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

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By Ken Stibler, Noah Berman, Nojan Rostami and Mariel Ferragamo. Executive editor: Dan Keeler

Africa

Africa programs reel under Trump funding cuts

Five weeks into Donald Trump’s second term as US president, the full scope of his plans to slash funding for Africa-related programs is becoming clear. Power Africa, a decade-old US initiative to enhance US firms’ involvement in electrifying the continent, has become the latest to face severe cuts. Almost all of Power Africa’s programs have been placed on a list for termination and its staff fired, sources familiar with the matter told Bloomberg. 

The program, launched under the Obama administration, has brought an additional 15,498 megawatts of power generation to Africa and helped supply electricity to 216 million new users, according to the Center for Global Development. In a region where over 600 million lack access to the grid, the initiative’s dismantling will impede progress, experts say.

Also this week, the Trump administration permanently halted 90% of aid programs. Meanwhile, other government officials told Semafor that AGOA, (the African Growth and Opportunity Act, approved in 2000 to ease trade between the US and Africa) is also on the chopping block. And as USAID shutdowns increasingly take effect, businesses and refugee centers are already feeling the impact.

Strengthening growth prompts optimism over Nigeria’s economy

Government reforms have helped propel Nigeria’s economy to its fastest growth rate in three years, Africa News reports. In the final quarter of 2024, GDP grew by 3.84% year-on-year, fueled by a strong expansion in the services sector. 

The country’s growth suggests the slew of reforms initiated by President Bola Tinubu since taking office in mid-2023 are taking effect, although his moves to end a longstanding petrol subsidy and to float the naira sent prices surging, prompting widespread protests. 

Last quarter’s growth is still lower than Tinubu’s 6% target. However, the IMF forecasts that the economy will grow another 3.2% this year, and improvements in industrial output should continue to accelerate the country’s economic recovery. 

DRC halts cobalt exports to support prices 

The Democratic Republic of Congo has announced it is pausing cobalt exportsfor four months to address a sustained slump in value, which has seen the mineral slump to its lowest price in a century in real terms, the FT reports. A large part of this is due to oversupply in the global market, a DRC strategic mineral watchdog said. 

DRC, the world’s biggest cobalt producer, racked up $2.4 billion of exports of the mineral last year. Its move to pause exports represents the most sweeping action yet to support the market. 

As the supply glut is expected to continue through the end of this decade, DRC has sought to expand production of other commodities, including oil. The country has at least 180 million barrels of proven oil reserves, and has in recent years begun auctioning them off for extraction.

FMN Quarterly Meta Report

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Asia

Bangladesh and Pakistan’s governments begin direct trade

The governments in Bangladesh and Pakistan began trading directly with one another this week after Bangladesh agreed to import 50,000 pounds of rice from its historical rival.

Divided geographically and politically by India, the two countries have been warming to each other since last summer, when protesters in Bangladesh ousted pro-India Prime Minister Sheikh Hasina. Commercial trade between Bangladeshi and Pakistani businesses resumed in November, when a cargo ship sailed between them for the first time in decades, Economic Times reports. Previously, Bangladesh’s imports from Pakistan had to be routed through third countries such as Sri Lanka.

• World Bank’s IFC pushes back against Pakistan military over power contracts (FT)
• IMF team to visit Pakistan to review $7bn bailout program (Business Recorder)

Pakistan and India have had a thorny relationship since partition in 1947. Bangladesh, which was then known as East Pakistan, fought a war for independence from Pakistan in 1971. 

US confirms funding for the Philippines as tensions mount with China

Two incidents in the South China Sea this week again brought China and the Philippines close to confrontation. Both centered on the Spratly Islands, an archipelago of 100 islands and reefs claimed by both countries.

The first occurred when a Chinese military helicopter flew within 10 feet of a Philippine patrol plane, Al Jazeera reports. Two days later, three Philippine planes flew over the islands, only to be chased away by China’s military, which accused them of “illegal” maneuvering.

