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

Africa

China sees doors opening in the Sahel

China appears to be moving rapidly to fill a vacuum caused by the departure of Western forces from the volatile Sahel region, VoA reports. A growing number of countries in the region, including Chad, Niger, Mali and Burkina Faso, have expelled French forces amid surging anti-Western sentiment.

China’s foreign minister Wang Yi, who just wrapped up a weeklong trip to the continent in which made stops in Namibia, the Republic of Congo, Chad and Nigeria, pledged $136 million more in military aid to the region. China has already surpassed Russia as the leading arms supplier to sub-Saharan Africa. Africa analysts told Voice of America that there was a “mercantilist, commercial element” to the diplomatic visit where countries are squarely in the market to ramp up defense sales. 

Beijing’s lending to African countries rose for the first time last year since 2016, and has grown more than three-fold since 2022. It has heavily invested in the critical minerals, transportation and ICT sectors but the increasing flow of funding for defense-related projects suggests its investment strategy for the continent is evolving, experts say. 

Somalia and Ethiopia mend ties

Somalia and Ethiopia have agreed to resume bilateral diplomatic relations a year after they broke down over landlocked Addis Ababa’s decision to recognize Somalia’s breakaway territory of Somaliland as a sovereign state in exchange for access to a port on the Red Sea, the Guardian reports. Recep Tayyip Erdoğan, President of Turkey, which has strong economic ties in Ethiopia and security deals in Somalia, reportedly helped negotiate the rapprochement. 

The restoration of ties between the two East African nations comes at a cost for Somaliland. Somalia’s ambassador to Ethiopia said that part of the two countries’ agreement hinges on a “one-door policy” meaning that Ethiopia would not directly engage with Somaliland without Somalia’s permission.  

Ethiopia hasn’t yet confirmed that it’s completely ditched its deal with Somaliland, but it has agreed to instead seek port access “under Somalia’s sovereignty, the BBC reports.” 

Nigeria’s instant payment system ‘supports crime’

Nigeria’s boom in instant payments is fueling criminal activity across the country, including kidnappings, according to an investigation by Premium Times. Abductors are using mobile money transfers to get ransoms, reportedly leaving authorities unable to trace them. 

Digital payments have grown strongly in Nigeria, in part because a redesign of the country’s naira currency in 2022 caused a cash shortage that pushed people to make more use of online platforms. These systems include a mandatory link to a unique 11-digit code to tie every account to an individual—intended to prevent their use for illicit trades—but enforcing this rule has proved challenging. 

• Nigeria’s central bank launches digital payment service for government agencies (Techpoint) 

Nigeria’s National Bureau of Statistics estimates that in the past year, around 2.2 trillion naira ($1.4 billion) was funneled to kidnappers as ransom payments via instant payment systems. The country’s central bank is working to implement stricter measures on tracking payments and is considering imposing sanctions on service providers that don’t comply. 

Asia

Pakistan wins billions in new loans

Pakistan secured a $20 billion loan package from the World Bank on Tuesday, a deal that could guarantee a steady injection of capital into the often cash-strapped South Asian economy.

The World Bank will distribute the funding over the next 10 years. It is aimed at building climate resilience, increasing access to clean water and sanitation, and catalyzing “inclusive” private investment, among other goals. 

“We are focused on prioritizing investment…that will help crowd-in much needed private investment in sectors critical for Pakistan’s sustainable growth and job creation,” Zeeshan Sheikh, a country manager for Pakistan at the World Bank’s International Finance Corporation said in a statement.

The funding will augment a $7 billion program Pakistan agreed with the IMF last year. Pakistan will raise further funds in 2024 by tapping the Chinese bond market, finance minister Muhammad Aurangzeb told Nikkei this week. 

Vietnam seeks to join BRICS—with Russia’s help

Russia will help Vietnam become a “partner country” to the so-called BRICS bloc, the two countries announced in a joint statement on Wednesday. The announcement followed a visit by Russian Prime Minister Mikhail Mishustin to Hanoi. 

• Nigeria admitted as a partner country of the BRICS bloc (ABC)

BRICS is rapidly expanding, having doubled in size with the addition of five new countries in the past 13 months. Indonesia became the most recent addition two weeks ago.

