Frontier Markets Weekly, January 21st 2024

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

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


IMF approves new loan for Kenya

The IMF approved a $941 million loan for Kenya on Wednesday, with an immediate disbursement of $625 million, RFI reports.

In a statement announcing the loan, the IMF lauded Kenya’s resilience amid a slew of economic issues, including a worsening cost-of-living crisis, East Africa’s worst drought in decades, a vast debt load, and a depreciating currency. “Kenya’s growth remained resilient in the face of increasing external and domestic challenges,” IMF Deputy Managing Director Antoinette Sayeh said.

Steady growth in Kenya’s economy is expected to continue this year. Photo: Simon Maina/AFP

The IMF has disbursed $2.6 billion to Kenya since 2021. The lender projects that Kenya’s economy will grow by 5% this year following estimated growth of 5.1% in 2023. Inflation also remains high at 6.6%, debt has risen to more than $60 billion, and the shilling is trading at an all-time low, AFP reports.

Zambia plans railway to spur intra-African trade 

Zambia intends to build a rail line to connect a harbor on Lake Tanganyika to tracks that lead to neighboring Tanzania, Bloomberg reports. The new track will connect the port on Tanganyika, which borders BurundiDemocratic Republic of the Congo, Tanzania and Zambia, with the existing Tanzania Zambia Railway.

The infrastructure could boost trade between the four countries, which do not currently conduct a significant amount of bilateral commerce, and provide a pathway to the sea for landlocked Burundi and DRC. Tanzania and Zambia conduct the largest amount of bilateral trade of any pair of the Lake Tanganyika countries.

The Tazara railway between Tanzania and Zambia. Photo: Shutterstock

Later this year, the two countries plan to award a contract to a Chinese company to “revitalize” and operate the Tanzania Zambia Railway, which has fallen into disrepair and operates at a fraction of its capacity. China built the original railway, which connects a copper-rich region of Zambia to the Tanzanian Indian Ocean port of Dar es Salaam, in the 1970s.


Binance launches in Thailand as government rejects bitcoin ETF

Cryptocurrency exchange Binance has launched full digital asset operations in Thailand, the company announced on Tuesday—the same day the country’s regulators decided to prohibit bitcoin ETFs “for the time being,” according to Nikkei.

Thailand is already a major cryptocurrency market, and the entrance of Binance could further crowd the country’s digital assets industry. About 20% of Thais own cryptocurrency, though the Thai government has banned the use of digital assets to pay for goods and services, Nikkei reports.

Image: The Block

In delaying the bitcoin ETF decision, the Thai SEC said the financial product “may not deliver direct economic value suitable for the current context of Thailand.” Earlier this month, the US SEC approved bitcoin ETFs, spurring optimism in the crypto community that other countries could soon follow suit.

Binance, the world’s largest cryptocurrency exchange, has come under scrutiny in recent months after US investigators charged the company with several violations of securities laws. 

Rapid rapprochement raises questions over Iranian and Pakistani exchange of air strikes

Iran and Pakistan this week exchanged air strikes on Baloch militant groups in each other’s respective territory, resulting in over a dozen deaths and prompting strong mutual diplomatic rebukes. Iran struck the ethnic Baloch (and, importantly, Sunni Muslim) group “Jaish al-Adl” which it claims is responsible for recent attacks in Iran’s restive Sistan-Baluchestan province, and Pakistan struck the Balochistan Liberation Front and Balochistan Liberation Army, also accused of attacks in Pakistan.

Baluchi tribesmen in Balochistan. Photo: Getty Images via NDTV

Balochistan is a distinct region currently politically divided between Iran, Pakistan, and Afghanistan, and the Baloch people number some 10 million and have a distinct ethnic and cultural identity from the nations in which they live. All three of the Baloch militant groups struck by Iran and Pakistan are engaged in a long campaign of militant Baloch separatism, which has prompted counterinsurgency campaigns by Iran and Pakistan in their respective Baloch regions.

Both Iran and Pakistan have a history of accusing each other of harboring or enabling Baloch groups in their own territory to attack the other—in other words accusing each other of waging a low-level proxy conflict. Interestingly, the mutual strikes are perhaps convenient for each other, as both countries arguably benefit from the weakening of Baloch militant groups on their territory, a possible reason that soon after the strikes both sides have apparently agreed to de-escalate by restoring their respective ambassadors to their posts and emphasizing “brotherly relations.” 

Indonesia peatland-clearing poses climate challenge

In a quest to grow its farming industry, Indonesia has cleared tens of thousands of acres of peatland, the Washington Post reports. The program has released enormous quantities of carbon dioxide that were previously buried deep underground.

Peatlands—a class of dense vegetation that form in wet areas—act as one of the world’s most effective carbon sinks. Globally, peatlands absorb more carbon dioxide than any other form of vegetation, according to the UN. Indonesia is home to more tropical peatland than any other country, holding between 55 and 57 billion tons of carbon dioxide, Mongabay reports. 

