Last week I wrote about Lenovo Group’s (Hong Kong: 0992; OTC: LNVGY) successful entry into the Chinese smartphone market. I posited that the company would have a relatively easy time breaking into Africa, given the prevalence of Chinese technology on the continent.

Maybe someone at Microsoft (NSDQ: MSFT) read my piece and decided they wanted a piece of the action (probably not, but it’s a nice thought), because the company announced on Monday that it was launching a “4Afrika” initiative that would entail a USD75 million investment on the continent over the next three years.

The goal of the program is to boost Internet accessibility on the continent by offering low-cost smart devices, promote the development of technology geared specifically towards Africa’s unique needs and help bring African web developers and ventures to maturity.

Microsoft is also partnering with the government of Kenya to bring low-cost or even free wireless broadband access to the country’s Rift Valley in a test project for white space technology that utilizes unused wireless spectrum to provide WiFi access. If successful, the project could be easily replicated across the continent.

Microsoft’s new approach to Africa is interesting in that it’s working on building a market for its products from the ground up. While there are clearly some philanthropic intentions there, given the sheer size and scope of the business opportunity in Africa, it’s also good corporate strategy. It’s also noteworthy that in helping to train web developers, it’s basically building itself a future indigenous workforce.

There’s also a certain competitive edge to the effort as Google (NSDQ: GOOG) has been making similar efforts on the continent for several years. Google began its efforts in Kenya in 2007 to help develop local content and educational initiatives through partnerships with local telecoms and technology businesses.

Google also partnered with Chinese handset maker Huawei and local telecom Safaricom to develop and offer an Android-based smartphone called the Ideos for USD100 a unit. It’s estimated that about 300,000 Ideos are being used today.

While that’s not a lot of units in absolute terms, it’s a solid start on a massively underserved continent. Those efforts are being helped along by the fact that a number of international consortiums have been laying new undersea data cables around the world, connecting the emerging markets to the developed ones through data links.

A number of undersea cable connections are already in place in the emerging markets, but the bulk of these intercontinental connections must be routed through more developed ones, leading to concerns that data can be mined for intelligence purposes.

As a result, a new consortium is working on laying a cable that will run from the Siberian region of Russia to China, from there to India and South Africa and then connect to Brazil before reaching the end of its line in Miami.

Given all the work of establishing these data pipelines and the efforts of Western (and Eastern) technology companies to build new markets from the ground up in Africa, the continent will eventually find itself in the happy position of having a 21st century technological economy handed to it.

In the intermediate term, that’s great for Africa and Western investors. Don’t be surprised if 25 years down the road we begin to hear growing cries of corporate colonialism, but hopefully all the efforts to develop local talent will help to mute that criticism.

Portfolio Roundup

Indonesian gross domestic product (GDP) grew by 6.2 percent last year, slightly down from 2011 due to a slowdown of exports to China but reflective of strong domestic consumption growth. As I’ve often written, Indonesia’s demographic profile skews quite young – the median age is just 28.5 years – and their incomes are growing rapidly. As a result, domestic consumption helps to shield the country’s economy from external shocks.

The one troubling component of the GDP report was the continued slowdown in investment growth. In the second quarter, investment came in at 12.5 percent but slowed to 9.8 percent in the third quarter and 7.3 percent in the fourth. Since there are still a number of weak spots in the global economy, foreign businesses are hesitant to invest in countries such as Indonesia where there are restrictions on foreign investment, particularly in such sectors as natural resources where the government is working to grow local ownership.

Rhetoric is also heating up ahead of elections slated for mid-2014, with many candidates taking a more protectionist stance. While that’s typical of elections anywhere, many are worried that no clear reform candidate has yet to emerge from the pack.

Overall, I remain relatively positive on Indonesia as the country’s economy continues to grow faster than its historical average of 5.7 percent. And while overall investment may be slowing down, foreign direct investment still hit record levels in 2012 and many local companies are holding big cash reserves. I suspect many are waiting on the outcome of next year’s elections before making any big moves. Continue buying iShares MSCI Indonesia Investable Market Index Fund up to 35.

Tullow Oil (London: TLW) has completed its acquisition of Spring Energy Norway and even as the deal was closed, Spring was granted 13 new licenses in the Norwegian Continental Shelf. Most of the new licenses are located adjacent to existing currently held areas and are a significant expansion on Spring’s current operating territory.
Additional license applications are pending in the area which includes the North Sea, Norwegian Sea and the Barents Sea, the results of which are expected to be announced in the second quarter. Tullow Oil is still a buy up to GBp1,450.