But analysts said some in Vietnam are hesitant for the country to become a full member of the bloc, AP reports, because of the potential reaction such a move might provoke in the incoming Trump administration. Vietnam has become a close US partner in recent years, and counts the US as its largest export market.

Malaysia attempts to thread needle on investment and trade with China 

Malaysia is expecting a “bonanza” of Chinese investment in high-tech industries, economy minister Rafizi Ramli told the FT this week. 

Two Chinese investment delegations have visited Malaysia in recent months, Ramli said. He is targeting fast-growing sectors that benefit from the AI boom, including semiconductors and data centers.

Also this week, however, Kuala Lumpur announced new antidumping taxes on steel and iron imports from China and three others on Monday. The decisions followed allegations that lower-priced imports had harmed Malaysia’s domestic industry, Reuters reports.

Middle East 

Lebanon’s defaulted bonds continue rally after president’s election

Lebanon’s foreign currency bonds, in default since 2020 after a reserves crisis and historic currency devaluation, have continued their unexpected rally in the wake of the January 9 election of Joseph Aoun to the presidency, Reuters reports. Aoun was elected after a ceasefire deal between Israel and Iran’s proxy Hezbollah opened a political path to break years of gridlock, solving one element of Lebanon’s complicated political crisis.

Investors hope the ceasefire, the weakening of Hezbollah and other Iranian proxies in the region, and the restoration of a semblance of political normalcy will provide an opportunity to pursue a debt restructuring deal and restore international capital markets access.

French President Emmanuel Macron, whose country has taken a leading role in supporting Lebanon’s political transition, has pressed Israel to accelerate its performance of the ceasefire deal and allow the Lebanese National Army, which Aoun was in charge of before his election, to regain control of the border and further consolidate power in the fractured country.

Saudi Arabia funnels $100bn into mining sector

Saudi Arabia’s government this week announced its largest commitment yet to investing in its growing mining sector, pledging $100 billion to support its local industry, NBC reports. Part of the investment will be a joint venture between Saudi Aramco and state-owned mining company Ma’aden aimed at developing the country’s lithium mining industry to commercial scale by 2027.

Following new discoveries last year Riyadh raised its estimate of the value of its mineral deposits from $1.3 trillion to $2.5 trillion. This week, the country agreed to create a critical minerals partnership with the UK hoping to attract foreign investment to make up for a shortfall of expected FDI into its Vision2030 programs, which last year spurred record borrowing from the sovereign wealth fund, PIF, and other state-owned economic vehicles. 

The kingdom also announced this week a plan to enrich and sell uranium for civilian energy use, Al Jazeera reports.

Europe

Poland’s support for Trump’s 5% NATO spending target could push up defense costs 

Poland’s Defense Minister Władysław Kosiniak-Kamysz has endorsed Donald Trump’s call for NATO members to spend 5% of GDP on defense, positioning Warsaw as a bridge between US demands and European implementation, the FT reports. Poland already leads the alliance with 4.7% of GDP allocated to defense, while just 23 of NATO’s 32 members currently meet the existing 2% target.

The push for increased military spending faces significant resistance across Europe, where fiscal constraints and political resistance complicate defense initiatives. But Poland hopes the fact that it currently holds the EU presidency will help it push through a €100 billion defense allocation in the next common budget, arguing that if the bloc could fund post-pandemic recovery, it should similarly invest in security.

Latin America 

Colombia counts cost of move away from fossil fuels

Colombia’s President Gustavo Petro’s ambitious effort to wean the nation off its dependence on fossil fuel production is having an unintended consequence: costlier imports of liquefied natural gas (LNG), according to Bloomberg. An analysis by Welligence Energy Analytics shows LNG imports delivered through Cartagena are more expensive and have a larger carbon footprint than domestically produced gas.

Petro’s policies are also crimping Colombia’s economy, which depends on oil and coal for approximately half of its exports. The consequential drag on revenues comes at a particularly challenging time, as the government faces budget constraints after Congress rejected both its 523 trillion peso budget proposal and a subsequent 12 trillion peso tax measure.

• Petro’s ‘chances of success recede’ (Americas Quarterly)

Investors are taking notice and demanding higher premiums for holding Colombian sovereign debt compared to peers with lower credit ratings. While the economy is projected to grow around 3% this year, the combination of declining domestic energy production, increased reliance on expensive imports, and fiscal constraints puts significant pressure on Colombia’s economic stability.