Carbon-rich peatlands in Kalimantan, Indonesia, have been cleared by the government to cultivate crops. Image: Muhammad Fadli/The Washington Post

After the Covid-19 pandemic revealed vulnerabilities in food supply chains, Indonesia enacted a plan to turn up to 4,000 square miles of peatland into fields for rice, corn and cassava cultivation. Through the program, Indonesia expects to grow enough food to feed its own population and begin exporting agricultural products to other countries. Experts say devastating and potentially irreversible climate costs will accompany that self-sufficiency.

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Middle East

Saudi Arabia looking to buy stakes in foreign mining operations

Saudi Arabia’s sovereign wealth fund, PIF, is looking to expand its critical minerals portfolio by acquiring stakes in foreign mining operations, Bloomberg reports. PIF’s subsidiary Manara Minerals Investment Company is reportedly hunting for secure offtake sources of critical minerals such as copper, nickel, and lithium—important to the development of green energy and battery technologies—to power its growing domestic industrial sector.

A mining site in Khnaiguiyah, Saudi Arabia. Photo: Tasneem Alsultan/Bloomberg

The push into mining is part of the country’s effort to reduce its reliance on oil and gas, and instead acquire a stake in technologies such as EV battery manufacturing. Last year, Saudi Arabia made a concerted effort to expand domestic mining and refining capacity to tap the estimated $1.3 trillion worth of critical minerals found beneath the kingdom.

Oman launches $5.2 billion fund for local SMEs

The Oman Investment Authority this week announced the launch of a $5.2 billion fund dubbed “Future Fund Oman” to support small and medium sized companies and attract foreign investment, Reuters reports. The fund will be a strategic partnership between the country’s sovereign wealth fund and finance ministry, and state-owned companies such as telecom firm Omantel. 

The launch comes on the heels of a disappointing year for the economy. In 2023, GDP grew only 1.5%—far lower than the predicted 4.3%—despite a fiscal stability program and a heavy tourism push in partnership with the UAE

Oman Investment Authority president Abdulsalam Al Murshidi said the fund will “serve the national economy’s growth and act as a trustworthy fund for local and international investors looking to expand their projects in Oman.”

Kuwait forms first government under new Emir and Prime Minister 

Kuwait this week formed its first government since the death of its Emir Sheikh Nawaf in December 2023, appointing a new Prime Minister, Sheikh Mohammed Sabah al-Salem al-Sabah, a member of Kuwait’s ruling family and nephew of the current Emir, Sheikh Meshal al-Ahmad al-Sabah. The cabinet reshuffle also produced new ministers for oil, finance, and foreign affairs.

Kuwait’s new Prime Minister, Sheikh Mohammed Sabah al-Salem al-Sabah (R), in a 2013 file photo. Photo: Stephanie Mcgehee/Reuters

In a statement, the new PM said his appointment is a “heavy responsibility of a new phase of Kuwait’s history” and he expects “further hard work and genuine accomplishment.” Kuwait’s political system is unique among Gulf states in that the legislature has significant power that allows it to challenge the ruling family, resulting in frequent political crises, gridlock-breaking snap elections and government reshuffles.

US redesignates Houthis as a terror group, escalating strikes on Yemen

The US this week redesignated the Houthis as a terror group, giving the Biden administration legal cover to block support or assistance to the group, the FT reports. Because the Houthis are not merely a terror group but also exercise control and governance over large sections of Yemen’s territory and population, the terror group designation, first imposed by the Trump administration, has in the past been criticized for impeding humanitarian assistance to Yemen.

Armed men stand on a beach as a commercial ship, seized by the Houthis last month, is anchored off the coast of Yemen. Photo: Reuters

The designation comes as the previous week’s US strikes have failed to stop Houthi attacks on shipping lanes in the Red Sea—at the time of writing, the US is on its fifth round of airstrikes against the group, and Biden in an exchange with reporters answered “no” when asked if the strikes were working. As the attacks continue, the EU has given initial backing to a naval mission to protect shipping lanes in the Red Sea, joining the US coalition after initial reservations.


Romanian farmers protest business climate

Hundreds of Romanian farmers and truck drivers have blocked roads in the capital, protesting against high diesel costs and other issues, including the impact of the war in Ukraine on their industry. The protests highlight continued challenges in the agricultural sector despite a broadly improving economic environment and diminishing commercial tensions with Ukraine

Farmers are demanding solutions including a moratorium on loan repayments, faster subsidy payments and improved border-crossing procedures for trucks. In the meantime, the situation is disrupting trade routes and customs checkpoints.

