Frontier Markets News, June 17th 2023

Welcome to the frontiers! This week, Nigeria took a large, but painful, step forward and Kenya nabbed a prized trade deal.

TikTok says it’s pumping money into one of the youngest regions of the world, Pakistan tries out a new payment method for oil, Oman helps ease Iran-US relations and Lebanon adds another entry in a long list of failures.

Latin America got some love this week, but with a clear split between friends of the West and not-friends of the West.

By Dan Keeler, Ken Stibler, Noah Berman and Nojan Rostami


Nigeria’s currency plunges after central bank abandons peg

After Nigeria scrapped its currency’s longstanding peg this week, the naira suffered the largest single-day drop in its history. On Wednesday, it fell almost 40%, local news outlet The Will reports, bringing the official value of the naira close to the black-market rate at which most of the Nigerian economy typically operates.

While the slump is painful in the short term, it could have silver linings. Floating the currency is likely to encourage an influx of foreign investors, who have found it difficult to invest due to foreign-exchange rationing, the FT reports. The move, which London-based Capital Economics described as a “positive step”, could also signal a return to orthodox economic policy under newly inaugurated President Bola Tinubu, whose predecessor Muhammadu Buhari favored a more interventionist approach.

Nigeria’s President Bola Tinubu favors more orthodox monetary policies. Photo: Temilade Adelaja/Reuters

Earlier this month, Tinubu ended a fuel subsidy that cost Nigeria $10 billion per year. Tinubu said this week that the burden imposed on citizens by ending the subsidy would be offset by investments in education, transportation and healthcare, Al Jazeera reports.

EU and Kenya agree to trade deal

The EU and Kenya signed a trade deal on Thursday that will give the East African country duty-free export access to the European market. In exchange, Kenya will open its economy to more European imports.
As part of the deal, Kenya committed to binding environmental protection, climate, and labor rules, FT reports. The EU has sought similar commitments in trade negotiations with Brazil and Indonesia. Last month, Indonesia and Malaysia froze trade talks with the bloc over anti-deforestation rules that the Southeast Asian countries viewed as unfair to small farmers.

A flower farm in Kenya. Photo: Andrew Renneisen/Getty Images

The deal comes as Europe increasingly turns to Africa for minerals necessary for its green transition. It marks the EU’s first trade agreement with an African country since the bloc signed a deal with Ghana seven years ago.

US lawmakers push for retaliation against South Africa over Russia

A bipartisan group of US lawmakers asked President Joe Biden to move a trade conference planned to take place in South Africa to another country. The request follows allegations that South Africa violated US sanctions to sell Russia arms to use in its war in Ukraine.

The Russian vessel at the heart of the sanctions-busting allegations docked at the Simon’s Town Naval Base near Cape Town, South Africa, on December 8, 2022. Photo via Radio Free Europe 

The lawmakers want Biden to move the annual forum of the African Growth and Opportunity Act. The act provides duty-free trade privileges for South Africa and more than 30 other countries in sub-Saharan Africa. South Africa benefits more than any other country, annually exporting about $3 billion worth of goods under the legislation.

Losing AGOA benefits would be a major blow for South Africa, which is struggling with debilitating power cuts and counts the US as its second-largest trading partner. “We are seriously concerned that hosting the 2023 AGOA Forum in South Africa would serve as an implicit endorsement of South Africa’s damaging support for Russia’s invasion of Ukraine,” the letter says. 

Podcast: “There’s a lot of low-hanging fruit” 

In this week’s podcast, Josh Rubin, portfolio manager at $40+ billion asset manager ⁠Thornburg’s⁠ Developing World fund, flags some underappreciated investment opportunities in emerging markets, offers a thought-provoking analysis of Saudi Arabia’s recent diplomatic whirlwind, digs into the impact of recent developments in China and suggests that a slight change in sentiment among global investors could tip off much greater changes in emerging markets.

Listen on Spotify or wherever you get your podcasts.

Did someone forward this to you? Subscribe at


Tiktok to invest billions in Southeast Asia

The video-sharing app TikTok announced that it would invest billions of dollars in Southeast Asia over the next decade. TikTok currently sees around 325 million monthly visits from the region, whose 630 million population is among the youngest and most rapidly growing in the world, Reuters reports. 

