Frontier Markets Weekly, March 4th 2023

SHARM EL SHEIKH, EGYPT - NOVEMBER 07: (From L to R) Mohammed bin Zayed Al Nahyan, President of the United Arab Emirates, Egyptian President Abdel Fattah El-Sisi and United Nations Secretary-General Antonio Guterres attend the Sharm El-Sheikh Climate Implementation Summit (SCIS) of the UNFCCC COP27 climate conference on November 07, 2022 in Sharm El Sheikh, Egypt. The conference is bringing together political leaders and representatives from 190 countries to discuss climate-related topics including climate change adaptation, climate finance, decarbonisation, agriculture and biodiversity. The conference is running from November 6-18. (Photo by Sean Gallup/Getty Images)

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

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Winner declared in Nigeria’s presidential election. Bola Tinubu will be the next president of Nigeria, election officials declared on Wednesday. Tinubu was the candidate of current President Muhammadu Buhari’s All Progressives Congress (APC) party.

Bola Tinubu, Nigeria’s president elect. Photo: Ben Curtis, AP

Both of Tinubu’s leading opponents in the presidential contest, Atiku Abubakar and Peter Obi, have called for a recount, which is likely to be followed by a court challenge, Politico reports. Tinubu won less than 50% of votes, receiving nearly 9 million of the roughly 21 million votes cast. Abubakar won nearly seven million votes and Obi won slightly over six million. 

The election was marked by numerous irregularities, according to Ebenezer Obadare, an expert on Nigerian politics at the Council on Foreign Relations. On Thursday, Obi said that he, not Tinubu, was the rightful victor, Reuters reports.

Tinubu, who campaigned under the slogan “It’s my turn,” will take over an economy that has stagnated in recent years, spurring dissatisfaction with the ruling APC party, the AP reports. The 70-year-old, who is known to be one of Nigeria’s richest politicians, will also face continued questions about how he accumulated his wealth.

Macron tours Central Africa. French President Emanuel Macron arrived in Gabon on Wednesday, for a four-country visit to Africa that will see him attempt to counter rising anti-France sentiment on the continent. He will round out his trip with visits to AngolaRepublic of the Congo, and the Democratic Republic of the Congo.

Macron visited the Mondah classified forest with Minister of Water and Forests Lee White while in Gabon. Photo: Reuters via VoA

Macron was expected to emphasize a reduction in France’s military activity on the continent, Le Monde reports. On Thursday, at a conference in Gabon’s capital Libreville focused on preserving global forests he promised $53 million for a global program aimed at rewarding governments for protecting biodiversity. The forests in Central Africa are the world’s second largest carbon sink. 

Macron’s visit comes as Western countries are growing increasingly alarmed about Russian influence in Africa. Moscow-affiliated mercenaries from the Wagner Group have expanded their footprint on the continent in recent years, including in DRC. Gabon has also hosted Russian paramilitary forces, but in a report on Russian activity across the continent, think tank RAND played down its significance relative to Chinese and US activity there.

Kenya pursues economic policy shakeup. Kenya will enact a series of budget cutson infrastructure projects, according to The Africa Report, as the country attempts to slash expenditure and increase revenues to comply with conditions set by the IMF under a multi-billion-dollar support program.

Workers plant flowers under the newly constructed Nairobi expressway, where a plan is underway to plant more than 5 million flowers on its pillars. Photo: Reuters

On Monday, Kenya’s government asked its oil suppliers if it could defer payments for up to a year, Reuters reports. Its aim is to preserve shrinking foreign-exchange reserves, which have fallen to less than enough to cover four months of imports. Kenya spends more money on oil than any other import, according to MIT’s Observatory of Economic Complexity. 

Kenya secured its last disbursement from the IMF in December 2022 under a 38-month deal agreed in April 2021. At the end of that period, Kenya will have received a total of $2.4 billion from the program, the IMF said. The fund projects Kenya’s economy to expand by 5.3% this year.

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Blinken highlights US support for Central Asia. US Secretary of State Antony Blinken visited Kazakhstan and Uzbekistan this week, his first trip to a region whose backyard has been mired in war since the Russian invasion of Ukraine a year ago. The war has made its presence known in Central Asia, both in the number of Russians seeking refuge and in soaring prices of energy and food.

