WSJ Emerging and Growth Markets, November 14th 2020

Welcome to the latest edition of WSJ Pro Emerging & Growth Markets, our weekly review of key news affecting frontier and small emerging markets. This newsletter is a companion to Strategic Intelligence, an information resource focused on emerging markets that brings together the global news coverage of The Wall Street Journal with the analysis of market intelligence firm FrontierView. 

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Africa

Ethiopia’s escalating military offensive raises specter of civil war.Ethiopia is widening a military offensive against the restive regional government of Tigray and arresting thousands across the country, dashing hopes of a quick, negotiated end to the conflict and feeding fears of a full-blown civil war, Nicholas Bariyo and Joe Parkinson report. More than 500 Ethiopians have been killed in fighting across the northern Tigray province in recent days, according to state television, while some 7,000 people have fled into Sudan, according to the United Nations.

Thousands more have been gathering onto the eastern bank of Atbara river, waiting to cross the frontier, in what aid agencies say is turning into a humanitarian crisis. Internet and telephone lines in Tigray have been cut since fighting erupted last week when Prime Minister Abiy Ahmed accused forces loyal to Tigray’s local government of attacking a military base.

Tensions have been building toward a showdown since the region’s governing party, the Tigray People’s Liberation Front, or TPLF, refused to join Mr. Ahmed’s ruling coalition and held regional elections that had been delayed because of the coronavirus pandemic. Both sides have accused each other of trying to provoke a military confrontation before active clashes began last week.

Jumia seeing signs of consumer shift. Africa-focused online marketplace Jumia is seeing signs that the economic contraction across the continent is changing what consumers buy on its e-commerce platform, Micah Maidenberg reports. In an interview with the Journal, Sacha Poignonnec, the company’s co-chief executive, said consumers who order goods for delivery are starting to scrutinize prices more and focus on essential goods.

“Consumers are going to be trading down,” he said.

Mr. Poignonnec said the more conservative tone from shoppers was noticeable in economies like Nigeria’s, which is driven by the struggling oil sector, as well as those that rely on tourism, including Egypt. Meanwhile, in South Africa, another market where Jumia operates, 79% of consumers said they were either unsure or pessimistic about the recovery of the economy there, according to a September survey from consultancy McKinsey.

The company, active in Nigeria, Morocco and nine other African countries, has been focused on generating profits in part by emphasizing everyday goods instead of pricier items such as mobile phones. Cutting costs helped it narrow its operating loss to €28 million ($33 million) from €55 million the year earlier.

Zambia debt-default fears rise ahead of creditors’ meeting. Fears that Zambia might default on its sovereign debt are mounting as creditors were due to meet on Friday to consider a request by the cash-strapped nation to delay interest payments until April next year, Nicholas Bariyo writes. Zambia wants to restructure around $12 billion of external debt including $3 billion in outstanding Eurobonds, $2.9 billion commercial debt and $3.5 billion of bilateral debt.

According to research firm NKC African Economics, Zambia’s creditors said they hadn’t received detailed information regarding the country’s outstanding debt to China.

“We expect that Zambia is mere hours away from being declared in default,” NKC’s Irmgard Erasmus said. Zambia’s tense relationships with creditors and multilateral organizations make it more difficult to negotiate a complex restructuring, she added.

Libyan oil chief warns oil production could reverse gains on funding woes. The chairman of Libya’s state-run company warned that crude oil production could fall back to close to zero due to an acute cash crunch, Benoit Faucon reports. In an interview with the Journal, National Oil Corp. Chairman Mustafa Sanalla said output had reached 1 million barrels a day—a ten-fold increase from late September—and production could rise to 1.3 million barrels a day within a month.

But he said the facilities were badly in need of refurbishment and maintenance, and that funds allocated by the government so far were falling short.

“The repeated blockade of oil production over the last few years had its toll on the oil infrastructure,” Mr. Sanalla said. The “approved budget is well short of what was requested by the NOC and will take us nowhere,” he said. If financing doesn’t come forward, “our production may fall back to near zero,” he warned.

Asia

Armenians protest over Nagorno-Karabakh peace agreement with Azerbaijan. Popular anger exploded this week in Armenia over a peace agreement brokered by Moscow to end a war for control of Nagorno-Karabakh, David Gauthier-Villars and Ann M. Simmons report. Armenians accused their government of having capitulated to Azerbaijan, ceding territory they regard as part of their ancestral homeland.

Demonstrators protesting against the end of war in Nagorno-Karabakh. PHOTO: STANISLAV KRASILNIKOV/TASS/ZUMA PRESS

Despite reports of sporadic clashes, the three-way pact signed by the presidents of Azerbaijan, Armenia and Russia appeared to have brought calm in the disputed province after six weeks of intense fighting.