Photo: Patrick T. Fallon/AFP/Getty Images via CNN

The announcement comes as TikTok seeks to grow its e-commerce platform in the region, which hosted almost $100 billion in such transactions last year. More than half of those transactions were in Indonesia. 
Thus far, TikTok has failed to challenge established e-commerce platforms in the region, such as Singapore’s Shopee, China’s Lazada, and Indonesia’s Tokopedia. However, TikTok could use its expanding regional user base to fuel growth. This year alone, the number of TikTok users in Indonesia, MalaysiaThailandVietnam and the Philippines is expected to grow by more than 10%.

Malaysia courts tech giants

Malaysia’s trade minister Zafrul Abdul Aziz says the country is attempting to position itself as a data hub and neutral supply chain base for Google and Microsoft, Bloomberg reports. 
The Southeast Asian nation has already had some success wooing multinational US businesses. Earlier this year, Tesla announced that it would import electric vehicles into Malaysia, and Amazon said that it would spend $6 billion developing cloud-computing infrastructure in the country over the next 15 years.

Malaysia’s trade minister Zafrul Abdul Aziz. Photo: Jason Alden/Bloomberg

The investments come as large US companies seek to diversify their supply chains away from China amid increasing tensions between the world’s two largest economies. Foreign investment into Malaysia reached 37 billion ringgit ($8 billion) in the first quarter of this year, a 37% increase over last year, according to the Malaysian Investment Development Authority. 

Other Southeast Asian countries have also benefited: Apple is in the process of moving MacBook production from China to Vietnam, and Thailand announced in March that it had won a US grant to build supply chain resilience. All three countries are part of the US-led Indo-Pacific Economic Framework, an initiative that includes collaboration on supply chains.

Pakistan pays for Russian oil in Chinese yuan

Pakistan received its first-ever shipment of Russian oil on Sunday. It paid for the cargo in Chinese yuan, in what could mark a significant shift of Pakistan’s previously dollar-dominated payment policy for imports.

Pakistan’s Prime Minister Shehbaz Sharif wrote on Twitter that the shipment was “the beginning of a new relationship between Pakistan and [the] Russian Federation.”

Russian oil, which is sold at a discount as a result of Western sanctions, could offer a respite to Pakistan’s pernicious economic crisis. The county’s junior petroleum minister said that gasoline prices would fall once shipments of Russian oil start on a regular basis, Al Jazeera reports. 

Islamabad has only enough foreign reserves left to cover about four weeks of imports, according to central bank data. It is awaiting a $1.1 billion IMF bailout package, which has stalled as Pakistan skirts requirements imposed by the lender. 

Middle East

Iran reportedly in talks with US to ease tensions

The US and Iran are working on an ‘informal, unwritten agreement’ aimed at cooling political tensions, the New York Times reports. Talks are centered on releasing American prisoners in Iran, and curbing Iran’s nuclear material enrichment program, in exchange for limited sanctions relief and the unfreezing of Iranian assets abroad.

Sayyid Badr Albusaidi, the foreign minister of Oman, which is facilitating the indirect talks, said this week that a deal is “close” and now a “question of technicalities” which are being ironed out, Al Monitor reports. 

Oman’s foreign minister Sayyid Badr Albusaidi. Photo: MOHAMMED MAHJOUB/AFP

Commenting on the reported informal talks, US State Department spokesman Matthew Miller said the US’ “no. 1 policy is ensuring Iran never obtains a nuclear weapon” and that it believes “diplomacy is the best path to help achieve that.” 

Jordan says it downed Syrian drug smuggling drones

The Jordanian army claims to have shot down two smuggling drones from Syriacarrying drugs and weapons, Reuters reports. Jordan claims the drones belong to pro-Iran militias who traffic arms and drugs to fund their operations under the protection of certain units of the Syrian army.

Jordanian soldiers involved in anti-smuggling efforts. Photo: Jordanian Armed Forces file photo

Jordan is the main transit route for the smuggling of captogen, a synthetic amphetamine uniquely manufactured in Syria. The country’s authorities have responded by expanding the army’s rules of engagement to include counter-drug operations. Last month, the Jordanian air force carried out strikes on Iran-linked drug manufacturing facilities and smuggling operations in Syrian territory.

Lebanon’s parliament fails to elect a president for 12th time 

Lebanon’s parliament this week failed to elect a president for the 12th time after a single round of voting, Al Jazeera reports. The first round vote was between Jihad Azour, a former finance minister with ties to the IMF, and Sleiman Frangieh, scion of a powerful political family and leader of the Marada party.

