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 Aduragbemi Omiyale
On Tuesday, December 17, 2024, President Bola Tinubu will present the 2025 budget to a joint session of the National Assembly.
The size of the 2025 Appropriation Bill is about N47.9 trillion and would be presented to the parliament for approval.
Speaking at the plenary on Thursday, December 12, 2024, the President of the Senate, Mr Godswill Akpabio, said the presentation by Mr Tinubu would be at the chamber of the House of Representatives.
However, it is not certain if the lawmakers will pass the budget before December 31 to allow for a recent budget cycle of January to December.
Recall that on December 3, the senate approved the Medium Term Expenditure Framework and Fiscal Strategy Paper (MTEF/FSP) for 2025 to 2027.
This was after the President presented this the National Assembly on November 19 ahead of the consideration of the 2025 budget proposal.
In the MTEF/FSP, the government said it planned to borrow about N9.22 trillion from local and foreign sources to finance the budget deficit.
It pegged the crude oil benchmark at $75 per barrel and a daily oil production of 2.06 million barrels at an exchange rate of N1,400 to $1, and a targeted gross domestic product (GDP) growth rate of 6.4 percent.
At the plenary today, Mr Akpabio informed his colleagues that, “The President has made his intention known to the National Assembly to present the 2025 budget to the joint session of the National Assembly on December 17, 2024.”
By Adedapo Adesanya
Nigeria added 150,000 barrels per day to its crude production in November 2024 as it continues to pursue an ambitious 2 million barrels per day target.
According to the Organisation of the Petroleum Exporting Countries (OPEC), Nigeria’s oil production rose to 1.48 million barrels per day in November, up from 1.33 million barrels per day the previous month.
In its Monthly Oil Market Report (MOMR), OPEC revealed that at 1.48 million barrels per day, it is the continent’s leading oil producer, surpassing Algeria’s 908,000 barrels per day and Congo’s 268,000 barrels per day.
Business Post reports that OPEC doesn’t account for condensates, which Nigeria’s accounts for in its broader 2 million barrels per day target.
Despite the surge in production levels, Nigeria is still under producing its 1.5 million barrels per day output quota under a deal involving OPEC and 10 other producers known as OPEC+.
OPEC said it relied on primary data gotten through direct communication, noting that secondary sources reported 1.417 million barrels per day as Nigeria’s crude production in November — up from 1.4 million barrels per day in October.
The data also shows that OPEC’s total oil production among its 12 members rose by 104,000 barrels per day in the month under review.
According to secondary sources, the total of the 12 OPEC countries’ crude oil production averaged 26.66 million barrels per day in November 2024.
“Crude oil output increased mainly in Libya, Iran, and Nigeria, while production in Iraq, Venezuela, and Kuwait decreased”, OPEC said.
“At the same time, total non-OPEC DoC crude oil production averaged 14.01 mb/d in November 2024, which is 219 tb/d higher, m-o-m. Crude oil output increased mainly in Kazakhstan and Malaysia,” the organisation added.
In a related development, OPEC trimmed its 2024 and 2025 oil demand growth forecasts for the fifth time this year.
Now, the cartel expects the world’s oil demand growth at 1.61 million barrels per day from the previously 1.82 million barrels per day.
For 2025, OPEC says the world oil demand growth forecast is now at 1.45 million barrels per day, a 900,000 barrels per day cut from the previously expected 1.54 million barrels per day.
On the changes, OPEC says that the downgrade for this year owes to more bearish data received in the third quarter of 2024 while the projections for next year relate to the potential impact that will arise from US tariffs.
By Adedapo Adesanya
The duo of Afriland Properties Plc and Geo-Fluids Plc crashed the NASD Over-the-Counter (OTC) Securities Exchange by a marginal 0.06 per cent on Wednesday, December 11 due to profit-taking activities.
The OTC securities exchange experienced a downfall at midweek despite UBN Property Plc posting a price appreciation of 17 Kobo to close at N1.96 per share, in contrast to Tuesday’s closing price of N1.79.
Business Post reports that Afriland Properties Plc slid by N1.14 to finish at N15.80 per unit versus the preceding day’s N16.94 per unit, and Geo-Fluids Plc declined by 1 Kobo to trade at N3.92 per share compared with the N3.93 it ended a day earlier.
At the close of transactions, the market capitalisation of the bourse, which measures the total value of securities on the platform, shrank by N650 million to finish at N1.055 trillion compared with the previous day’s N1.056 trillion and the NASD Unlisted Security Index (NSI) went down by 1.86 points to wrap the session at 3,012.50 points compared with 3,014.36 points recorded in the previous session.
The alternative stock market was busy yesterday as the volume of securities traded by investors soared by 146.9 per cent to 5.9 million units from 2.4 million units, as the value of shares transacted by the market participants jumped by 360.9 per cent to N22.5 million from N4.9 million, and the number of deals increased by 50 per cent to 21 deals from 14 deals.
When the bourse closed for the day, Geo-Fluids Plc remained the most active stock by volume (year-to-date) with 1.7 billion units valued at N3.9 billion, followed by Okitipupa Plc with 752.2 million units worth N7.8 billion, and Afriland Properties Plc 297.5 million units sold for N5.3 million.
Also, Aradel Holdings Plc, which is now listed on the Nigerian Exchange (NGX) Limited after its exit from NASD, remained the most active stock by value (year-to-date) with 108.7 million units sold for N89.2 billion, trailed by Okitipupa Plc with 752.2 million units valued at N7.8 billion, and Afriland Properties Plc with 297.5 million units worth N5.3 billion.
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