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Welcome to the latest edition of Frontier Markets News. As always, I would love to hear from you at [email protected] with news ideas, feedback and anything else you find interesting. 

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

Africa

ECOWAS pushes for post-coup states to remain in bloc

The Economic Community of West African States (ECOWAS) this week launched an effort to persuade Burkina Faso, Mali and Niger to remain in the group, Reuters reports. The three junta-led countries early this year announced their intent to withdraw and form their own Alliance of the Sahel States after ECOWAS urged them to return to democratic rule. 

Their exit date, originally set for January 29, will now be pushed to July, but it is unlikely that any of the three rulers will be persuaded to stay, the BBC reports. The trio did announce, however, that travel within their borders would remain visa-free for ECOWAS member citizens after their departure, assuaging concerns that freedom of movement and trade would be hindered. 

Ethiopia greenlights foreign banking law 

The Ethiopian parliament approved a rule this week that will allow foreign banks to operate in the country’s financial sector as part of a push to attract more external investment. The move is part of a long-standing effort to open the country’s tightly controlled economy to outsiders.

• Amhara Bank urges local banks to merge amid foreign banks’ entry (Addis Insight) 

Despite Ethiopia’s being one of the continent’s biggest economies, its two-year civil war, sluggish economic reform efforts and currency challenges have dissuaded investors from entering the market. The opening of Ethiopia’s banking industry marks a significant shift, but critics say it doesn’t create enough room for foreign actors.

The new legislation allows foreign banks to establish subsidiaries, open branches or representative offices, and acquire shares in existing local banks. However, it caps foreign strategic investors’ ownership at 40% for any local banks, and the total foreign ownership can’t make up more than 49% of any bank. 

Ghana court clears way for anti-LGBTQ+ law

The Supreme Court in Ghana voted unanimously to dismiss two legal challenges to an anti-LGBTQ+ bill passed in February by the country’s parliament. The bill includes sanctions against LGBTQ+ people including a three-year sentence for anyone identifying as such and five years for anyone involved with forming or funding LGBTQ+ organizations.

Considered one of the continent’s most draconian laws in a landscape of limited rights for the LGBTQ+ population, the bill has been widely condemned by the international community. Ghana’s finance ministry has cautioned that stamping this bill into law will imperil $3.8 billion in World Bank financing and another $3 billion from the IMF over the next five years; the World Bank froze funding to Uganda for a similarly harsh anti-LGBTQ+ bill last year. 

Outgoing President Nana Akufo-Addo has not yet publicly said whether he will sign the bill before he steps down at the end of his term in January. Incoming leader John Mahama has expressed support for it.

Asia

Bangladesh’s former PM ‘orchestrated mass disappearances’

A commission organized by Bangladesh’s interim government this week found that exiled former prime minister Sheikh Hasina and her senior officials had orchestrated a campaign of mass disappearances and torture, the New York Times reports. Mass protests that turned deadly after being met with lethal police response helped oust Hasina over the summer. 

But in addition to holding Hasina’s regime accountable for 15 years of authoritarian rule, the new government, led by Nobel Prize-winning economist Muhammad Yunus, has also found itself adopting some of her repressive tendencies, the Wall Street Journal reports. Among incidents that are raising concern are the withdrawal of press credentials for dozens of journalists and investigations into others over allegations of abetting crimes committed by the Hasina administration.

In a preliminary report, the commission set up by Bangladesh’s interim government to investigate the mass disappearances said it had received more than 1,600 reports of enforced disappearances. The commission estimates the actual number of victims could be as many as three times that.

Vietnam slashes spending and cuts government jobs

Vietnam is lining up one of its largest bureaucratic cuts in decades, Reuters reports. The country is planning to eliminate five government ministries, four state agencies and five state-run TV channels, purging several thousand federal employees in the process.

Investors in the fast-growing economy are concerned that friction caused by the cuts could delay projects in the short-term. The government, however, says the cuts will streamline the nation’s bureaucracy, potentially easing investment. 

