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

Africa

World Bank teams up with AfDB to provide 300 million Africans with electricity

The World Bank is collaborating with the African Development Bank to provide electricity for some 300 million people across the continent by 2030. Concessional lending will form a key part of the $35 billion project, which will provide electricity through “distributed renewable energy systems or the distribution grid,” the Banker reports. 

World Bank President Ajay Banga said that the initiative’s success will depend on supportive government policies, financing from other multilateral development banks, and the private sector. For the project to work, governments will need to establish the conditions for private investment while implementing tariffs that protect the poor, according to the bank.

Supplying electricity to half of the Africans currently without power will create billions in private sector investment opportunities, including $9 billion in distributed renewable energy alone, the bank added.

Analysis: Yearlong war in Sudan puts region on the brink

In April 2023, a power struggle between rival armed groups in Sudan escalated into outright war. The conflict’s expansion over the past year has created one of the world’s most dire humanitarian crises, with more than eight million people (about 16% of the population) displaced and double that number facing severe hunger.

While wealthy countries marked the anniversary by pledging more than $2 billion in aid to Sudan, they are by and large sitting on the sidelines while the war rages, with severe consequences for the Horn of Africa and the Sahel, where a band of coup states now stretches from the Atlantic to the Pacific. 

That’s not for lack of need. Beyond the devastating humanitarian situation, the war now threatens to spill across Sudan’s borders. In February, disrepair stemming from the war forced South Sudan to declare force majeure on its main oil export pipeline, which runs through Sudan. That could cause an “economic meltdown” in already-fragile South Sudan, the International Crisis Group think tank warned. 

Neighboring states including Chad, Ethiopia, and Eritrea could also become embroiled in the conflict, and a lasting power vacuum in Sudan could lay the foundation for jihadist extremism, which is becoming increasingly prevalent across the Sahel, and driving insecurity that lays the foundation for yet more coups. —Noah Berman

Nigeria recovers $29m in anti-fraud probe

Nigeria has recovered $28.9 million after an anti-corruption probe uncovered fraud at a government ministry tasked with reducing poverty, a spokesman for the government said on Monday. 

Nigeria has long struggled with entrenched corruption, and many Nigerians blame politicians for their financial distress. The country is one of Africa’s largest economies and its largest oil producer, but 39% of the population—87 million people—lives in poverty, according to the World Bank.

Demand for Egyptian bonds soars after series of bailouts

A February commitment from a UAE sovereign wealth fund to invest $35 billion in Egypt appears to have set off a chain reaction that is triggering a rush of investment in the country’s bonds, the FT reports. Yields on one-year Treasury bills fell from 32% to 26% this month as bond buyers bid $21 billion for the $2.4 billion in bills Cairo offered. 

It’s a far cry from the situation, just months ago, when investors viewed Egyptian debt as too risky, citing the country’s overvalued currency, weak foreign exchange reserves, and dim economic prospects amid the war in Gaza, FMN’s Noah Berman writes in CFR. 

In a recent analysis for FMN, Charlie Robertson, head of macro strategy at FIM partners argued that Egypt is now on a much more stable path. “It simply needs to stick to its fiscal plans, retain a competitive EGP, maintain the social peace and extend welcoming arms to foreign and domestic investors willing to invest in Egyptian assets,” he wrote.  

Asia 

Pakistan courts IMF for new loan program

With its current $3 billion bailout set to expire at the end of this month, Pakistan began conversations with the IMF this week to negotiate the contours of a new loan program. The South Asian nation is hoping to agree to new terms with the IMF in May, finance minister Muhammad Aurangzeb said on Thursday after a meeting with IMF Managing Director Kristalina Georgieva at the lender’s spring meetings. 

Islamabad is aiming to receive at least $6 billion from the fund, Reuters reports. A package of that size would make Pakistan, a heavily indebted economy that has teetered on the edge of crisis for the past several years, one of the IMF’s largest debtors. Pakistan has also sought help from Saudi Arabia. The kingdom’s foreign minister led a delegation to Pakistan on Monday, and last week Saudi Crown Prince Mohammed Bin Salman told Pakistan’s Prime Minister Shehbaz Sharif that Saudi Arabia would invest $5 billion in Pakistan, Pakistani officials said.

Investors responded with optimism about Pakistan’s economic prospects. On Friday, the country’s stock market closed for the weekend at an all-time high.

Indonesia strikes delicate balance between US and China

Indonesia’s president Joko Widodo (Jokowi) this week asked China to increase its investments in the Southeast Asian nation even as he requested that US tech giant Apple move some of its China-based production to Indonesia. Jokowi made the request at a meeting with Apple CEO Tim Cook, aiming to capitalize on the US’ drive to reduce production of high-tech goods in China, which has created an opening for states including Indonesia and Vietnam to win supply contracts from major US manufacturers. 

A day later, though, Jokowi was working to bolster his relations with China. On Thursday, he met Chinese foreign minister Wang Yi to request investment for a new capital city that is slated to open in August and to expand a China-constructed high-speed rail line, Nikkei reports.

