Profit from Africa's resurgence
By
Tom Bulford Aug 12, 2009
Print this article
Africa: boundless opportunities
Russian President Dmitry Medvedev recently paid a visit to Namibia. He made it clear that he wanted to strengthen Russia's economic ties with the country.
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.
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.
Before he left, 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
A new scramble for Africa is under way and diplomacy is at a premium. 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. 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.
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 (LSE: LONR) has a portfolio of interests ranging from running an airline to canning fish. IPSA Group (LSE: 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.
• This article was written by Tom Bulford, author of the
Red Hot Penny Shares
newsletter, and is taken from his free daily email the
Penny Sleuth
Published in
Tips & advice
| More
articles
by
Tom Bulford
Related articles
-
By Jody Clarke, Nov 20, 2009
-
By John Stepek, Nov 20, 2009
-
By Paul Hill, Nov 20, 2009
-
By Paul Hill, Nov 20, 2009
FREE - MoneyWeek's daily investment email
Our free daily email, Money Morning, is an informative and enjoyable analysis of what's going on in the markets. Written by our Editor, John Stepek, and guest contributors.
Sign up FREE to Money Morning here.