• US firms could help build up Vietnam armed forces amid China disputes (Newsweek)

Companies based in the US and Europe have increasingly moved production to Vietnam over the past few years in a bid to diversify their supply chains away from China. On Friday, the country’s Ministry of Industry and Trade reported that exports during the first 11 months of 2024 had grown 14% year-over-year.

Middle East

Syria’s rebels promise to build inclusive government as Turkey offers support

Some of Syria’s most powerful rebel leaders this week publicly committed to building an inclusive, non-sectarian government following the collapse of the Assad regime. Hadi al-Bahra, head of the Syrian National Coalition, and Ahmed al-Sharaa, also known by his nom du guerre Abu Mohammad al-Jolani, the leader of HTS, considered the most powerful faction among the rebels, both expressed support for a peaceful transition to a constitutional government, the BBC and Reuters report.

• Israel continues to build buffer zone in Syria (WSJ)

Turkey’s President Recep Tayyip Erdoğan on Friday said his country would provide Syria economic and security support, directly engage in humanitarian and reconstruction efforts, and help draft a new constitution, Middle East Eye reports. Erdoğan also said Turkey was already working with HTS on the project, suggesting he is keen to fill a security vacuum created by Assad’s downfall—and Iran’s abrupt withdrawal from Syria.

As well as pulling back its military from Syria, Iran has halted oil flows to the country, causing Syrian refineries to shut down. Iran is also pressing its claim over an alleged $50 billion debt—teeing up a potential fight over odious debt and successor state doctrine similar to the one following the collapse of Saddam Hussein’s regime in Iraq.

Europe

Eastern European right-wingers undermine EU coherence on CIS instability 

Hungary and Slovakia this week blocked the EU’s efforts to sanction officials in Georgia over recent violent crackdowns on pro-Western protesters, Radio Free Europe reports. The move by the two populist, pro-Russian governments prevented the implementation of visa bans and asset freezes against Georgian leaders, highlighting growing divisions within the bloc over its response to political instability in the Commonwealth of Independent States region.

Despite the setback, EU foreign ministers advanced plans to suspend visa liberalization for Georgian diplomatic passport holders, leveraging a majority voting mechanism that bypasses the need for unanimous consent.

The development comes as Western leaders are expressing mounting concern over the Georgian Dream-led government’s authoritarian drift and pro-Russia tilt. The US has already implemented visa restrictions and promised additional sanctions, and the EU had previously frozen more than €100 million in funding to Georgia and halted accession talks with Tbilisi.

Private military involvement in Romanian elections raises concerns of broader destabilization

Controversy over Romania’s recent first-round presidential vote grew this week after far-right presidential frontrunner Călin Georgescu was found to have met a group of armed men led by a mercenary leader, Romania Insider reports. The incident, occurring after Romania’s constitutional court took the unprecedented step of canceling the presidential run-off due to alleged Russian interference, has exposed concerning connections between domestic far-right politicians and private military contractors with international operations.

The mercenary leader Horațiu Potra, a former French Foreign Legion member who bears a striking resemblance to late Wagner Group leader Yevgeny Prigozhin, has built a significant private military operation in Africa, particularly in the Democratic Republic of Congo, where his “Romeos” contingent has grown to 900 troops. Despite denying links to Russian mercenary groups, Potra’s organization has operated in countries with a strong Wagner presence, including Central African Republic, the FT reported.

The developments have alarmed Western allies and domestic security experts, who warn that paramilitary groups blending ultranationalism with Orthodox religious elements could mobilize larger networks within Romania. 

Latin America

El Salvador secures IMF deal, but crime crackdown has yet to deliver strong growth

El Salvador’s dramatic transformation from murder capital to tourist destination under President Nayib Bukele has yielded mixed economic results, Bloomberg reports. While the nation’s 96% reduction in homicide rates has helped catalyze a housing boom and a surge in tourism, broader economic growth continues to lag behind regional peers Guatemala, Nicaragua and Honduras.

