Frontier Markets Weekly, January 28th 2023

VC Investors flock to Kenya…and Bangladesh | Iraq seeks Qatar’s help | Romania thrives | El Salvador pays up

 By Dan Keeler, Ken Stibler, and Noah Berman 

Welcome to the latest edition of Frontier Markets News.

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France pulls out of Burkina Faso. France said on Wednesday it would withdraw its troops from Burkina Faso within a month, CNN reports. The announcement came three days after the country’s government formally requested the move.

French troops entered the Sahel region in 2013 at the request of governments seeking assistance in their fight against a number of jihadist groups. While the deployment was initially lauded as a potential solution to the problem of jihadist violence, local attitudes toward it have soured after years of continued violence.

A soldier of the French Army patrols a rural area during the Barkhane operation in northern Burkina Faso on November 9, 2019. Photo: Michele Cattani/AFP/Getty Images

Dozens of women were kidnapped by suspected jihadists last week, the latest in what has become an all-too-common act of violence in the region. Protests against the French presence had grown in recent months, especially in the wake of a similar withdrawal from neighboring Mali.

On Thursday, France announced that it would recall its ambassador to Burkina Faso.

Kenya scores venture capital investors. VC investors poured $1.1 billion into Kenyan private venture-backed companies last year, a windfall for the East African nation during a year of soaring inflation and a rapidly depreciating local currency. The investment was over double the funding Kenya raised in 2021, TechCrunch reports

The increased investor interest resulted in the strongest VC funding growth on the continent. Nigeria raised the most VC money on the continent at $1.2 billion, with Kenya coming in second, according to The Big Deal.

Most investor interest focused on clean technology, e-commerce, fintech and the food and agriculture sectors; the cleantech sector raised nearly $550 million. Most of that investment was in Sun King, a manufacturer of solar-powered home electricity systems that raised $330 million in its series D funding round.

Russian foreign minister tours Africa. Russia’s Foreign Minister Sergei Lavrov continued his tour of Africa this week, with stops in South AfricaEswatiniBotswanaand Angola. The trip, which coincides with US Treasury Secretary Janet Yellen’s visit to the continent, is intended to present Russia as an alternative partner to the US for economic development.

South Africa’s Foreign Minister Naledi Pandor and Russia’s Foreign Minister Sergei Lavrov. Photo via VoA

However, talks this week have primarily focused on security. During Lavrov’s visit to South Africa, the country’s foreign minister announced that it would host joint military drills with Russia

And in Eswatini, Lavrov offered security training that would be conducted by Russian troops. The country was reeling this week after leading opposition politician and human rights lawyer, Thulani Maseko, was murdered in front of his family.


Investors warm to Bangladesh’s private markets. Bangladesh saw the lowest level of participation by foreign investors in its equities market in a decade last year, according to The Business Standard. Non-domestic investors’ contribution to turnover on the Dhaka Stock Exchange dropped below 2%, down from a near-8% high in 2020.

Equity investors’ disinterest in Bangladeshi public companies stands in stark contrast to enthusiasm for private-equity investments. Some of the world’s biggest PE investors have been exploring—and buying into—the country’s thriving startup sector, according to Tina Jabeen, president of the Bangladesh Startup Consortium and director of Bangladesh Women Investors Network.

In an interview for FMN’s latest podcast, Jabeen said PE investors active in Bangladesh include Sequoia, Valar Ventures, Alipay and Omidyar Network. According to Jabeen, investors are tapping into a surge in startup activity, drawn by the “huge opportunity” Bangladesh’s 170 million population presents. “This market is so large, and because it’s densely populated, acquiring new customers costs far less than in other countries,” she said.

Fiji ends policing agreement with China. Fiji’s newly installed Prime Minister Sitiveni Rabuka has scrapped a controversial policing agreement with China that saw Chinese police deployed in Fiji and Fijian officers trained in China, the Fiji Times reports. Rabuka said the decision was partly because the two countries’ democracy and justice systems were “so different.”

On Friday, the head of the Pacific island nation’s police force was suspended, as well as the supervisor of elections, on the advice of the Constitutional Offices Commission.