“We’re…very well aware of the consequences that the Russian aggression against Ukraine has had for people in Central Asia,” Blinken said to reporters in the Uzbek capital of Tashkent on Tuesday. He also pressed Uzbek leaders to push ahead with reforms focused on human rights and religious freedoms.

Blinken with Uzbekistan’s acting Foreign Minister Bakhtiyor Saidov in Uzbekistan. Photo: AP

Ahead of the visit, the State Department announced it would invest $25 million in the region in the upcoming fiscal year. The bulk of the investment will be used to expand an existing program to “catalyze transformative economic growth” and $5 million will support regional connectivity through economic and energy programs.

Vietnam’s parliament elects a new president. Vietnam’s ruling communist party elected a new president, Vo Van Thuong, on Wednesday. The selection comes after an anti-corruption drive saw the resignation of his predecessor, President Nguyen Xuan Phuc. 

The selection of Thuong, who has spent the majority of his career as a Communist Party apparatchik, marks a conservative choice, the BBC reports. The role of president is largely ceremonial, but it is one of the four major positions in Vietnamese politics that are governed by Nguyen Phu Trong, the secretary-general of the country’s Communist Party. The 52-year old Thuong has been viewed as a potential successor to Trong, the Diplomat reports.

Vo Van Thuong took an oath of office as Vietnam’s new president on Thursday. Photo: EPA via BBC

Markets barely responded to the selection of Thuong. The benchmark VN-Index inched down 0.28% on Thursday, according to Bloomberg data.

Nepal faces potential political upheaval. Nepal’s ruling coalition began to crumble on Monday after the second largest party in the country’s parliament, the Communist Unified Marxist Leninist (UML) party, withdrew its support for Prime Minister Pushpa Kamal Dahal, known as Prachanda.

The move comes after a decision by Prachanda to support a presidential candidate from Nepal’s main opposition party, the Nepali Congress party, instead of the candidate from his coalition partner UML. Support by Prachanda and seven other major parties all but guarantees that the Ram Chandra Paudel, the Nepali Congress candidate, will win the presidential election, The Hindu reports. The country will elect its next president on March 9.

Nepal’s Prime Minister Pushpa Kamal Dahal ‘Prachanda.’ Photo: Reuters

Prachanda’s ruling coalition still retains a majority in the country’s parliament, but the resignation of four top ministers in protest could portend turmoil for the young republic, the Times of India reports. Nepal has had 11 governments since transitioning away from its 239-year old monarchy in 2008.

The office of president is largely a ceremonial position in Nepal, where the prime minister controls the government.

Middle East

UAE, Egypt, Jordan and Bahrain sign multilateral industrial investment agreements. The third meeting of the Industrial Partnership for Sustainable Economic Development concluded this week with the signing of 12 investment agreements worth over $2 billion, Al-Monitor reports. Local firms in the countries and their respective sovereign wealth funds agreed to invest in industrial projects aimed at creating 13,000 jobs in agriculture, pharmaceuticals, metals, chemicals and electric vehicles.

Mohammed bin Zayed Al Nahyan, President of the United Arab Emirates and Egyptian President Abdel Fattah El-Sisi at a previous meeting with regional leaders. Photo: Sean Gallup/Getty Images

The partnership was conceived in June 2022, with an original $10 billion committed to investing in food security, economic diversification through industrial projects and securing regional supply chains. The Abu Dhabi Developmental Holding Company (ADQ) manages the funds as the UAE takes the lead on diversifying its economy away from petrochemical exports.

Saudi Arabia outlines its long-term economic diversification plan. Saudi Arabia this week outlined its $51 billion Shareek Program, part of the Vision 2030 Plan intended to diversify the Saudi Arabian economy and reduce its reliance on oil exports, Bloomberg reports. The program highlights capital commitments on new manufacturing and industrial projects from local firms such as Aramco, Saudi Basic Industries, mining giant Maaden, and logistics company Bahri, with financing support provided by the government.