Frangieh is the preferred candidate of a Hezbollah-affiliated voting bloc, and his first round defeat prompted the bloc to withdraw from the process and deny quorum for a subsequent round of voting.

Lebanon’s caretaker Prime Minister, Najib Mikati. Photo: Hussam Shbaro/Anadolu Agency

Lebanon’s political dysfunction, manifested in its failure to elect a president since last October, has had a compounding effect on its economic crisis. The country’s caretaker Prime Minister Najib Mikati says the state’s treasury now has insufficient funds to pay government payrolls this month.


Kosovo tensions threaten European investment in fledgling country

The German-Kosovo Economic Chamber has warned that continued upheaval in Kosovo could lead German companies to withdraw their investments, Balkan Insight’s Xhorxhina Bami reports. The group called for de-escalation of tensions and the establishment of a sustainable business environment to prevent further damage to Kosovo’s economic prospects.

Soldiers of the US contingent of the NATO-led international peacekeeping force in Kosovo. Photo: EPA-EFE/Georgi Licovski

The political crisis in Kosovo’s Serb-majority municipalities began with protests on May 26, triggered by the appointment of ethnic Albanian mayors elected in April. The EU and US have increased pressure on Kosovo to calm the situation but recent incidents, such as the arrest by Serbian authorities of Kosovar police officers, have further strained relations, prompting Kosovo’s Prime Minister Albin Kurti to tighten border controls with Serbia.

Russia reopens trade with North Korea as war machine runs out of weapons

Russian President Vladimir Putin has acknowledged that his armed forces lack the necessary military equipment to win the war on Ukraine. Speaking at a meeting of pro-war bloggers in the Kremlin, Putin admitted that Russia is short of precision-guided munitions, communications equipment, aircraft, drones and modern anti-tank weapons.

Vladimir Putin and Kim Jong Un. Photo: Alexey Nikolsky/AFP/Getty Images

At the same time, cooperation between Russia and North Korea has increased as the two nations resume their oil trade, despite Western sanctions. A report from a UN sanctions committee revealed that Russia began sending refined petroleum products to North Korea in December 2022, after a hiatus since October 2020. 

Arms sales from North Korea to Russia could provide a revenue stream for the isolated state, but are denied by both parties and are illegal under several UN resolutions. While North Korea possesses a substantial arsenal of Soviet-era artillery, the Biden administration believes these weapons would have little impact on the battlefield in Ukraine. 

Latin America

EU optimistic about Mercosur trade deal, despite environmental concerns

Efforts to finalize a free trade agreement between the Latin American Mercosur bloc and the EU hit new speed bumps during a visit by European Commission President Ursula von der Leyen to Brazil, Reuters reports. Brazilian President Luiz Inacio Lula da Silva expressed concerns over the EU’s attempt to introduce additional environmental protections to the trade deal—which has been in negotiation for two decades—emphasizing the need for a relationship based on mutual trust rather than mistrust and sanctions.

The FTA was agreed in principle in 2019 but the ratification process stalled, with European concerns centered on the environmental protection in Mercosur countries, particularly regarding the Amazon rainforest. Lula voiced staunch opposition to an EU “side-letter” focused on the environment, arguing that it expands Brazil’s obligations and allows for sanctions in case of non-compliance. 

EC President Ursula von der Leyen with Brazil’s President Luiz Inacio Lula da Silva. Photo: Ricardo Stuckert/Brazil Presidency

In an additional twist, France’s lower house voted against the deal this week, citing concerns primarily related to agricultural groups. Despite the challenges, von der Leyen, whose visit to Brazil is part of a regional tour aimed at strengthening ties between the EU and Latin America, expressed optimism that the deal could be finalized by the end of the year.

Iran bolsters ties with Latin American allies 

Also on tour in Latin America this week—but visiting a very different range of countries—was Iran’s President Ebrahim Raisi, whose trip was focused on tightening ties with allies who oppose Western influence. Raisi visited VenezuelaCuba and Nicaragua, all countries that are also sanctioned by the US, in a trip that highlights the strategic importance to Iran of its Latin American allies and the emergence of a trade network outside of Washington’s control.

