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

Africa

Security forces kill at least 20 as mass protests in Nigeria turn deadly

Protests escalated across Nigeria this week, with demonstrators calling on President Bola Tinubu to reverse economic reforms that they say have worsened a cost of living crisis.

The protesters called on Tinubu to fully reinstate a gasoline subsidy, which kept fuel prices low in a country where 40% of people live below the international poverty line, according to the World Bank. Last year Tinubu erased the subsidy, which was costing the cash-strapped government around $4 billion a year, before partially reinstating it in March. Despite these moves, inflation remains near a 30-year high, and the country’s currency, the naira, is close to record lows.

Security forces this week fired live ammunition to disperse the protesters, and more than 20 people have been killed, according to rights group Amnesty International. The demonstrations have drawn inspiration from Kenya, where protests against an unpopular tax bill led President William Ruto to shelve the legislation and sack most of his cabinet.

Mali and Niger, both home to Russian mercenaries, sever diplomatic ties with Ukraine

Ruling military juntas in Mali and Niger each cut ties with Ukraine this week after Mali accused Ukraine of supporting a July attack on its troops.

Mali cited comments by a Ukrainian military spokesman as justification for the break. After a Tuareg rebel group killed more than 100 Malian soldiers and Russian mercenaries last month, the spokesman said the rebels had received the “information they needed,” BBC reports. Mali’s junta said in a statement on X that Ukraine was supporting “international terrorism.” Ukraine denied involvement in the attack, VOA reports.

• Ukrainian foreign minister tours Malawi, Mauritius, and Zambia (DW)

On Tuesday, Niger followed suit. A government spokesman said the decision was made in “solidarity” with Mali, FT reports. 

Russian military contractors have recently gained a foothold in both countries, where Western influence has receded. Moscow’s mercenaries have been entrenched in Mali since 2022, a year after the current junta seized power in a coup, according to the Center for Strategic and International Studies. Troops affiliated with Russia’s African Corps—viewed as the successor to the Wagner Group—arrived in Niger in April.

Mali kicked out French troops in 2022 and told French UN Peacekeepers to leave last year. On Monday, the US military turned over its last base in Niger to local forces.

US approves $424mn in aid for DRC

The US will provide $414 million in humanitarian aid and an additional $10 million in health assistance to the Democratic Republic of the Congo, the US Agency for International Development announced on Wednesday.

• UN agency raises just 20% of needed southern Africa drought aid (Reuters)

The funding will go toward US-partnered NGOs and UN agencies to support programs aimed at bolstering access to food, water, and shelter in the conflict-addled country. Nearly 7 million people in the DRC have been displaced as of last October, according to the UN. A resurgent crisis in the country’s east has made matters worse, as the army battles Rwanda-backed M23 rebels, RFI reports.

The US will also send the DRC 50,000 vaccines against mpox—formerly known as monkeypox—as part of the assistance, which brings the total US aid to the country this fiscal year to $838 million, according to USAID. The DRC is home to 96% of reported cases and deaths in the worsening African mpox outbreak, AP reports.

Asia

Bangladesh appoints Yunus as interim leader after PM flees

The resolve of student-led protests in Bangladesh proved sturdier this week than that of the country’s leader. Succumbing to pressure, Prime Minister Sheikh Hasina resigned on Monday and fled to India, AP reports. Three days later, President Mohammed Shahabuddin swore in exiled Nobel laureate Muhammad Yunus as leader of a new caretaker government.

Police and soldiers killed hundreds of demonstrators, but the violence hardened their resolve, and what began as protests against a government jobs quota soon turned into calls for Hasina’s resignation. 

Hasina had withstood waves of protests in her 20 years as prime minister, but she became increasingly autocratic as she ruled, undermining the political legitimacy of her regime. In 2016, her government hanged leaders of an Islamist opposition party, and in 2018 she jailed her predecessor.

When protests erupted against the job quota last month, Hasina’s mountain of political opponents joined in, the Hindu reports.

As Vietnam picks new leader, US denies it ‘market economy’ status

In a week during which Vietnam confirmed a new top leader, the country’s economic ambitions were dealt a setback by the US.

Vietnam elevated President To Lam to general-secretary of the country’s Communist Party last weekend. Lam is best known for leading an anticorruption campaign that brought down several business leaders and government officials, the New York Times reports. He will lead the country until at least 2026, when the party will determine its leadership for the next five years.

