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. I don't want to spend too much time on this, since few people are likely in a position to capitalize on it; but it's something you should be aware of, since it's symptomatic of what's now happening many places in the world. Everyone knows that South America is liberalizing and freemarketizing; that resulted in stupendous gains in its stock markets and economies. Fewer people know that the same thing is happening in Africa. In Zambia, Tanzania, Kenya, and Zaire, among others, things are changing rapidly from the old regime of "One Man, One Vote--One Time." The old formula worked well enough for the people at the top, who were able to systematically loot their countries and salt away the proceeds in Switzerland. That's where all the foreign aid (which might be defined as a transfer from poor people in rich countries to rich people in poor countries) went as well. The U.S. government still squanders about $20 billion a year this way, and European governments spend proportionally even more; it's all gone straight down a giant rathole.

Casey has lived in seven countries, and visited over 150 ~ most several times. His book The International Man played a part in inspiring this website. Doug Casey's viewpoint and his newsletter are distinctive sometimes outrageous, but always clear, dead honest and very canny. ~ Since 1979 he's written a monthly newsletter, "The International Speculator"  ($145 p.a., 21,000 subscribers). .

But despite the best efforts of Western governments to prop up these corrupt kleptocracies, reality has asserted itself. This was quite evident in Mozambique, where I spent a week. The capital, Maputo, went from being a gem 20 years ago, possibly the prettiest and cleanest as well as one of the most prosperous colonial cities in the world, to a genuine dump, where all the stores were shuttered, and none of the electricity or plumbing worked. Meanwhile, a full-scale bush war has been raging everywhere outside of the capital, making travel totally unsafe.

Travel is still unsafe, as evidenced by the battalion of government soldiers that populate (mostly at likely ambush points) the 100 kilometer corridor between Maputo and the Swaziland border. The "soldiers" are loosely organized teenagers, who will aggressively bum cigarettes from you if you have to stop. But you don't want to stop, because you might join the approximately 200 burned-out vehicles lining that same road.

The civil war between the "bad guys" of Frelimo who currently control the government, and the "good guys" of Renamo, who use a lot of pro-Western rhetoric to garner donations from individuals in the West, is winding down. Soon that funny little saw "I'm a freedom fighter, you're a rebel, he's a terrorist" will become academic here, as the two groups form a coalition government. Even then, there will still be ambushes as units from both armies turn into professional banditos. They are, after all, young, heavily armed, unskilled, and have no other obvious means of support. Even today, it's often impossible to determine which of the dozen or so ambushes each month are conducted by Renamo, Frelimo, freelancers from either organization, or full-time banditos (who are mostly deserters).

But things are much better than they used to be. The Frelimo government has mellowed a great deal from the days when it was run by Samora Machel, who died in a plane crash a few years back. Among other things, Machel promoted starvation by making even subsistence fishing a capital offense; he'd sold all rights to the Russians. Since then the government has backed off from trying to create a true Peoples Republic, and in just two years, the markets are again full of produce, probably 75% of the storefronts are open again, there are several new car dealerships prospering, and factories are being renovated. Frankly, the rate of change is unbelievable; of course, that's all in and around Maputo, insulated from attack.

There are, however, no real opportunities in the capital; property prices fully reflect the changes. I spent most of my time on the beaches and islands nearby, both because they were more interesting and because I've already seen enough Third World cities to last a lifetime. In fact, the dominant impression of a Third World city is smell as much as sight; the diesel fumes and aroma of garbage ripening in the tropical sun is the same worldwide.

In any event, I stayed mostly with an Afrikaner who had staked out 20 hectares (50 acres) of beautiful beach about an hour out of town; his cost basis is basically zero. The government gave it to him because he committed to develop it for tourism; someday it's going to be worth what prime beach front just outside a city is worth anywhere else in the world. He'll fill his property with Germans and Swedes flying down to beat the European winter while taking advantage of fresh lobster and fish that cost almost nothing. And there aren't just hundreds, but thousands of miles of pristine deserted beach on this country's coast. Most nights I slept on the beach, since it was so pleasant; it's strange how you can sleep on the beach safely in a war zone, but you wouldn't dare do so anywhere in the U.S. near a city.

