Back in 2012, the news of Kenya’s oil discovery spread fast. Stock markets roared, politicians gushed and the Twitterati tweeted. Fast forward to today: with $70 off oil prices and at least another four to five years to go until the first commercial production, one cannot help but ask, has Kenyan oil been overrated?

With a tip of the hat to Clint Eastwood, the prospects for Kenya’s oil wealth can be characterised as the Good, the Bad and the Ugly. Read more

By James McCormack, Fitch

The strength of the US dollar is the single most important issue of the many facing emerging market (EM) economies. At the same time – and in some cases as a corollary of the dollar’s strength – they are struggling with lower commodity prices, increasing rates of inflation, heightened political and geopolitical risks, greater financial market volatility, large capital outflows and an extended period of weakness in global trade.

It is critical to consider nominal dollar incomes in assessing countries’ relative economic performance and prospects because the dollar continues to dominate the pricing of global commodities, the settlement of international trade, the extension of cross-border credit and the foreign reserve assets held by EM central banks. Although the international roles of several other currencies, including the Chinese renminbi, are expanding, there is no convincing evidence that the dollar’s supremacy is under any immediate threat. Read more

By Wiebke Schloemer, International Finance Corporation

There’s no doubt that the recent influx of refugees has strained the European Union, both politically and, in some cases, logistically. But fewer people are aware that in the Middle East and North Africa, which still hosts the majority of refugees, the crisis has pushed fragile infrastructure systems to breaking point, highlighting an issue vital to the region’s future.

The five-year Syrian conflict has so far forced more than 11m people from their homes, including nearly 5m who have left the country. In neighboring Iraq, some 3.5m people have been displaced. Read more

By Matthew Page, Council on Foreign Relations

Africa’s largest economy is struggling to find its feet. Sliding oil prices threaten to derail President Muhammadu Buhari’s efforts to put Nigeria’s public finances back in order, fund planned infrastructure spending, and field much-needed social programs. Until global crude prices rebound or he undertakes more ambitious reforms, Mr Buhari almost certainly will need to borrow just to make ends meet.

The good news for Mr Buhari is federal government debt is relatively low as a percentage of GDP, which was estimated at $488bn in 2013. In 2005, Nigeria struck a deal with Paris Club lenders to write off over half of the country’s $30bn debt. Since then, however, Nigeria’s debt profile has steadily grown. As of the end of last year, Abuja owed domestic and international creditors roughly $55bn. Read more

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One should always be cautious with TV documentaries but, knowing the terrain and winter climate of many of the countries through which thousands of refugees are pulling their families on a daily basis, last week’s BBC story told by two doctors certainly did hit home.

It also highlighted how Germany as a country has provided refuge to so many people against all odds. The latter is clearly reflected in the daily German TV debates on the crisis and the border restrictions that have again been set up between Germany, Austria and Hungary – a very big issue after so many decades of working on pulling down those very borders. Read more

Markets used to cheer when China’s exports rose, believing this showed the global economy was in good shape. They are still hopeful today, despite the 25 per cent fall in February’s exports. But closer analysis of China’s important refining and petrochemical sector shows that a paradigm shift is under way.

No more is China’s economy based on importing raw materials and exporting low-cost manufactured goods. Instead, the focus is on using the new capacity built during the 2009–13 stimulus period to maintain employment and boost China’s self-sufficiency. Read more

A glimmer of hope that the deadlocked Minsk II peace agreement could yet prevent a frozen conflict in the Donbas is emerging in Kiev.

Ukraine previously blocked a proposal to hold municipal elections under Ukrainian law in separatist-held territory before the end of June at a summit of the ‘Normandy Four’ signatories to the Minsk Agreement in Paris on March 3. This meant that, should the separatist authorities proceed with planned elections under their own laws in late April, the conflict would effectively be frozen. Equally, Kiev threatened to hold a referendum on the question of granting the Donbas autonomy which, if opinion polls are correct, would likely be lost, also freezing the conflict. Read more

Belarus has seen very little political change since gaining its independence in 1990, in spite of a warming in relations with the European Union (EU), which has recently ended visa bans and unfrozen the assets of 170 senior Belarusian officials. With the 12-year-old Nikolay Lukashenko being visibly groomed for a leadership role by his father, President Alexander Lukashenko (they are pictured here at a ceremony in Moscow in December), Belarus remains Europe’s most bizarre political regime, steeped in Soviet nostalgia. Can it survive in today’s economic climate? Read more

In the usually predictable world of African presidents-for-life, it doesn’t get more exciting than this.

