Africa's maturing private equity market set for growth

Subject

Outlook for private equity in sub-Saharan Africa.

Significance

Private equity (PE) investments in sub-Saharan Africa (SSA) grew to 8.1 billion dollars in 2014 from 1.5 billion dollars in 2009, according to African Private Equity and Venture Capital Association data. Inexperience in relatively risky markets and lack of 'investment ready' prospects has held back major foreign PE firms, but this is beginning to change.

Impacts

• Nigerian billionaire Aliko Dangote may increase his investments non-SSA ventures to reduce his exposure to slowing regional GDP growth.
• Disappointing 'middle class' spending growth could dampen investor interest in mainstream retail opportunities such as shopping malls.
• Rising property prices, particularly in first-tier SSA cities, will attract substantial PE investment, particularly by South African firms.