Tensions have been building between China and the Philippines for months. While U.S. President Donald Trump’s decision to freeze foreign aid led some in the Southeast Asian nation to worry about military assistance from the United States, a treaty ally, the Philippine ambassador confirmed on Monday that such funding had been exempted from the freeze, Bloomberg reports.

Kazakhstan wins development bank investment

The Eurasian Development Bank will increase its investments in Kazakhstan, bank chairman Nikolai Podguzov said in a meeting with Kazakh officials on Wednesday. The multilateral bank, which is headquartered in Almaty, Kazakhstan’s largest city, will focus its investments on energy, transportation, and industry, Podguzov said.

The pledge comes as Kazakhstan’s government is pushing hard to improve the investment environment in the country and to attract more foreign capital. Last week, Kazakh Prime Minister Olzhas Bektenov hosted a meeting aimed at expediting major investments in the Central Asian country, Astana Times reports.

In 2024, the EDB provided almost $1.4 billion for projects in Kazakhstan, bringing the bank’s total investments in the country to $3.6 billion over the past three years, Kazinform reports. Kazakhstan is currently looking to find investors in 20 projects, worth a total of $12 billion. Negotiations with two Chinese agricultural firms are already set to net $1 billion, according to Astana Times. 

Middle East

Hopes for stability grow as Lebanon government wins confidence vote 

This week, Lebanon’s Prime Minister Nawaf Salam, backed by President Joseph Aoun, won a confidence vote in Parliament on his newly appointed government, the AP reports. With 95 of 128 MPs backing his government, notably including Hezbollah votes, Salam’s win is a milestone in restoring normal parliamentary and government function after years of gridlock owed to an obstructive blockading strategy by Hezbollah. 

In his victory speech, Salam said that his government will “work on removing Lebanon from the [financial] gray list and start negotiations with the IMF”—essential steps to bring Beirut out of sovereign default and restore access to international capital markets. Salam also committed to help depositors by restoring a functioning banking system and reopening lines of credit, both of which have been effectively frozen since a 2019 financial crisis ended normal bank operations in Lebanon.

• US envoy says Lebanon and Syria could join regional peace accords (North Press Agency) 

The confidence vote excluded recognition of Hezbollah and reaffirmed Lebanon’s official government as the leading security and economic force in the country, bolstering the government’s legitimacy and leverage ahead of President Aoun’s upcoming visit to Saudi Arabia. Aoun is expected to make the case for resetting diplomatic relations and restoring economic ties between the two nations.

Saudi Arabia sees high demand for region’s first green sovereign euro-denominated bond

Saudi Arabia issued the Middle East’s first euro-denominated green sovereign bond this week, a €1.5 billion 7-year note yielding just about over 6%, more than 1 percentage point over the benchmark rate, Bloomberg reports. The bond sale was heavily oversubscribed, drawing €7.25 billion of investor bids. A €750 million 12-year conventional bond offered for sale at the same time drew €2.7 billion in bids. 

• Saudi Arabia quietly steps up releases of political prisoners (FT)

Saudi Arabia has issued green bonds previously via the Public Investment Fund, the country’s sovereign wealth fund, but this is the first such sovereign bond issued primarily for the European market with proceeds intended directly for sustainability-linked projects. This bond is part of a series of some $12 billion of notes issued over the past month as Riyadh scrambles to fill a larger than expected budget deficit.

According to S&P Global, green bond issuance in the Middle East slowed considerably in 2024. That these latest bonds are sovereign-issued means that they have the highest-yet credit ratings and draw the strongest demand. 

Europe

Romania indicts right-wing presidential candidate

Romanian prosecutors have indicted far-right presidential candidate Călin Georgescu on multiple serious charges including undermining constitutional order and founding an anti-Semitic organization, potentially barring him from the May re-run election, Balkan Insight reports.

