(Ecofin Agency) - From US$1.1 billion in 2021, the region attracted less than US$600 million in 2022. This is mainly due to the poor performance of startups in South Africa, its powerhouse.
The private equity funding raised by Southern African startups dropped by 46% year-on-year in 2022. Indeed, from US$1.1 billion in 2021, the funding dropped to less than US$600 million. According to Africa: The Big Deal, Southern Africa was even " the only region where the number of $100k+ deals disclosed in 2022 was lower than in 2021."
The region's underperformance is closely linked to South Africa's, it adds. Indeed, in 2022, the private equity funds raised by South Africa, which alone accounted for 98% of total funds raised in Southern Africa in 2021, fell slightly. Nevertheless, the country accounted for 95% of the private equity funding attracted by the region that year.
The "two runner-ups - Zambia & Namibia - attracted about 40x less funding each (~$15m) than the rainbow nation," Africa: The Big Deal explains.
The US$15 million raised in Namibia came from a single operation by Jabu. Similarly, the US$12 million raised in Zambia was all thanks to a single operation by Union54. In both Namibia and Zambia, the two funding rounds were led by investment firm Tiger Global.
Zimbabwe recorded three US$100,000+ deals in 2022, compared to six in 2021. Botswana and Mozambique each had one deal and four countries recorded none.
With less than US$600 million raised in 2022, Southern Africa now ranks fourth in the continent in terms of private equity funding attracted, far behind West, East, and North Africa. In 2021, it was second. Its share of continental funding fell from 23% in 2021 to 12% in 2022.