Article: So what do we want from Frontier Market Governments? Hint; not power cuts.

What do we want from Frontier Market Governments? Hint; not power cuts.

There’s no question that the January 9th nationwide power outage across Pakistan - yes, nationwide - must have been frustrating for the country’s 212 million people.

Most will see this as just another power cut, which are common in Frontier Markets. Homes and offices react as usual: generators for the ‘haves’, candles and paraffin for the ‘have-nots’.

But for investors, the scale and scope of the outage spoke of policy failure and not a “… plunge in the frequency in the power transmission system.”

And it left us asking “So what do we want from Frontier Market Governments?” - especially as we look towards the Great Reset.

Turns out it’s a pretty short list.

#1 Stabilize transaction laws: in key areas like profit repatriation, foreign exchange transparency, and employment law. These are table stakes and any administration serious about attracting foreign capital must crack these cases to attract capital.

#2 Sort out the expensive stuff: put sustained, programmatic effort into roads, urban mass-transit, national education and - yes, power generation and distribution. Business needs infrastructure to grow and prosper and will happily pay for it through reasonable taxes.

#3 Cut the red tape. Example? Single-entry, high priced visas, Chamber of Commerce validation of invitation letters, repeated, in-person visits to busy, hot consulates. These are no longer acceptable. Visa on arrival, multiple-entry, low cost (if not free) are now normal pretty much everywhere. Anything more burdensome repels investors.

#4 Limit market distortions: many Frontier Market governments have vested interests in certain sectors where they jig prices, support inefficiency, invest at fantasy valuations and impose unfair duties for competitors. These chasses gardées increase compliance costs for investors, limit upsides for consumers and hold back the power of free markets.

OK, Frontier Market investors are a resilient breed and we take most things in our stride. But when Governments take their eyes off the ball and lose control of the basics, the national investment opportunity starts to look pretty thin.

Do you work for a Frontier Market government? Drop us a line!