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

Africa

Ghana aims to transform economy through oil

Ghana broke ground on a $12 billion oil refinery this week that officials hope will make the country a larger player in global oil and gas markets.

The petroleum hub will have capacity to refine some 300,000 barrels a day, Reuters reports. That’s more than double the 132,000 daily barrels of crude that Ghana currently produces. Ghanaian President Nana Akufo-Addo said the hub, which will include plants that make products derived from oil, such as plastic, ”promises to be a cornerstone” of Ghana’s development.

• Senegal establishes commission to review oil and gas contracts (Reuters)

• Niger resumes oil exports through Benin (Bloomberg)

• Uganda expands oil exploration (Africanews) 

But some experts have expressed skepticism that Ghana’s project will be a regional game changer. It is being financed by a consortium including several firms based in China that Bright Simons, head of think tank IMANI Africa, described as missing a “bankable business plan.” It also faces local opposition for its potential for environmental harm.

Ethiopia ramps up restructuring efforts

Ethiopian officials this week accelerated their efforts to restructure an outstanding $1 billion international bond, Reuters reports, raising the prospect of a stand-off between investors and the government.

The dispute centers on the scale of Ethiopia’s cash crunch. Some bondholders view the country’s fundamentals positively despite a current liquidity crisis, preferring extended maturities to a haircut. Others, including the IMF, point to worrying signs about long-term solvency and favor a haircut.

Ethiopia began restructuring talks in 2021, with negotiations sputtering along until the country missed a $33 million coupon payment on the international bond last December, triggering a default. Ethiopia’s economic outlook began to look up a month ago, when the country floated its currency, unlocking billions in loans and grants from the IMF and World Bank.

$30mn data center opens in DRC

A data center backed by $30 million in funding from investors in the US and France opened in the Democratic Republic of Congo’s capital Kinshasa on Thursday. It is the largest data center in the country. 

The center, built by African firm Raxio Group, will join an increasing number of data centers on the continent, which is home to just 1% of global data center capacity, Bloomberg reports. In May, Raxio opened a data center in Mozambique, part of a $290 million push to build such infrastructure. The firm has also built data centers in Ethiopia and Uganda.

• Rwanda overtakes Kenya and Tanzania in cheap broadband internet race (Business Daily Africa) 

Africa has the world’s largest youth population, but not the internet infrastructure to keep up with a generation born into a world of generative AI chatbots. 

Asia

Sri Lanka eases visa rules to boost tourism

Sri Lanka will soon begin offering free tourist visas to visitors from 35 countries in an effort to boost tourism to the island nation. As part of a six-month pilot program, the government will offer 30-day visas to tourists from countries including China, India and the UK beginning October 1.

Tourism to Sri Lanka cratered in 2019 after terrorist bombings at churches and luxury hotels killed more than 260 people, including dozens of foreigners. The number of visitors sank lower still during the following year’s pandemic, and stayed low amid a political and economic crisis in 2022. 

Overall tourism to the island is now back to prepandemic levels. Almost two million people have visited the island this year, bringing in some $1.5 billion in revenue, Reuters reports. Tourism raised $875 million in revenue through this point last year, according to Sri Lanka’s central bank.

India and the UK have sent the most tourists to Sri Lanka so far this year, Business Standard reports. 

Pakistan’s government accused of slowing internet

Millions of Pakistanis faced an unexpected slowdown in internet speed this week, leading many to accuse the government of creating a national firewall. 

• Pakistan’s Internet ‘firewall aimed at crushing dissent’ upends livelihoods (Radio Free Europe)

The slowdown proved costly for many Pakistani businesses, which depend on internet connectivity for their livelihood. Internet speeds are 40% slower than normal, AP reports. A national software industry group warned that the deceleration could cost the Pakistani economy some $300 million, or about 1% of GDP.

Independent analysts and technology experts suggested the ongoing slowdown is due to government efforts to control, surveil, and censor the internet, the New York Times reports. The government has denied creating a firewall and instead attributed the slowdown to a broken deep-sea internet cable. 

Philippines and Thailand report mpox cases 

The Philippines and Thailand recorded cases of mpox this week, validating concerns over the deadly virus’ spread beyond its initial locus in Africa.

The Thai case is the first instance in Asia of a new, deadlier strain of mpox known as clade 1b, which has a fatality rate of 3.6%, according to the World Health Organization. It was recorded in a European traveler who arrived from Africa. The Philippines’ health minister said the case in his country was the less deadly clade 2 variant, which had a fatality rate of 0.1% in a European study.

