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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

Police crack down on Kenyan gender-based violence protest

Demonstrators took to the streets of Nairobi this week to demand the government do more to tackle an alarming spike in femicide in recent months, the New York Times reports. Police used teargas to break up what were peaceful marches and detained at least three people in a strategy that echoed the heavy-handed response to antigovernment protests in June and July.   

Gender-based violence is growing in Kenya. Police and human rights groups say at least 97 women were murdered between August and October. Last month, President William Ruto pledged $770,000 toward ending femicide and protecting victims, which activists say falls far short of the need.  

Protesters are calling for Ruto to declare a national crisis over the issue, and for laws that make gender-motivated killing a specific crime with harsh penalties. 

Kenya was among several African countries to be elected to the UN Human Rights council in October.

Syria upheaval jeopardizes Russia’s access to Africa

Russia’s strategic gateway to African countries through Syria is at risk in the wake of the sudden ouster of President Bashar al-Assad’s regime, the Telegraph reports. Moscow has had strong ties with Syria and its military bases there were crucial in helping Assad to remain in power, but analysts expect the country’s new leaders will be unlikely to continue the relationship.

As well as allowing the Kremlin to project its military power in the Mediterranean the bases have served as a critical access point to Russian operations in Africa. Without the Tartus naval base in Syria, analysts say it will become much more difficult for it to resupply and support the estimated 20,000 Russian mercenaries operating in African countries.

Russia’s lack of action in Assad’s fall has also tarnished Vladimir Putin’s image among Africa leaders, to whom he had been presenting himself as a reliable ally. According to the Washington Post it sent a message to potential African partners that Russia has “lost interest“ in those it claims are in its circle as it is consumed with its war against Ukraine. 

Tinubu overhauls tax system to fight corruption and cut costs

Nigeria’s President Bola Tinubu plans to create a single national agency to collect taxes in an effort to reduce costs and corruption and increase transparency, according to The Africa Report.  

Currently, 63 agencies have been collecting revenue on behalf of the government, often taking a collection fee before turning the remainder over to the common pool. Under Tinubu’s proposal, the new Nigerian Revenue Service (NRS) would collect all of the government revenue, although he didn’t detail how much money the move would save.  

The Federal Inland Revenue Service (FIRS), which is currently in charge of gathering national taxes, will also be scrapped and folded into the NRS in the push for tax reforms. Tinubu hopes that the more transparent NRS system will enhance taxpayer compliance and avoid costly evasion. The NRS would likely have more power than any other Nigerian agency in history, however, prompting concern that it could provide more opportunities for corruption.  

Asia

Myanmar rebels capture border with Bangladesh

Ethnic rebels in Myanmar seized control of the country’s 170-mile border with Bangladesh this week in one of the bloodiest battles yet of the country’s three-year civil war. Rebels now control an entire border for the first time since the military seized power in a coup in 2021, the BBC reports.

The Arakan Army’s advance in northern Rakhine State marks a major setback for Myanmar’s army, which has been pushed back to the local capital. The rebel group could soon become the first to control an entire state.

• Myanmar’s crisis-torn economy to contract further, World Bank warns (Nikkei)

The advance of the Arakan Army, a Buddhist Rakhine group, has raised concerns among the state’s large Muslim Rohingya population, which some Rakhine regard as imposters from Bangladesh. After the Arakan Army took the town of Buthidaung in May, up to 200,000 Rohingya were displaced, CNN reports.

Bangladeshi protestors head toward Indian border as relations deteriorate

Thousands of people gathered in Bangladesh’s capital of Dhaka on Wednesday and began a march toward the Indian border, protesting an attack on a Bangladeshi diplomatic mission in India and the reported burning of Bangladeshi flags in Kolkata.

The demonstrations in Bangladesh followed smaller protests on Tuesday in New Delhi by Indians who called for an end to alleged attacks against Hindus across the border, AP reports.

As their citizens took to the streets, high level officials from both countries met in Dhaka in an attempt to lower the temperature, Nikkei reports. Tensions have been hot since student-led protests drove Bangladesh’s former Prime Minister Sheikh Hasina into exile in India over the summer. 

Nauru and Papua New Guinea secure aid deals from China-wary Australia

Two South Pacific countries secured half a billion dollars from Australia this week in deals that will give the largest country in the region more oversight into the Pacific states’ security partners. 

The bonanza began on Monday, when the tiny island nation of Nauru signed an arrangement that will net the island $90 million— almost 60% of the island’s GDP—in budget and security assistance over five years. In exchange, Nauru will give Australia a say in any deal that it signs with a partner in strategic sectors, including banking, ports, and telecommunications.

• Tongan prime minister resigns ahead of no confidence vote (AP)

Three days later, Australia and Papua New Guinea announced that Canberra would give its closest neighbor almost $400 million to start a rugby team that will play in Australia’s national league. Australia will retain the right to pull the funding if Papua New Guinea rejects Australia as its preferred security partner, the Washington Post reports. 

