WSJ Emerging & Growth Markets, 2.20.21

Africa

South Africa rolls out J&J Covid-19 vaccine to healthcare workers. South Africa started administering Johnson & Johnson’s Covid-19 vaccine, which has yet to be authorized anywhere, to healthcare workers, as the country grapples with a new, more contagious coronavirus strain, Gabriele Steinhauser reports. The South African government scrambled to secure the J&J shots after halting a planned rollout of a vaccine developed by AstraZeneca and the University of Oxford earlier this month.

That followed results from a small clinical trial in South Africa that found the AstraZeneca vaccine didn’t appear to protect recipients from developing mild or moderate illness from the fast-spreading new strain of the coronavirus first detected in the country. 

South Africa has been the African country hit hardest by the pandemic, recording 1.49 million cases and 48,313 deaths so far. But excess deaths have reached more than 137,000 since the virus first took hold in the country, suggesting a much larger toll.

President Cyril Ramaphosa, left, was vaccinated with the Johnson & Johnson vaccine.

PHOTO: SIYA DUDA/SOUTH AFRICAN GOVERNMENT/EPA/SHUTTERSTOCK

The J&J vaccine was found to be 57% effective at preventing moderate and severe Covid-19 symptoms in a larger trial held in South Africa, including from the B.1.351 variant, which has become the predominant version there. When looking at just severe Covid-19 cases, though, the J&J vaccine was found to be 85% effective, including in South Africa.

In contrast to other Covid-19 vaccines in use, the J&J vaccine requires just a single dose, making it much easier to distribute and administer, especially in developing countries.

Ebola returns to West Africa. Health officials in Guinea are rushing to contain the first outbreak of the deadly Ebola disease in the region since 2016, days after authorities detected new cases of the hemorrhagic fever in the Democratic Republic of Congo, Nicholas Bariyo reports. The current outbreak began in late January, but was only identified as the Ebola virus last Sunday, health officials said, suggesting it may have spread substantially in the intervening weeks.

The new outbreak comes as the continent grapples with a steady rise of coronavirus infection rates, driven at least in part by a more transmissible variant first detected in South Africa. The outbreak also comes shortly after DRC, which has faced more Ebola outbreaks than any other nation in the world, also detected cases in the restive region of North Kivu, after having defeated an outbreak late last year.

The Ebola virus kills by shutting down the body’s organs and draining victims of the fluids that keep them alive. The virus has historically claimed as many as 9 in 10 patients, but the deployment of new vaccines and experimental treatments reduced death rates to around two-thirds during the last outbreak, according to the World Health Organization.

Guinea was one of the three most-affected countries during the 2014-2016 epidemic, which left more than 11,000 dead across West Africa.

Nigeria’s economy begins to show signs of recovery. A slight reduction in restrictions on movement and commercial activity has helped Nigeria’s economy to emerge from its second recession in five years, Obafemi Oredein writes. According to the country’s National Bureau of Statistics Nigeria’s economy grew by 0.11% in real terms in the fourth quarter of 2020, representing the first positive quarterly growth in the past three quarters.

Quarter-on-quarter real GDP growth was 9.68%, although the actual rate of expansion was considerably lower than during the same period in 2019. Over the course of 2020, Nigeria’s economy shrank by almost 2%, the statistics bureau said, after growing 2.27% in 2019. A key culprit for the slowdown was declining oil production, which shrank to 1.56 million barrels per day in the fourth quarter of 2020, compared with 2.0 mbpd in the same quarter of 2019.

The Nigerian economy remains under severe pressure and the government has depended on external and local borrowings to finance its budget and build infrastructure such as roads, rail, ports and other essential services. Earlier in the week, the National Bureau of Statistics said annual inflation rose to 16.47% in January from 15.75% the previous month, largely driven by higher food and commodity prices.

Zambia raises lending rate to calm inflation. Faced with inflation cresting 20% and a falling currency, Zambia’s central bank hiked its key lending rate to 8.5% from 8% this week, Nicholas Bariyo writes. The country is also facing sluggish economic growth and a food crisis that has left around a third of its 17 million people facing food shortages.

Analysts had expected Africa’s second-biggest copper and cobalt producer to hold the interest rate staeady, but central bank governor Christopher Mvunga said inflation looked to be increasing. “The decision balances the need to contain rising inflation and anchor inflation expectations against efforts made to support financial systems stability and growth,” he said.

Zambia has external debts of some $12 billion and heightened government spending has created a negative output gap, crimping economic growth, according to NKC African Economics.

Asia

Myanmar’s ousted leader faces new charge. Authorities in Myanmar filed a new charge against Aung San Suu Kyi, who was ousted and detained in a military coup this month and appeared before a court on Tuesday, Niharika Mandhana reports. Ms. Suu Kyi stands accused of an offense under a natural disaster management law, which has been generally applied in Myanmar against those who break pandemic-linked restrictions, according to a lawyer appointed by her party to represent her.

Protesters in Myanmar have been demanding for days that detained leader Aung San Suu Kyi be set free.

