Igniting potential in Africa's untapped territories
With Munazzah Siddique, Senior Conference Producer, SuperReturn Africa
Private markets investment in Africa has seen its share of ups and downs. However, with the right strategies—and a firm understanding that the continent’s 54 countries each have unique economic conditions, regulatory environments, and political circumstances—the region can offer significant returns for those willing to embrace its dynamic landscape.
Geopolitics and Macroeconomics: Navigating 2024’s Uncertain Terrain
As 2024 comes to a close, Africa's private capital landscape faces a complex mix of geopolitical and macroeconomic challenges. Global tensions—rising oil prices, logistical bottlenecks, and trade disruptions in the Suez Canal—are driving up costs and impacting African businesses. Regional elections in Mali, Mauritius, and Ghana add further uncertainty, with potential shifts in policies and government leadership. Meanwhile, the upcoming U.S. elections, with Harris and Trump as contenders, could significantly influence U.S.-Africa relations, depending on who takes office. Investors must develop robust contingency plans to navigate these evolving risks and opportunities.
At SuperReturn Africa, keynote speaker Arne Elias Corneliussen, Founder & CEO of Norwegian Risk Consulting International (NRCI), will address these challenges and answer key questions in his presentation on Navigating Business in an Era of Geopolitical Instability: A Global Panorama and Implications for Africa:
To what extent are global tensions impacting Africa’s economic outlook?
How are current macroeconomic conditions affecting raw material prices, and how can businesses and governments de-escalate the situation?
How have African countries developed contingency plans in response to the rerouting of hundreds of cargo ships away from the Suez Canal?
Reflections on the 'Super Election Year': What are the results, revelations, and ramifications?
New Entrants to the Market: Breaking Barriers
What does all this mean for emerging managers in Africa? Is all hope lost?
While established funds face their own obstacles, first-time funds in Africa are encountering unprecedented challenges in the private capital landscape. Development Finance Institutions (DFIs) are increasingly skeptical about the institutional quality of new funds, leading to a reluctance to invest or protracted decision-making timelines. However, many Limited Partners (LPs) are now exploring ways to provide working capital to these nascent teams, recognizing that deal-making capability is critical to their long-term viability. The pressing question remains: How can emerging managers attract investment and prove their value in a crowded market?
The landscape for emerging managers in Africa has evolved dramatically, with a surge of new faces entering the General Partner (GP) universe. Many first-time funds are seeking guidance and support in raising capital, increasingly turning to private investors and focusing on smaller funds to build their track record. Some funds are innovating by pooling internal resources to deploy capital without the constraints of formal fund structures, allowing for greater flexibility in their investment approaches. This shift highlights the importance of grounding return expectations in hard evidence to gain credibility with investors.
For those seeking to refine their strategies, Audrey Verhaeghe, CEO of Anza Capital, will lead a workshop at SuperReturn Africa in Cape Town this December titled Stand Out from the Crowd: The Emerging Manager’s Handbook. Key themes include:
An overview of the current landscape for emerging managers in Africa
Insights into what makes investors reluctant or eager to invest
Non-traditional entry strategies for the market
Evolving LP priorities in fundraising
From Risk to Reward
Despite the setbacks, Africa remains rich in resources and home to some of the world’s fastest-growing economies. Opportunities in fintech, renewable energy, and healthcare are abundant, driven by the continent’s youthful population, urbanization, and expanding technological ecosystems. Investors who take a long-term view are well-positioned to tap into these growth areas. The key to success lies in navigating regulatory complexities, currency volatility, and supporting local entrepreneurship and sustainable initiatives.
Hany Assaad, CEO & Managing Director of Avanz Capital Egypt, and Oumnia Benaddi, MENA Equity Lead at the EBRD, will discuss these topics during the Crisis Control fireside chat at SuperReturn Africa. Key questions to be addressed include:
How can investors diversify their portfolios to build resilience despite external risk factors?
How are firms managing regional and cross-border crises, such as foreign exchange risk?
What innovative solutions exist for managing political risk in African markets, and how can investors integrate these most efficiently?
The Road Ahead
While risks abound, there are also compelling reasons for optimism in Africa’s private capital landscape. According to AVCA’s Q2 2024 report, “the volume of exits in H1 2024 surpassed that of the similar period in 2023.” As African economies continue to mature, the demand for infrastructure development, inclusion, and innovation will create further opportunities for investment.
For private market investors, Africa presents a frontier of growth where early movers can capitalize on the continent’s potential. Success will depend on a deep understanding of local contexts, strong partnerships, and a long-term investment horizon. Those who navigate these challenges effectively will be well-positioned to reap the rewards of Africa’s growth story.
The most important event in the African private equity industry for GPs and LPs to connect
"For private market investors, Africa presents a frontier of growth where early movers can capitalize on the continent’s potential. Success will depend on a deep understanding of local contexts, strong partnerships, and a long-term investment horizon."
