By Antony Mutunga
Despite being in recovery after facing a difficult start in the pandemic, private investment in 2021 hit a record high in the last five years. According to the African Private Capital Activity report by African Private Equity and Venture Capital Association (AVCA), private investment reached Sh856.2bn ($7.4bn) as compared to 2020, where it stood at Sh393.4bn ($3.4bn).
For a while, Africa has maintained its resilience and continued to be among the leading regions with vast potential. The case has been similar in the past — whether with a pandemic, periods of political instability, or financial crisis, and the African region has managed to maintain its growth no matter the conditions.
This time around, the remarkable increase in investment activity in 2021 was mainly the result of the accelerated pace of capital deployment by private capital fund managers in the post-Covid era across various investment strategies and sectors.
According to the report, of the total investments in 2021, venture capital investments made a majority share with 54 percent, translating to Sh462.8bn ($4.0bn) venture capital deals being executed. This was followed by infrastructure investments (24 percent), private equity (19 percent) and private debt (3 percent). Apart from increasing investment value, private capital deals also rose from 258 in 2020 to 429 in 2021.
Once again, the West African region accounted for the largest share of deals in Africa for 2021, recording 33 percent, with Nigeria accounting for a large percentage of the total deals in the region, 69 percent. Following West Africa was South Africa (20 percent), with South Africa accounting for 78 percent of total deals in the region; North Africa was third (17 percent), with Egypt attracting the most private investors (69 percent).
At 16 percent, although seeing a fall in position, East Africa witnessed increased investment in the other regions. Kenya was again in the lead in terms of the largest share of several deals, 66 percent.
As more and more investments continue to flow into Africa, the financial sector was on top of the list as it attracted the largest share of the value of investments in 2021, recording 39 percent; the industry also recorded the largest share in terms of number of deals, 30 percent which were both increases as compared to 2020. This was mainly a result of some large deals involving fintech companies operating across the continent. For example, within Africa’s fintech space, Chipper Cash, an African cross-border payments company, raised a combined Sh28.9bn ($250million) in May and November 2021 from a wide range of investors.
According to the report, the rapid growth of mobile and internet penetration in Africa, coupled with challenges related to traditional banking infrastructure and services, has laid the foundation for fintech to flourish and transform the financial services sector in Africa.
In terms of the share of the total value of investments, industries (21 percent) and utilities (14 percent) ranked 2nd and 3rd respectively. The utilities sector saw a considerable share as much investment was required to construct renewable energy projects. On the other hand, in terms of the largest share in number of deals, the Consumer Discretionary sector, which includes automobiles and auto components, consumer durables and apparel, and consumer services (16 percent), was 2nd. The information technology sector (14 percent) was 3rd on the list.
Be it the pandemic or conflict, looking forward, the future of private capital in Africa looks bright, driven by the continent’s strong growth fundamentals, digital transformation, technology adoption, cross-country and cross-sector collaboration, and increasing levels of regional integration. 2022 will see some countries like Kenya host a general election; how will it affect private investment for the country and the East Africa region as a whole? If past trends are anything to go by, the numbers are expected to rise again. (
Email your news TIPS to Editor@nairobilawmonthly.com, and to advertise with us, call +254715061658 anytime of the day