PHOTO: NYEIN CHAN NAING/SHUTTERSTOCK

Police had already filed charges against Ms. Suu Kyi for allegedly possessing walkie talkies that were illegally imported.

The coup ended a decadelong shift toward democracy, putting the military—which ruled for half a century before the transition—back in absolute control.

Faced with international pressure and large street demonstrations, the generals have doubled down in recent days. For two nights in a row they have ordered near-total internet blackouts. In a show of force, tanks appeared in the streets of Yangon, Myanmar’s largest city, on Sunday and Monday. 

Azeris wrestle over return to abandoned towns, decades after first Nagorno-Karabakh conflict with Armenia. Some 30 years on from the war that saw Armenian forces drive hundreds of thousands of Azeris from their homes in and around the conflict-torn enclave of Nagorno-Karabakh, many hope they can soon return after Azerbaijan regained much of the surrounding area in a counteroffensive last fall, Ann M. Simmons reports. But that dream is clouded by questions such as where they would live in the rubble-strewn border territories, and whether they could realistically carve out a new livelihood upon their return.

Alastun Pashayev prays in Juma mosque in Agdam, Azerbaijan, in January, on his first visit back to the area in almost 30 years.

Photo: Justyna Mielnikiewicz for The Wall Street Journal

The scale of the rebuilding required means the Azeri government budget is stretched. Tahir Mirkisili, chairman of an economic planning and business committee in the Azeri parliament, says that over 150,000 homes were destroyed in the areas Azerbaijan recaptured last year, along with 9,000 public buildings, including 700 schools. Land mines and unexploded ordnance still pepper the landscape.

Some 800,000 Azeris have said they want to return, according to a government committee supporting repopulation efforts. Armenia and Azerbaijan have agreed to work together to develop the region, although some independent economists estimate the ultimate cost could exceed Azerbaijan’s current state budget, of around $15 billion a year.

So far, the government has allocated around 10% of that to build new infrastructure in the enclave.

Middle East

U.S. says it would meet for nuclear talks with Iran and other powers. U.S. and Iranian officials could hold talks within coming weeksunder a plan by the European Union to bring the two sides together for nuclear talks for the first time since President Biden took office, Laurence Norman reports. According to U.S. officials and senior diplomats, the move, which is potentially a first step toward reviving the 2015 international nuclear agreement, came after Secretary of State Antony Blinken discussed the deepening nuclear standoff with the foreign ministers of Britain, France and Germany.

Iranian officials didn’t respond to a request for comment and they haven’t agreed to participate in such talks, according to senior diplomats.

Iranian supreme leader Ali Khamenei. Top Iranian officials have said in recent days that they will only return to compliance with the 2015 nuclear accord after the U.S. acts to lift its sanctions.

PHOTO: IRANIAN SUPREME LEADER/EPA/SHUTTERSTOCK

Top Iranian officials have said in recent days that they will only return to compliance with the 2015 accord after the U.S. acts to lift the sweeping sanctions former president Donald Trump imposed after withdrawing from the nuclear deal in 2018. They also have said they wouldn’t talk directly with the U.S. until sanctions are lifted, but left open the option of multilateral discussions.

Europe

Russian protests go beyond Navalny as Putin’s reserve of good will withers. In recent weeks tens of thousands of demonstrators turned out across Russia to protest the detention of Kremlin critic Alexei Navalny, but while the treatment of Mr. Navalny may have lit the fuse for protests, the rallies quickly became an outlet for Russians’ widespread grievancesabout falling living standards, collapsing infrastructure and chronic corruption, Georgi Kantchev reports.

“People don’t go out to protest for someone, they go out against something,” said Artyom Prokhorov, a marketing manager in the formerly industrial city of Oryol. “Navalny simply served as a trigger. People are tired of what’s happening here.”

A factory in the once-industrial city of Oryol that churned out air conditioners and refrigerators is now closed.

Photo: Arthur Bondar for The Wall Street Journal

For much of President Vladimir Putin’s 20 years in power, oil prices were high, economic growth was solid, Russian military interventions abroad stirred national pride, and Russians largely stayed out of opposition politics and protests. Now, after a fall in oil prices that analysts say could last for years and sanctions that have choked off foreign investment, reserves of good will are waning. Russia’s economy has scarcely grown in recent years, and last year, real disposable incomes were around 10% lower than in 2013.

In comments broadcast on state TV on Sunday, Mr. Putin said, “There are lots of problems and scarce funds,” adding that he could understand why “irritation is accumulating.”

Slow vaccine rollout in Central and Eastern Europe clouds economic outlook. The economic recovery across the Central and Eastern Europe region will hinge on the pace of the Covid-19 vaccine rollout and the early signs are not encouraging, Xavier Fontdegloria writes. According to Bethany Beckett, an assistant economist at London-based research firm Capital Economics, the latest data suggests that most countries in the region have managed to vaccinate only around 3-4% of their populations with at least one dose.

Although fourth-quarter 2020 GDP numbers showed that the economies of Romania, Slovakia, Bulgaria, Hungary and the Czech Republic grew at the end of 2020, concerns over a resurgence in infections and the emergence of variants of the coronavirus have prompted renewed restrictions in many places.

