Frontier Markets Weekly, February 21st 2022

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France and allies to withdraw forces from Mali. France and its European allies said they would withdraw their military forces from Mali, a move that threatens to leave a security vacuum in Africa’s Sahel region where French-led troops have spent nearly a decade battling Islamist terrorist groups and tamping down ethnic conflict, Matthew Dalton writes in the Wall Street Journal.

The decision comes after months of deteriorating relations between the West and Mali’s rulers, who took over the West African nation in a coup backed by the military in May last year. The Malian government has since hired Russian private-security firm Wagner Group, prompting Europe to impose sanctions on the coup leaders.

A Malian soldier and a French soldier last year at a base in Mali, where French-led troops have been battling Islamist terrorist groups.
Photo: Florent Vergnes/Agence France-Presse/Getty Images

France has suspended much of its financial support for the impoverished nation to stop those funds from being used to pay Wagner an estimated $10 million a month. Mali expelled the French ambassador earlier this year.

France has some 4,600 soldiers on its Sahel mission, called Operation Barkhane, the majority of whom are in Mali. Other European nations have deployed around 800 special operations troops and Canada also has a small military deployment, which is withdrawing from Mali as well.

Decade-high food prices drive poverty and unrest in Africa. Africans are facing a wave of inflation that’s causing food insecurity and driving some to emigrate to escape the spiraling cost of living, Nicholas Bariyo reports in the WSJ. Food prices are at their highest levels in over a decade, according to the United Nations’ Food and Agriculture Organization, compounding the plight of some 40 million people thrown into poverty by the impact of the Covid-19 pandemic and its accompanying lockdowns.

That is creating a food crisis that threatens to spill over into unrest. In some places, it is already driving people to emigrate. Over the past 12 months, for example, some 100,000 Ugandans—including teachers, accountants and social workers—have migrated to the Gulf, according to government data. That flow could pick up pace as prices track higher, undermining what had been one of Africa’s economic success stories.

People at a food distribution center in Lagos, Nigeria. Photo: Emma Houston/Zuma Press

In Malawi, where a 10% slide in the local currency has pushed inflation into double digits, authorities have arrested more than 1,000 people in recent weeks during protests at rising costs. In the Sahel, the arid band stretching across the southern reaches of the Sahara, price surges have added to simmering unrest.

The U.N. says food prices there are nearly 40% higher than other parts of the world and that some 14 million people are facing a serious food crisis, exacerbated by a growing Islamist insurgencies in the north.


Asian Arms markets heats up amid continued great-power rivalry. Defense spending in Asia rose 2.8% to $488 billion in 2021, bucking a 1.8% global decline according to the International Institute for Strategic Studies. China and India account for over 60% of the total, although China’s spending growth is decelerating.

While India and China continued to dominate the demand side, Indonesia made a flurry of purchases from the US, France, India and South Korea as part of its efforts to modernize its armed forces.

On the supply side, South Korea is keen to increase its market share. A series of announcements highlight Seoul’s ambitions to take advantage of its position in an increasingly insecure region and push beyond its 2.7% share of the lucrative arms market. —Ken Stibler

Afghan economy further imperiled by US move to split assets. Afghan bankers and economists and international aid workers say the Biden administration’s decision to effectively seize the Afghan central bank’s foreign reserves is likely to deepen Afghanistan’s already devastating economic crisis, Margherita Stancati writes in the Journal.

A child waits to receive supplies during a distribution of humanitarian aid in Kabul. Hussein Malla/Associated Press

In an executive order signed on Friday, US President Biden blocked the roughly $7 billion foreign exchange reserves of Afghanistan’s central bank, known as Da Afghanistan Bank, held on US soil. The White House said it plans to split the sum in two, transferring half to a trust fund set up to assist the Afghan people and for now setting aside the rest for potential compensation for families of 9/11 victims in ongoing court proceedings.

US officials say the goal of Friday’s executive order was to make as much money available as quickly as possible to help address Afghanistan’s humanitarian crisis while the litigation by the 9/11 victims’ families continues. But many Afghans, including opponents of the Taliban, see the decision as a betrayal of the country, saying that those funds weren’t the US’s to keep or spend in the first place.


EU court rules funding for Poland and Hungary can be cut. Europe’s top court ruled on Wednesday that the European Union could withhold money for member countries that have curtailed the independence of their democratic institutions, marking a potentially costly defeat for Hungary and Poland, the WSJ’s Drew Hinshaw and Laurence Norman report. The ruling by the EU’s European Court of Justice gives the bloc more power to clamp down on governments accused of purging their judiciary or weakening anticorruption watchdog agencies.

A rally in Warsaw to protest against a media bill passed by Poland’s Parliament in December last year.
Photo: Slawomir Kaminski/Agencja Wyborcza, via Reuters

Under the decision, the EU could block those countries from receiving money if it can show that their lack of independent courts or their weak anticorruption agencies present a risk that the EU’s money—meant for the building of roads, trains, bridges and other social programs—could be misspent.