The conflict in Nagorno-Karabakh has caused an estimated 5,000 deaths, according to Russian officials, and forced more than 100,000 civilians to flee their homes for safer parts of the territory or Armenia. Protests flared in the Armenian capital of Yerevan following the announcement of the deal, with Prime Minister Nikol Pashinyan saying his official residence had been ransacked, as residents vented their outrage over what they view as their government’s capitulation.

Aung San Suu Kyi, under fire abroad, wins big in Myanmar election. Myanmar’s ruling party led by Aung San Suu Kyi has won enough seats in parliament to form the next government, giving it five more years to shape the country’s transition to democracy that turned rocky in its first term, Niharika Mandhana and Myo Myo report. The election, which took place on Sunday, was the second truly contested and democratic vote since the end of military rule in the Southeast Asian country.

Full results for all races haven’t been announced as votes continue to be counted, but by Friday morning Ms. Suu Kyi’s National League for Democracy had captured at least 346 out of 476 elected seats in parliament, according to the election commission. The party needed to cross the 322-seat threshold to remain in power.

Supporters of Aung San Suu Kyi’s National League for Democracy celebrated in Myanmar after party officials said they were confident of victory. PHOTO: KAUNG ZAW HEIN/ZUMA PRESS

Myanmar, which was long dominated by a military regime, began a new chapter in 2015 when it held its first elections considered free and fair in decades. Ms. Suu Kyi, who had fought the generals and endured years of house arrest, led her party to a landslide victory  in that vote. The military kept control of key levers of power—including a bloc of reserved parliamentary seats and three government ministries—but the political shift raised hopes that Ms. Suu Kyi, a Nobel Peace Prize winner, would forge a path to full democracy.

Turkey’s Erdogan shakes up economic leadership as country faces currency crisis. Turkey’s President Recep Tayyip Erdogan dismissed the country’s central banker and the its finance minister announced his resignation, in a surprise weekend shake-up that fueled uncertainty over the direction of an economy caught in deepening currency crisis, David Gauthier-Villars reports.

The finance minister, Berat Albayrak, pictured, who is also a son-in-law of Mr. Erdogan, said he was stepping down in a late Sunday Instagram post, a day after Mr. Erdogan ousted Murat Uysal from his post at the helm of the central bank, replacing him with Naci Agbal, a former finance minister.

The reshuffle followed weeks of a currency selloff that has pushed the Turkish lira 30% down against the U.S. dollar this year. The slump, which echoes the lira’s steep drop of 2018, has alarmed economists, who fear it could crystallize into a balance-of-payments crisis that could hammer the $740 billion emerging-market economy.

Europe

Belarusian leader resists efforts to unseat him. Three months after Belarus’s widely disputed presidential vote sent waves of protesters into the streets to contest the re-election of longtime leader Alexander Lukashenko, the demonstrations have continued unabated but Mr. Lukashenko has managed to repel the attempts to unseat him, Ann M. Simmons writes.

A woman draped in the red-and-white flag of the opposition movement stands in front of law-enforcement officers during a rally in Minsk on Sunday. PHOTO: REUTERS

Weekly mass rallies, calls for a national strike and sanctions imposed by Western nations have all failed to persuade the leader of 26 years to step down. Instead, since the Aug. 9 vote, Mr. Lukashenko has strengthened his resolve to remain in office, refusing demands for fresh elections, allowing security personnel to use live ammunition against protesters and jailing or exiling key opponents, including opposition leader Svetlana Tikhanovskaya, who was forced to flee to neighboring Lithuania.

The Belarusian leader’s political survival is partly thanks to the fact that he has handpicked leaders of key government organs and sectors, allowed security officials to operate with impunity, and compensated loyalists with comfortable salaries and living arrangements, guaranteeing their allegiance. “He managed to remain in power because he controls law enforcement and there haven’t been any political cracks within the ruling regime,” said Artyom Shraibman, founder of Minsk-based political consulting firm Sense Analytics.

Ukrainian president is hospitalized with Covid-19. Ukraine’s President Volodymyr Zelensky was hospitalized after contracting coronavirus, as the country imposed new lockdown measures to curb the rapid spread of the infection, Georgi Kantchev writes. Mr. Zelensky, 42, was suffering from mild symptoms and moved to a hospital to self-isolate and continue working, a presidential spokesperson said Thursday.

Several other officials, including Andriy Yermak, the head of the presidential office, have also been infected.