Georgescu, who unexpectedly won the first round of Romania’s November presidential election before it was annulled over alleged Russian interference, was detained Tuesday as authorities conducted widespread searches, confiscating €1 million and weapons from associates.

The case has attracted significant international attention, with US Vice President JD Vance criticizing the election annulment and Elon Musk condemning Georgescu’s arrest on social media. Meanwhile, Romania’s Prime Minister Marcel Ciolacu has insisted authorities must present “extremely solid evidence” to avoid transforming the NATO-skeptic, pro-Russian candidate—who recent polls showed leading with over 40% support—into a political martyr.

Latin America

US deals blow to Venezuela’s Maduro with Chevron license cancellation 

US President Donald Trump has revoked Chevron’s license to operate in Venezuela, citing President Nicolas Maduro’s failure to implement promised electoral reforms and insufficient cooperation on migrant returns. The decision reverses a November 2022 concession granted by the Biden administration that had allowed Chevron to produce and export approximately 240,000 barrels per day of Venezuelan crude, representing over a quarter of the country’s total oil output.

The license cancellation, scheduled to take effect on March 1, is expected to deliver a significant blow to Venezuela’s fragile economic recovery. Analysts predict the loss of Chevron’s operations could cause Venezuela’s crude production to fall below 500,000 barrels per day from around 900,000 barrels per day last year, potentially reducing GDP growth from 3.2% to 2% in 2025. US Gulf Coast refineries, which received 13% of their crude imports from Venezuela in 2024, have already seen spot prices spike as they seek alternative supply sources.

Venezuelan Vice President Delcy Rodriguez condemned the decision as “damaging and inexplicable,” while opposition leader Maria Corina Machado praised Trump’s move as proof he “is on the side of the Venezuelan people.” US Secretary of State Marco Rubio has indicated he will provide guidance to terminate all Biden-era oil and gas licenses that have “shamefully bankrolled the illegitimate Maduro regime,” potentially affecting operations by Europeancompanies including Repsol, Eni, and Maurel & Prom that also operate under US authorizations.

US backs Guatemalan port to counter Chinese expansion

The US and Guatemala have unveiled a $125 million initiative to expand Puerto Quetzal, Guatemala’s largest Pacific port, in what analysts view as a direct counter to China’s growing maritime influence in Latin America, MercoPress reports. The ambitious project, set to begin construction in 2027 under the supervision of the US Army Corps of Engineers, will extend the terminal by 800 meters and add four new berths to accommodate larger vessels, with total costs estimated at $600 million. 

This project comes amid concerns over Beijing’s increasing control of regional shipping routes through its involvement in the Panama Canal and construction of Nicaragua’s planned interoceanic crossing, as well as last year’s opening of the China-sponsored Chancay Port in Peru.

For Guatemala, the expansion represents a critical opportunity to leverage geopolitics to fund a badly needed upgrade for its primary Pacific port, which has handled up to 700 million kilograms of cargo annually since 1980 and serves as a vital export hub for the country’s sugar, coffee and textile industries.

Colombian wind auction attracts global investors

Colombia’s inaugural offshore wind energy auction generated robust international interest, with companies proposing development across 69 areas, Reuters reports. The auction is part of President Gustavo Petro’s push to diversify the country’s energy portfolio beyond oil and coal.

The National Hydrocarbons Agency reports that firms from Belgium, Britain, China and Spain and domestic players such as Ecopetrol are among those competing for projects, with successful bidders limited to two awards each after passing suitability verifications. 

The government aims to secure at least one gigawatt of installed capacity through this auction—with each project required to deliver at least 200 megawatts—as part of a plan to achieve seven gigawatts of offshore wind power by 2040. Authorities have yet to announce when final awards will be made.

Chile suffers worst blackout in 15 years

Chile’s most severe power outage in 15 years struck Tuesday after a transmission line failure left 98% of the population without electricity and halted operations at copper mines including Codelco and BHP’s Escondida. The blackout, caused by a fault in Colombian-owned ISA InterChile’s infrastructure, prompted President Gabriel Boric to impose a nationwide curfew.

