Economy
Africa: Resilience in the Private Equity Market
By Angela Simpson and Lydia Shadrach-Razzino
Private markets in sub-Saharan Africa (SSA) have seen a continuous rise in activity since the COVID-19 pandemic. The latest AVCA Private Capital Activity Report 2022 revealed that $7.6 billion of private capital was invested in 2022, resulting in a 3% growth in deal value across the continent last year after a similarly upbeat 2021. According to the report, 37% of the deal volume came from multi-region investments.
Challenges, risks and resilience
This resilience is despite the impact of numerous crises over the last couple of years, especially the looming global recession, supply chain disruptions and soaring energy prices. These factors have led to fears that we could be entering an extended period of high inflation and poor economic growth, but for private equity investors, challenging periods can also provide opportunities for access to value. While not immune to market challenges, the private equity market has the resilience to survive and thrive.
On the positive side, the high amounts of available capital mean that fund managers have more to deploy in a better value environment. The private sector has a remarkable capacity to adapt to changing economic conditions and capitalize on new opportunities. This is boosted by the fact that, to a large extent, risk management has already been factored in. According to Deloitte’s Private Equity Review 2022, 41% of PE firms in South Africa have prioritized risk management in portfolio companies, and 14% of private equity firms in the country said they would focus on bolt-on and tuck-in acquisitions to augment their portfolio companies.
Exits
The general consensus is that exits in the African market might take a little longer going forward, and the fund life of a typical vehicle might need to be extended as managers hold assets a little longer to turn the time and growth into a premium. We have not seen many IPOs recently, and the cyclical nature of the market impacts this. The recent AVCA report details how private capital investors achieved 82 full exits in 2022, the highest number ever recorded in a single year on the continent. Another recent AVCA survey showed that LPs see opportunism in the PE market in Africa for the medium- to long-term, and more than 90 per cent are hopeful that returns in Africa over the next few years will be similar to those in other emerging markets.
Take-privates
Take-privates are also expected to increase in popularity in 2023. There have been some delistings from the Johannesburg Stock Exchange in the past 18 months, and this trend will likely continue. According to the AmaranthCX database of South African company listings and delistings, South Africa has been averaging about 25 delistings a year. This, however, also presents a good opportunity for PE companies as they can take over and delist struggling companies. Taking a longer-term view, PE sponsors can work with the management team of a delisted company to transform it, using innovative methods to create a stronger and more resilient company, removing the burden of reporting requirements and the market spotlight.
Adaptability in financing
Increasing inflation and rising rates have also resulted in a decrease in the availability of cheap debt financing. Fund managers have to generate organic growth and are looking at driving a real improvement in earnings before interest, taxes, depreciation, and amortization (EBITDA). Add-on and buy-and-build strategies are also proving popular because they are helping to mitigate the higher valuations that may have been paid for the acquisition.
There has also been an increase in direct lending, with investors seeking to partner with lenders that can provide deal certainty for acquisitions. However, direct lending hold sizes have been reduced, which has required that financing structures be adapted to facilitate longer-term deals. Other innovative financing methods include permanent capital vehicles, which result in a longer fund life and enable PE firms to hold assets for longer, something that aligns well with the longer holding period often seen in African portfolio companies.
Blended finance is another fundraising avenue that has risen in popularity, and it means that investors can use catalytic funding, such as grants to mobilize private sector investment. According to Convergence, SSA has been the most targeted region for blended finance transactions to date, representing 33 per cent of blended finance transactions launched in 2017–2019 and 43 per cent of the market historically.
Another factor that has mitigated the pandemic’s impact on PE activity in Africa is the composition of the limited partner base of firms operating on the continent, where development finance institutions (DFIs) continue to play a significant role. We have also seen increasing interest in and appetite for start-ups among DFIs, with some pretty edgy new ventures attracting their attention.
