Last month Russian President Dmitry Medvedev paid a visit to the African country of Namibia.
There is a bit of history here. Back in the 1960s and 70s Russia supported Namibia’s SWAPO party in its battle for independence from South Africa.
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But Medvedev was not in town to swap tales of revolutionary days with Namibia’s President Hifikepunye Pohamba. He got straight down to business. He made it clear that he wanted to strengthen Russia’s economic ties with Namibia. He wanted his visit to mark the start of a new era of co-operation. Many good intentions were expressed for joint endeavours in areas such as tourism, education and health. - Petrochemical industry consultant KBC Advanced Technologies (ticker: KBC) wins a $10m contract to work on the design of a new petrochemical complex in Ecuador.
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But Medvedev’s visit achieved more than fine words. Before he left Namibia’s capital Windhoek, he had signed a deal. Russian fishing fleets would be given access to Namibian waters and will now haul in 200,000 tons of hake and mackerel each year. And Russia will build a new power plant to provide electricity for both Namibia and for export to South Africa.
So another relationship has been forged. Another poor African nation has gladly accepted the capital and the assistance of a foreign power. His job done, Medvedev moved on to Angola, where for thirty years the Soviets had backed the Popular Movement for Liberation in the bloody civil war against the US and South African backed Unita.
The trouble with Africa... and the opportunity
The history of Africa is troubled. Back in the nineteenth the European colonial powers carved up the continent. French claims extended over nearly four million square miles, Britain about half of that. The Congo became the private property of the greedy and devious King Leopold II of Belgium. White settlers helped themselves to land. In South Africa 87% of the total area was declared white land; in Zimbabwe half of the land was appropriated by just 2,500 white settlers. In our indignation against Robert Mugabe and other African dictators it is all too easy to forget the root cause of the problems. But in Africa memories are long and many old scores are as yet unsettled.
Now a new scramble for Africa is under way and diplomacy is at a premium, but more so for some countries than for others. For decades enterprising Chinese have travelled far and wide in search of prosperity without trying to exert political domination. Now China is reaping the benefit. China is knocking on the door of African nations, without carrying historical baggage.
In the race to build relationships in Africa, China has the lead. Back in 1902 the trans-African railway was built by an enterprising engineer from Aberdeen, Sir Robert Williams. After being destroyed in the Angolan civil war it is now being rebuilt by the Chinese.
This is by no means China’s only contribution to Africa’s infrastructure. Still in Angola it has built roads, bridges, schools, hospitals and telecommunication networks, and in exchange been granted an entry ticket to Angola’s rich off-shore oil fields. In Gabon the Chinese have rejuvenated the entire national grid, this the price for access to the huge Belinga iron ore deposit. China has invested $100bn into Africa and it has not stopped yet.
How you, too, can make money from Africa
Contracts are being signed. Hands are being shaken. Celebratory banquets are being prepared. African countries are open for business but in this century it is their leaders who hold the whip hand and they know it. They know that Africa is rich in all manner of resources that the rest of the world desperately needs. Gold, copper, zinc, oil and gas, uranium and much more. Africa has fertile land, too, land that should be doing much more to support its ever increasing population. There are opportunities for farmers as well as miners.
Will Africa seize the moment? Behind their friendly smiles and promises of largesse foreign diplomats and business executives are after one thing. Trade, and money and profit. They must tread a fine line. The Africans want to do business – but they do not want to be exploited.
How can investors participate in Africa’s resurgence? How much trust should we place in political promises, in contracts with individual governments, in the promise of local movers and shakers?
Well, there is no shortage of penny share companies trying to get in on the act. Lonrho (ticker: LONR) has a portfolio of interests ranging from running an airline to canning fish. IPSA Group (ticker: IPSA) is building power stations to solve South Africa’s black-outs. Mining ventures are two a penny… but you need to be careful with those.
Africa, to me, is risky territory. And yet it also a land of boundless opportunity. For the August issue of my newsletter Red Hot Penny Shares, I have identified two companies that are in the thick of the action. I like what they are doing. I do not think it will ruffle feathers. I think they could make big money.
I’m publishing this newsletter tomorrow at 5pm. If you would like to receive it, just add your name to the mailing list today. You can do that here.
And also, look out for my email tomorrow. I’ve got another opportunity that you might well like to add to your portfolio. It’s not a penny share, this one, but it’s got great potential all the same and is a way to play a very important investment trend.
Best regards,
Tom Bulford
For The Penny Sleuth
P.P.S. If you want to follow the insights of a small company investor, and uncover the hidden gems of the stock market, find out more about The Penny Sleuth by clicking here.