The decision is the latest twist in a yearslong struggle between the EU and Poland and Hungary. The two nationalist governments, both of which have won back-to-back elections, have tried to create a new model of European democracy, in which ruling parties are able to cement power over institutions such as courts and state media.

Latin America

Brazil’s Bolsonaro meets Putin amid Ukraine crisis. As the crisis in Ukraine deepens, Brazilian President Jair Bolsonaro paid a visit to Russian President Vladimir Putin, Radio Free Europe reports. During the trip, Bolsonaro reportedly discussed his wishes for peace in Ukraine, defense cooperation, and Brazil’s desire to acquire Russian nuclear technology.

The two-hour conversation came on the heels of Russian state-owned atomic energy company Rosatom’s September agreement with Brazil’s state-owned Eletronuclear to cooperate on the construction and maintenance of nuclear power plants, the processing of nuclear materials, and radioactive waste management.

Russian President Vladimir Putin (right) meets with his Brazilian counterpart, Jair Bolsonaro, in Moscow on February 16. Photo via RFE.

Unlike Ecuador’s President Guillermo Lasso and Argentina’s President Alberto Fernández, who had traveled to Beijing seeking economic concessions, Bolsonaro is widely believed to have been trying to bolster his legitimacy at home as he heads toward an October election that he is currently tipped to lose. The president also met Hungary’s Victor Orban, himself trying to secure reelection by hosting right-wing leaders, reflecting Bolsonaro’s isolation from the US and many European governments over Covid policies, democratic concerns and a failure to stem deforestation in the Amazon. —Ken Stibler

Inflation and stagnation fail to stop Latin America’s booming new economy. The start of 2022 has seen struggles over mining and oil production across a range of Latin American countries. While the old economy stumbles, though, new areas of digitally-driven dynamism have emerged.

Latin America has the second-highest e-commerce growth potential at 20.4% in 2022, according to an EMarketer report. The highest potential growth is in Southeast Asia, the report said. 

Brazil appears in fourth place, with an expected growth of 22.2% for e-commerce. Argentina lies in sixth place, with an expected growth of 18.6%. Mexico is ninth, with estimated growth of 18%. E-commerce is expected to expand by at least double digits every year until 2025 in all Latin American countries, the report said.

Cryptocurrency and related investment in Latin America continues to boom in consumer-facing asset exchanges and retail trading platforms, according to the Association for Private Capital Investment in Latin America. VC investment in crypto and blockchain firms in Latin America reached $653 million in 2021, almost 10 times 2020’s $68 million total.

And fintech and new banking services are aggressively challenging entrenched players across the region. In Brazil, for example, such players have seen an influx of venture capital investment and an increasingly competitive acquisition environment as big transnational players such as BBVA and Blackrock try to get in on the action. —Ken Stibler

What we’re reading

Podcast: Why crypto is Africa’s next big bet. (Blockworks)

Burkina Faso junta leader installed as president after coup. (DW)

Africa’s largest economy, Nigeria, tops growth forecasts. (Al Jazeera

Côte d’Ivoire and Ghana have ‘lost 80% to 90% of forested area.’ (MyJoy Online)

Zimbabwe inflation returns to dash hopes of higher growth. (AfricaReport)

Rwanda unexpectedly hikes interest rate for first time in decade. (Bloomberg)

Vietnam to fully reopen borders from mid-March. (Reuters)

World Bank accused of ‘funding campaign of repression’ in China. (SCMP)

Indian tax authorities raid China’s Huawei, triggering protest from Beijing. (WSJ)

Malaysia eyes China 40 years after it ‘looked east’ to Japan. (Nikkei)

Nepal arrests dozens in protest against US grant. (France24)

Philippines rejects Myanmar trade pact. (AP)

China rolls dice with Myanmar’s military. (Nikkei)

President’s son nominated as candidate in Turkmenistan’s presidential campaign. (Radio Free Europe)

Inflation starts to show up in Asia. (WSJ)

Israeli prime minister visits Bahrain for first time in regional security push. (WSJ)

As oil nears $100, Saudis snub US, stick to Russian pact amid Ukraine crisis. (WSJ)

Egypt demolitions undermine Sisi’s main support base. (AfricaReport)

Pakistan and Iran to work more closely on border issues. (Al Jazeera)

How well could Russia’s economy withstand sanctions? (WSJ)

Bulgarian stock exchange launches eight crypto exchange-traded notes. (

US citizens urged to leave Moldova breakaway region aligned with Russia. (BalkanInsight)

Moscow-based firms ‘appear to handle high proportion of cryptocurrency laundering.’ (Cyberscoop)

Albania, Kosovo and Bosnia deny Russian claim they’re sending mercenaries to Ukraine. (BalkanInsight)

Colombia’s economy grows the most in 115 years. (Al Jazeera)

Argentina’s central bank raises interest rate to 42.5 percent. (Al Jazeera)

Honduras arrests former president sought by US on drug charges. (WSJ)

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