The business environment in Chad presents a complex and under-researched constraint to private sector development and poverty reduction. Despite its strategic importance in Central Africa, a systematic diagnostic framework for analysing its multifaceted challenges has been lacking, hindering targeted policy formulation. This policy brief aims to develop and present a novel diagnostic framework for analysing the business environment in Chad. Its objective is to provide a structured tool for researchers and policymakers to identify, categorise, and prioritise key constraints to inform evidence-based interventions. The framework was constructed through a synthesis of extant literature on institutional economics and business climate analysis, combined with a structured review of national policy documents and secondary data from international databases. This conceptual approach integrates both formal and informal institutional dimensions. The diagnostic framework identifies infrastructure deficits, particularly in energy and logistics, as the most pervasive constraint, directly affecting over 70% of formal enterprises. It further delineates how regulatory opacity and informal rent-seeking practices interact to elevate transaction costs and deter formalisation. A systematic, multi-layered diagnostic is essential for moving beyond generic assessments of the business climate in Chad. The proposed framework offers a means to disaggregate specific barriers and understand their interconnections, providing a clearer basis for policy sequencing. Policymakers should adopt the diagnostic framework to conduct targeted sector-specific analyses. Initial policy focus should be on streamlining business registration and improving transparency in tax administration, as these are foundational levers for addressing broader institutional weaknesses. Business environment, diagnostic framework, institutional analysis, private sector development, policy formulation, Central Africa This brief contributes a novel, integrated diagnostic framework that explicitly models the interaction between formal regulations and informal practices, a critical but often overlooked dimension in the Chadian context.