Middle East

Heavy rains and flooding batter Oman, UAE, Bahrain and Qatar, killing 21

A storm bringing record rainfall hit the eastern part of the Arabian peninsula last Sunday, causing catastrophic flooding that killed at least 21 people and brought the region’s airports to a standstill, the New York Times reports. Oman was particularly hit badly, with some parts of the Sultanate receiving a year’s worth of rainfall overnight, causing dams to overflow and triggering landslides, per local media reports.

As of Saturday, works to drain floodwaters and repair damaged infrastructure were ongoing, as were search and rescue operations for still-missing persons in North Al Sharqiyah Governorate. In neighboring UAE, one person was reported killed and Dubai’s airport, the second busiest in the world, was closed and flights were intermittently canceled until as late as Thursday, the BBC reports. 

Jordan and Saudi Arabia face domestic backlash after helping Israel defend against Iranian missile barrage

Officials in Jordan are dealing with domestic criticism after it was reported that the country helped down Iranian drones and missiles targeting Israel, as part of a coalition that included the US and UK defending against the Iranian attack, the Guardian reports. Jordanian officials said the actions were taken in self-defense, citing that the Iranian projectiles were violating its airspace, but nonetheless drew accusations both at home and abroad that it was “propping up Israel.”

Jordan, which hosts a large population of Palestinians and is the custodian of Muslim holy sites in Jerusalem, especially the Al-Aqsa Mosque, has for years tried to balance a precarious position between supporting Palestinians and managing its relationship with neighboring Israel, with whom it closely collaborates on security.

The Wall Street Journal reported in detail on the close-collaboration between the US and Jordan and other Arab states, particularly Saudi Arabia, in sharing intelligence and coordinating in detecting and intercepting Iran’s attack. Saudi state-owned media outlet Arab News reported that sources in the Saudi government denied helping down any drones, but did not comment on the report of intelligence-sharing.

Saudi Arabia’s SWF looks to grow mining portfolio

Saudi Arabia’s Public Investment Fund is considering a $1 billion investment to acquire a minority stake in Barrick Gold Company’s Reko Diq project—a copper and gold mining operation in Pakistan—Bloomberg reports. The investment by the sovereign wealth fund could help Pakistan shore-up its critical foreign currency reserves, and follows a meeting between Saudi Arabia’s Crown Prince Mohammed bin Salman and Pakistan’s Prime Minister Shehbaz Sharif earlier this month.

Saudi Arabia’s PIF has been pouring investments into the mining and critical minerals sectors as part of its directive to diversify the economy away from overreliance on oil and gas by 2030, aggressively purchasing stakes in foreign projects and seeking to attract investment for domestic operations. Along with the expected investment in Pakistan, this week also saw reports of the PIF considering purchasing struggling Canadian First Quantum’s copper mines in Zambia. 

Europe

Ukraine seeks debt deal amid tricky restructuring environment

Ukraine is gearing up for a $20 billion debt restructuring, aiming to reach an agreement with its international bondholders by September, the FT reports. Bondholders have formed a creditor committee, a key step before commencing negotiations, in response to the Ukrainian government’s request.

The anticipated restructuring, which affects around one-fifth of Ukraine’s external debt and could include state-owned companies, is complicated by several factors, including disagreements among Western governments over Ukraine’s access to frozen Russian reserve assets for reconstruction. Many bondholders acknowledge the necessity of a restructuring this year but some investors argue that it would be challenging due to the uncertainty surrounding the war and the timing of promised international funding.

Further complicating matters, a group of bondholders led by a London-based hedge fund is pushing for Ukraine’s state grid operator, Ukrenergo, to be excluded from restructuring. Despite Russia’s intense attacks on Ukraine’s industrial base, many Ukrainian state and private companies have managed to keep creditors on their side through intricate deals to service some debts and extend others, setting a potential precedent for the current restructuring process.

Latin America 

Andean countries struggle with energy shortages

Ecuador and Colombia are facing severe electricity rationing as the El Niño weather pattern has led to droughts, depleting reservoirs and limiting output at hydroelectric plants. In Ecuador, power cuts have affected major cities including Quito, Cuenca and Guayaquil, forcing businesses to adapt and leading to allegations of sabotage by President Daniel Noboa.

Colombia has suspended electricity exports to Ecuador to conserve energy for domestic needs, as its own hydroelectric plants struggle to meet demand. A shortage of rainfall associated with El Niño is constraining production of hydropower, which can account for up to 80% of total electricity generation in normal conditions. The country’s fossil fuel power plants are operating near capacity limits in an effort to make up the shortfall. 

Colombia’s weather institute, IDEAM, forecasts increased rainfall in the coming months, which could help replenish water reservoirs. However, until this occurs, Colombia faces an elevated risk of energy rationing, and multinational corporations operating in the country should prepare their production strategies accordingly.

US to reimpose Venezuela sanctions amid elections backsliding

The US has decided not to renew an easing of sanctions on Venezuela’s oil and gas sector, citing President Nicolás Maduro’s failure to uphold commitments for free and fair elections. The decision comes six months after Washington granted sanctions relief to encourage Venezuela’s leaders to foster a more-open democracy.