José Eduardo dos Santos, Angola’s president since 1979 and constitutionally allowed to stay in power until 2022, made the surprise announcement on Friday that he would leave “active political life” in 2018. He did not give clues as to whether he would still head the ruling MPLA’s list for the 2017 elections; nor did he name his successor.

Public discontent caused by Angola’s economic crisis and the fact that he mentioned a date for his departure suggest he may mean what he says. But the 73-year-old Dos Santos is a resilient player. His coterie has built up globalised interests whose ultimate guarantor is their control over Africa’s third largest economy. They are not going to go quietly into the night. Read more

The European Parliament on Thursday slammed Montenegro for its lack of progress in tackling institutional corruption and making any meaningful progress in improving the rule of law. The elaborate façade of prime minister Milo Djukanovic’s charm offensive towards the west is crumbling at his feet as his European interlocutors realise that the emperor is indeed quite naked.

The Central European Aluminum Company (CEAC) invested millions in the KAP smelter in Montenegro, only to see itself stripped of its ownership of the metal plant by the Montenegrin government. Following the government’s refusal to come to the negotiating table, CEAC has been obliged to initiate arbitration proceedings. Read more

US penalties handed down on ZTE, the Chinese telecoms giant, are a reminder that despite January’s partial lifting of sanctions on Iran after UN nuclear inspections, they can still bite.

Previously, the Bank of Kunlun, set up to handle oil for loans and infrastructure deals between Beijing and Tehran during the embargo, had been cited for violations. Chinese commercial and policy banks nonetheless were gearing up last year for legal business, supported by a flurry of official initiatives.


China’s “One-Belt One-Road” outward investment campaign envisions a tenfold increase in Sino-Iranian economic engagement over the next decade to $500bn; Iran took a tiny 2 per cent founding share in the Asian Infrastructure Investment Bank; and the countries discussed bilateral currency swap lines. Read more

Poverty is sexist. When a girl lives in poverty, every aspect of her life will be harder than that of a boy. It’s a shocking fact that in 2016, half a billion women can’t read – twice the number of illiterate men. A hundred and fifty five countries still have laws that discriminate against women, and three quarters of adolescents contracting HIV in Africa are girls. And yet, evidence shows that when girls and women are invested in, everyone climbs out of poverty more quickly – including boys and men.

On International Women’s Day, the ONE Campaign’s Poverty is Sexist report underscores this reality. It includes a country index looking at where life is toughest for girls based on data for some the biggest opportunities and threats a girl may face in her life, such as economic opportunity, health, nutrition, education and political empowerment. Read more

This is the way the world ends
Not with a bang but a whimper.

T S Eliot, “The Hollow Men”, 1925.

Actually when it comes to globalisation, we are used to seeing things end with a bang. That’s what happened, almost literally, in 1914, with the start of the First World War. The onset of war made it impossible for central banks and governments to act as agents of international cooperation, and that suffocated the international flow of trade, finance and investment. And so the era of globalisation that had defined the pre-war world for decades came to a very abrupt end.

But can globalisation end with a whimper? Arguably that’s just what’s happening right now. Read more

The furore over allegations that Lech Walesa collaborated with Poland’s communist secret police in the 1970s shows that the past is ever present in the countries that once made up the Soviet bloc. Intelligence files, real or fabricated, have often been used to destroy political opponents or settle scores, while laws on lustration and ‘de-communisation’ have played an important role in the efforts of central and eastern European states to define their post-communist identities. Vladimir Putin has also been an active participant in these ‘history wars’, rehabilitating the symbols and personalities of the Soviet period to encourage patriotic sentiment at home and labelling countries that try to erase their Soviet legacies as inherently Russophobic.

