Frontier Markets Weekly, April 1st 2023

Uganda risks Western ire | Indonesia loses World Cup event | Saudi ties with China tighten | Argentina faces instability

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

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US VP Harris pledges $1 billion to African women. US Vice President Kamala Harris toured Africa this week, stopping in GhanaTanzania, and Zambia. In Ghana on Wednesday, Harris announced a $1 billion initiative to improve women’s participation in African economies. The program includes $400 million in funding from the private sector, Voice of America reports.

Kamala Harris and her husband Doug Emhoff, depart Accra, Ghana

Harris also announced $100 million in new aid for BeninCôte d’IvoireGuinea and Togo, all of which lie on the West African coast. Analysts worry that violence in the nearby Sahel region could migrate West, Africanews reports. Harris also announced that the United States would provide $139 million in bilateral assistance to Ghana next year.

Harris became the latest US official to visit the continent as it emerges as a battleground for great-power competition. Earlier this month, US Secretary of State Antony Blinken visited Ethiopia and Niger, and in December, President Joe Biden hosted a US-Africa summit in Washington. At that conference, Biden announced that the United States would commit $55 billion in funding to the continent within the next three years.

Ugandan economy at risk over anti-gay law. Some of the world’s largest corporations warned that Uganda’s economy would suffer if the country implemented anti-gay legislation passed by its parliament last week. Ugandan President Yoweri Museveni, who has the authority to veto the bill, will be forced to decide whether his anti-gay agenda is worth the cost of losing relations with Western donors, tourists, and investors, the BBC reports.

A Ugandan transgender woman watches the vote on TV. Photo: AFP via BBC

The legislation, which is awaiting Museveni’s approval, imposes harsh penalties for anyone engaging in same-sex relations. The law would punish homosexuality with life in prison and include the death penalty in certain cases. 

Among the law’s provisions is a requirement that companies report those suspected of being gay. Massive companies with operations in Uganda, including Google, Mastercard, and Unilever, were part of the coalition that denounced the bill.

Anti-gay policy has a history of harming African economiesKenya loses up to 1.7% of its annual GDP over such legislation, Reuters reports.

Podcast: Bill Stoops, Dragon Capital, on Vietnam

After a difficult 2022, Vietnamese equities are stabilizing and set for steady, if unexciting, performance in 2023. But next year? Fasten your seatbelts and hang onto your hats—the rebound will be dramatic, according to Bill Stoops, CIO at Ho Chi Minh-based Dragon Capital.

Listen in to learn more about where and how the market will outperform from one of the most experienced equity investors in Vietnam.


Myanmar dissolves former leader’s party. The ruling military junta in Myanmar dissolved the National League for Democracy (NLD), the party formerly chaired by jailed opposition leader Aung San Suu Kyi. The move to ban the NLD and 39 other parties on Tuesday was condemned by the United States and its allies, including the European Union, Australia, Japan, and the United Kingdom. 

The junta said that the ban was a result of the NLD and other parties’ failure to meet a Tuesday registration deadline for an election that is widely expected to be skewed in the military’s favor, Al Jazeera reports. A date for that election is yet to be set.

A protester outside the Embassy of Myanmar in Tokyo, Japan on February 1, 2023 Photo: Issei Kato/Reuters

Myanmar’s military has ruled the country since it took power in a violent coup in February 2021. It has since jailed Aung San Suu Kyi, the country’s last democratically elected leader, who at 77 years old is now serving a 33-year prison term. The junta has arrested over 20,000 political prisoners and killed over 3,000 since the coup began, according to the Assistance Association for Political Prisoners, a nonprofit.

Indonesia stripped of World Cup event. FIFA, the international organization that governs world soccer, removed Indonesia as host of the Under-20 Men’s World Cup after an Indonesian official criticized Israel’s participation. The event had been scheduled to take place there this summer. 

Currently, the dates of the tournament remain unchanged, but FIFA is looking for a new host. The decision to remove Indonesia as host comes after the governor of Bali, Indonesia, said that he would not allow the Israeli team to compete in the state. That decree came despite comments by the Palestinian ambassador to Indonesia voicing support for Israel’s participation in the tournament, the Diplomat reports.