The US State Department has since accused Maduro of preventing opposition candidates from registering, harassing political opponents, and unjustly detaining activists.

The reimposition of sanctions is expected to complicate Venezuela’s oil sales to global markets but will not completely halt them, HartEnergy reports. While the move could cause foreign income losses of around $3 billion and a 3.6% decrease in national income, according to consultancy Ecoanalítica, the US will still allow companies like Chevron to continue their joint ventures with Venezuela’s state-owned oil company PDVSA.

Costa Rica looks to boost trade with Middle East

Costa Rica signed a comprehensive economic partnership agreement (CEPA) with the UAE on Wednesday. The landmark deal is the first of its kind between Costa Rica and a Middle Eastern nation and is set to unlock a wide range of trade and investment opportunities in key sectors such as logistics, energy, aviation, tourism, and infrastructure development, the National reports.

The agreement aligns with Costa Rica’s strategic objective of expanding into new markets and is expected to boost private sector collaboration between the two countries.

Non-oil trade between the UAE and Costa Rica has been on an upward trajectory, exceeding $65 million in 2023, a 7% increase from the previous year and up 31% from 2021. The signing of this CEPA is expected to further accelerate bilateral trade and could help provide a bridge from the Gulf into Central America.

Global 

Investors pull billions from emerging markets amid geopolitical risks

Emerging-market stocks and currencies took a hit this week as the tit-for-tat attacks between Israel and Iran spooked investors. The Mexican peso, often considered a proxy for risk assets, suffered its largest drop in four years on reports of Iran’s attack on Israel, before paring losses as both countries played down the severity of the incident.

Elevated geopolitical risks contributed to a sharp fall in assets at fund manager Ashmore, which saw a $2.1 billion drop in assets under management in the first quarter. Local-currency bonds and corporate debt were among the hardest-hit asset classes.

Despite the challenges, Ashmore’s chief executive, Mark Coombs, expects emerging markets to outperform developed countries. He believes that developed-market central banks will continue to cut interest rates as inflation declines, encouraging investors to return to riskier assets in search of higher returns.

What We’re Reading

Somalia’s IMF program was ‘springboard for statebuilding’ (The Africa Report)

Kenya: The rise of Rutonomics (Africa Finance Review)

Kenya to debut $500 million sustainability-linked bond (Bloomberg)

Tanzania: Ratings boost risks debt spree that could strain economy (The Africa Report)

Zambia seeks $900 million as drought set to halve growth (Bloomberg)

OPEC eyes Namibia for possible membership as oil production looms (BusinessInsider Africa)

Nigeria sees record inflation in March (AfricaNews)

Nigeria’s government targets 60% revenue jump (Semafor)

Nigeria’s economy, once Africa’s biggest, slips to fourth place (Bloomberg)

Niger and China ‘sign crude oil MOU worth $400m’ (Reuters)

Ghana’s debt restructuring deal falters after IMF rebuff (FT)

Senegal’s new leader is breaking old ties amid economic reform push (Semafor)

For multinationals, Africa’s allure is fading (Bloomberg)

Vietnam mounts ‘unprecedented’ $24 billion rescue for bank engulfed in giant fraud (Reuters)

Philippines and New Zealand plan troop visits and logistics deals (Bloomberg)

Pakistan says it blocked social media platform X over ‘national security’ (Al Jazeera)

Kazakhstan’s compensation claims against Kashagan oil firms jump to $150b (Bloomberg)

Asian EM currencies come under pressure from strong dollar (FT)

Asia to drive 60% of global GDP growth in 2024, led by India: IMF (Nikkei)

Visitors to ASEAN hit 100m in 2023, 70% of pre-COVID level (Nikkei)

Microsoft invests $1.5b in UAE’s G42 in pivot from China (Bloomberg)

Oman LNG signs 10-year gas supply agreement with Turkey’s Botas Petroleum (Muscat Daily)

Oman LNG and Shell agree 10-year supply deal amid transition-led demand growth (EnergyConnects)

Saudi Arabia looking to launch a new airline with an Africa focus (Zawya)

Saudi Arabia’s Neom Hunts for More Cash for $1.5 Trillion Desert City (Bloomberg)

The UAE has set its sights on Africa’s critical minerals (World Politics Review)

Iran oil exports hit six-year high as West prepares sanctions (FT)

US and UK issue new sanctions on Iran in response to Tehran’s weekend attack on Israel (AP)

Qatar ‘reevaluating’ Hamas-Israel mediation role amid mounting criticism (Al Monitor)

Croatia plans gas pipelines and capability able to supply neighbors Hungary and Slovenia (Offshore Technology)

Moldova punches well above its weight in robotics (BalkanInsight)

Shell dashes Albanians’ hopes of major oil find (BalkanInsight)

Paraguay on track for record soy crop, but low river levels slow exports (Reuters)

Uruguayan shopping in Argentina dries up amid price rises (El Pais)

IMF says Argentina improving but results not expected this year (Mercopress)

Argentina applies for NATO global partnership (Mercopress)

We are committed to providing FMN readers with a free weekly digest of politically unbiased, succinct and clear news and information from frontier and small emerging markets.

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