Divergent attitudes to the past are likely to remain a potential flashpoint in relations with Russia, yet it is no longer clear that the efforts many of these countries devote to repudiating the communist era serve any useful purpose in promoting or consolidating political change. Most of them completed their democratic transitions years ago and the danger of a communist revival is now wholly non-existent. If there is an internal threat to the open, pluralistic, market-oriented societies that successfully emerged from the wreckage of the Soviet experiment, it comes from a different direction altogether. In particular, it comes from a populist, authoritarian right that wants to build an illiberal Europe of closed borders and closed minds. Read more

This International Women’s Day some 75m women and children are caught in humanitarian crises, according to the Women’s Refugee Commission. They include over half a million Syrian women who face giving birth away from home, families and health services; Nepali girls forced into marriage too young by families who can no longer support them after the earthquake; and over 300 women and girls fleeing violence in Burundi who need post-rape care.

Girls and women are the worst affected in today’s multiple humanitarian crises. Respecting their rights and needs should be at the centre of humanitarian action – yet a recent IDS report found that Gender Equality programming is too often a box-ticking exercise. The Global Humanitarian Assistance Report 2015 shows that the proportion of humanitarian programmes making a significant contribution to gender equality is falling – from 24 per cent in 2012, to 20 per cent in 2014. Read more

Our strategy team at Citi has been bearish on EM fixed income and FX for many quarters, on the back of the reversal of international capital that was triggered by a G3 attempt at decoupling from EM growth.

In 2013, the markets recognised the risk of growth divergence between the G3 (the US being the major driver, of course) and EMs. That led the US dollar into a 22 per cent appreciation on a trade-weighted basis from April 2013 to the end of 2015, and a marked deceleration in EM portfolio flows (most recently an estimated outflow of $240bn in 2015). Read more

Since 1991, the European Bank for Reconstruction and Development has been focused on building a robust private sector and market economy, two key conditions for transition and economic growth. The recent approval of the Bank’s first ever Gender Strategy will provide an enhanced platform to deepen and broaden our commitment to work alongside clients to build sustainable business environments that are conducive to growth. In particular, the EBRD has identified three specific areas of financing where it can most actively respond to the need to diversify, reach new markets and deliver better business, while also actively encouraging gender equality.

Firstly, supporting financial institutions throughout the EBRD region is a pillar of the Bank’s business. This makes it a natural place to launch the Bank’s approach towards promoting gender equality. The business case is clear: currently, there is a global gender credit gap estimated at $285bn and up to 70 per cent of women-led small and medium enterprises (SMEs) are underserved or unserved financially. The EBRD is committed to supporting our partner financial institutions in their efforts to specifically target financing to women entrepreneurs. Read more

China has reminded investors that there’s more to the country than worrisome economic indicators by announcing a significant step in the opening up of its domestic interbank bond market. The move has positive implications for capital flows and the strength of the currency.

One of the challenges in forming a clear understanding of China’s economy from the perspective of investment risk and reward is the complex interplay taking place between cyclical trends and structural reform. Read more

Innovations in technology and financial services are enabling previously “unbanked” people in developing countries around the world to gain access to credit and financial services at an unprecedented velocity and scale. It’s no overstatement to call this new trend in financial inclusion a revolution.

What’s happening is exactly what socially responsible microfinance institutions like ours have been dreaming of for decades and, to be sure, we’re excited to be playing our own part in it. Read more

Four years ago, Mongolia’s economy was the fastest growing in the world, the stock market was booming and the future looked very bright. This year, the consensus is for growth at no more than 1 per cent and all of the rating agencies have sovereign risk at speculative grade, while warning of possible default on debt obligations in 2017. Even within a troubled emerging market asset class, the case for Mongolia looks grim.

But, while accepting that Mongolia is certainly not for the risk averse, the investment case is worth a second look. Even the rating agencies concede that although the outlook is bad, based on what we assume today, the situation could “change on a dime” this year, and that would send debt yields sharply lower and equities higher. Read more