Copper futures jumped 4.5% on Wednesday as the outage affected a country that produces a quarter of global copper supply, although power was restored to the majority of the country the following day.

Global Macro

China’s response to tariff risks skews emerging-market opportunities

Trump-driven disruptions are triggering a rush of Chinese investment across emerging markets and a broad reversal in EM asset performance, Ken Stibler writes in an FMN analysis.

The “China plus one” strategy that began during the US president’s first term has evolved into a more urgent restructuring of global supply chains, with Chinese outward direct investment into ASEAN manufacturing doubling from $4.5 billion in 2018 to $9.1 billion in 2023.

This shift is part of a broader restructuring in EM performance, with two-thirds of developing and emerging stock markets tracked by index-provider MSCI moving in the opposite direction this year compared to their post-election trajectory.

Read the full story at Frontiermarkets.co

William Blair launches frontier market debt fund

Fund manager William Blair Investment this week launched a new frontier market debt fund targeting local and hard currency government bonds, Fund Selector Asia reports. Led by portfolio managers Yvette Babb and Daniel Wood under the direction of Marcelo Assalin, the fund aims to penetrate less accessible economies such as Kenya, Egypt, Sri Lanka and the Dominican Republic. 

Wood emphasized that the strategy will provide clients diversification into traditionally challenging local-currency opportunities in frontier markets.

Babb said the firm expected the fund’s performance to be enhanced by the fact that frontier-market bonds offer higher yields and value opportunities stemming from market inefficiencies, limited research coverage and higher risk premiums.

What We’re Reading

Putin hosts Guinea-Bissau leader as Russia builds Africa ties (Reuters)

UAE investor buys stake in Mali gold mines from Canada’s Allied Gold (FT)

Ghana’s president aims to overhaul $3bln IMF deal (FT)

Nigeria to challenge Ghana in cocoa production race after $40.5m boost (The Africa Report)

Kenya raises $1.5bn in new eurobond sale (Business Daily Africa)

UK suspends financial aid for Rwanda over its alleged role in DRC conflict (FT)

Rwanda’s multimillion-dollar tourism industry is under threat over DR Congo conflict (Semafor)

Malawi trade minister sacked after cost-of-living protests erupt in capital (Bloomberg)

Botswana gets improved 10-year deal with miner De Beers (AP)

Angola considers issuing $3bn in eurobonds (Bloomberg)

Sub-Saharan Africa is the most expensive region for remittances (Business Insider Africa)

Indonesia launches new sovereign wealth fund with goal of investing $20bn in 20 projects (Jakarta Post)

Indonesia to lift iPhone ban after winning $150mn pledge to build Airtag factory (FT)

Thai car production falls 25% in January (Reuters)

ASEAN ministers eye intra-regional cooperation in defense industry (Nikkei)

Kyrgyzstan agrees to swap land with Tajikistan (The Hindu)

EU suspends sanctions against Syria including on energy, banking (Reuters)

Iran turns to solar to address electricity shortage (Oilprice.com)

Iran to tighten restrictions on cryptocurrency as rial continues to deteriorate (Al Jazeera)

BP and Iraq sign deal to revive Kirkuk oilfields (Offshore Technology)

Russian ruble sinks as Trump-Zelensky shouting match cools hopes for peace deal while stocks recover from brief selloff (Fortune)

First Quantum steps up campaign to reopen Panama copper mine (Bloomberg)

Peru and Bolivia expand bilateral partnership (Mercopress)

Bolivia launches industrialized iron complex (Mercopress)

Argentina’s Javier Milei to bypass senate to name supreme court judges by decree (FT)

Argentina’s Milei wins senate votes despite memecoin scandal (FT)

Japanese public turns against foreign aid as Trump dismantles USAID (Nikkei)

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