(Ecofin Agency) - Ecofin Pro's Journal of Transactions has been collecting and storing information on private financing in Africa (excluding bank credit and financial markets) since 2017. It now enables a comprehensive overview of this sector, encompassing various aspects such as resources provided by development finance institutions, private equity firms, and venture capital.
This databank is more about the flows of transactions rather than the stock of amounts, as resources raised by investment funds can be redirected to projects. The analysis below is based on information collected up to November 10, 2023.
Since 2023 started, the overall value of private financing flows involving African entities (excluding bank credit and stock markets) has reached $19.2 billion as of November 10, 2023, according to data gathered and updated by the Ecofin Pro platform. It is now obvious that by the end of December 2023, a new record for private financial transactions will be achieved in the region, surpassing the $19.8 billion from the year 2022.
This would be a peak for Africa since 2017, the year Ecofin Agency started compiling this data. This trend is also evident in the annual transaction numbers. With a total of 940 transactions already recorded, the figures for 2020 to 2022 have been surpassed. The number in 2019 (1,071 transactions) could also be exceeded.
Another positive aspect highlighted in the data analysis is that the median, representing the middle value of transactions when sorted in ascending order, has again exceeded $3 million in 2023. This level had not been reached since 2017 when the median was $3.5 million. Moreover, 2023 marks a record with 470 transactions surpassing this median value, compared to only 360 six years earlier.
Furthermore, the number and total value of transactions exceeding $100 million remain robust. As of the latest data collection date, 2023 already had 38 transactions of this size. This is fewer than the 48 recorded in 2022, but the overall value ($10.45 billion) is similar. However, this positive dynamic hides some disparities.
The growth rate of transaction values shows signs of slowing down after the years 2021 and 2022, which were considered post-COVID-19 recovery years. After an increase of 53.10% in 2021 and 31.6% in 2022, it is uncertain whether the overall value for the current year will experience such a significant rise.
A more in-depth analysis and examination of expert opinions suggest hypotheses to explain this slowdown. Unlike the Covid-19 pandemic, which led to increased liquidity and opportunities, particularly in the technology sector, other cyclical factors such as rising interest rates in developed markets, the repercussions of the Ukrainian crisis on food prices, and consequently, on the interest rate policies of African central banks, have had a negative impact on investments in Africa.