Here's what you need to know about emerging markets this week, from the WSJ
News and analysis on the frontier markets
EMERGING MARKETS UPDATE FROM THE WSJ
Dan Keeler, editor of Frontier Markets on Wall Street Journal, co-ordinates the Journal's coverage of the world's frontier markets. Launched in early 2014, WSJ's frontier market coverage brings together a broad range of news and analysis, providing readers with a deeper understanding of some of the world's most dynamic and fast-growing economies.
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The chief of Kenya’s electoral commission on Wednesday said he wasn’t able to deliver a credible election this week amid meddling from candidates and threats of violence, Matina Stevis-Gridneff reports. The announcement cast further doubt on the vote just hours after a top electoral official, Roselyn Akombe, announced she had resigned and said she feared for her life.
The country has been plunged into political turmoil since the Supreme Court annulled the August election and ordered an October 26 redo, saying there were major problems with the original count. The planned revote has strongly divided the country, with some arguing that the electoral commission can’t deliver a fair and trustworthy election as planned.
In the wake of Akombe’s announcement, Wafula Chekubati, chief of the Independent Electoral and Boundaries Commission, issued a warning to the country’s political leaders. “It’s impossible under the current conditions to hold free and fair elections,” he said.
A retired soccer star and Liberia’s vice president will square off in November in a runoff to succeed the longtime president, Ellen Johnson Sirleaf, after no candidate got enough votes in the first round, Nicholas Bariyo reports. George Weah, who was FIFA’s World Player of the Year in 1995, took 39% of the vote in the October 10 poll, with nearly 96% of ballots counted. Vice President Joseph Nyumah Boakai of the ruling Unity Party was second with 29%. The two candidates, who topped a field of 20, will vie to succeed Sirleaf, the Nobel Peace Prize-winning economist who has served two six-year terms, the maximum allowed under the constitution. The contest is set to result in the West African nation’s first peaceful transition of power in more than 50 years.
Akinwumi Adesina, the President of the African Development Bank, this week told WSJ Frontiers that a sense of urgency was developing across the continent about the need to find ways to bridge Africa’s chronic infrastructure funding gap. Akinwumi, who was in Iowa to receive the World Food Prize, stressed that attracting more investment will be essential for Africa to achieve the UN’s Sustainable Development Goals, but most crucial would be mobilising domestic financing.
“When you look at the amount of money we have in the continent, it’s mind-boggling. We have $334bn in pension funds on the continent, and over $164bn in sovereign wealth funds. What we’ve got to do is mobilise a lot of these resources and direct them to energy, to power, to roads and ports,” Akinwumi said.
Barrick Gold’s African subsidiary will make a $300m payment to the government of Tanzania as part of an agreement to resolve tax and revenue sharing disputes over its three gold mines in the country, Jacquie McNish and Nicholas Bariyo report. The Toronto-based mining company also said its majority controlled Acacia Mining has agreed to a framework for a new partnership that will hand the Tanzanian government 50% of the economic benefits of its mining operations. Acacia noted that it had yet to review the specifics of the plan, which is subject to its board’s approval.
Barrick said Acacia would form a new operating company with Tanzania’s government to hold its three gold mines in the country. The new company will split “economic opportunities” with Tanzania in the form of royalties and tax payments. Acacia, Tanzania’s biggest gold miner with $1bn in annual revenue, was served with a $190bn bill earlier this year for what Tanzanian authorities have said were unpaid taxes, penalties and interest accumulated over the past 17 years.
The IMF on Monday praised Sri Lanka’s efforts to improve its fiscal position but said more needs to be done. “Upholding the reform momentum will be important for addressing fiscal and external imbalances and meeting the government’s ambitious social and development objectives,” the multilateral said.
