Over the past decade, private capital has significantly impacted Africa’s investment landscape, emerging as a key driver in its economic transformation. Private equity (PE), venture capital (VC), infrastructure funds, and private debt have played a significant role in bridging financing gaps, catalysing business growth, and enabling inclusive development across the continent.
As Africa navigates a global economic slowdown, inflationary pressures, currency depreciation, and reduction in foreign aid, the private capital landscape is undergoing a recalibration marked by cautious optimism, sharper due diligence, and a more localised self-reliant approach.
A Cooling, but Not Collapsing, Investment Climate
After record highs in deal volume and fundraising in 2021 and early 2022, activity in Africa’s private capital markets has slowed, mirroring global trends. According to the African Private Capital Activity Report by AVCA, total deal volume dropped in 2023, with investors adopting more conservative strategies. Fundraising has become more selective, with Limited Partners (LPs) scrutinising track records, ESG integration, and risk-adjusted returns more rigorously.
“While global headwinds have made fundraising more selective, what we are seeing is a shift towards quality, not just in assets, but also in fund managers. Investors are prioritising experienced teams with a deep understanding of local markets, and that’s where African GPs have a distinct edge,” notes Bhavna Ramsurun, Partner, BLC Robert & Associates (ALN firm in Mauritius)
Yet beneath the surface, the story is not one of retreat — but of recalibration. While mega-deals are less frequent, smaller, more strategic investments are rising. According to a recent report by Stears titled Africa’s Private Capital Report, capital moved in a new direction in 2024. Debt and structured financing became a more prominent feature of the landscape. Southern and East Africa continued to lead in deal volume, but new energy and infrastructure plays in West Africa started changing the balance. Meanwhile, private investors are navigating a more complex environment, balancing opportunity with currency risks, regulatory uncertainties, and the unpredictability of global markets.
Africa’s Value Proposition: Resilience and Long-Term Growth
What makes Africa attractive remains unchanged, anchored on a rapidly growing young population. This growth, expanding urbanisation, and a growing middle class create scalable opportunities in high-growth sectors. Increasingly, African General Partners are differentiating themselves through their local expertise and market knowledge which they are combining with impact-driven investing that resonates with development finance institutions and ESG-conscious LPs.
“Africa’s private capital story is entering a more pragmatic phase. Investors are more grounded, emphasising legal certainty, dispute resolution mechanisms, and long-term partnerships. This is creating space for more innovative deal structures, including private debt, co-investment platforms and blended finance,” observes Alex Calloway, International Transaction Advisor – UK Counsel, n.dowuona & company (ALN firm in Ghana)
Although slightly muted compared to its 2021 peak, venture capital is showing signs of maturity. Startups are shifting from growth-at-all-costs to sustainable scale. According to AVCA’s 2024 Venture Capital in Africa report, African startups demonstrated remarkable competitiveness at later funding stages and while early-stage funding faced significant headwinds, companies securing growth capital achieved substantial success on the global stage.
The report further indicates that Africa’s entrepreneurial ecosystem collectively secured 487 deals in 2024. This was distributed across 427 venture capital deals with a value of USD 2.6 billion and 60 venture debt deals worth USD 1 billion. Despite declining activity, the median VC deal size rose to USD 2.5 million (+32% YoY), indicating higher deal values despite a drop in overall activity.
Private debt is also rising, offering flexible financing alternatives in an environment with limited access to conventional bank lending. Meanwhile, infrastructure-focused funds are capitalising on opportunities in energy transition, transport and logistics, and digital connectivity — especially under regional initiatives like the African Continental Free Trade Area.
“There is rising investor appetite for scalable projects — from climate-resilient energy to digital connectivity. The key is creating bankable, de-risked models that work across multiple jurisdictions, and that’s where we see real momentum under frameworks like AfCFTA,” comments Ayodeji Oyetunde, Partner, Aluko & Oyebode (ALN firm in Nigeria)
Policy and Regulatory Tailwinds
There is growing recognition across the continent that enabling policy environments are key to unlocking private capital. From fintech licensing reforms to tax incentives for impact investing, governments are considering how they can attract capital. However, inconsistency, unpredictability, and slow reform processes continue to impact investment flows into the continent negatively.
Increased collaboration between policymakers, fund managers, and ecosystem enablers is essential to build a regulatory environment that fosters business growth and de-risks private capital inflows.
Looking Ahead: A More Grounded, African-Led Model
The future of Africa’s private capital landscape should not be written solely in the boardrooms of New York or London — but shaped by local investors, entrepreneurs, and policymakers who understand the intricacies of doing business in African markets. The rise of homegrown fund managers, regional co-investments, and blended finance models is a testament to this shift.
There is also a growing focus on value creation beyond capital shaped by governance and operational support, as well as market linkages and talent development. African GPs are evolving from being only investors; they are finding their place as architects of a rapidly changing investment ecosystem.
Conclusion
Africa’s private capital landscape is at a critical juncture — tested by macroeconomic headwinds but buoyed by long-term fundamentals and a new wave of locally grounded, impact-driven capital. As the market evolves, success will depend on adaptability, partnerships, and a firm belief in the continent’s potential to deliver not just returns but real, lasting impact.
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