Private capital flow into Africa more than doubled from 2020 to 2021

Investors pumped record amounts of private equity and venture capital into Africa last year, according to a new report by the African Private Equity and Venture Capital Association (AVCA.)

The ‘African Private Capital Activity Report’(pdf), released on 19 Mar., found that the total value of private capital deals in Africa reached a record high of $7.4 billion in 2021, representing a 118% increase compared to the $3.4 billion registered in 2020.

The record amount was almost double the $4 billion that was invested on an annual average basis in Africa between 2016 and 2020.

“The report highlights how Africa’s economy continues to be fertile ground with attractive investment opportunities for investors in search of yields,” said Abi Mustapha-Maduakor, CEO at AVCA.

Breakdown of private investment into Africa

There were 429 private capital deals across a range of sectors and geographies – demonstrating that African assets remained attractive throughout the covid-19 pandemic. Private capital is the umbrella term for investments in assets not available on public markets, including private equity, venture capital, private debt, real estate, and infrastructure.

The report attributed the growth to fund managers’ increased appetite to deploy capital in Africa after sitting on ‘dry powder’ for more than one year.

“The accumulation of unspent capital pre-covid-19 pandemic, coupled with the covid-19 deal activity hiatus led to a remarkable increase in investment activity in 2021,”, it said.

Financials were the most funded sector by volume in 2021 accounting for 30% of the total, followed by consumer discretionary (16%), information technology (14%) and industrials (13%). West Africa accounted for the largest share of deals, followed by southern Africa, north Africa, and east Africa.

The greatest share of money was plowed into venture capital assets followed by infrastructure and then private equity. Private debt, loans that are issued by non-bank financial institutions, and which are not traded on public markets, also featured as an asset class that has been growing over the last three years in Africa.

Venture capital accounts for the lion’s share of private funding in Africa

The report found that 54% of the total deal value reported in 2021 were venture capital investments. AVCA’s ‘Venture Capital in Africa Report’, released alongside the private capital report, found that 604 African startups had raised a total of $5.2 billion in Africa last year.

The accumulation of unspent capital pre-covid-19 pandemic, coupled with the covid-19 deal activity hiatus led to a remarkable increase in investment activity in 2021.

Some of the biggest deals included a $400 million Series C investment round by the Nigeria-based payments company OPay and a $200 million Series A round by the Senegal-based mobile money company Wave. Most of the value came from 16 “super-sized deals” that raised a total of $2.6 billion.

However, 32% of the share of venture…