A Time for Renewal Investor optimism toward Africa reached new highs in the early years of this decade. An uninterrupted commodity boom, stable governments and investment in basic infrastructure had fueled sustained economic growth since the turn of the millennium, culminating in the widespread conviction that a new African middle class would be a boon for businesses across the continent for years to come.
Private equity proved to be a locus of investors’ attention. Over the course of 2014 and 2015, private investment funds focused on Sub-Saharan Africa raised nearly US$9 billion, and private equity in particular captured US$6 billion of that total, nearly matching capital raised in the previous four years combined (see Exhibit 1 on the next page). Public pensions, insurers and endowments from the United States and Western Europe entered the African PE space for the first time, joining longstanding development finance institutions (DFIs) in supporting fund managers’ investments in companies that would capture new growth opportunities.
Yet shortly after these commitments were made, many African markets were beset by falling commodity prices, economic slowdowns and currency volatility that has had a knock-on effect on the investment environment