Welcome to the latest edition of Frontier Markets news. As always, I would love to hear from you at with news ideas, feedback and anything else you find interesting.

If you'd like to receive this newsletter every weekend, sign up at Please also share this link with any friends or colleagues you think would enjoy it.

Missed our previous newsletters? See them here!


Burkina Faso military leader asks for international help after ousting president. Burkina Faso’s military seized power early this week amid growing criticism of the government of President Roch Marc Christian Kaboré’s failure to contain an Islamist insurgency creating havoc in the West African nation, the New York Times reported.

According to the Daily Beast, in the weeks running up to the coup, the ousted president had repeatedly refused coup leader Paul-Henri Sandaogo Damiba’s request to enlist Russian military contractor Wagner Group to help fight violent extremists aligned with al Qaeda and Islamic State.
burkina military jan 22
Members of the military announcing the takeover on state television
Photo: Getty Images, via NY Times

On Thursday, Damiba said the military would hand over power to civilian leadership “when conditions are right,” the BBC reported.

Burkina Faso’s military leader has called on the world to back the country in its fight against Islamist militants, Nicholas Bariyo reported in the Wall Street Journal.

Tropical storm leaves trail of destruction in southeastern Africa. Several nations in Southeast Africa were reeling this week after a fierce tropical storm caused fatalities, building collapses and flooding, Deutsche Welle reports. Tropical storm Ana caused widespread destruction and fatalities in several countries including Malawi, Mozambique and Uganda.

The death toll from tropical storm Ana continued rising through the week, and on Thursday Al Jazeera reported 41 people had died in Madagascar, 18 others were killed in Mozambique and 11 in Malawi.
malawi storm ana kids Reuters jan 22
Children use a mosquito net to catch fish near a wrecked
truck in Malawi after Tropical Storm Ana. Photo: Reuters via Al Jazeera

The storm made landfall in southeastern Africa on Monday and carried on through Tuesday with winds reaching up to 100 kilometers (62 miles) per hour, destroying buildings, disrupting infrastructure and forcing hundreds to flee their homes.

Economic recovery remains weak in Sub-Saharan Africa. Sub-Saharan Africa is likely to trail the rest of the world in recovering from the impact of the coronavirus pandemic, research firm Capital Economics said this week. Growth on the subcontinent is likely to be constrained by weak commodity prices and austerity measures imposed by cash-strapped governments, the firm said.
Prospects for the future are also dim, according to CapEc. “The latest virus waves already seem to be ebbing, but low vaccination rates will keep much of the region vulnerable to possible future outbreaks,” it said.

But while tourism-dependent economies such as Mauritius, Namibia and Botswana are likely to struggle as international travel remains depressed, and Ghana and Zambia both face difficult fiscal conditions, Kenya could see strong GDP growth fueled by loose fiscal policies, the research firm said. Tanzania is also a potential bright spot, as “the new government’s more business-friendly policies should support the recovery,” CapEc said.


Crypto miners in Kazakhstan cut off from power after blackouts. Kazakhstan's state electricity provider has cut power for cryptocurrency miners after shortages led to blackouts across the Central Asian nation, the UK’s Daily Mail reports.

Kazakhstan had quickly become one of the world’s leading producers of bitcoin after miners ejected from China last year relocated there, taking advantage of cheap electricity to power their mining hardware. But the sharp growth in power demanded by the industry has led to accusations that the crypto miners have caused blackouts across Kazakhstan and two neighbors Uzbekistan and Kyrgyzstan whose electricity systems are linked through a Soviet-era power grid.
bishkek kazakh power shortage jan 22
Shoppers in Bishkek, Kyrgyzstan during a mass blackout across Central Asia, which caused chaos across the region for several hours. Photo: AFP, via Daily Mail

According to the Mail, the power shortages “caused chaos across the region for several hours, with subway trains stuck in tunnels and skiers on lifts, airports closing, district heating and tap water pumps going idle and traffic lights switching off.”