Farmers protesting in Romania. Photo: Octav Ganea

Several Eastern European countries, including BulgariaPolandHungary, Romania and Slovakia, are also voicing concerns over the impact of Ukrainian grain imports on their local markets. These nations have formally asked the European Commission to reimpose import duties on Ukrainian grains, citing unfair competition.

EU sidesteps Polish institutional barriers to release funding

The European Union is seeking novel legal methods to release over €100 billionin funds to Poland, despite the expected veto by the opposition-controlled presidency, the Financial Times reports. The funds, earmarked for regular disbursement and post-pandemic recovery, have been held up over controversial judicial reforms by the previous government. 

With the current pro-EU prime minister, Donald Tusk, undertaking the necessary reforms, the EU is trying to finally provide the aid, while the outgoing opposition party is pushing back against the unwinding of its judicial plans. 

  • Read more: Donald Tusk’s forced reboot of the Polish state (FT)

Hungary, with its own EU funding frozen for similar reasons, has criticized the EU for perceived double standards in handling the situations in Poland and Hungary. The PiS opposition in Poland, aligning with Hungarian sentiments, has accused EU officials of overlooking fundamental values, particularly in light of recent events like the arrest of former ministers.

Latin America

The long read: Brazil as a case study for market uncertainty

Global stock markets closed 2023 on a high note, buoyed by expectations that 2024 will see more central banks cutting rates in response to slower growth. But investors who are basing their strategies on expectations that inflation will remain subdued might be disappointed, José Pedro Martinez Sanguinetti, chief investment officer of Rimac Seguros, writes in a guest post on FMN this week.

After a sharp rally since October, current market valuations leave little room for such disappointment.

Brazil’s prospects for 2024 are far from clear

Brazil may become a case in point. The second-largest economy in the Americas showed surprising resiliency over the first half of 2023, but it has been losing momentum.  The boost it received from higher fiscal spending after President Lula da Silva’s inauguration and from higher demand for its agricultural exports seems to be fading. 

Is the party over almost before it began? Read Sanguinetti’s excellent analysis at FMN to find out.

Argentine province plans its own currency 

The Argentine province of La Rioja is set to issue its own currency to pay for salary and tax payments within the province, with plans for rapid conversion to cash through local commerce agreements. The move, initiated by Peronist governor Ricardo Quintela, involves issuing 15 billion pesos’ worth of notes, which will be legal tender within the northern province. 

La Rioja’s decision to launch its own currency is part of a broader dispute with the national government over budget allocations, which has prompted a lawsuit before the Supreme Court. Quintela aims to claim $9.3 billion for the province, arguing these funds are rightfully theirs and not subject to discretionary federal cuts. 

Speaking at the World Economic Forum in Davos, President Javier Milei expressed support for provinces’ issuing their own currencies but warned that they would not receive national government assistance.

What we’re reading

UN peacekeepers to leave DRC by end of 2024 after 25 years (Bloomberg)

Afreximbank disburses $2.25b to Nigeria under oil payment loan (Rigzone

Côte d’Ivoire to end Africa’s eurobond hiatus with new issue (Bloomberg

Saudi Arabia targets investment in East Africa critical minerals (The Africa Report

Egypt’s Sisi steps up pressure on Ethiopia over Somaliland plan (VoA

African leaders gain in confidence despite setbacks (FT

Debt crisis is top risk for Africa, Standard Bank chair says (Bloomberg

African ports see higher refueling demand as vessels round Cape (Bloomberg

Vietnam’s lagging North-Central region sees investment boom (Nikkei

Philippines plans to explore oil-rich sea amid China tension (Bloomberg

Red Sea conflict plunges Bangladesh garment makers into the red (Nikkei

Kyrgyzstan’s lucrative reexport of vehicles getting the squeeze from Russia (Radio Free Europe

Bond giant Pimco says Turkey on track for investment grade rating (FT

Saudi Aramco beefs up venture capital arm to diversify from oil (FT

Government debt instruments worth $1.37b set to debut on Saudi Exchange (Arab News

Saudi Arabia’s Neom awards $5b Trojena dam project to Italian firm (Zawya

Kuwait Finance House lists $1b sukuk on London Stock Exchange (Zawya

Moldova and Ukraine to join gas corridor, ending dependence on Russia (Balkan Insight)

US presses Bosnia Croat leader to stop blocking gas pipeline (Balkan Insight)

Kosovo ends free electricity after 25 years (Radio Free Europe

Arévalo sworn in as Guatemala’s president despite efforts to derail his inauguration (NPR)

Italy turns to Cuba to help revive ailing health system (The Guardian

Maduro says Venezuelan economy grew 5% in 2023, will reach 8% this year (Reuters

Amid an escalation of violence, Ecuador political tensions ease (FrontierView

Milei’s ‘all-or-nothing’ stance faces crunch time in Argentina’s congress (FT

Brazil bets on a return to state capitalism (FT

China widens South America trade highway with Silk Road mega port (Reuters)

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