Sitiveni Rabuka in Suva, the capital of Fiji. Photo: Saeed Khan/AFP

Rabuka’s narrow election victory in December 2022 over incumbent Frank Bainimarama marked the first change of power in 16 years. Under Bainimarama, Fiji grew closer to China, which has sought a larger presence in the strategically significant South Pacific, FMN previously reported. 

Myanmar opium production surges as economy stumbles under sanctions.Myanmar’s production of illicit opium, the raw ingredient of heroin, has reached an eight-year high, reversing decades of progress, according to a new UN Office on Drugs and Crime (UNODC) report.

As legal industries struggled under international sanctions, the economy contracted by almost 18% in 2021 alone and saw only modest growth in 2022, Nikkei’s Tom Allard writes. Facing growing insecurity and rising costs of key imports, both the regime and opposition groups turned to opium production to fund operations and purchase weapons.

Middle East

Iraq looks to Qatar for energy investment. Iraq is hoping to secure a $27 billion investment from Qatar that would stanch the flow of money out of the country, as Western energy companies exit the market. Qatar is considering the acquisition of a group of projects owned by France’s TotalEnergies SE, Reuters reports.

The French energy giant signed a deal to build renewable and gas-powered projects in the country in 2021. But the project has since floundered, and major Western energy companies including Shell, Exxon Mobil, and BP have sought to reduce their footprint in Iraq.

Photo: Stephane Mahe/Reuters

Iraqi Prime Minister Mohammed al-Sudani traveled to Paris on Thursday to meet President Emanuel Macron and TotalEnergies officials. An investment from a Gulf state such as Qatar could revitalize the Iraqi energy industry, Zawya reports. The deal would also mark a win for Sudani, who took office in October last year after a period of political turmoil that threatened to throw the country into chaos.

EU-Iran sanctions escalate. After the EU announced a new round of sanctions against Iran on Monday, officials in Tehran were quick to respond with a batch of their own two days later.

Photo: AFP

The EU sanctions, announced in conjunction with a package from the UK, prohibit travel by sanctioned individuals to the bloc and allow any of their assets held in the EU to be frozen. This week’s were the fourth such round since a wave of protests began to rock the Middle Eastern nation in September, when 22-year-old Mahsa Amini died at the hands of the country’s morality police, a group that enforces the country’s strict dress code. Amini had refused to wear a headscarf.

Iran’s retaliatory sanctions target 34 individuals from the EU and UK, including government officials, advocacy groups, and satirists at the French magazine Charlie Hebdo, which was the target of a terrorist attack in 2015.


Go deeper: Read the full stories at

Ukraine’s President Volodymyr Zelensky oversaw the departure of 15 officials this week as allegations of graft grew, threatening to sap momentum and support for Ukraine’s war with Russia. The public servants, who had been accused of various types of misappropriation, overpaying and self-dealing, include front-line governors, high level development and defense officials, and members of Zelensky’s own staff.

Romania is quietly outpacing the economies of stagnating neighbors as Bucharest benefits from reshoring, EU funding and a strong currency support—and growing FDI from companies settling there after fleeing from Russia. The IMF expects Romania’s real GDP to grow 3.1% in 2023, surpassing Hungary and Poland’s 1.8% and 0.5% respectively. 

Serbia is considering imposing sanctions against Russia, which would be a prerequisite for joining the EU. Serbia’s President Aleksandar Vučić has long opposed sanctions against Russia, but after its invasion of Ukraine, Serbian officials appear more willing to speak out against their traditional ally.

Hungary, which has voiced disapproval of EU sanctions against Russia and vetoed previous aid packages to Ukraine, said it won’t block an additional $543 million in aid as part of the bloc’s European Peace Facility. However, Hungary’s foreign minister said Budapest would oppose future proposals to sanction Russia’s nuclear power industry, which provides fuel for Hungary’s only nuclear power plant.