Middle East

Collapse of Assad regime in Syria triggers geopolitical reshuffle

The sudden collapse of Bashar al Assad’s regime in Syria last week, which ended nearly 50 years of strongman rule by the Assad family, has created an unexpected power vacuum that will reshape the political chessboard of the Middle East, the WSJ reports. Assad’s main political allies have seen their influence reduced, as Russia closes bases and withdraws its military, and Iran evacuates thousands of its citizens after its diplomatic and military facilities were overrun.

The finger pointing has already begun in Iran, which had spent decades building and supporting Assad’s regime as the lynchpin for Iranian power in the region. Israel has already capitalized on the situation, taking advantage of the chaos to destroy Syria’s air force, air defenses and armories with air strikes. It has also expanded its buffer zone on the border in the contested Golan Heights, a move that was denounced by Saudi Arabia and the rest of the Arab League.

• Syria’s acting finance minister pushes plan to revive war-torn economy (FT) 

The biggest winner by far is Turkey, which is reaping the benefits of having its own proxy rebel forces take the lion’s share of Syrian territory. The rebels’ victory clears the way for the return of some four million Syrian refugees from the Turkish border, and guarantees Ankara’s place as the primary power broker in the reconstruction of a new Syria. Shares of Turkish construction and materials companies rallied on the news, and the Turkish lira, already one of this year’s best performing EM currencies, continued its rally. 

Lebanon’s defaulted bonds surge following Syria upheaval

Investors’ expectations that the collapse of the Assad regime in Syria will help speed neighboring Lebanon’s economic recovery helped double the price of defaulted Lebanese bonds this week. Specialist sovereign debt hedge funds and other highly risk-tolerant investors began buying into the bonds earlier this autumn in the hope that Israel’s campaign against Hezbollah could clear the way for Lebanon to resolve a political impasse that has hobbled its economy.

Israel’s compliance this week with the first phase of a US-brokered ceasefire deal has further reinforced cautious optimism. France and Saudi Arabia have since called for a new round of elections in Lebanon to resolve the political impasse by selecting a president, which has been impossible due to Hezbollah’s politicking since 2022.

Iran’s president and parliament face off over hijab enforcement laws

Iranian President Masoud Pezeshkian, who promised during his election campaign to loosen morality laws and relax enforcement policies, is facing a rift with the country’s conservative-hardliner dominated parliament over proposed strict new hijab regulations, the FT reports.

The new laws, which would tighten enforcement of the dress code for women and increase penalties for non-compliance, are deeply unpopular, and come at a time when Pezeshkian is under fire from his base for failing to follow through on his campaign pledges.

Adding to the pressure on Pezeshkian are rising fuel costs, dissatisfaction with his administration’s handling of a growing energy crisis, and discontent over a surge in executions of political prisoners, the Guardian reports.

Europe

Moldova declares state of emergency as Russian weaponizes gas flows 

Moldova’s parliament has enacted a 60-day state of emergency amid escalating tensions over Russian gas supplies, Offshore Technology reports. The move is partly in response to Ukraine’s decision not to renew its transit contract with Gazprom, which threatens to cut off vital energy flows from January 1, 2025.

• Hungary turns itself into a hub for Russian gas (BalkanInsight)

• Austria’s OMV terminates Gazprom contract (Energy Intelligence)

Moldova’s Prime Minister Dorin Recean has accused Moscow of “gas blackmail” and attempting to destabilize the country through energy leverage. While Moldova has proposed alternative supply routes via the TurkStream pipeline through Turkey, Bulgaria and Romania, Gazprom has tied any new delivery arrangements to the settlement of a disputed $709 million debt for past supplies.

Romania and Bulgaria gain free movement in the EU

Romania and Bulgaria have secured full membership in the EU’s Schengen free-travel zone effective January 1, following Austria’s decision to lift its long-standing veto over migration concerns, Politico reports. The breakthrough agreement, which builds on the partial air and maritime access granted in March, marks the completion of both countries’ integration into Europe’s borderless travel area, ending years of exclusion that had persisted since their 2007 EU accession.  

Latin America

El Salvador agrees to rein in crypto to secure IMF deal

El Salvador’s pioneering embrace of bitcoin as legal tender is set for a significant rollback, the FT reports. President Nayib Bukele’s government is poised to make cryptocurrency acceptance voluntary for businesses, abandoning its landmark 2021 policy that made adoption mandatory. The policy shift comes amid negotiations for a $1.3 billion IMF loan package, expected to be finalized within weeks, which would mark the country’s return to mainstream international finance. 