DFIs also continue to be the main providers of long-term infrastructure finance in Africa. Local and regional banks, specialist infrastructure funds, and private equity and debt firms are stepping in to collaborate with DFIs and access returns. DFIs can shoulder political risk, access government protections in a way that others can’t, enter markets others can’t, and are uniquely capable of facilitating long-term lending. Multi-finance and blended solutions are therefore expected to grow in popularity as a way to de-risk deals and support a broader ecosystem of lenders.
Resilience in sustainability
In terms of preparing for future market resilience, there is a growing focus among PE investors on the green, low-carbon, and sustainable initiatives in Africa. Environmental, social, and governance (ESG) have been incorporated into PE funds’ general investment considerations for several years now, but it’s fair to say that these are no longer nice-to-haves. Energy efficiency, community healthcare, staff training and qualifications, greenhouse gas emissions, the highest standards of governance and best business practices, inclusion and diversity, social impact, and litigation risks are some factors they have been considering. Alongside the increased focus of equity investors on ESG, some lenders are also prescribing particular ESG principles that a company must meet to receive funding.
It appears that the PE sector is shining in Africa as we head into the second half of 2023, and investments in the sector are playing a catalytic role in sustainable growth and investment on the continent. The Deal Leaders International report was optimistic about the M&A market in SSA, saying that foreign direct investment would increase in the next few years, despite the global economic recession. However, current economic challenges have required resilience, adaptability and agility from the PE market, leading to changes in the structure and length of deals, the implementation of new financing methods, effective risk management, and an increasing focus on ESG.
Angela Simpson and Lydia Shadrach-Razzino are Partners and co-heads of the Corporate/M&A Practice, Baker McKenzie Johannesburg
By Adedapo Adesanya
The Nigerian government has officially gazetted and transmitted the ECOWAS Schedule of Tariff Offers for Trade in Goods under the African Continental Free Trade Area (AfCFTA) to the AfCFTA Secretariat.
The move came ahead of the 16th meeting of the AfCFTA Council of Ministers (COM), which is being held today in Kinshasa, Democratic Republic of Congo (DRC).
The development marked a crucial milestone in regional trade integration amid the current global trade war initiated by the United States President Donald Trump.
Nigeria became the 23rd AfCFTA state party to gazette its Provisional Schedule of Tariff Concessions (PSTCs).
The Minister of Industry, Trade, and Investment, Mrs Jumoke Oduwole, while announcing the development on her official X handle, said the manufacturing and agriculture sectors in Nigeria are poised to see improvements because of this actions.
She said AfCFTA would trigger a 73 per cent growth in tarde volume in the agriculture and fishing sectors, adding that prices of items should begin to see a downtrend as a result because of competition.
“Stronger sectors, stronger Nigeria,” she noted in a statement issued by the Director for Press and Public Relations in her ministry, Mr Adebayo Thomas.
The Minister further said the milestone would enable Nigerian exporters leverage preferential tariff access across African markets, positioning the country as a key player in regional and global trade, stressing that the gazetting and transmission of tariffs to the secretariat signified the country’s readiness for trade under the agreement.
Mrs Oduwole said the development underscored Nigeria’s dedication to leveraging Africa’s single market for economic transformation.
The AfCFTA agreement establishes zero duties on 90 per cent of tariff lines for trade in goods, enhancing Nigeria’s market competitiveness and expanding trade opportunities across Africa.
Essentially, Nigerian goods are now competitively positioned in the African market, ensuring greater business access and profitability.
President Bola Tinubu signed the ECOWAS Schedule of Tariff Offers, which reinforces the country’s commitment to regional trade expansion, strengthening its role in shaping the future of intra-African trade and boosting export competitiveness under the AfCFTA framework.
Furthermore, it enables the seamless shipment of goods to and from Nigeria, unlocking new opportunities for businesses, manufacturers, and exporters.
The gazetting of the schedule of tariff concessions was expected to yield significant benefits, including boosting economic growth and job creation by reducing trade barriers, strengthening regional integration and trade relations through enhanced economic ties, and supporting Nigerian SMEs by lowering costs and encouraging market expansion.
