RISING COST OF LIVING IN CHAD'S CAPITAL

UNCLAS NDJAMENA 000200


STATE FOR AF/C, AF/EX, EEB
LONDON FOR POL - LORD
PARIS FOR POL - KANEDA, DELIA
ADDIS ABABA FOR AU

E.O. 12958: N/A
TAGS: PREL APER ECON ETRD ELAB EFIN CD
SUBJECT: RISING COST OF LIVING IN CHAD'S CAPITAL

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SUMMARY
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1. (U) The prices of basic goods in Chad's capital, N'Djamena, have
risen significantly over the past year. The consumer price increase
is up 15 percent in the twelve-month March 2008 - March 2009 period;
prices for basic grains and cereals rose 25 - 30 percent; home
rental rates in the capital rose 56 percent. Worker strikes
continue to be common despite a 140 percent raise in the minimum
wage in July 2008. This inflation could be due to some combination
of rising oil prices in the first half of 2008, shortage in global
food stocks, the global financial crisis' effect on trade and
credit, competition for goods brought about by increased
humanitarian and military presence, and the impact of certain GOC
decisions. END SUMMARY.

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PRICEY BASIC NECESSITIES
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2. (U) N'Djamena residents have suffered from significant price
increases in the capital over the past year. According to Chad's
National Institute for Statistics and Economic Study and Demography
(INSEED),the consumer price index in N'Djamena increased 15 percent
from March 2008 to March 2009. In March 2009 alone, month-on-month
inflation was 8.3 percent in Chad, compared with an average 3
percent for the six-state Central Africa Economic and Monetary Union
(CEMAC),of which Chad is a member.


3. (U) Prices in N'Djamena for staple cereals, including maize,
rice, increased 25 to 30 percent between March 2008 and March 2009,
according to the Famine Early Warning Systems Network (FEWS-NET).
The organization forecasted continued price increases of these
staple goods well into 2009 due to a) sustained demand, b) price
speculation by local traders, and c) decreasing yields in producing
countries limiting supply in the international market.


4. (U) GOC decisions in 2008 to demolish homes in some parts of the
capital coupled with increased demand created by a large and growing
international community have led to increased rental rates in
N'Djamena. It is a landlord's market, as demand far outnumbers
supply. INSEED data show a 56.1 percent increase in the cost of
rental housing from March 2008 to March 2009. The GOC's nationwide,
permanent ban on charcoal -- for environmental reasons -- has caused
Chadians to turn to more expensive butane gas for basic food
preparation, further inflating the cost of living.

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COSTLY SUPPLY CHAIN
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5. (U) Chadians consumers are disadvantaged in any case in the
pursuit of low-cost goods. N'Djamena lies at the end of an 850-mile
supply route from the Cameroonian port of Doula over which 75 to 80
percent of Chad's imported goods travel. The president of the
Development Bank of Central African States recently said that it
cost six times more to transport goods from Douala to N'Djamena than
to ship those goods from Shanghai to Douala. Transportation costs,
as well as both Cameroonian and Chadian import duties, add to resale
prices that are then further affected by rising oil prices (as in
the first half of 2008),shortage in global food stocks, the global
financial crisis' effect on trade and credit, competition for goods
brought about by increased humanitarian and military presence, and
the impact of certain GOC decisions.

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VOCAL UNHAPPINESS
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6. (U) Various groups have protested against the rising cost of
living and strikes have been prevalent over the past several months.
Workers at the Chadian Brewery Company struck in April 2009,
demanding salary increases. They also protested the rising prices
of beer, which they claim forces consumers over the border to
Cameroon where the same bottle can cost 25-30 percent less. Other
union strikes that have started over unfair labor practices or poor
treatment of colleagues have often devolved to wage and salary
protests. These strikes have occurred despite the GOC's 2008
efforts to address the rising cost of living: in July 2008, the GOC
raised the minimum wage 140 percent, from approximately USD 52 to
USD 124.


7. (U) Minimize considered.

NIGRO