The deal, which could catalyze an additional $2 billion in funding from the World Bank and Inter-American Development Bank, also requires fiscal reforms including a 3.5 percentage point reduction in the budget deficit. Markets have already responded favorably to El Salvador’s pivot, with sovereign bond spreads tightening dramatically from 3,500 to 398 basis points above US Treasuries since mid-2022.

Shale drives surge in Argentine oil production

Increased production from Argentina’s shale oil sector is helping drive the country’s oil output to near-record levels, propelling the country past Colombia as South America’s third largest oil producer, Oil & Gas Journal reports. The rapid rise in production—boosted by state backing and an aggressive infrastructure build-out—stands in stark contrast to Colombia, where President Gustavo Petro’s administration has frozen development through fracking bans and permit freezes. 

• Petrobras and Ecopetrol announce Colombia’s largest gas discovery in rare new exploration (Offshore Technology) 

Argentina’s decision to balance energy transition goals with hydrocarbon development has helped it attract substantial investment, while Colombia’s more restrictive policies risk undermining its energy security and fiscal position.

US opens trade investigation over alleged Nicaraguan labor abuses 

The Biden administration has launched a wide-reaching trade probe into Nicaragua’s labor practices, human rights record and rule of law, potentially threatening the country’s crucial position within the CAFTA-DR free trade agreement, El Pais reports. The investigation could lead to tariffs or fines, or even Nicaragua’s suspension from the trade pact that underpins its economy.

The stakes are particularly high. The US accounts for 55% of Nicaragua’s exports and 30% of its imports, dwarfing its trade with China. While previous pressure campaigns against President Daniel Ortega’s regime have avoided disrupting trade flows, this broader investigation signals a more aggressive approach from Washington, despite expected resistance from businesses invested in the country.

Global

Dollar rally sinks EM currencies

Emerging market currencies are on track for their steepest quarterly decline since September 2022, with JPMorgan’s EM currency index falling more than 5% over the past two and a half months, the FT reports. The sell-off has been remarkably broad-based as investors react to a surging dollar driven by expectations of US president-elect Donald Trump’s planned trade tariffs and fiscal policies.

Analysts at major banks point to a “confluence of bad news” across emerging markets, citing China’s domestic economic challenges, Brazil’s fiscal crisis, and South Korea’s political turbulence. The dollar’s strength has also pressured the euro, creating knock-on effects for European EM currencies including the Polish zloty and Hungarian forint.

What We’re Reading

Opposition and former Ghana president defeat ruling party (BBC)

Ghana’s economy accelerates to fastest pace since 2019 (Bloomberg)

Senegal ‘making progress’ convincing military regimes in Sahel to remain with Ecowas (Radio France International)

Nigerian debt sales draw strong demand after success of eurobond (Business Day)

Ethiopia and Somalia agree to Turkey-instigated talks on Somaliland port deal (Africanews) 

Violent clashes erupt in Somalia over disputed local election (Africanews)

World Bank cuts Kenya’s 2024 growth estimate on fiscal challenges (CNBC)

Tesla supplier closure shows rising fallout of Mozambique unrest (Bloomberg)

Zambia and France sign landmark debt restructuring deal (Daba)

Zambian court rules against ex-president Edgar Lungu reelection bid (Reuters)

Morocco produces Africa’s first mpox tests (AP)

Record flooding in Africa compounds stress on fragile countries (African Center for Strategic Studies)

Africa Finance Corporation Plans $3B Investment Next Year (Daba)

Adani drops request for US loan to finance strategic Sri Lankan port (FT)

Vietnamese tech firm CMC plans half a billion dollars in data center investments (Nikkei)

Thai banks join stablecoin rush with eye on migrant worker remittances (Nikkei)

Thailand approves $306mn Foxconn chip plant (Nation Thailand)

Indonesian telecom rivals finalize $6.5bn merger (Nikkei)

Exxon to invest $15bn in Indonesia carbon storage (Indonesia Business Post)

Philippines considers new UN case against Beijing over South China Sea activity (FT)

 ‘Modern Silk Road’ brings booming trade to China-Kazakhstan border (Nikkei)

Oman’s IPO value soars in 2024 (FT)

FIFA confirms Saudi Arabia to host 2034 World Cup (AP)

UK Prime Minister Keir Starmer in Saudi Arabia to discuss trade and investment deal (The Guardian)

Qatar’s $500bn wealth fund targets bigger deals as LNG windfall looms (FT)

Polish finance chief calls out central bank on policy shift (Bloomberg)

El Salvador’s new laws ‘threaten free expression’ (Human Rights Watch)

Venezuelan tourism strategy threatens fragile ecosystems (Reuters)

Colombian congress rejects Petro government’s tax increases (Bloomberg)

Ecuador’s Amazon debt swap set to cancel $1.5bn of bonds (Bloomberg)

Confidence in Argentina’s government and economic optimism grow (Gallup)

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