Middle East

Sensing opportunity in Syria, UAE leads Arab efforts to do business with Assad. The United Arab Emirates is at the leading edge of an effort in the Arab world to bring Syria in from the cold, the Journal’s Benoit Faucon and Jared Malsin report. Government officials and business executives from the U.A.E. and Syria say the oil-rich state is attempting to normalize a closer relationship with Bashar al-Assad’s regime, a decade after he was ostracized for his brutal crackdown on opponents and plunging the country into civil war.

Assad remains shunned by most of the world due to his government’s record of human-rights abuses, including the use of chemical weapons and bombing schools and hospitals. But, backed by Russia and Iran, Assad has clawed back control over much of the territory he lost to rebel forces, and now Egypt, Jordan and some others are trying to bring him back into the Arab diplomatic fold—a move that could unlock trade benefits for all sides and reduce Iran’s influence—with the UAE leading the way.
“These overtures reflect the UAE’s assessment that Assad isn’t going anywhere and it has to adjust its policies accordingly,” said Steven Heydemann, a fellow at the Brookings Institution’s Center for Middle East Policy, a think tank in Washington.

Differences splinter US team negotiating with Iran on nuclear deal. With talks to restore the 2015 nuclear agreement with Iran reaching a critical phase, differences have emerged within the U.S. negotiating team over how tough to be with Tehran and when to walk away, Laurence Norman reported in the Wall Street Journal. US officials confirmed last weekend that Richard Nephew, the deputy special envoy for Iran, has left the team.
iran jan 22
Iran has refused to sit directly with the U.S. in the nuclear-deal talks.
Photo: Abedin Taherkenareh/Shutterstock

Nephew, an architect of previous economic sanctions on Iran, had advocated a tougher posture in the current negotiations, and he hasn’t attended the talks in Vienna since early December.

Two other members of the team, which is led by State Department veteran Robert Malley, have stepped back from the talks, people familiar with the matter said, because they also wanted a harder negotiating stance. Among the issues that have divided the team are how firmly to enforce existing sanctions and whether to cut off negotiations as Iran drags them out while its nuclear program advances, the people familiar with the negotiations said.


EU backs Lithuania in tussle with Beijing. The European Union hit back against China’s targeting of one of the bloc’s smallest members over its ties to Taiwan, opening a new front in the global battle over Beijing’s use of economic pressure to advance political objectives, Daniel Michaels writes in the WSJ. The EU launched a case against China at the World Trade Organization over alleged trade restrictions that were imposed on Lithuania after the small Baltic country allowed Taiwan to open a representative office in Vilnius under a name that suggests it is separate from China.

EU Executive Vice President Valdis Dombrovskis said his office had requested a consultation at the WTO with China over what the EU sees as discriminatory trade practices, the first stage of an official proceeding.
eu china lithuania jan 22
Lithuania and EU officials claim China has used a variety of trade restrictions that it hasn’t made public. Photo: Valda Kalnina/Shutterstock

Gao Feng, a spokesman for China’s Commerce Ministry, said the country “has been maintaining communications with the WTO dispute settlement mechanism” and that Beijing “has always managed its foreign trade in a way that conforms to WTO rules, and will handle related issues in accordance with relevant WTO rules.” The EU said China’s actions “appear to be discriminatory and illegal under WTO rules” and were hurting exporters in Lithuania and other EU countries.

Latin America

IMF asks El Salvador to remove bitcoin’s legal-tender status. The IMF is urging El Salvador to remove bitcoin’s status as legal tender, just four months after the Central American country adopted the cryptocurrency, Casey Wagner writes in Blockworks. Bitcoin poses significant risks to financial stability and consumer protection, IMF executive directors said.

The IMF “urged the authorities to narrow the scope of the bitcoin law by removing bitcoin’s legal tender status,” the multilateral said in a statement. There also needs to be greater regulatory oversight of Chivo, El Salvador’s bitcoin wallet designed to be used for transactions in the digital currency, the IMF said.
el salvador jan 22
El Salvador’s president Nayib Bukele via video at Bitcoin 2021

“The statement on bitcoin and Chivo shows this is too close to de-dollarization for comfort,” Nathalie Marshik, head of emerging markets sovereign research at brokerage Stifel, said. “The tone of the statement is quite negative.”