The day after Lam’s selection was announced, the US rejected Vietnam’s bid for “market economy” status, which would have reduced tariffs on its exports to America. Vietnam will stay a “non-market economy,” a label the US applies to countries that manipulate their currencies or otherwise intervene in trade.  

Cambodia begins construction on China-funded canal

Cambodia has started building a canal that will link the capital Phnom Penh to the Gulf of Thailand. China Road and Bridge Corporation, a subsidiary of a state-owned company, is financing a little less than half of the project, which is expected to cost $1.7 billion and run for more than 100 miles. Cambodia will finance the remainder.

The project is expected to lower the cost of shipping and reduce Cambodia’s reliance on ports in Vietnam, AP reports. It has also raised attention to the scale of China’s investments in Cambodia, which include airports, highways, casinos, and loads of other infrastructure.

A China-built pier at a Cambodian military base on the Gulf of Thailand has been a source of particular consternation for US officials, who fear it could become a Chinese naval base, the New York Times reports.

Middle East 

Pressure grows on Iran to back down from Israel attack threat

A week after threatening retaliation for the assassination of Hamas leader Ismail Haniyeh in Tehran, Iran is being pressured on multiple fronts to back down from escalation. The US has bolstered its military presence in the region and has warned Iran that a serious attack on Israel would result in “serious risk of consequences for Iran’s economy and the stability of its newly elected government.”

Iran’s allies are also weighing in. Russian President Vladimir Putin is reported to have asked the Supreme Leader Ayatollah Ali Khamenei via official channels for a restrained response. However, the two allies continue to trade arms, as anonymous IRGC officials confirmed to the New York Times that discussions on delivering air defense systems are on the table, and Russia is said to be due to receive a shipment of Iranian-made ballistic missiles soon.

Regional players including Saudi Arabia and Jordan are threading a delicate needle, condemning the killing as a violation of national sovereignty via channels such as the Organization of Islamic Cooperation on the one hand, and joining the US in cautioning restraint on the other. Iranian opposition media outlets like Iran International have published as yet unverified reports that newly-elected President Masoud Pezeshkian is also counseling Khamenei for restraint. 

Flight cancellations disrupt Middle East tourism industry

Airlines are hurrying to respond to the sudden risk of escalation in the Middle East, as Iran’s threats of an imminent direct attack on Israel force flight cancellations. Flights to Iran, Israel, Lebanon, and Jordan by a range of US, EU, and regional carriers are being canceled this week as the region’s governments close their own airspace in anticipation of drone and missile attacks, and airlines are told to avoid flying certain routes. 

Anecdotal reports gathered by FMN staff suggest travelers are finding themselves stuck in regional airports with short-notice of flight cancellations and scarce guidance on when regular flights will resume. 

Jordan’s tourism sector is already feeling the pain, having declined 4.9% in the first half of 2024. It’s likely to fall further if tensions between Iran and Israel escalate into direct open conflict.

Europe 

Romanian economy glides to a soft landing 

Romania is demonstrating a quiet resilience as policymakers have achieved a delicate balance between sustained growth and inflationary pressures. Consumer spending and wages have grown strongly, with retail sales booming 7% in 2024 and real wage growth for the last 18 months. 

Despite such strength, inflation has continued to fall, dropping below 5% in June, its fifth consecutive monthly decrease. The downward trajectory allowed the central bank to cut interest rates in July for the first time after a multi-year tightening cycle. With 2024 GDP growth expected to come in at nearly 3%—the highest in Central and Eastern Europe and the second highest in the EU—Romania appears to have stuck its soft landing. 

While the country has received less attention compared to Poland and Ukraine, it holds nearly 6% of wealth in the region and is expected to generate over 60,000 high-net-worth individuals over the coming five years, according to BCG’s 2024 Global Wealth Report. Such wealth creation outpaces both regional and global averages and should be a boon to consumer spending which accounted for 62% of economic activity in 2023.

Money managers flood Turkey with $30bn wave of investment

Despite the domestic pain caused by Turkey’s return to orthodoxy—which FMN has recently covered—economic reforms have prompted a $30 billion surge investment since May, Bloomberg reports. The influx has pushed foreign ownership of Turkish stocks and bonds to a five-year high, as major asset managers such as Amundi, Abrdn and Vanguard build up their positions.

