and authorities estimates
Table 4.

Chad: Staffing of education and health sectors

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Source: World Bank, Fund staff and authorities estimates
uA05fig01

Police and Armed Forces as a Percentage of Total Population in Selected African Countries, 1996-2000

Citation: IMF Staff Country Reports 2007, 028; 10.5089/9781451836462.002.A005

uA05fig02

Employees as a percentage of total population, 1996-2000

Citation: IMF Staff Country Reports 2007, 028; 10.5089/9781451836462.002.A005

11. The wage bill as a share of GDP is in line with other African countries’, but it absorbs a significant portion of non-oil revenue; this absorption of resources, in the context of weak cash management practices and complex system, has contributed to the emergence of recurrent wage arrears in 2005. The wage bill as a share of non-oil GDP increased from 4.6 percent in 2001 to 6.0 percent in 2005, absorbing about 60 percent of 2005 non-oil revenue, or 50 percent of current expenditures (Table 5). Because the 2005 budget earmarked oil revenue to capital expenditures, such revenue could not be used to finance timely wage payments in priority sectors. Shortfalls in non-oil receipts, combined with weak cash and budget management, thus gave rise to the accumulation of wage arrears of about two months at the end of September 2005, sparking significant social and political tensions. Notably, the timeliness of wage payments has improved since the end of 2005, when greater timeliness was identified as a priority in cash management.

Table 5:

Chad: Basic data on civil and military personnel and wages, 2001-2006 1/

article image
Sources: Chadian authorities and Fund staff estimates.

Statistics on civil and military personnel are weak.

Ratio of the highest salary to the lowest on the salary scale.

12. Because the legal basis of the new statutes is still incomplete, competitive recruitment, merit-based remuneration, and performance-based promotion practices have not been widely adopted. Across-the-board wage increases in 2003 and 2004 went against the spirit of the reform. The government announced a further 5 percent general civil service wage increase in mid-2006, despite poor strategic human resources planning and weak coordination between the ministry overseeing the civil service and its line ministries. High staff turnover also continues to weaken the quality of civil service administration.

13. Personnel and payroll management systems remain weak. A comprehensive, computerized, and up-to-date database on civil personnel (including job profiles, grades, and related salary and allowances) has yet to be created. Further, manually maintained personnel and payroll files have yet to be harmonized, resulting in important inconsistencies. The payroll file also still reflects the old wage structure, which includes 11 staff categories. Finally, inadequate payroll monitoring tools and the absence of payroll data in the computerized budget execution system continue to hamper the monitoring of wage payments.

Personnel Management in the Education Sector

According to the World Bank, the share of nonteaching personnel in the education sector is higher than in other sub-Saharan African countries (Table 6).

Table 6:

Chad: Non teaching personnel in the education sector in 2003

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Sources: World Bank.

Cameroon, Madagascar, Mauritania, Niger, and Togo.

Although wage and nonwage costs are higher than in other sub-Saharan African countries, the quality of service in Chad (e.g., supervision rate by teacher) is low (Table 7).

Table 7:

Chad: Some international comparisons for the education sector (2003)

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Sources: World Bank, UNESCO/BREAD, Pole de Dakar.

Burkina Faso, Benin, Cameroon, Ivory Coast, Guinea, Madagascar, Mauritania, Niger, and Togo.

There is a two-speed personnel system between community teachers (who are hired and paid by parents) and civil servants. Despite the implementation of a subsidy system in 2001 (funded by Heavily Indebted Poor Country Initiative resources and, since 2005, by earmarked oil revenue), significant wage disparities between civil servants and community teachers persist (Table 8). In addition, subsidies do not always reach beneficiaries because the HIPC budget has been systematically underfunded or funds have been used for other purposes at the local level. There is a plan to elaborate a specific civil service status for community teachers in 2007.

Table 8:

Chad: Wage disparities in primary education (2003)

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Sources: World Bank.

14. Wage disparities do not appear related to either skills or job descriptions but rather to ad hoc nonwage benefits granted to specific categories. Although the compression ratio, based on the average wage between category A and C, is only 2 (Table 9), there appears to be large same-grade disparities between ministries, with priority sector workers receiving lower pay (Table 10). The compression ratio is 6 for category A staff, while it is 17.4 for the highest paid category A staff and the lowest paid category C staff. Such large disparities make it difficult for some ministries to attract qualified staff. According to the theory of the fair wage-effort (Akerlof and Yellen, 1990), such disparities could prompt public workers to scale back their efforts to compensate for the difference between their actual wage and their “fair wage,” an amount determined by equity and social exchange considerations.

Table 9:

Chad: Compression ratios

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Sources: Chadian authorities; staff estimates.
Table 10:

Chad: Structure of civil personnel wage bill. 1/

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Sources: Chadian authorities; staff estimates.

Based on May 2005 data.

Recommendations

15. It is urgent that the government push ahead with the reform of its civil and military services through actions that:

  • (i) Ensure fiscal sustainability. Chad’s public wage bill as a share of GDP and the size of its civil services are within regional and international standards. However, the wage bill has continued to absorb an increasing share of non-oil revenue, and weak cash management practices have contributed to recurrent wage arrears. Thus, to ensure the timely payment of wages and to strengthen payroll management, any wage increase must be carefully evaluated, using sensitivity scenarios, against the potential risks to the fiscal outlook.