Protesters demand the Indonesian government stop the Israeli soccer team from taking part in the FIFA U-20 World Cup. Photo: CNN

Anti-Israel sentiment runs high in Indonesia, which does not have diplomatic ties with Israel, CNN reports. The loss of the international sporting event marks a blow to Indonesia’s international soccer aspirations. The host country automatically qualifies for FIFA tournaments, but with the tournament occurring elsewhere, Indonesia may no longer qualify. 

Kazakhstan beefs up non-Russia oil exports. The volume of oil flowing from Kazakhstan to Turkey is projected to reach 125,000 tons in April, Eurasianet reports. The oil will transit by pipeline across the Caspian Sea and through Baku, Azerbaijan.

Prior to the invasion of Ukraine in February 2022, 94% of Kazakh oil traversed through Russia, Astana Times reports. Much of that oil was ultimately purchased by European buyers, including Italy, the Netherlands and France. After international sanctions against Russia sapped demand for oil passing through Russia, Kazakhstan began to seek alternative routes.

Kazakh oil sourced from the Tengiz field. Photo: Chevron via Eurasianet

The results so far have been mixed. Experts point out that the flows through the pipeline leading to Turkey still fall well short of the 1.5 million tons Kazakhstan said it could pump. The country still exports 70% of its oil to Russia and allows Russian oil to transit through Kazakhstan on the way to neighboring Uzbekistan, Upstream reports.

Malaysia seeks to expand palm oil exports. Malaysia plans to create export hubs in Egypt and Saudi Arabia to facilitate its access to the African and Middle East markets. Both of those countries have seen increases in their own exports of palm oil, despite neither being a domestic producer.

Malaysian Deputy Prime Minister Fadillah Yusof: “Palm oil is a stable commodity which will contribute immensely to Malaysia’s GDP.” Photo: Norman Goh via Nikkei

Malaysia saw a 32% increase in palm oil exports to the Middle East and a 51% increase in palm oil exports to North Africa last year, Nikkei reports. Those increases came as some European countries decreased palm oil imports over concerns over the cooking ingredient’s environmental impact. Italy decreased its imports by 57%, and Swedendecreased its imports by 37%.

Malaysia is the world’s second largest producer of palm oil after Indonesia. Both countries sent representatives to the EU last year to oppose proposed regulations that would restrict countries in the bloc from importing palm oil. And last year Malaysia initiated a World Trade Organization dispute against the EU over the regulations. The dispute is yet to be resolved.

Middle East

Saudi Arabia to join Shanghai Cooperation Organization. In another step toward China, Saudi Arabia has become a ‘Dialogue Partner’ of the Shanghai Cooperation Organization, the FT reports. The SCO is a political, security and trade alliance set up in 2001 as a counterbalance to Western influence. 

Members of the SCO include China, Russia, India and Pakistan, with Iran also expected to become a full member this year. The addition of Saudi Arabia and Iran—particularly in light of their China-brokered rapprochement—highlights the increasing influence of China in the Middle East amidst a perceived US pivot from the Middle East, leaving Saudi Arabia looking for new alliances.

A Shanghai Cooperation Organization summit in Samarkand, Uzbekistan. Photo: Sergey Bobylev/Sputnik via Reuters

Dialogue Partner status is the first step in joining the organization and will see China and Saudi Arabia deepen their economic and diplomatic ties through a series of joint investments. This week, oil firm Saudi Aramco purchased a 10% stake for $3.6 billion in one of China’s refining giants, and committed to investing a new $12 billion refining and petrochemical plant in China’s northeast, Bloomberg reports.

US-Iran tensions rise after attacks on US bases. The US warned Iran that it would “act forcefully” in response to recent drone attacks on US special forces bases in Syriaby Iranian proxies, Reuters reports. Last week’s attacks caused 7 American casualties, including the death of one contractor, triggering counterstrikes by the US on Iranian proxies in Syria.

Russian President Vladimir Putin with Iranian President Ebrahim Raisi last summer. Photo: Iranian Supreme Leader’s Office/Zuma Press via WSJ

The tit-for-tat exchange of strikes is the latest development in a series of escalating events between Iran and the US that have put talks on reviving the 2015 nuclear deal on hold. Iran has in response turned to Russia, this week receiving another package of military aid in the form of cyberweapons and surveillance equipment, the Wall Street Journal reports.