At a meeting in New York, Sri Lanka’s central bank Governor Indrajit Coomaraswamy told the Journal that the country’s authorities were committed to tackling some of the longstanding issues that have hindered its economic development—and that investors appear to be taking note. “The most crucial thing is whether we can maintain the macroeconomic fundamentals,” he said. “Sri Lanka historically has been a classic stop-go economy. For the past 60-70 years we’ve had a toxic combination of populist politics and a deeply entrenched entitlement culture. We have to break that.”
One factor weighing heavily in Sri Lanka’s favour, the central banker noted, is that regional powers in Asia are acutely aware of its strategic importance, by virtue of its location and its relationships with other countries. “China has been here for a while, but others are not willing to allow the Chinese to have their way there,” Coomaraswamy said. “The Japanese are interested, the Indians are clearly interested. What we need to do is to leverage this interest in the country for commercial advantage,” he said.
At the same meeting in New York, Vajira Wijegunawardane, Director General of Sri Lanka’s Securities and Exchange Commission, told the WSJ that the country hopes to be eligible to achieve emerging-markets status within two to three years. “Reforms under way in capital markets should make Sri Lanka more attractive to investors. Once the reforms are in place, we will be in a position to make a case for elevation. If we can do that it would significantly attract portfolio investments. Even if fund managers maintain a neutral position, that would have a positive effect,” Wijegunawardane said.
Pakistan may also be seeing a turnaround in investor sentiment, according to Luke Uzoziri at emerging-markets-focused investment bank Renaissance Capital. Many funds appear to have finished cutting their weighting to Pakistan, which they had been trimming in the wake of the country’s elevation from frontier- to emerging-market status by MSCI earlier this year, Uzoziri said. “Sentiment from frontier funds [toward Pakistan] from a contrarian perspective is getting increasingly bullish,” he added.
After a months of dismal performance, Pakistan’s benchmark KSE 100 index seems to be reflecting that improved sentiment. This week, it rebounded by more than 5.6% from last week’s 12-month low—although it remains more than 20% down from its pre-upgrade peak.
Saudi Arabia still plans to publicly list a portion of its state oil company in 2018, the kingdom’s oil minister said on Tuesday, Benoit Faucon writes. “We are on track,” Saudi oil minister Khalid al-Falih said outside the Oil and Money energy conference in London.
Doubts about the IPO of Saudi Arabian Oil Co., better known as Aramco, have grown in recent days as news organisations including The Wall Street Journal have reported that the kingdom may not go forward with the plan.
In Venezuela, newly elected opposition governors refused to take their oaths of office before a pro-government assembly on Wednesday, setting the stage for a showdown that threatens to further weaken the demoralised coalition opposed to President Nicolás Maduro, Anatoly Kurmanaev reports. The five antigovernment figures among the 23 winners of Sunday’s regional elections boycotted a swearing-in ceremony at the Constituent Assembly, a superbody packed with Maduro’s supporters that the opposition and dozens of foreign governments consider unconstitutional.
Maduro has said failure to attend the ceremony would mean the governors-elect couldn’t take office. And ruling-party officials in the states won by the opposition said they were ready to take over the governors’ offices in case of a boycott.
On Thursday, Maduro’s opponents released evidence they said proves electoral fraud in a crucial industrial state. Opposition leaders had hoped sweeping victories would put pressure on Maduro to enter into negotiations that would lead to a presidential election in 2018, opening the way for his likely defeat. But Sunday’s electoral outcome narrowed the opposition’s options, as many experts predicted that a peaceful political solution that could alleviate the suffering among Venezuela’s 30 million people was now more remote.
US President Donald Trump and his Argentine counterpart Mauricio Macri on Wednesday discussed their commitment to expand trade and investment, as well as working together to tackle the Venezuela crisis, Taos Turner reports. According to a readout from the White House, Trump “praised” Macri’s economic reforms and the two leaders “agreed to continue to work together to help the people of Venezuela restore democracy in their country.” Trump and Macri have known each other for decades, having done business together in New York long before either entered politics.