The Asian cases mark the first spread of the disease since the WHO declared it a global emergency on August 14. The disease is thought to be deadlier in children, according to Africa’s Centers for Disease Control.

Middle East

Saudi Arabia’s SWF redirects investments to cover FDI shortfall

Saudi Arabia’s sovereign wealth fund the Public Investment Fund is reportedly slowing down international dealmaking in favor of domestic investments, the FT reports. Once considered a “cash cow” for bankers as it splurged on international investments, the PIF is now adding mandates for local investment and employment as it seeks to cover weaker-than-expected foreign investment for the Kingdom’s Vision2030 program.

Debt levels in the country have also surged as personal loans and real estate lending grew 12% annually since 2019, with public sector lending doubling since 2016, according to a Capital Economics update describing the phenomenon as a “slow burning risk.” The lending growth has affected the liabilities side of bank balance sheets, as domestic deposits have failed to rise in conjunction with the lending, causing banks to turn to wholesale international financing. 

Kuwait looks to Qatar to boost LNG supply as heatwave strains power grid

Kuwait is in talks with Qatar on a 15-year deal to buy three million metric tons of liquified natural gas per annum to meet rising energy demand, Reuters reports. An OPEC member and large oil producer, Kuwait intends to grow its gas production as part of a 2040 Development Master Plan, but it’s struggling with shortfalls in power-generation capacity.

Extreme heat in Kuwait, where temperatures rise above 50 degrees Celsius at certain times of the day, is driving massive spikes in air conditioning use that strain its power grid. The Ministry of Electricity has resorted to rolling power cuts of up to two hours to relieve pressure on the grid—an ironic first for the major energy producer.

Part of Kuwait’s long-term energy plan is to diversify away from overreliance on oil and gas and move to renewables including “green” hydrogen. This week, consultancy KBR was tapped to create a green hydrogen plan for Kuwait Oil Company, which includes deployment of wind and solar energy, and significant storage capacity.

Europe

Hungary urges Ukraine to greenlight Russian oil-sale loophole

Hungary is pressing Ukraine to approve a workaround that would allow continued imports of Russian oil, despite its difficuult diplomatic relationship with Kyiv, Politico reports. The proposed solution involves rebranding Russian oil from Lukoil as Hungarian MOL’s product before it crosses the Ukrainian border, effectively circumventing Kyiv’s recent sanctions on Lukoil and sustaining key energy supplies for the Hungarian economy. 

The situation underscores the continued dependence of countries in Central Europe such as Hungary and Slovakia on Russian imports. Fitch Ratings reports that in early 2024, Russia still accounted for 41% of Hungary’s oil imports and 82% of its natural gas, while Slovakia sourced 60% of its oil and 85% of its gas from Russia.

Despite an EU-wide embargo on Russian oil pipeline imports, these countries secured exemptions, highlighting the difficulties in rapidly transitioning away from established energy supply chains.

Latin America

Latin American nations explore boundaries of climate finance

From green bonds to nature swaps, nations in the Caribbean and South America are at the forefront of a movement to enlist finance in tackling climate change. This week Grenada added a new vector, becoming the first country to activate a “hurricane clause” in a $112 million bond, which suspended $12 million in interest payments following Hurricane Beryl, the FT reports.

Meanwhile, Suriname’s launch of sovereign carbon credits, leveraging its vast forest cover and recent oil discoveries, showcases an innovative approach to monetizing environmental assets and potentially offsetting the carbon footprint of its emerging oil industry.

The World Bank’s offer of two-year ‘disaster pauses’ on new loans to small economies and the IMF’s consideration of climate-linked bonds in debt sustainability analyses further underscore this shift. However, the limited adoption of such mechanisms in bond markets and the nascent state of the internationally transferred mitigation outcomes (ITMOs) market highlight the challenges in scaling these solutions.

Dominican Republic aims to capitalize on mineral deposits

The Dominican Republic is establishing a state-owned mining company to capitalize on its mineral resources and Western demand for rare-earth metals critical to defense and technology supply chains, Reuters reports.

The new company, Emidom, will have the authority to negotiate contracts with international firms and will manage the Avila mining reserve in Pedernales province, an area previously identified for potential rare-earth projects.

Emidom’s establishment comes as the country seeks to expand its mining sector beyond its existing operations, which include Barrick Gold’s Pueblo Viejo, the largest gold mine in the region. 