Lebanon’s government backpedals on proposed daylight savings time change. Lebanon’s government’s attempt to delay daylight savings time until April 20 to accommodate Ramadan has triggered old sectarian tensions, Al Jazeera reports. After the decision was announced, leaders of Lebanon’s Maronite Church announced it would disregard the government’s decision, effectively putting the country into a two timezone system.

A protest near the parliament building in downtown Beirut. Photo: Mohamed Azakir/Reuters

No official reason was given for the decision, but a leaked video of a conversation between Lebanon’s caretaker prime minister Najib Mikati and Parliamentary Speaker Nabih Berri discussing the issue confirmed the delay was meant to accommodate Ramadan, the FT reports. The government u-turned after 72 hours, and criticized “some who were trying to drag the country into sectarian divides.”

Iran threatens Azerbaijan over partnership with Israel. This week, Azerbaijan and Israel strengthened ties with the opening of Azerbaijan’s embassy in Tel Aviv—a large step in the countries’ strategic partnership meant to counter Iran, the Times of Israel reports. For nearly 30 years, Israel has supported Azerbaijan in its conflict against Iran’s ally Armenia, but has significantly stepped up military aid since the Second Nagorno-Karabakh War in 2020.

Israel’s Foreign Minister Eli Cohen (R) with Azerbaijani Foreign Minister JeyhunBayramov. Photo: Miri Shimonovich/Israeli Foreign Ministry)

Iran has threatened Azerbaijan over its partnership with Israel, and the relationship between the countries hit a low with last month’s announcement that Azerbaijan would give Israel access to its airfields in case of war with Iran. This week, tensions escalated as Azerbaijan’s foreign ministry accused Iran’s IRGC of an assassination attempt on an anti-Iran Azeri MP, and an Iranian IRGC officer was killed by an Israeli strike.


CEE economies borrow strongly despite tough rate environment. The combination of global interest rate rises and recent banking sector stress has effectively locked a quarter of all emerging markets out of bond markets. However, analysis from Dutch bank ING shows that Central and Eastern Europe has dominated bond issuance in 2023 so far. 

HungaryRomaniaBulgariaSerbiaPoland and North Macedonia have already issued bonds with relatively attractive terms as the region has issued $30.4 billion year-to-date, compared to $18.5 billion in all of 2019. The bank expects the non-eurozone countries to borrow primarily in euros or dollars—bucking recent trends toward local currency issuance—as the region faces continued funding needs for energy and military spending.

Latin America

Drought threatens Argentina’s relative post-IMF stability. The relative stability that access to IMF funds provided Argentina’s economy is crumbling in the face of a record drought and continued borrowing. Lower rainfall has substantially reduced agricultural outputs in the cash-crop-dependent economy, which has forced the giant soybean producer to rely on costly agricultural imports to feed its dominant grain processing industry.

As FMN previously reported, reduced hard currency revenues from exports and a larger budget deficit from imports and subsidies threaten IMF support and the macroeconomic status quo underpinned by fund disbursements. This week ‘supereconomy’ minister Sergio Massa visited the IMF during a trip to Washington to negotiate looser debt and spending requirements.

The Rosario Grains exchange predicts that Argentina will import 7.9 million tons of soybean this season, up 139% from the previous season

While the IMF has agreed to relax requirements for continued disbursements, there are concerns that the country is heading to another debt default. Ratings firm Fitch, which downgraded Argentina’s sovereign rating from CCC- to C last week, suggested another default and painful negotiation with the IMF is “imminent.”

Corruption and impeachment disrupt regional executives. As the Ecuadorian constitutional court approved impeachment proceedings against President Guillermo Lasso, the Peruvian congress tabled a motion to impeach President Dina Boluarte for alleged money laundering after only four months in office.

The impeachment attempt against Lasso, based on corruption-related accusations against a family member, comes after the center-right president lost support in the left-wing-dominated national assembly and was hobbled by a failed referendum in early February. Meanwhile, another impeachment is business as usual in Peru, where a diverse opposition in a fragmented legislature wants another president gone.