Iranian President Ebrahim Raisi with his Cuban counterpart Miguel Díaz-Canel. Photo via Mercopress

In Venezuela, Raisi said the two countries hope to sharply increase trade as well as to ramp up their cooperation in the petrochemicals sector. The visit to Cuba follows recent collaboration between the two countries in organizing the production line for one of Cuba’s Covid-19 vaccines in Iran. 

In Nicaragua, which has faced increased US and European sanctions, Raisi was following up on previously signed agreements and exploring new avenues of cooperation.


Japan quietly counters Chinese development lending

In a bid to counter China’s massive Belt and Road infrastructure initiative, the Japanese government has announced a new approach to foreign aid, pledging to proactively offer assistance to developing nations instead of waiting for requests, Nikkei’s Erin Kobayashi reports. 

Japan’s revised Development Cooperation Charter aims to position the country as a responsive donor that caters to countries’ needs, particularly in the areas of clean energy and digital technology. Prime Minister Fumio Kishida, during a recent visit to India, emphasized the importance of “quality infrastructure investment” to help build relationships with nations in the ‘global south’ through foreign aid. 

Indian Prime Minister Narendra Modi and Japanese Prime Minister Fumio Kishida at a March meeting in India. Photo: Reuters

Under the new charter, Japan plans to prioritize expertise over large financial commitments alone. This includes offering decarbonization projects to nations heavily dependent on fossil fuels and providing training opportunities in the digital sector. 

What we’re reading

Zambia snags $100m World Bank loan for sustainable tourism development (Afrik21

RussiaUkraine war: Why Kenya is now playing both sides (The Africa Report)

Eritrea rejoins East African bloc nearly 16 years after walkout (Voice of America)

IMF wants Zimbabwe to take further steps on currency reforms (Bloomberg)

Egypt says India providing credit line in boost to economy (Bloomberg)

Fitch cuts Tunisia deeper into junk as IMF deal seen delayed (Bloomberg)

EU offers Tunisia over €1b to stem migration (FT)

Morocco carrier plans fleet expansion to grow global network (Bloomberg)

Selling carbon credits from Africa: Indigenous people vs carbon offset schemes? (AllAfrica

IMF criticizes Pakistan budget as pressure mounts for bailout package (FT

Bangladesh readies digital bank framework in push to go cashless (Nikkei)

Bhutan puts bitcoin mining plan in motion to power up economy (Nikkei)

Chinese highway project in Georgia brings hope, scandal and change (Radio Free Europe)

Palau leader calls for US help over Chinese ships in its waters (Nikkei)

Opposition gain majority in Kuwait vote; just one woman elected (Al Jazeera)

Palestinian President Mahmoud Abbas arrives in China (Al Jazeera)

Oman’s huge renewable hydrogen potential can bring multiple benefits in its journey to net zero emissions (International Energy Agency)

Bahrain and Iran likely to restore diplomatic ties soon, US diplomat says (Reuters)

Iran’s car sector buckles under impact of sanctions (FT)

Iraqi parliament approves more federal control over Kurdish oil revenues (The National)

Saudi Arabia signs $5.6 billion deal with Chinese EV company (Reuters)

Romania taps social democrat Marcel Ciolacu as new PM (Politico

African leaders embark on peace mission to Ukraine and Russia (Al Jazeera)

Bank fraud trial tests Ukraine’s efforts to curb corruption (FT)

Poland’s governing party likely to form coalition with far-right amid growing opposition (FrontierView)

Russia unveils windfall tax to raise Rbs300b from oligarchs (FT)

Qatar’s top dealmakers get ready for a spending power boost (Bloomberg)

Costa RicaUS immigration agreement aims to manage region’s flows (AP)

EU and Chile to develop lithium and green hydrogen projects (Reuters)

Honduras wants to join BRICS bank (Mercopress)

Argentina turns to IMF in last-ditch bid to stave off devaluation (FT)

Lula eyes trips to Africa to boost Brazil’s trade (Bloomberg Línea)

Lula says Brazil GDP will grow at least 2% this year (US News)

Talk to us! Contact with news ideas, feedback and anything else you find interesting. 

Follow us on Twitter, Find us on LinkedIn

Are you missing out? Subscribe at

Welcome to Frontier Markets News

Sign up to receive our frontier and emerging markets newsletter.

We don’t spam and we won't share your info!

Leave a Reply

Your email address will not be published. Required fields are marked *