  • (ii) Strengthen personnel and payroll management. Related measures include finalizing the computerized integrated system for personnel and payroll management, backing up manually updated files, and strengthening the human resource management skills of the administrative and financial directorates. An update of the census, conducted as soon as possible, would ensure timely and accurate personnel information. Better coordination between the payroll and the Ministry of Finance would facilitate timely wage payments. Connecting the computerized integrated system to the computerized financial system for budget execution would support wage payment monitoring. Measures to strengthen budget and cash management would also ensure timely wage payments.67

  • (iii) Improve the quality of the provision of priority services and pro-poor spending. Given financial constraints, efforts to analyze staffing and training needs would be a wise first step. Some redeployment between sectors could be envisaged, but such efforts would need to be backed by financial incentives to account for ministry wage disparities. A comprehensive analysis of staffing needs should be conducted, given that redeployment and training could help limit new hiring. It is also important to better distribute staff in urban and rural areas using poverty maps. In the short term, it would likely be difficult to increase staff in rural areas; however, some incentives (such as accelerated promotion) could be readily implemented.

  • (iv) Strengthen the quality of institutions and governance. Upgrades to the CESRAP budget and human resources that aim to strengthen its monitoring role would improve governance. Regular, publicly available reports from the CESRAP on the implementation of reforms would enhance accountability. To strengthen government ownership of the reform and reinvigorate the reform process, a seminar could convene the Ministry of Labor, the Ministry of Finance, key line ministries, the Poverty Reduction Strategy Paper Committee, unions, and other civil society representatives to discuss civil service reform and how to schedule, coordinate, and finance its implementation. Since strengthening the oversight and accountability role of beneficiaries can often improve service delivery (Devarajan and Reitnikka, 2004), the reform strategy could also include demand-side measures,68 such as public service report cards, similar to those implemented in Bangalore, India, allowing beneficiaries to rate public services. Report card outcomes could then be linked to a performance-based personnel management system. It is also important to define and adopt a fair wage structure, which could help strengthen governance without increasing wages (Van Rijckeghem and Weder, 1997). For this purpose, a detailed review of benefits granted on top of the base salary could be conducted, and analytical work on the structure of a fair wage system in Chad could identify ways to reduce compression ratios.

References

  • Akerlof, George A, Yellen, Janet. L., 1990 “The Fair-Wage Hypothesis and Unemployment,” Quarterly Journal of Economics (US); 105:255-83

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  • Devarajan, Shantayanan and Ritva Reitnikka, 2004 “Making Services Work for Poor People” Journal of African Economies, Volume 13 Supplement 1, pp. i142- i166

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  • Tanzi, Vito, 2000, “The Role of the State and the Quality of the Public Sector,” IMF Working Paper, WP/00/36 (Washington: International Monetary Fund).

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  • Ul Haque, Nadeem and Jahangir Aziz, 1998 “The quality of governance: ‘second-generation’ civil service reform in Africa”, IMF Working Paper, WP/98/164 (Washington, International Monetary Fund)

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  • Van Rijckeghem, Caroline and Beatrice Weder, 1997 “Corruption and the Rate of Temptation: Do low wages in the Civil Service Cause Corruption?” IMF Working Paper WP/97/73, (Washington DC: International Monetary Fund)

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60

Prepared by Sarah Lacoche.

61

As called for in the recent Ex Post Assessment of Performance under ESAF/PRGF Programs, Country Report No. 04/111.

62

This paper provides a general overview of military service reform.

63

These measures amount to a second generation of civil service reforms (Ul Haque and Aziz, 1998). The first generation focused on containing budgetary costs, particularly wages, to address fiscal constraints, while second-generation reforms aim to improve the quality of the public sector, which allows the state “to pursue its objective in the most efficient way” and to better implement public sector policies (Tanzi, 2000).

64

In addition to noncompetitive hiring procedures, recruitment efforts do not match skills with job requirements, d promotions are based on time-in-grade rather than on performance, and educational degree. rather than job responsibility, determines the wage level.

65

In 2005, Transparency International ranked Chad (along with Bangladesh) as the most corrupt country in terms of perceived level of corruption among a sample of 159 countries.

66

Reinsertion programs have yet to be specified. Agriculture and livestock were identified as potential reinsertion sectors.

67

Most of these measure are part of the government action plan to strengthen public finance management, the PAMFIP (Plan d’Amélioration des Finances Publiques), but remains to be implemented.

68

The demand-side approach focuses on engaging civil society and empowering communities for service delivery and could include such measures as initiating anticorruption activities to raise awareness and mobilize reform support and shifting service delivery resources with a focus on accountability.

Other IMF Content

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Cover IMF Staff Country Reports
Chad: Selected Issues and Statistical Appendix
Author: International Monetary Fund
Volume/Issue:
Volume 2007: Issue 028
Publisher:
International Monetary Fund
ISBN:
9781451836462
ISSN:
1934-7685
Pages:
148
DOI:
https://doi.org/10.5089/9781451836462.002
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    Police and Armed Forces as a Percentage of Total Population in Selected African Countries, 1996-2000

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    Employees as a percentage of total population, 1996-2000

Police and Armed Forces as a Percentage of Total Population in Selected African Countries, 1996-2000

Employees as a percentage of total population, 1996-2000