Has the PE industry failed Sub-Saharan Africa?
African PE (Private equity) firms raised less than $20bn in the decade to 2018, equivalent to just 2.5 per cent of the capital raised by the world’s emerging markets, according to a Preqin report. Moreover, most of that African capital was invested into the relatively advanced economies of South Africa and North Africa, with very little flowing into the rest of the continent.
This limited investment into Sub-Saharan Africa (SSA) is explained by investors in PE funds as a result of the low returns from such investments. The PE firms, themselves, acknowledge the limited returns, but claim these markets are still nascent and that returns will rise as these economies evolve.
Yet the reality is that it may be the approach being taken by SubSaharan Africa’s PE investors that is causing them such...