Saudi Crown Prince Mohammed bin Salman. Photo: Fayez Nureldine/AFP/Getty Images

The investment and diversification strategy is intended to create 64,000 new jobs in manufacturing and industrials. Two important targets for the program are to increase private sector contributions by 65% and the share of non-oil exports in Saudi Arabia’s trade mix to 50% by 2030.

Saudi Arabia is also seeking foreign direct investment and corporate joint ventures to research potential new technologies. To that end, Japan’s Marubeni and Saudi Arabia’s Public Investment Fund announced this week a feasibility study for producing clean hydrogen both for local use and for export.

Domestic pressure increases on Iran’s government as gas attacks on schools remain unsolved. Mysterious poison gas attacks on girls schools in Iran, originally concentrated in Qom, the religious establishment’s power center, have this week spread to other cities, with at least 900 girls affected, the FT reports. After four months of attacks Iranian officials have yet to identify any suspect, motivation, or even the substances used in the attacks, drawing sharp criticism from Iranians who are doubting the government’s commitment to protecting women’s education.

A young woman lies in hospital after reports of poisoning at an unspecified location in Iran. Photo: WANA/Reuters

The attacks follow protests in Iran demanding women’s rights and political reform. Many Iranians believe the attacks are a targeted effort by religious hardlinersresponding to the protests by suppressing women’s education.

Compounding the pressure on Iran’s leaders are punishing sanctions imposed on the country over its nuclear program and its support of Houthi proxies in Yemen. Sanctions relief for Iran seems unlikely anytime soon, given the discovery of highly enriched uranium in violation of international agreements, and this week’s seizure by the British navy of an Iranian shipment of guided missiles bound for Yemen.

UAE ‘having internal debate’ over OPEC membership. The UAE is internally discussing its future membership in OPEC over a growing rift with Saudi Arabia, the WSJ reports. Due to a Saudi-led OPEC decision to cut output to raise prices, the UAE is forced to pump oil far below its capacity, hurting its revenues.

Middle East leaders at a regional event in January. Photo: Hamad Al-Kaabi/AFP/Getty Images

Since the price cut, the UAE has been privately lobbying other OPEC members to break with Saudi Arabia and vote to pump more oil, causing the global benchmark Brent to fall sharply, Bloomberg reports. The UAE has said that it is sticking to the current OPEC output levels for at least the current year.

Saudi Arabia and the UAE are also reported to be at odds over foreign policy in neighboring Yemen, where Saudi Arabia’s priorities are securing its border and stopping Houthi drone and missile attacks. However, the UAE wants to expand its strategic foothold and secure sea routes for its ports, and has signed a security agreement that includes plans for building a military base in the Red Sea.


Chinese offer for mediated Ukraine settlement muddies the water. A visit to China by Belarusia’s president Aleksandr Luckashenko exacerbated concerns that the two countries were growing closer and planning for an escalated conflict in Ukraine. But in an unexpected twist, Beijing and Minsk together proposed a ceasefire and negotiationsto find a political resolution with Kyiv.

Lukashenko arriving in Beijing on Tuesday. Photo: Maxim Guchek/Belta

The move further complicates an unclear situation in which Russian propaganda has suggested Ukraine might be preparing to attack Moldova or Belarus. Amid accusations of Ukrainian strikes on Russian territory some believe this is Moscow’s attempt to come to the table while saving face.

Others believe the peace proposal could be a smokescreen to distract or split allied nations, who have at times have equivocated about the feasibility of a negotiated agreement that would likely see Ukraine ceding some territory in its east.

Montenegro hikes corporate taxes to cover elevated spending and swelling debt.Montenegro’s finance ministry announced a 33% additional tax on businesses making more than €5 million as budget deficits and welfare spending needs skyrocket. The draft law would raise the tax on medium and large businesses from its current 15% level. 

The measure comes after Montenegro’s tourism-dependent economy has struggled to recover from the impact of Covid-19 and Russia’s war on Ukraine.

Montenegrin finance minister Aleksandar Damjanovic at a press conference in Podgorica. Photo: Government of Montenegro

Montenegro’s government has borrowed substantially to cover costs from temporary reductions in sales and gas taxes while raising pension and welfare payments. The IMF and EU urged Podgorica to avoid further unfunded spending or tax cuts while debts stand at more than 80% of GDP, inflation is over 17%, and debt service costs are mounting.

