This Week on the Frontiers: Ethiopia’s Appeal Grows

by Zelalem

Ethiopia has been generating a great deal of interest from potential investors. At a PAN Africa Network event in New York this week, panelist John Saunders said U.S. investors on a recent African tour singled out Ethiopia as a country that has positive fundamentals and good investment opportunities. Saunders, a managing redirector at Deer Isle Group, a New York-based broker-dealer, told WSJ Frontiers: “[Investors] are comfortable with their existing Ethiopian exposure and even interested in Ethiopia-specific funds to increase it.”

Ready to roar? A lion statue in Addis Ababa, Ethiopia.
Agence France-Presse/Getty Images

Matt Vogel, head of emerging- and frontier-market strategy at Dubai-based fund manager Duet, also sees increasing enthusiasm for Ethiopia, although the investment opportunities for public-equity investors are still limited. “People are excited about it. The outlook is great and the prospects for the country’s growth rates are pretty jaw-dropping, but it seems like more of a private equity story right now,” he told WSJ Frontiers in an interview that we will publish next week.

The country still faces considerable challenges, though, says consultancy Business Monitor International, which predicts that Ethiopia will “become increasingly ungovernable” if democratic reforms don’t occur. “Ethiopia will effectively remain a one-party state following the May 24 general election,” BMI says, which will increase the already substantial pressure for reform as well as the potential for politically inspired violence.

Egypt has also been getting more attention — perhaps not surprisingly given the country just held an investment promotion conference. But while significant new investment was announced at the conference, the country’s president revealed that Egypt would need hundreds of billions of dollars more in order to fulfill its potential.

The WSJ’s Nicolas Parasie reports that Bank of America Merrill Lynch believes the Egyptian summit “delivered on lofty expectations” but adds that the bank says “bridging the short-term external financing gap remains key, as well as execution of the reform program.”

An image from Islamist propaganda outlet Welayat Tarablos purportedly showing Islamic State forces in Libya.
Agence France-Presse/Getty Images

Egypt’s neighbor Libya continues to struggle, its travails illustrated this week by Associated Press reports that the air force loyal to the country’s elected government attacked the country’s only functioning airport. And a report from the Journal’s Benoît Faucon explains in disturbing detail the methods and strategies of ISIS-linked terrorists who are attempting to destabilize the country further.

A trio of Latin America’s presidents were in the news this week. Venezuela’s national assembly handed President Nicolás Maduro the power to rule by decree, thousands of people took to the streets of 13 cities in Ecuador to protest against that country’s economic policies, and a second prosecutor in Argentina urged an appeals court to reconsider recent allegations against President Cristina Kirchner.

Strong investor demand continues to prompt frontier-market countries to issue sovereign debt. Slovenia, Armenia, Bulgaria and Ecuador joined the party this week. According to the WSJ’s Josie Cox and Ben Edwards, the key characteristics of the deals demonstrate just how eager investors are to find sources of meaningful yield.

Key Stories from the Wall Street Journal

Tensions Flare Over Tanker Seeking Libyan Crude
China Moves to Cool Tensions With Myanmar
Lithuania Presses Hard Line on Russia
Egypt Unveils Plans for New Capital City
Nigeria Election: Muhammadu Has “Edge” Over President Jonathan, Teneo Says
Congo Escalates Crackdown on Pro-Democracy Activists

Around the Web

Power Play: Ghana’s trade minister touts opportunities in power sector.
Firm Foundation: Moody’s praises Namibia‘s ‘strong growth record and sound public finances’.
Energy Boost: China’s Three Gorges Corp. completes construction of $130m wind farm in Pakistan.
Familiar Story: Vietnam promises record year for privatizations.
Backing Up: China defends Sri Lankan port city project.
Forward Thinking: Myanmar’s Yoma bank sets stage for growth in mobile banking.
Higher Goal: Ivory Coast’s PM targets double-digit growth until 2020.
Drive Time: Kenya set to award $3.2 billion in road contracts.

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