Nicaragua cracks down on NGOs

In a sweeping move that has sent shockwaves through Nicaragua’s civil society and business community, President Daniel Ortega’s government this week revoked the legal status of over 1,650 non-governmental organizations, CNN reports. The crackdown began with the closure of 1,500 primarily religious groups but has now extended to key trade organizations, including the American Chamber of Commerce and the umbrella organization for European countries’ chambers of commerce.

The government’s justification for these closures ranges from alleged failure to report financial statements to vague national security concerns. However, critics argue the move is part of a broader strategy to consolidate power and stifle dissent and heightens concern about the deteriorating business environment in Nicaragua.

• As repression in Nicaragua deepened, one DFI kept the money flowing (Washington Post)

• Venezuela passes “anti-NGO law” (Amnesty International)

This latest crackdown is part of a troubling trend that has seen the Ortega administration shut down over 5,000 NGOs, media outlets and private universities since June 2022. The United Nations has expressed “grave concern” over the human rights situation in the country, noting that at least 35 people have been arrested since March in what they describe as a “crackdown on civic space.”

Global

OPEC’s charity shifts focus to climate-change adaptation 

The OPEC Fund for International Development, a charity backed by some of the world’s largest oil producers, is shifting its focus from projects that increased oil and gas demand in developing nations, Politico reports. More than a third of the charity’s financial support so far this year—approximately $217 million—has been directed to projects helping low- and middle-income countries cope with climate-related challenges such as droughts, wildfires, floods and rising sea levels.

Between 2018 and 2021 the fund dedicated less than six percent of its loans and grants to climate resilience efforts and the abrupt shift in priorities has raised concerns that OPEC is looking to prolong global dependence on fossil fuels by helping vulnerable nations adapt to climate change rather than addressing the root cause.

What We’re Reading

Algeria to supply Lebanon with fuel for power stations (Reuters)

Investors eye Nigeria, Gabon, Kenya as U.S. signals rate cut (Bloomberg)

Ghana ditches foreign funding of cocoa, breaking 32-year-old tradition (Bloomberg)

South Sudan’s state-owned Nilepet to take over Petronas oil fields as multinationals flee (S&P Global)

How Ethiopia’s currency float and IMF deal are powering economic reform (The Africa Report)

Somalia threatens to suspend Ethiopian Airlines flights (Africanews)

Why Kenya is turning teachers into its next big export (Semafor)

Second-biggest diamond of all time discovered in Botswana (NYT)

Libya’s instability will worsen further without a unified government and elections, UN envoy says (AP)

Libya’s central bank suspends operations after kidnapping of official (Reuters)

Vietnam and China sign 14 deals as Hanoi’s new top leader visits Beijing (Reuters)

Myanmar households crippled as currency tumbles to record low (Reuters)

Scion of Thai political dynasty begins term as PM (Bangkok Post)

Southeast Asia solar boom at risk from US-China trade stress (Bloomberg)

Nepal asks China to forgive $216mn loan it used to build airport (Kathmandu Post)

Nepal lifts ban on TikTok (NYT)

Azerbaijan ‘formally applies to join BRICS’ (Bloomberg)

Putin’s Azerbaijan visit signals Russia’s waning influence in the South Caucasus (Radio Free Europe)

Kiribati’s pro-China government bars foreign officials from visiting until 2025, citing elections (AP)

Kuwaiti banking sector benefits from M&A increase (Fitch)

Oil tanker explosion claimed by Houthis threatens Red Sea pollution (FT)

Saudi Arabia to ‘reduce big spending on oil sector’ (Bloomberg)

Iran’s hard-line Parliament approves all members of President’s Cabinet, first time since 2001 (AP)

Iranians struggle to access crucial medicines as sanctions hit supplies (FT)

Iran’s South pars field—the world’s biggest gas reservoir—is at a tipping point (Oilprice.com)

Poland’s big bet on a new airport: After years of debate, new project seen as the next big thing in the country’s economic development (FT)

Consumption plunges in Argentina despite Milei’s optimism (Mercopress)

Argentina’s recession grinds on (Buenos Aires Times)

Argentine Senate passes pension spending increase in a blow to President Milei’s radical austerity (AP)

Opinion: Brazil and Mexico are playing a dangerous inflation game (Bloomberg)

Latin America sovereigns mostly off track for 2024 fiscal goals (Fitch Ratings)

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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