Economy
Private Capital Slowdown in Africa Mirrors Global Investment Trends
The African Private Capital Association – today announced the release of the 2023 African Private Capital Activity Report, the anticipated annual report providing insight into dealmaking, fundraising, exits and the key trends shaping Africa’s private capital landscape.
In 2023, the global economy faced a series of interconnected shocks, including rising political tensions, increasing fragmentation in global trade, escalating interest rates and tightening monetary policies to address high inflation. Amidst volatile market conditions, dealmaking in Africa was not shielded from the global slowdown in private capital, leading to reduced investment activity on the continent. However, Africa experienced more robust performance than other regions, such as North and Latin America, which noted comparatively larger declines in deal activity.
Private capital activity resets after post-pandemic highs
In the new report, AVCA found that Africa’s total private capital deal volume declined for the first time since 2016, falling by 28% year-over-year (YoY) to 450 deals. Despite a reduction in the number of transactions, Africa showed resilience, returning to the steady growth trajectory the region drove until 2022 when investors deployed large reserves of capital that were not allocated during the Covid-19 pandemic. Compared with activity throughout the last decade, 2023 was the second-strongest year on record for deal volume in Africa. Notably, deal volume on the continent surpassed the annual average of 264 deals from 2012 to 2022 and the average of 387 deals from 2019 to 2022.
Venture Capital and Infrastructure drive investor appetite
Continuing established trends, investors favoured venture capital (VC) as the route to back promising African businesses with innovative, tech-enabled solutions in rapidly developing markets. VC maintained its four-year streak as Africa’s leading asset class, accounting for 68% of the total investment volume of private capital activity across the continent in 2023.
The report notes that infrastructure had an impressive year for capital raising and deployment as the only asset class to benefit from increased funding in 2023, with deal values surging to US$1.8bn – a remarkable threefold YoY increase. Investments in renewable energy largely fueled this trend, indicating a growing interest in leveraging Africa’s abundant solar, hydro, biomass, and wind potential to accelerate the clean energy transition.
Shifting trends and familiar patterns
In a departure from previous years, Southern Africa reclaimed its dominance as one of Africa’s top investment destinations. The sub-region attracted 119 capital investments at US$2.6bn, the highest volume (together with West Africa) and the value of deals across the continent. South Africa accounted for the majority of investments in Southern Africa, with 81% of deals in the sub-region, due to growth across the IT and industrial sector and a rise in VC investments in software and services, logistics and transportation.
In line with AVCA’s previous research, the Financials, Information Technology, and Consumer Discretionary sectors remained the most attractive sectors, accounting for 54% of the total volume of private capital deals in 2023. This trend replicates investor activity noted in previous years as digital financial services and e-commerce expand to meet growing consumer demand, presenting more opportunities for investors.
Final close funds show a modest decline and interim fundraising surges
Notwithstanding final closed funds declining by 9% YoY, investors continued a trend of increasingly high values of capital raised for private debt and VC funds. Interim fundraising also surged across the continent, with Africa-focused fund managers achieving 40 interim closes. The uptick in private debt interim fundraising underscored growing interest in private debt as an asset class, stepping in to fill the gap left by commercial banks as investors seek protection from rising interest rates.
Exit market resets to pre-2022 averages
Despite a 48% YoY decline in volume, Africa recorded 43 exits in 2023, which marks a return to pre-2022 averages of 42 per year. All sub-regions in Africa experienced a YoY decline. Economic challenges were exacerbated in 2023, ending the exit rush in Africa of 2022 led by fund managers dealing with a backlog of mature portfolio companies from the Covid-19 pandemic. Southern Africa, demonstrating its position as a mature exit market, was the most popular sub-region for exits, increasing its overall share of exits to 36% YoY.
Abi Mustapha-Maduakor, Chief Executive Officer, AVCA, said: “Despite global economic headwinds, we are pleased to see Africa-focused investors’ ongoing commitment to the continent, particularly in venture capital – the continent’s leading asset class. Whilst there were dips in investment activity across many asset classes, infrastructure proved to be resilient, as the only asset class to receive increased funding during the year. Based on this report, our expectation for the coming year is that investors will remain committed to investment opportunities that leverage disruptive tech on the continent.”
By Dipo Olowookere
The Nigerian Exchange (NGX) Limited was further pulled back by 0.50 per cent on Tuesday as a result of profit-taking in some heavyweight stocks.
Like the preceding session, the key sectors of Customs Street were depressed yesterday, with the banking index down by 2.82 per cent. The consumer goods declined by 0.52 per cent, the insurance space lost 0.10 per cent, and the energy counter shrank by 0.03 per cent, while the industrial goods segment was flat.
Consequently, the All-Share Index (ASI) eased by 1,437.54 points to 241,984.80 points from 243,422.34 points, and the market capitalisation contracted by N922 billion to N155.204 trillion from N156.126 trillion.
The worst-performing stock was International Energy Insurance, which gave up 10.00 per cent to close at N5.76. Vitafoam dipped by 10.00 per cent to N189.00, Austin Laz crashed by 9.93 per cent to N3.90, SUNU Assurances depleted by 9.82 per cent to N3.58, and Sovereign Trust Insurance lost 8.37 per cent to finish at N2.30.
