In a recent report released by the European Investment Bank, it has been revealed that Africa’s private investment faced a 3% decline, totaling $6.3 billion in 2022. This setback is primarily attributed to global risk aversion, which significantly impacted private equity and venture capital fundraising activities across the continent. Remarkably, this marks the lowest fundraising figure for Africa in nine years, with total fundraising plummeting by 35% to $2.1 billion.
Despite the challenging fundraising landscape, the report highlights the remarkable resilience of private investment in Africa. This resilience can be attributed to the efficient deployment of pre-existing capital, underscoring the continued strong interest in regional investment opportunities.
Notably, the financial services sector remained the prime beneficiary of private capital, attracting nearly 40% of total investments in 2022. This phenomenon is largely attributable to the sustained growth of Africa’s fintech sector, which has experienced substantial investment inflows in recent years.
Furthermore, the report sheds light on the increasing significance of private credit as a vital source of financing for African businesses. Globally, private credit investments surged by 89% in 2022, with Africa mirroring this trend. The private credit market in Africa expanded to $993 million in 2022, constituting 16% of total private capital investments.
South Africa, Kenya, Egypt, and Nigeria retained their positions as Africa’s top four markets for private capital investment in 2022, collectively representing nearly two-thirds of all such investments on the continent. However, it is noteworthy that Nigeria, previously the leading market in 2021, slipped to fourth place in 2022, signaling shifts in the investment landscape.
The report underscores the resilience of Africa’s private investment ecosystem in the face of challenging global economic conditions. The continued growth of the fintech sector and the rising prominence of private credit signify positive trends for the continent’s economic development. Nevertheless, concerns persist regarding the high concentration of private capital investments in a limited number of key markets.
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October 2, 2023
Delino Gayweh
Serrari Financial Analyst
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