“Virus restrictions may remain in place for longer than we anticipated, which threatens our forecast for a strong recovery from the second quarter onwards,” Ms. Beckett said.

Latin America

Chinese Covid vaccine secretly given to VIPs in Peru and elsewhere. After Peru’s death toll from Covid-19 surged last fall, nearly 500 politically connected people, including then-President Martin Vizcarra, were secretly given a Chinese vaccine, Ryan Dube reports. The revelation by Peru’s government that consultants, lobbyists, cabinet ministers and the former president and his family were inoculated starting in September—before the vaccine was approved by Peruvian authorities—has resulted in a roiling scandal now dubbed Vaccine Gate.

Nurses and doctors waited in line to get a shot of China’s Sinopharm vaccine in Lima, Peru, last week. PHOTO: MARTIN MEJIA/ASSOCIATED PRESS

Peru’s health minister and other top officials have resigned, and prosecutors have opened a criminal investigation into what happened with the 2,000 undisclosed shots from a Chinese government-owned company.

The line-jumping came as powerful politicians, well-connected officials, and the wealthy in countries around the world are finding ways to secure vaccines ahead of the most vulnerable. In the Philippines, President Rodrigo Duterte’s security detail got Covid-19 vaccines last year before their use was authorized. And in Uganda, members of President Yoweri Museveni’s inner circle were offered vaccines. In Uganda as in Peru, the vaccines were from China state-owned drugmaker Sinopharm .

Global

Vaccine delays in developing nations risk prolonging pandemic.In the race to vaccinate the world against Covid-19, developing countries are running dangerously behind even as mutations of the virus make it harder to catch up—a situation that could spell at least another year of humanitarian and economic misery for poor nations, Saeed Shah, Gabriele Steinhauser and Feliz Solomon report.

The U.S. has now administered vaccine doses to about 12% of its population and Europe has reached about 5%. But in South America, just 1.8% of the population had been given a vaccine by this week, while Asia reached 1.5% and Africa 0.1%, according to Our World in Data, a project based at Oxford University. Almost 130 countries are yet to administer a single dose, the World Health Organization said recently.

Large parts of Africa and some countries in Latin America and Asia are unlikely to cover most of their populations before 2023 or 2024, experts say, so it could be years before life returns to normal in poorer countries, which saw more than 100 million people fall back into extreme poverty last year and which lack resources to unleash government spending as much as rich countries have.

The disparity could also slow the global economic recovery more broadly and prolong the pandemic, by creating pockets of unchecked infection that could become breeding grounds for mutations of the virus, experts say. A recent study by the U.S.-based National Bureau for Economic Research concluded that a failure to inoculate all countries equitably could wind up costing advanced economies up to $2.6 trillion as their economies suffer supply disruptions and low demand for exports long after their populations are fully inoculated.

What We’re Reading

Safaricom to bid on opportunity to expand in Ethiopia. (IT News Africa) 

Ghana Pays Half Its Debt to Power Producers With $750 Million. (Bloomberg)

How the ‘Bring Back Our Girls’ tweets changed a war in Nigeria. (WSJ) 

WTO Appoints Nigeria’s Ngozi Okonjo-Iweala as First Female Leader. (WSJ) 

Dozens missing in Nigeria’s latest school kidnapping. (WSJ) 

C?te d’Ivoire’s informal economy has come online and the government’s not happy. (Quartz)

Cocoa giants face fresh lawsuit over child labor claims in C?te d’Ivoire. (Confectionery News) 

Egypt defies Biden administration with arrest of relatives of Egyptian American activist. (WaPo) 

U.N. report accuses Blackwater founder Erik Prince of Libya weapons ban violations, diplomat says. (WSJ) 

Vietnam trade grows strongly from early 2020. (VietnamInvestmentReview) 

Cambodia adopts China-style internet gateway to control, monitor online traffic. (SCMP) 

Thailand’s economy slumps despite consumption recovery. (WSJ) 

Philippines demands more U.S. security aid to retain pact. (AP) 

Georgia’s prime minister steps down ahead of looming clashes. (Eurasianet) 

India’s stock market mania defies economic reality. (WSJ) 

What ‘The Hunger Games’ three-finger salute means to protesters across Asia. (WSJ) 

Saudi Arabia and U.A.E. tussle over foreign-company headquarters. (S&P Global) 

Biden plans to ‘recalibrate’ relations with Saudi Arabia and downgrade MBS. (France24) 

Saudi Arabia set to raise oil output amid recovery in prices. (WSJ) 

Shadow network of militias backs Iran. (WSJ) 

Biden and Israel’s Netanyahu vow continued cooperation. (WSJ) 

Carlos Menem, Argentine president who ushered in ‘pizza and champagne’ era, dies at 90. (WSJ) 

Brazil turns sleepy sugarcane town into global Covid-19 experiment. (WSJ)

Tech stocks in emerging markets that have momentum…for now. (Barron’s)