Between 2015 and 2020, West Africa has attracted $5.4 billion in private equity investment, according to a report recently issued by the African Private Equity and Venture Capital Association (AVCA). This makes the region the part of the continent to have captured the most PE investment during the period under review, accounting for 24.8% of the $21.7 billion attracted over the period.

Southern Africa, led by South Africa, comes second with $4.4 billion. According to the document, between 2015 and 2020, Southern Africa recorded the highest number of deals-364-with a value of $4.4 billion. West Africa followed with 313 deals but attracted the highest value of deals at $5.4 billion. North and East Africa followed with 220 deals at $3.6 billion and 237 at $2.8 billion, respectively.

This trend can be explained by the macroeconomic contexts of the two regions. West Africa has countries such as Côte d'Ivoire and Senegal, which over the period analyzed, have achieved average growth rates of over 6%. Although the Ivorian economy contracted in 2020, it is one of the few in sub-Saharan Africa to have maintained a positive growth rate, the report says. There are also Nigeria and Ghana, whose potential market of 250 million people has continued to attract investors.

Southern Africa, for its part, has suffered a decline in South African economic performance. Long before the covid-19 pandemic, the South African economy had already been struggling due to crises in its government, a lingering energy challenge, and a slight slowdown in the mining sector.

Behind these performances, 2020 was a particularly challenging year for private equity. Deal volumes and fundraising were down compared to the performance in 2019. Some analysts, however, are optimistic about 2021. Nearly three-quarters of participants (73%) in an S&P Global Ratings survey of private equity firms in the Middle East and Africa (MEA) region expect deal volumes to improve in the coming months.

Idriss Linge