Peso’s rise signals confidence in Chile’s prospects. Chile’s central bank surprised analysts this week, increasing its benchmark interest rate by 1.5 percentage points, prompting a 0.6% jump in the country’s currency. The Chilean peso’s 7% rise so far this year has outperformed most emerging-market peers, Bloomberg’s Matthew Malinowski and Valentina Fuentes report.

The strong start to 2022 comes on the heels of a weak 2021, which saw destabilizing pension withdrawals, 14-year highs in inflation, and the peso falling 16.5% to become one of the worst performers in the developing world. Surging gas prices, corrosive inequality and the prospect of a crackdown on mining leave open questions about Chile’s future, but investors seem increasingly confident president-elect Gabriel Boric, who is set to take office in March, will bring more stability to the country’s struggling economy.

Chile’s benchmark stock index has risen more than 5% since the start of this year.
— Ken Stibler

Honduran president puts debt restructuring on the agenda. In her inaugural address, Honduras’ new president Xiomara Castro shocked observers by putting debt restructuring at the top of her agenda, Bloomberg reported. Castro said it was “practically impossible” to make current debt payments and called for a “comprehensive restructuring” of government debt she described as “thunderous and suffocating.”

The incoming minister for economic development contradicted the president’s statements just a day later, though, announcing that Honduras would seek to refinance, not restructure, its debt, given its ability to make debt service payments.
honduras castro jan 22
New Honduran President Xiomara Castro during her swearing-in ceremony.
Photo: Reuters/Jose Cabezas
Castro frequently railed against the country’s $15.5 billion of debt during her election campaign, comparing it to looting. However, Honduras’ debt-to-gdp ratio is near Mexico’s and substantially lower than El Salvador’s 80%.
While debt sustainability does not appear to be a significant concern, corruption, poverty, and a “brain drain” have sapped the country’s potential. Such endemic challenges combined with tightening borrowing conditions threaten to sink Castro’s ambitious agenda, Reuters reported. A split with key congressional allies could also threaten to put her policy priorities like free electricity, job creation, and reduced remittance commissions out of reach.
— Ken Stibler

Argentina averts default with IMF deal, but doubts remain. After weeks of hardening rhetoric from the finance ministry and facing a $731 million bond repayment, Argentina announced a deal with the IMF to restructure $44 billion debt, the Wall Street Journal’s Ryan Dube reported.

The agreement avoids a painful default and grants Argentina access to other international sources of financing. However, the IMF deal binds Buenos Aires to reforms, including gradually reducing the budget deficit, halting money-printing by the central bank, and reducing pervasive public subsidies.
argentina jan 22
President Alberto Fernández blames the IMF and previous administration for saddling Argentina with foreign debt.

News of the deal prompted a 4.5% rally in the peso’s unofficial exchange rate, according to Mercopress. Markets also welcomed the announcement. The country’s $16.1 billion in bonds due 2030 climbed 2.5 cents in early trading Friday to 33.2 cents on the dollar. Economic growth is projected to slow to 2.2% this year after a 9.8% expansion in 2021, and 50%-plus inflation and soaring energy prices are complicating planned energy-subsidy reductions and central bank reforms.
— Ken Stibler


Emerging-market growth to ease in 2022. After a strong recovery last year much of the emerging world will see growth slow in 2022 as monetary authorities try to rein in inflation and put their economies on a stronger footing, Capital Economics forecast this week. The London-based research firm said economies in Emerging Europe and China in particular would struggle to meet optimistic growth predictions.