Latin America

Peru spends to stabilize economy but diplomatic scars likely to last. Peru’s government announced around $9 billion in new spending aimed at reviving its troubled economy and defusing widespread protests and disruptions by supporters of ousted president Pedro Castillo. The funding will flow through 30 public-private projects to improve infrastructure, energy and sanitation. The government also hopes to regain investor confidence by simplifying contracting processes.

Demonstrators call for a nationwide strike during a march in Lima. Photo via Yahoo

The spending, which amounts to 2% of GDP, comes as the country’s political crisis has undermined confidence in the long-stable economy. Private investment fell 0.5% in 2022 after growing by 37% in 2021. 

While the government’s efforts could restore Peru’s attractiveness based on its business-friendly policies and sound macroeconomic management, strains with regional partners over Castillo’s outster look likely to cut deeper. This week Lima recalled its ambassador to Mexico after the country’s President Andres Manuel Lopez Obrador voiced his support for Castillo. Ties have similarly been damaged with Colombia and Argentina, which have questioned the constitutionality of Castillo’s removal.

Lasso moves forward with international deals despite political stalemate at home. Headwinds appear to be strengthening against Ecuador’s President Guillermo Lasso after a congressional committee investigating alleged corruption recommended he be subject to impeachment proceedings. The effort comes on the heels of Lasso’s loss in a referendum designed to give him the political capital needed to support his agenda during the final years of his administration.

While the Opposition is effectively shutting the door on legislative change, Lasso is continuing to pursue international partnerships. This week Ecuador and Costa Rica finalized a free-trade agreement. The new FTA comes as the pro-free-trade Lasso has inked similarly open deals with China and has expanded cooperation with the EU and various international bodies.

Guillermo Lasso. Photo via Mercopress

Such deals can open Ecuador’s economy and increase security cooperation in the drug smuggling hotspot, but political pressures suggest there will continue to be considerable resistance to the country’s new course.

What we’re reading

US special forces launch counter-terrorism drills with African armies. (Reuters)

Zimbabwe government struggles with debts. (The Africa Report)

Tunisians protest crackdown on migrants. (Foreign Policy)

Sri Lanka workers defy strike ban to protest IMF bailout plan. (Al Jazeera)

Myanmar’s natural gas income in jeopardy as foreign firms exit. (Nikkei)

Malaysia’s Anwar urges ASEAN rethink on resolving Myanmar crisis. (Nikkei)

Philippines and Malaysia emerge as startup hot spots. (Deal Street Asia)

World Food Program seeks to triple funding for food assistance in North Korea. (NK News)

Turkey’s sovereign fund allots at least $1 billion to boost stock-market heavyweights. (Bloomberg)

Uber’s Middle East business Careem suspends operations in Qatar. (Al Jazeera)

Syria’s President Assad hosts delegation from Arab States, suggesting relations are thawing. (Reuters)

Oman’s Abraj Energy Services signs deal with Saudi ArabiaKuwait, and Chevron. (AI Monitor)

Turkmenistan being pushed to follow Russia’s lead in gas games. (Radio Free Europe)

Hungarian PM’s party backs ratification of FinlandSweden NATO entry. (Reuters)

Serbia rules out signing EU plan over Kosovo’s UN membership. (Balkaninsight)

Albanian tax inspectors fine critical media outlets. (Balkaninsight)

Slovakia moving forward with biggest investment in green electricity. (Euractiv)

Argentina power-line fire sparks huge blackout amid heat wave. (Reuters)

Avatars are the latest tool in Venezuela’s disinformation campaign, experts say. (Washington Post)

Colombia cabinet shakeup reveals troubled state of Petro’s reform agenda. (FrontierView)

Chile deploys troops to border as backlash over immigration grows. (Bloomberg)

Haiti’s rural gangs threaten food production as hunger crisis looms. (Insight Crime)

Uruguayan February exports 8% less than same month last year. (Mercopress)

Brazil allows two Iranian warships to dock in Rio despite US pressure. (Reuters)

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