On the flip side, Conoil gained 9.79 per cent to trade at N213.00, Prestige Assurance also expanded by 9.79 per cent to N1.57, Neimeth jumped 9.74 per cent to N8.45, eTranzact chalked up 9.40 per cent to close at N16.30, and Cornerstone Insurance improved by 9.09 per cent to N5.40.
The bourse witnessed heavy sell-offs in some equities, with Sterling Holdings recording the sale of 100.9 million units worth N782.8 million to lead the activity log. UAC Nigeria transacted 49.4 million units valued at N9.1 billion, Access Holdings sold 28.8 million units for N699.3 million, Zenith Bank exchanged 29.4 million units worth N3.0 billion, and GTCO traded 20.2 million units valued at N2.7 billion.
At the close of transactions, market participants bought and sold 535.5 million shares worth N36.8 billion in 55,123 deals compared with 569.1 million shares valued at N31.4 billion traded in 77,652 deals on Monday. This implied that the trading value went up by 17.20 per cent, while the trading volume and the number of deals went down by 5.90 per cent and 29.01 per cent, respectively.
By Adedapo Adesanya
The NASD Over-the-Counter (OTC) Securities Exchange was further down by 0.48 per cent on Monday, June 16, as a result of the losses printed by three bellwethers, led by MRS Oil Plc, which fell by N15.80 to N142.20 per unit from N158.00 per unit.
Further, FrieslandCampina Wamco Nigeria Plc dipped by N2.94 to close at N180.14 per share versus the previous day’s N183.08 per share, and Central Securities Clearing System (CSCS) Plc crumbled by 38 Kobo to N80.24 per share from N80.62 per share.
Consequently, the market capitalisation of the trading platform moderated by N12.55 billion to N2.605 trillion from N2.605 trillion, while the NASD Unlisted Security Index (NSI) weakened by 20.98 points to 4,333.35 points from 4,354.33 points.
During the trading day, the value of transactions surged by 16.5 per cent to N45.6 million from the preceding session’s N39.2 million, and the number of deals soared by 34.8 per cent to 31 deals from 23 deals, while the volume of securities declined by 30.6 per cent to 688,290 units from 992,164 units.
At the close of trades, Great Nigeria Insurance (GNI) Plc remained the most traded stock by value on a year-to-date basis with a turnover of 3.4 billion units valued at N8.4 billion. The second spot was occupied by Infrastructure Credit Guarantee (Infracredit) Plc, with 2.3 billion sold for N6.5 billion, and the third position was taken by CSCS Plc, with 66.9 million units exchanged for N4.6 billion.
GNI Plc also ended the session as the most traded stock by volume on a year-to-date basis, with 3.4 billion units worth N8.4 billion, followed by Infracredit Plc with 2.3 billion units traded for N6.5 billion, and Resourcery Plc with 1.1 billion units transacted for N415.7 million.
By Adedapo Adesanya
The Naira suffered a 0.55 per cent or 91 Kobo loss against the US Dollar in the Nigerian Autonomous Foreign Exchange Market (NAFEX) on Tuesday, June 16, closing at N1,357.18 /$1 compared with the previous day’s N1,356.27/$1.
It also weakened against the Pound Sterling at the official market during the session by N11.53 to trade at N1,820.39/£1 versus Monday’s rate of N1,808.86/£1, but appreciated against the Euro by N2.06 to quote at N1,573.79/€1 versus the preceding session’s N1,575.85/€1.
In the black market, the Nigerian currency crashed against the Dollar yesterday by N5 to sell for N1,385/$1, in contrast to the N1,380/$1 it was traded a day earlier, and at the GTBank FX desk, it traded flat at N1,373/$1.
Nigeria’s gross external reserves surged to $50.505 billion, the highest international Dollar balance since January 2009, affirming expectations that the local currency will remain along a stable band. The FX reserves position was buoyed by inflows from oil sales.
In its Article IV consultation report on Nigeria, the International Monetary Fund (IMF) said that the Naira remains significantly undervalued despite recent gains from FX reforms. It noted that its Real Effective Exchange Rate (REER) assessment showed the local currency was still trading below levels supported by the country’s economic fundamentals, saying the Naira should have traded around N1,142.04/$1 using the end-of-2025 exchange rate benchmark, or N1,130.88/$1 when calculated using the average exchange rate for the year.
As for the cryptocurrency market, prices showed renewed risk appetite as total 24-hour trading volume jumped 51 per cent to $207 billion, open interest rose 2.4 per cent to $113.41 billion, and liquidations surged 64 per cent to $561 million, with shorts accounting for the bulk of the forced exits, according to Coindesk data.
Cardano (ADA) slid 2.7 per cent to $0.1731, Binance Coin (BNB) slumped 1.6 per cent to $605.80, Ripple (XRP) declined by 1.5 per cent to $1.22, Bitcoin (BTC) fell 0.8 per cent to $65,739.70, Dogecoin (DOGE) also tumbled by 0.6 per cent to $0.0873, and TRON (TRX) depreciated by 0.6 per cent to $0.3166.
However, Ethereum (ETH) grew by 0.5 per cent to $1,795.40, and Solana (SOL) rose by 0.2 per cent to $73.81, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) remained unchanged at $1.00 apiece.
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