Turkey’s consistent effort to enact difficult reforms and its clear communications has won over even investors skeptical about the long-term sustainability of the recovery. 

While the lira shows signs of stability and local markets outperform global peers, some analysts warn of potential pitfalls, including geopolitical risks that could reverse inflows. Nevertheless, the party is too attractive to miss out on. According to Simon Quijano-Evans, chief economist at Gemcorp Capital Management, Turkey is now “the number one topic” for emerging-market investors.

Latin America

Panama moves to create local bond market

Panama’s finance ministry received approval to raise up to $9 billion in debt, a major step towards deepening its local bond market to diversify funding sources, Latin Finance reports. The authorization includes the issuance of up to $6 billion in local-currency bonds with maturities ranging from two to 10 years, alongside the ability to secure $3 billion in loans from domestic and international banks. 

The government is planning a phased approach to local bond issuance, aiming for responsiveness to seasonal demand. This initiative follows Panama’s $3.1 billion global bond sale—its largest ever—in January, and underscores both its rising borrowing needs and its desire to reduce its reliance on global markets in the face of international volatility and domestic macroeconomic challenges. 

Chilean industry undermined by cheap Chinese imports

Chile’s sole steel mill will cease operations in September due to competition from Chinese imports, despite the recent imposition of tariffs on imports, the FT reports. CAP, the mill’s operator, says it lost more than $500 million over two years.

The planned closure, which threatens 20,000 jobs and will disrupt the steel supply to Chile’s vital copper industry, reflects a broader balancing act Latin American economies face amid surging Chinese exports. China is Chile’s largest trading partner and supplied Chile with a record 10 million tons of steel in 2023, a 44% increase from 2022 which has undercut the economics of domestic production. 

The Chilean government criticized CAP’s decision as “irresponsible,” arguing the company failed to leverage protective tariffs effectively. But while the government blames the producer, Beijing’s excess capacity of refined products threatens to drag many of its EM trading partners back down the value chain.

What We’re Reading 

Ghana opens first gold refinery (The Africa Report)

US jury convicts former Mozambique finance minister for ‘tuna bonds’ fraud (WSJ)

Libya’s biggest oil field halts production (Bloomberg)

Island nations top Egypt as best African investment destinations (Bloomberg)

Conflicts worldwide crimp African diaspora remittances (The Africa Report)

African central banks step in to prop up slumping currencies (Bloomberg)

TotalEnergies joins exodus from Pakistan (Reuters)

Japan and Mongolia to agree on defense equipment cooperation (Nikkei)

Myanmar businesses flood Thailand to follow fleeing customer base (Nikkei)

Hyundai to make $28mn EV investment in Thailand (Reuters)

Thai court disbands country’s most popular party (NYT)

Chinese company BTR opens $500mn anode plant in Indonesia (Bloomberg)

Malaysian ringgit hits 16-month high (Nikkei)

Saudi Aramco to pay out $124 billion as it says oil demand underestimated (FT)

Central Bank of Oman reports rise in short-term risk for Oman’s financial system (Zawya)

Bahrain’s Q1 real GDP ‘up 3.3% year-on-year’ (Reuters)

BP and Iraq agree to explore redevelopment of oil fields in Kurdistan Region (BP Press Release)

Iran’s oil exports skyrocket in July, shattering previous records (Lloyds List)

Hungary faces reality check with disappointing H1 growth (ING)

China stands by Venezuela’s Maduro to safeguard its investments (Voice of America)

Natural gas shortages loom for Colombia (FrontierView)

Rift grows in US-Colombia relationship (Americas Quarterly)

Bolivia’s president promises public votes on fuel subsidies and constitutionality of reelection (AP)

Dominican Republic seeks constitutional changes to keep dictators in check (Bloomberg)

Latin America aging more quickly and growing more slowly than expected (Bloomberg Opinion)

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.

Please consider becoming a paid supporter to help cover some of our costs and support our continued development of sharp markets-focused coverage and new informational products. Paid subscribers will also gain exclusive access to our quarterly EM/FM report that aggregates EM insights from 25 major banks, international institutions and consultancies.