Nigeria’s commitment to AfCFTA implementation makes it an attractive destination for foreign and intra-African investment, reinforcing its role as a trade hub in West Africa.
The gazetting announcement follows the AfCFTA digital trade mandate announced in February in Addis Ababa, where President Tinubu received a personal commendation for his work on digital trade, further reinforcing the country’s commitment to regional and continental trade integration.
The statement added that as a digital trade co-champion, the country was advancing seamless trade facilitation and cross-border commerce, ensuring businesses, especially SMEs, can fully benefit from the AfCFTA framework.
By Adedapo Adesanya
The Minister of Marine and Blue Economy, Mr Adegboyega Oyetola, has instructed the Nigerian Maritime Administration and Safety Agency (NIMASA) to initiate the long-awaited disbursement process for the Cabotage Vessel Financing Fund (CVFF).
This directive marks a significant shift from over two decades of administrative stagnation and ushers in a new era of strategic repositioning of Nigeria’s indigenous shipping.
The CVFF, established under the Coastal and Inland Shipping (Cabotage) Act of 2003, was designed to empower Nigerian shipping companies through access to structured financing for vessel acquisition. However, successive administrations failed to operationalize the fund—until now.
According to the Minister, the disbursement of the CVFF will represent not just the release of funds, but a profound commitment to empowering Nigerian maritime operators, bolstering national competitiveness, and fostering sustainable economic development.
“This is not just about disbursing funds. It’s about rewriting a chapter in our maritime history,” said Mr Oyetola. “For over 20 years, the CVFF remained a dormant promise. Today, we are bringing it to life—deliberately, transparently, and strategically,” he stated.
NIMASA, in alignment with the Minister’s directive, has already issued a Marine Notice inviting eligible Nigerian shipping companies to apply.
Qualified applicants can access up to $25 million each at competitive interest rates to acquire vessels that meet international safety and performance standards.
The fund will be administered in partnership with carefully selected and approved Primary Lending Institutions (PLIs), ensuring professional and efficient disbursement.
“We are not merely funding vessels; we are investing in a future where Nigerian shipping companies can stand shoulder-to-shoulder with their international counterparts,” Mr Oyetola said.
“This is a turning point—one that affirms our commitment to local content, economic resilience, and maritime sovereignty,” he added.
The disbursement of the CVFF is anticipated to yield far-reaching benefits. It will enable the growth of a stronger, self-sufficient shipping fleet, generate employment opportunities, stimulate local shipbuilding and repair industries, and significantly reduce capital flight associated with foreign vessel chartering.
“We are doing what should have been done years ago—because our vision is clear.”
“A strong indigenous fleet is not just a matter of pride; it is a strategic national asset. Through this intervention, we will be securing jobs, strengthening our economy, and redefining our place in the global maritime economy,” said Mr Oyetola.
By Adedapo Adesanya
Nigeria’s inflation rate edged up to 24.23 per cent in March, according to the National Bureau of Statistics (NBS) on Tuesday.
It was the first time since the Consumer Price Index (CPI) has risen since it was rebased in January by the stats office, which made the base year 2024 from the previous 2009.
The new rate indicates an upward movement of 1.05 per cent from the 23.18 per cent reported in February 2025, signalling a return to levels (24.48 per cent) recorded in the beginning of the year after the CPI rebasing.
This latest figures came at a time that the United States President, Mr Donald Trump, has unleashed a trade war that has triggered a sharp selloff in the price of oil, Nigeria’s main export and led to the weakening of the Naira, which will push up import costs, though this should reflect in the next CPI numbers next month.
Although the US administration announced a 90 per cent day pause on the 14 per cent reciprocal tariffs last week, its felt impact remains, as it continues to fight China.
The Nigerian government have announced plans to boost its non-oil imports to tackle the blowbacks from the trade war, which will heavily impact the global economy.
The rise in inflation will also present a challenge to the Central Bank of Nigeria (CBN) regarding interest rates, which it paused at its last meeting.
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