“The EM monetary tightening cycle will continue, with further aggressive interest rate hikes likely in Latin America and Emerging Europe,” the firm said in a report. Economies in much of Asia, however, have suffered less inflation and will be able to avoid sharp interest-rate rises.
turkey lira jan 22
Turkey’s lira has plunged as investors have lost confidence in its economic and monetary policies.
Photo: Umit Turhan Coskun/Zuma Press via WSJ

While most emerging markets have strong enough external positions to resist negative impacts from interest-rate rises in the US, some stand out as being vulnerable. “Turkey is one key exception, and we’re growing more concerned about a handful of countries—Romania, Poland, Hungary, Chile and Colombia—where current account deficits have widened rapidly,” CapEc said.

Inflation hits agriculture in emerging markets, eroding real benefits of commodities boom. Commodity price increases have raised hopes for a new supercycle in emerging markets, but the benefits of strong demand for soft commodities such as soy, corn, and rice are increasingly not being felt by farmers themselves. Input costs have risen, and key shortages in the fertilizer value chain are threatening to exacerbate global hunger while fueling continued inflation, according to the WSJ’s John Emot.

High yields in crops from soy to cocoa rely on nitrogen created through an energy-intensive refining process. But as energy prices have risen, refining is starting to become cost-prohibitive. Additionally, international sanctions on leading potash producer Belarus have restricted the market for around 20% of the world’s production of potash, which is refined into nitrogen, the key ingredient in fertilizer.
africa grain jan 22
Fertilizer demand in sub-Saharan Africa could fall 30% this year translating to a sharp loss in food production. Photo: Legnan Koula/Shutterstock, via WSJ
Rising fertilizer prices have the potential to sharply reduce crop yields, exacerbating inflation in the process. Complications to nitrogen production are also starting to be self-fulfilling, with producers including China, Turkey, and Russia curbing exports while Belarus’s exclusion from the market looks likely to continue.
— Ken Stibler

What we’re reading

Binance restricts Nigerian crypto accounts on security concern. (Bloomberg)

At least six reported dead in crush at Cameroon soccer game. (AP)

Ethiopia lifts state of emergency on diminishing security threat. (Bloomberg)

Rwanda to reopen its Uganda border, ending a tense standoff. (AP)

Sovereign Fund of Egypt aims to double $1b investment portfolio in 2022. (The National)

Covid is proving more lethal for children in Africa. (HealthDay)

Sri Lanka ‘trying all options’ to avoid default, says finance minister. (FT)

As hunger spreads in Afghanistan, hospitals fill with premature and dying babies. (WSJ)

Taliban increases Afghanistan’s water flow to Iran. (Radio Free Europe)

India calls for coordination over Afghanistan at first Central Asia summit. (Indian Express)

US-Vietnam trade set to rise as Covid-19 recedes. (Geopolitical Monitor)

Biden administration warns of risks in doing business in Myanmar. (The Hill)

World Bank says Myanmar economy to remain ‘severely tested’ by coup fallout. (Reuters)

US calls on Cambodia to explain its plans for Ream naval base. (Radio Free Asia)

Rio Tinto to push ahead with Mongolian copper project. (FT)

North Korea fires medium-range missile, its most powerful test in years. (WSJ)

Thai regulators to clamp down on crypto payments for goods and services. (Blockworks)

Turkish industry hit by power cuts amid gas supply troubles. (FT)

China and Saudi Arabia consider closer military ties. (South China Morning Post)

Houthis attack U.A.E. again in threat to business and tourism hub. (WSJ)

U.S.-backed forces retake Syrian prison from Islamic State. (WSJ)

Schroders merges Middle East and frontier market equity funds. (CityWire)

Latvia slams Germany’s ‘immoral’ relationship with Russia and China. (FT)

Survey: Most Romanians think NATO will defend country in the event of a conflict in Ukraine. (Romania Insider)

OECD takes first step in accession discussions with Argentina, Brazil, Bulgaria, Croatia, Peru and Romania. (OECD)

Armed group attacks UN convoy, burns two vehicles in Colombia. (Al Jazeera)

Great Wall Motor ploughs $1.9bn into Brazil as global expansion picks up. (FT)

“It’s a bloodbath”: US companies are pillaging Latin America’s tech talent. (RestofWorld)

Email Marketing Powered by MailPoet