Tether stablecoin firm boosts El Salvador’s crypto ambitions

Cryptocurrency firm Tether said this week it plans to establish its global headquarters in El Salvador, just weeks after President Nayib Bukele eased back his pro-bitcoin policies under IMF pressure, according to the Latin America Risk report. Tether, which claims to have around $125 billion in assets—dwarfing El Salvador’s foreign reserves by a factor of 25 and exceeding its annual GDP—brings significant financial heft to the country.

Tether’s 2023 profits from Treasury bond interest alone reached $5 billion, approximately matching annual remittances into El Salvador.

Tether’s decision will help El Salvador maintain its status as one of the world’s most crypto-friendly countries, despite its recent moves to scrap a policy forcing companies to accept bitcoin, to restrict government bitcoin transactions, and to unwind state involvement in the Chivo crypto wallet.

FM Macro

Trump-fueled dollar strength hits EM stocks

Global emerging markets are facing intensifying headwinds as investors bet that the incoming Trump administration’s anticipated tax cuts and tariff increases will drive inflation and prompt the Federal Reserve to keep interest rates higher for longer than previously anticipated, the FT reports.

Index provider MSCI’s emerging markets index has already dropped more than 10% since early October, with investors pulling $3 billion from global emerging market equity funds this year—adding to some $31 billion of outflows last year.

• Pain is coming for emerging markets from a Trump trade war (FT) 

Higher-interest rate environments historically entice US investors to stay home rather than venture into riskier emerging markets, while also raising the specter of competitive currency devaluations as countries attempt to protect their export competitiveness.

What We’re Reading 

Millions in seized funds linked to former Nigerian petrol minister earmarked for rural electrification (DW)

Benin’s $500mn bond marks Africa’s first 2025 debt sale (Bloomberg)

Côte d’Ivoire ‘a pillar of growth and stability’ (IMF)

Ghana’s new president scraps seven ministries to save public funds (Bloomberg) 

Military regimes in the Sahel move to assert control over critical mineral supplies (FT)

Interpol cracks down on illegal mining in West Africa (AP)

Rwanda strikes oil for the first time, near border with DRC (Africanews) 

DRC courts new mining investment interest from Saudi Arabia, EU and India (Reuters)

Angola and France to sign €430mn in contracts during Lourenço state visit (Radio Free International)

Chevron plays down Namibia’s oil and gas potential (Reuters)

How Morocco overtook Egypt as Africa’s leading tourist destination (The Africa Report)

Garment factory closures cast shadow over Bangladesh’s economy (Nikkei)

Niece of ousted Bangladesh PM resigns as UK anticorruption minister (NYT)

China and Sri Lanka agree $3.7bn oil refinery investment (Nikkei)

BYD expands into SE Asia with Grab partnership (China Global South Project)

Indonesia's universal health insurance program braces for default (Nikkei)

Indonesia unexpectedly cuts rates and lowers growth forecast (FT)

Azerbaijan 'suspends cooperation' with USAID (Reuters)

Jordan signs $5bn deal with French-led group for desalination plant (Times of Israel)

Iranian president takes flak for ‘soft’ stance in NBC interview (Iran Intl)

UAE-Oman railway systems integration contract awarded to Italian firm (Railway Gazette)

Kenya solidifies trade ties with UAE through landmark deal (Business Insider Africa)

Saudi domestic tourism thrives (Arab News)

Kuwait struggles to keep to development projects on schedule (Zawya)

Iraq and UK agree on defense deal and sharp increase in trade (Reuters) 

Fico’s rival pushes snap election as Slovak PM’s Moscow trip backfires (Politico)

Croatian President Zoran Milanovic wins second term in landslide victory (BalkanInsight)

Bulgarian pro-Russia party joins coalition government (FT)

Panama wants to preserve US alliance, but Trump could push it closer to China (NYT)

Guatemalan president ‘optimistic’ about finding common ground with Trump (AP)

Rubio says US should reconsider Chevron’s deal in Venezuela (Bloomberg)

Javier Milei extends bet on Argentina’s unorthodox currency policy (FT)

Argentina accepting other currencies besides pesos (Mercopress)

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