Finance

Covid-19: Africa’s private equity sector at risk of a slowdown

Friday, 27 March 2020 15:24
Covid-19: Africa’s private equity sector at risk of a slowdown

(Ecofin Agency) - Private equity firms present or operating in Africa face the risk of a slowdown due to the current coronavirus pandemic. Many companies that partner with private equity funds are also exposed to the negative consequences of the lockdown measures taken by several countries in the region to deal with the pandemic.

In South Africa, the Central Bank plans a quantitative easing strategy that will involve buying bonds to bring balance in the financial sector, especially the banking sector. For the time being, the arrangements for supporting investments by private equity firms and funds are not clearly defined.

According to data provided by the Crunchbase database, a total of $1.24 billion was raised over the first quarter this year from private equity firms. This is the lowest level for the period since 2016.

Since the companies benefiting from private equity investments are also likely to perform poorly, the South African Private Equity Association calls on sector players to support these companies. According to relevant data collected by the Ecofin Agency, 172 investment funds focusing on Africa are active in the region.

In addition to these investment funds, there are also development finance institutions with a stake in the capital of nearly 450 companies or investment funds. Private equity is as important a part of economic financing as the banking sector in Africa. Its evolution in the post-covid-19 years is to be followed.

Idriss Linge



 
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ECOFIN AGENCY offers a selection of articles translated from AGENCE ECOFIN. Founded in 2011, Agence Ecofin is a leader in Francophone Pan-African economic news, particularly in West and Central Africa. The agency publishes daily news on nine African economic sectors: Public Management, Finance, ICT, Agribusiness, Energy, Mining, Transport & Logistics, Communication, and Training.

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