Ukraine’s government introduced new coronavirus-restriction measures this week, including shuttering non-essential businesses on weekends, as the number of cases continued to increase at a rapid clip. The country registered 11,057 daily new cases on Thursday, a record high, bringing the total tally to over half a million infections. The total death toll stands at 9,145.

Latin America

Peru’s new president Merino faces swelling protests after helping to oust predecessor. Peru’s new president, Manuel Merino, is facing a backlash after helping to orchestrate the impeachment of his predecessor and angering Peruvians already battered by a devastating coronavirus outbreak and a sharp economic downturn, Ryan Dube reports. From Lima’s Plaza San Martin to towns in the jungle and high Andes, Peruvians on Thursday ramped up protests against Mr. Merino, yelling “down with the usurper.” 

Mr. Merino, Peru’s third president in less than four years, was sworn in on Tuesday after congress overwhelmingly approved the impeachment of Martin Vizcarra by using an obscure constitutional clause to declare him morally unfit to hold office. With no vice president, Mr. Merino was next in line as the speaker of congress to take over as head of state.

People protesting against Peru’s new president, Manuel Merino, at Plaza San Martin in Lima on Thursday. PHOTO: ALDAIR MEJIA/SHUTTERSTOCK

Lawmakers said they ousted Mr. Vizcarra, even though new elections are in April, because of unproven allegations that he took bribes as a state governor from 2011 to 2014, claims Mr. Vizcarra denies. The Organization of American States has yet to recognize Mr. Merino as Peru’s legitimate president, and international human-rights groups warn the rule of law is being undermined. 

Evo Morales returns triumphantly to Bolivia after exile. Former Bolivian President Evo Morales returned in triumph to his home countryfrom exile on Monday, a year after he resigned amid election-rigging allegations that plunged the Andean nation into violent turmoil, Kejal Vyas writes. The 61-year-old was welcomed by throngs of supporters who cheered and waved the wiphala, a rainbow-colored flag representative of Bolivia’s large, politically active indigenous communities.

Supporters of former Bolivian President Evo Morales in Villazón, Bolivia, on Monday. PHOTO: JUAN KARITA/ASSOCIATED PRESS

“I was sure I was going to return. I didn’t think it would be so soon,” said Mr. Morales, who participated in an indigenous cleansing ceremony. He then set out on a three-day, 700-mile trip across the heart of Bolivia in a caravan of vehicles to the Chapare, a lowland jungle region where he began his career as an activist for farmers of coca, the raw ingredient used to make cocaine.

His return is seen as a test for the new government of President Luis Arce, a close ally of Mr. Morales who was sworn into office on Sunday after his resounding victory in last month’s presidential elections. Mr. Arce, a U.K.-educated economist who had been Mr. Morales’s economy minister, had said during his campaign that Mr. Morales, who had lost popularity among many in Bolivia after 14 years in office, would play no role in his government.

What We’re Reading

Tanzania’s president denounces U.N. human rights report as opposition leader flees country. (The Africa Report)

Fears for a million livelihoods in Kenya and Tanzania as Mara River fish die out. (The Guardian)

U.N. raises alarm over escalating violence in northern Mozambique. (Al Jazeera)

Thousands flee C?te d’Ivoire as post-election violence intensifies. (MedAfrica)

Nigeria freezes accounts of police-brutality protesters. (Reuters)

Nigerian mobile-first bank nets $10m investment. (TechCrunch)

South African corruption probe ensnares ruling party heavyweight. (WSJ)

Morocco’s exports slumped by 11.8% in first nine months of 2020. (Morocco World News) 

Six U.S. peacekeepers killed in helicopter crash near Egypt. (WSJ)

U.N. hails Libya elections ‘breakthrough’ at Tunis political talks. (Al Jazeera) 

Global manufacturers are flocking to Vietnam. Is it ready? (NikkeiAsia)

Cambodia demolishes second U.S.-built facility at Ream naval base. (VoA)

Covid-19 spurs Indians to swap home-help for appliances. (WSJ) 

Philippines extends military pact with U.S. (Defense Post)

Pandemic prompts Gulf countries to adopt more Western norms.(WSJ)

Lebanon reinstates lockdown amid economic crisis. (Arab News)

Bahrain’s prime minister, world’s longest-serving, dies at 84. (WSJ)

Kuwait’s $124b pension fund plans infrastructure boost. (Gulf Business)

Israel prepares for new era of U.S. relations. (WSJ)

Iran’s enriched uranium stockpile is 12 times nuclear accord’s cap, U.N. agency says. (WSJ)

Developing countries offset impact of pandemic on global food supplies. (WSJ)