Hungary’s Foreign Minister Peter Szijjarto. Photo: Virginia Mayo, AP

Tensions between Russia and Baltic EU member countries Estonia and Latvia have escalated following Moscow’s decision to expel Estonia’s ambassador, Politico reports. Russia and Estonia have both expelled ambassadors from each other’s countries in tit-for-tat moves, with Latvia also announcing it would downgrade diplomatic relations with Moscow in a show of solidarity with Estonia.

Go deeper: Read the full stories at

Latin America

El Salvador confounds critics with bond repayment. El Salvador repaid an $800 million Eurobond this week, ending speculation over whether the country’s soured bitcoin bet would force 2023’s first default. Ratings firm Moody’s had already warned that the country’s enthusiasm for bitcoin raised its credit risk, as the government had seen liquidity issues, and Fitch downgraded El Salvador’s sovereign debt, saying a default was probable.

El Salvador’s Finance Minister Alejandro Zelaya. Photo: Jose Cabezas/Reuters

Critics of the country’s president Nayib Bukele predicted El Salvador would need to strike a deal with the IMF, which demanded an end to bitcoin as legal tender, to fulfill its debt obligations. Even without IMF support, the government received a $450 million loan from the Central American Bank for Economic Integration which allowed it to defy Fitch’s assessment.

The country still faces about $6.4 billion in outstanding foreign bonds and has announced it plans to issue additional debt. Investors remained concerned about the government’s ability to avoid a debt restructuring in the future and have questioned whether it can tap international capital markets without turning to riskier options such as Chinese funding or syndicated debt.

Brazil and Argentina revive common currency plan. Brazil and Argentina have agreed to discuss creating a common currency, reviving a goal held for decades by left-wing leaders and reviled by economists in both countries. In an opinion piece for Argentine newsletter Perfil, Brazilian President Lula de Silva and Argentina’s president Alberto Ferndanez emphasized the importance of keeping both the real and peso, suggesting that the new “sur” would operate in parallel to both. 

Brazil’s President Luiz Inacio Lula da Silva. Photo: Bloomberg

While the project is nominally intended to manage exchange-rate risk and reduce operational overheads, both leftist leaders are keen to reduce dependence on the US dollar after a brutal tightening cycle and longstanding accusations of its role as a vestige of colonial dependence. 

The negotiations, which were initiated by Argentina, have no set deadline and appear reminiscent of similar initiatives that failed in the past due to the high volatility and political barriers to cooperation that currently stalk the Mercosur trade bloc. A 95% differential in inflation, drastic differences in central bank independence and the Brazilian real’s relative strength compared to the peso all pose substantial barriers to any common currency.

Colombia reassures oil producers after ban on new exploration. Colombia moved to reassure investors and energy companies this week after energy minister Irene Vélez announced a halt to new hydrocarbon exploration and production, triggering fears that existing projects might be canceled. 

Since she made the commitment at the World Economic Forum in Davos last week, Veléz has been undercut in separate statements by the ministers for public credit and finance who suggested the decision could be reversed. Veléz later confirmed that canceling existing contracts was not being discussed but the country’s President Gustavo Petro also reaffirmed his government’s commitment to move away from fossil fuels and focus on renewable energy and boosting tourism.


Emerging markets attract $1.1 billion a day as sentiment shifts. Investors are pouring money into emerging market assets at a near-record pace as currency resilience and China’s reopening have helped reverse last year’s slide, the FT’s Jonathan Wheatley reports. Emerging equity and debt markets have attracted $1.1 billion a day in net new money this week, according to the Institute of International Finance.

China’s decision to begin unwinding its zero-Covid measures has provided a big boost to the country’s vast markets. Photo: Getty Images

Recent inflows are second only to the surge that followed the lifting of coronavirus lockdowns in late 2020 and early 2021. This strong inflow underscores the shift in sentiment on developing markets after a significant underperformance in 2022. 

Paul Greer, portfolio manager for EM debt at Fidelity International, said the rally was partly driven by investors returning to emerging-market assets after cutting exposure over much of the past decade. Regardless of whether outsized inflows hold, EMs appear to have weathered recent shocks remarkably well.