Lasso waiting for the President of the Dominican Republic Luis Abinader at a meeting of the Alliance for Development in Democracy, in Quito, Ecuador. Photo: Dolores Ochoa/AP

Since the Odebrecht scandal in 2016 led to a wave of executives’ being ousted across the region’s largest economies, impeachment has quietly become a more common political tool. Peru’s routine use of the ‘moral incapacity’ clause has notably accelerated political fragmentation leading to five presidents in the last six years. 

And despite the costs of Peru’s political upheaval it appears that the instinct for political use of impeachment is spreading to other countries, such as Chile, where President Gabriel Boric suffers from very low approval ratings, and Colombia, where President Gustavo Petro’s radical economic overhaul is rapidly losing support in a moderate congress.


Chinese lending in spotlight as emerging-market debt defaults loom. Sovereign debt defaults have hit a record high, according to ratings firm Fitch, as countries with high debt levels face increasing pressure from global macro shocks. In a report released this week, Fitch said borrowing from China by smaller emerging markets had played a significant role in the rapid growth of government debt.

China’s involvement also appears to be slowing the progress of debt restructuring for countries that default. “Widespread reports indicate that a key reason for delays is weak coordination amongst Chinese stakeholders, and China’s demands that multilateral debt is included in debt restructuring and that there are no haircuts, just maturity reprofiling,” Fitch said.

According to the FT, Chinese banks prefer to provide “rescue loans” to countries that are struggling to service their debts. The country’s financial institutions granted $104 billion worth of rescue loans to developing countries between 2019 and 2021, with the structure of the bailouts suggesting China is working mostly to protect its fragile banking system from losses generated through loans. With over $838 billion lent between 2013 and the end of 2021, according to American Enterprise Institute data, Beijing has racked up significant exposure to dozens of vulnerable borrowers.

What we’re reading

UN alarmed over surge in violence in eastern DR Congo. (France24)

Top Zimbabwe ambassador involved in gold smuggling scheme (Al Jazeera) And videoon Africa’s ‘gold mafia.’

Al Qaeda closes in on a stalwart US ally in Africa. (WSJ)

Burkina Faso to revive ties with North Korea and seek ‘exemplary’ weapons trade. (NKNews)

South Africa: Putin’s ICC warrant and BRICS summit puts hosts in tailspin. (The Africa Report)

Vietnam’s rising middle class ‘will drive growth of capital market.’ (Korea Herald)

Taliban unity shows cracks under Afghanistan’s isolation. (Nikkei)

Taliban want control of more Afghan diplomatic missions. (AP)

Pakistan police resort to shutting Chinese shops over terror risk. (Nikkei)

Philippines President Marcos aims to merge two state banks into country’s biggest lender amid global turmoil. (Nikkei)

Sri Lanka reels from aftershocks of debt crisis. (FT)

Renewed fighting in Yemen clouds peace efforts (Al Jazeera)

International oil firms stop operations as IraqiKurdish oil dispute continues (Al-Monitor)

Crippling dollar shortage underscores vulnerability of Iraq’s oil-based economy. (FT)

Iraq changes electoral laws, sparking anger from opposition. (Alarabiya)

Iraq halts northern crude exports after winning arbitration case against Turkey. (Reuters)

Riyadh joins Shanghai Cooperation Organization as ties with Beijing grow. (Reuters)

Despite China tilt, Saudi Arabia still wants US engagement. (Nikkei)

Erdoğan to slash Turkey’s energy bills ahead of tough election. (FT)

Middle East on ‘radar’ of global investors as it enjoys IPO boom. (FT)

Russia’s economy is starting to come undone. (WSJ)

Russia supplies Iran with cyber weapons. (WSJ)

Haiti faces ‘hunger emergency’ amid escalating gang violence and surging inflation. (The Guardian)

Honduras switches alliegance from Taiwan to China. (CNN)

Argentina’s former president Mauricio Macri says he won’t run for president in 2023 election. (Buenos Aires Times)

Venezuela: 21 officials, businessmen arrested in oil scheme. (ABC)

US grants Costa Rica $25m to bolster cybersecurity efforts. (Axios)

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