The economy is benefitting from infrastructure improvements, including port expansions and a new airport, and recent sovereign-rating upgrades, but analysts note that a weak education system, low investment levels and existing infrastructure deficits are hampering El Salvador’s growth. The IMF expects the economy to have expanded by 3% this year, which is below regional benchmarks.

This week, Bukele’s crime crackdown and an agreement to scale back his controversial experiment establishing bitcoin as legal tender, helped the country snag a $1.4 billion loan from the IMF, the WSJ reports. The agreement comes as El Salvador’s dollar bonds are rallying following Donald Trump’s election victory, although concerns persist about the impact of potential US deportations on the remittance-dependent economy, where transfers account for over one-fifth of GDP.

Argentina considers currency liberalization as economy exists recession

Harsh spending cuts and a whirlwind of deregulation have helped Argentina’s government transform the country’s economic fortunes, the FT reports. In a milestone development, the economy exited recession in the third quarter, expanding 3.9% quarter-on-quarter.

The rebound, marked by strengthening consumer spending and capital investment, has boosted investor confidence, with Argentina’s sovereign bond spreads narrowing to 677 basis points from over 2,000 when President Javier Milei took office a year ago. But despite the positive momentum, which has prompted JPMorgan to forecast 5.2% growth in 2025, the administration faces a critical challenge in dismantling the country’s complex web of capital and currency controls.

Policymakers are now considering implementing a “dirty float” exchange rate regime in 2025, with Central Bank director Federico Furiase indicating that Argentina needs to maintain limited currency volatility as it continues to liberalize its currency. Enacting the plan will be challenging as it will require the recapitalization of the country’s central bank and a reduction in peso-denominated Treasury debt. 

Guest post

Argentina’s bet on itself pays off for investors

CHANGE Global Investment’s Thea Jamison explains how Argentina’s comeback is unfolding and why investors should be paying attention. 

What We’re Reading 

Peace talks between DRC and Rwanda canceled, clashes break out (The Africa Report)

DRC files criminal complaints against Apple (BBC) 

Ghana’s president-elect plans to reform cocoa sector, restructure regulator (Reuters)

Chad’s electoral commission asks for military help to secure December 29 vote (VOA) 

Namibia probes China’s Xinfeng for suspected illegal mining (Bloomberg)  

Sensitive data leaked after Namibia telco ransomware hack (BBC)

Skirmish between armed groups in Libya shuts down major oil refinery (VOA)

US banks fill gap in Africa left by European lenders (The Africa Report)

Sri Lanka’s president chooses India for first overseas trip (Foreign Policy)

US sanctions on Pakistan’s aerospace, defence for continuing of long-range missiles (Indian Express)

US Navy ship docks in China-aligned Cambodia for first time in eight years (AP)
ASEAN pushes Myanmar junta to hold elections at Thailand-hosted meetings (Bangkok Post)

Malaysia launches first domestic EV (Fortune)

Malaysia tightens grip on internet, in blow to online freedom (Rest of World)

Vietnam’s largest EV company launches taxis in Indonesia (Nikkei)

Earthquake rocks Vanuatu (CNN)

Oman Investment Authority acquires stake in Elon Musk’s XAI company (Reuters)

EU nears migration deals with Jordan and Morocco (FT)

Iran Shuts Down Government Offices, Schools Amid Freezing Temperatures, Gas Shortages (Radio Free Europe)

Global law firms rush to cash in on $150bn Gulf deals boom (Bloomberg)

Fear and economic uncertainty weaken Russia’s pull for Central Asian migrants (Radio Free Europe)

Botched Belt and Road project triggers political crisis in Serbia (Nikkei)

Eastern Europe sidesteps global shift toward monetary easing (Bloomberg)

Cuba projects 1% growth in 2025 after dismal year, economy minister says (Reuters)

Colombia seeks renegotiation of investment treaty with the UK (FT)

As Bolivia’s big state economic model slowly implodes, fear of ‘total crisis’ (Reuters)

Chile seeks to boost investment with ‘national data centers’ plan (Government of Chile)

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