EU alternative to Belt and Road Initiative gains momentum. The EU has lined up 70 projects in its first concrete steps to counter Chinese projects through the Global Gateway initiative, Politico’s Barbara Moens reports. The initiative aims to offer developing countries an alternative to China’s Belt and Road Initiative, which seeks to project the country’s power along strategic trade routes through various infrastructure projects.

The first projects of EU’s Global Gateway include a cable under the Black Sea, an optical fiber cable to connect Mediterranean and Northern African countries, and a hydroelectric project in Cameroon.

China has invested nearly $2.3 trillion into around 4,000 overseas investment and construction projects since 2005. Photo: Paula Bronstein/Getty Images

The Global Gateway aims to mobilize up to €300 billion ($326 billion) in public and private funds by 2027 to finance infrastructure projects abroad—still far short of the nearly $2.3 trillion China has invested in nearly 4,000 overseas projects since 2005. The EU initiative’s list includes several projects in China’s and Russia’s backyards, such as an energy transition partnership with Indonesia, a digital connectivity project in the Philippines, a hydrogen project in Kazakhstan, a transport link in Central Asia and a hydro-power plant in Tajikistan.

What we’re reading

Nigeria bets on Chinese-funded port to drive economic growth. (AP)

Ghana’s debt crisis sets up difficult 2023. (FrontierView)

Eritrean troops endanger Ethiopian peace deal. (WSJ)

Rwanda fires on Congo military aircraft accused of violation. (AP)

Six dead in siege at mayor’s office in Somali capital (AFP via Jordan Times

Zambia: Will UAE cooperation revive solar dream after World Bank and Chinadisappointments? (The Africa Report)

Yellen urges Zambia debt restructuring after talks with China. (Reuters)

Inflation is so high in Egypt that eggs are a luxury. (NYT)

Long-closed Algeria hopes for tourism boost. (Bloomberg)

Africa needs up to $65b in loans every year to curb food imports. (Bloomberg)

Tens of millions without power in Pakistan as national grid fails. (The Guardian

Archrivals China and India move in to fund same Bangladesh port. (Nikkei)

China’s mining ambitions in Afghanistan haunted by militants. (Nikkei)

Myanmar military exploits global rifts to deflect Western pressure. (Nikkei)

Laos to revamp economy in effort to avoid default. (Manila Times

Philippines records strongest economic growth in more than 40 years. (FT

Indonesia boosts South China Sea security ahead of energy project. (Nikkei)

Indonesia’s geothermal plants billow with foreign investments. (Nikkei)

Russia forges ahead with gas ambitions in Uzbekistan and Kazakhstan. (Eurasianet)

Kyrgyzstan aims to shut down radio station in escalation of campaign against Radio Free Europe. (RFE

Russia and Syria restore Syrian air base for joint use. (Reuters)

JordanLatvia and Israel shake up diplomatic corps after ‘shadow diplomats’ investigation. (ProPublica)

Iraqi central bank chief leaves post amid currency volatility. (AFP via Barron’s)

As tough elections loom in Turkey, Erdogan is spending for victory. (NYT)

Ukraine inks tentative energy deal with Turkish ‘powership’ company. (Nikkei)

Bulgaria to hold fifth election in two years after talks fail. (AP)

Less than 9% of Western firms have divested from Russia. (University of St. Gallen)

US brands Russia’s Wagner mercenary group ‘transnational criminal organization.’ (Radio Free Europe)

North Macedonia says Bulgaria diplomat recall ‘disproportionate’ as Balkan tensions bubble over. (Radio Free Europe)

Azerbaijan sues Armenia for wartime environmental damage. (The Guardian)

Crime and inflation sap support for Chile’s Boric in tough first year. (Reuters)

Jamaica seizing ever-larger cocaine shipments from Colombia. (InsightCrime)

China consortium to develop lithium deposits in Bolivia. (Nikkei)

Counterfeiting, contraband, cocaine: how Panama’s trade hub lost its luster. (The Guardian)

Pension reform advances in Chile’s Congress. (Bloomberg Línea)

US issues license to Trinidad and Tobago to develop Venezuela offshore gas field. (Reuters)

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