Podcast Summary
India market volatility, Kenya protests: JP Morgan's inclusion of India's debt in its index sparks foreign investment but poses challenges for managing market volatility. In Kenya, President Ruto drops controversial tax bill amid violent protests, reflecting public opposition and geopolitical tensions between US and China over resources.
JP Morgan's decision to add India's sovereign debt to its emerging markets index is bringing in a large influx of foreign investment, but this sudden surge could make it challenging for India's central bank to manage market volatility. Meanwhile, in Kenya, President William Ruto responded to widespread protests against a controversial tax bill by deciding not to sign it into law. The violent demonstrations had left at least 22 people dead. FT's Africa editor, David Pilling, explained that the situation in Kenya had been escalating, with protests turning violent and Parliament being stormed. Ruto's decision to drop the legislation was a response to the strong public opposition. In the geopolitical arena, JP Morgan's move highlights the importance of India in the global economy and the US's need to be more pragmatic in securing natural resources to compete with China.
Kenyan protests against finance bill: Protests against unpopular economic policies, like a proposed finance bill increasing taxes on essential goods, can lead to violent clashes and financial implications for governments during times of economic hardship
The Kenyan population has shown significant anger towards their government over a proposed finance bill, leading to widespread protests and violent clashes. The bill, which aimed to increase taxes on essential goods and services, came at a time when Kenyans were already struggling with the economic aftermath of COVID-19 and high interest rates. Despite initially labeling protesters as "treasonous," President Ruto later reversed course and announced he would abandon the bill. The abandonment of the bill could have significant financial implications for Kenya, which had a deficit to GDP of 5.7% this year and relies heavily on international loans to fund infrastructure projects. The protests underscore the challenges governments face in implementing unpopular economic policies, particularly during times of economic hardship.
African tax policies, sanctions: The Kenyan government's withdrawal of a controversial tax bill may lead to cuts in public services and potential economic instability, while the US considers lifting sanctions on a Congolese businessman for access to the country's mineral reserves, highlighting the geopolitical significance of Africa's resources
The Kenyan government's decision to withdraw a controversial tax bill could lead to cuts in public services and potential economic instability. The revenue from the proposed tax rises was crucial for the government to meet its debt obligations and avoid trouble with international financial institutions. Now, with the tax bill withdrawn, the emphasis is on austerity measures within the administration and potential cuts to public services. Meanwhile, in the Democratic Republic of Congo, the US is considering lifting sanctions on Dan Gertler, a billionaire businessman, to gain access to the country's critical mineral reserves. Gertler has been under sanctions since 2017 for allegedly engaging in corrupt deals. The strategic move by the US underscores the geopolitical significance of Africa's mineral resources and the competition among global powers to secure access to them.
DRC minerals sanctions: The US is considering exempting sanctions against Dan Gertler to facilitate Western parties' purchase of his DRC copper and cobalt royalties, reducing reliance on China and securing access to these minerals for clean energy technologies
Dan Gertler, a diamond trader with close connections to the former president of the Democratic Republic of Congo (DRC), has held royalties on significant copper and cobalt mines in the country for many years. These minerals are crucial for clean energy technologies, particularly in the production of power lines and batteries for electric vehicles. The US is considering granting a conditional exemption to sanctions against Gertler to facilitate the sale of these royalties to Western parties. This move is driven by the strategic importance of the DRC as a major producer of these minerals and the competitive advantage China holds in their processing and investment in the country. The US aims to reduce reliance on China and secure access to these resources for clean energy technologies in Western markets.
US raw materials access, DRC: The US is investing $250M in a railway project in the DRC to challenge China's dominance and secure access to raw materials for clean energy technologies, marking a more interventionist approach to foreign policy.
The US is increasingly recognizing the strategic importance of securing access to raw materials, particularly in regions like the Democratic Republic of Congo (DRC), as the world shifts towards a metals-intensive future of clean energy. The US has invested $250 million in a railway project to challenge China's dominance in the region and ensure the materials can be transported west instead of east. This marks a more interventionist approach to foreign policy, reflecting the understanding that control of these resources is crucial for underpinning future technologies. The upcoming US presidential debate between Joe Biden and Donald Trump is another significant event, with topics likely to include age, criminal convictions, and the future of American democracy. Stay tuned for more analysis on these developments and others in our Swamp Notes podcast. Remember to click the links in our show notes for more detailed coverage. This has been your daily FT News briefing; join us tomorrow for the latest business news.