One bright side to this country being dirt poor is that none of the locals have motorboats or sophisticated fishing gear, so the reefs are packed with waterlife. One of the sad things about prosperity is that it will probably look like a vacuum cleaner has gone through the water when the technology arrives here to let people do it. An excellent ancillary reason for getting hold of some beachfront - to make sure it doesn't happen (see the April 1990 issue for more on that).

Another South African I spent time with was a cotton farmer in Swaziland, but had just sold his spread to take advantage of a Mozambique government grant of 10,000 hectares (25,000 acres) on which he'll grow cotton. He'll employ about 2,000 workers at about $ 10 per month each, and expects to be immediately profitable, especially since he can import machinery, seed, etc. duty free, and has a tax holiday for three years. By the time he has the operation in production for a few years, which should be about coincidental with the situation normalizing here, he'll be able to sell out for $5 million to $10 million. Not bad.

The country is full of abandoned farms left by the Portuguese when their property was nationalized; some were looted and abandoned, others, incredibly, are pretty tidy, kept up by loyal workers who awaited the return of the rightful owners. The government is restoring property to all previous owners, but many have such a bad taste in their mouths they won't reclaim it. How'd you like a 1,000-acre dairy farm for $10,000 plus 15 years back taxes (another $15,000)? This is clearly an opportunity for someone who can track these people down. I'm pursuing this from a couple angles, and will let you know.

At the moment, however, it's basically impossible to buy anything in Mozambique (in the conventional way) since there's no process for transferring title; you can only get long-term leases from the state. And that takes lots of palavering with officials, trading of favors, and little envelopes stuffed with cash. But that will change.

Investing in Third World countries

Investing in Third World countries has become quite popular in the last couple of years. There are dozens of closed-end country funds traded now, and likely more on the way, considering the flood of new issues now coming out. On the whole, I'm favorably inclined toward them for a number of reasons I've spelled out here in the past. To give you an analogy, they're like undiscovered low P/E stocks, with huge dormant assets and low production costs, but dishonest, incompetent managements, and very bad public relations. The key, of course, is to buy after a change in management. That's what revolutions, peaceful or otherwise, are all about.

With Third World countries, a change generally isn't made until the place has literally been run into the ground. At that point, people are anxious for change, and all but the most stupid and malevolent have seen enough of socialism in action to have figured out it doesn't work. It's at that point you step in, if the price is right.

In South America, the trend is in motion, and the price is still right - although it's going up with the current worldwide bull market in stocks. Speaking of that, let me add Latin America Fund (LAM, $32) to our buy list, next to Brazil Fund, which has done so well for us. The fund sells at an attractive discount from net assets, and yields an acceptable 2.7%; put a stop-loss in at $26, however, since anything can happen with today's generally overpriced markets.

In Africa, there's no practical way to follow the trend, short of going there and making the rounds personally. You may not be up for it yourself, but perhaps you have a son or grandson (this is not as suitable a suggestion for most women, since these backward societies tend to be quite chauvinistic). If he has a spirit of adventure, a quick wit, persistence, and a small amount of capital, it's possible to make a fortune in a relatively short time. That possibility didn't really exist in these countries just a few years ago, but now it does. And few people are still aware of it. If you have a friend or relative that fits the bill, show him this article (and perhaps December 1989's on Brazil and March's on Chile). Have him drop me a line, with an SASE, and perhaps I can be of help.

Why don't I do it myself? It means living there for months at a time, and it's tough making or receiving telephone calls. In my own situation, it makes more sense to spend a month in each of a dozen countries than twelve months in any one. If you're trying to hit a home run, you want to pick and choose the balls you swing at.

Going back to South Africa, this is why I don't recommend you buy stocks (or land) there. They haven't "learned their lesson" there as yet. It seems all these countries have to make their own mistakes. South Africa is much more analagous to Zimbabwe (which I've visited many times over the years) than Mozambique. Zimbabwe (ex-Rhodesia) was rich and delightful, but has pretty well been run into the ground over the last decade by Mugabe. But not quite far enough, since that government just announced it was going to nationalize 12 million acres, or roughly half of the remaining white-owned farm land in the country, in a wrongheaded effort to prop up his collapsing economy. Better he took a lesson from President Chiluba in Zambia (another place now worth looking at), where, as in Mozambique, they're giving away large tracts of land to anyone who shows he can use it productively.