Resilience, resurgence and results in 2021

04 Feb 2021

By Abi Mustapha-Maduakor, Chief Executive Officer

1. AfCFTA launching Africa into the global economy

It is now one month since the AfCFTA launched to leverage regional value chains and encourage greater capital flow across Africa by removing trade barriers. This might be the most important development in recent trade history as the AfCFTA opens up opportunities to boost local and regional manufacturing capacity, bridge funding gaps across the continent, and create more value. Over time, we could potentially see an increase in intra-Africa exports as part of the continent’s economic resurgence.

2. Onward and upward for the start-up ecosystem

Between 2014–2019, we saw steady growth in the number of early-stage deals in Africa, reaching a six-year high of 139 reported VC deals in 2019 worth US$1.4bn. In 2021, we can expect to see an increase in the number of VC deals across the continent, building on the success of the past six years. So far this year, Pula, a Kenyan business specialising in agricultural insurance, has closed a Series A round led by TLcom Capital, raising US$6mn to support smallholder farmers. This reflects our findings that Financials and Information Technology make up the bulk of VC deals by volume and value. In addition to Utilities, Healthcare and E-Commerce, we can expect these sectors to continue driving investment opportunities this year and beyond.

3. Greater investor appetite for real assets

Despite the constraints of the past year, we saw accelerated growth in e-commerce businesses, potentially indicating more demand for industrial space. The recent US$38mn fundraise by Daystar Power to expand solar access across West Africa was also welcome news for the industry. Looking forward, real assets which offer consistent returns over extended periods, including data centres, energy and real estate, will attract more investment from African PE and VC players.

4. Strengthening our healthcare systems

Even though African countries initially saw slightly lower rates of COVID-19 infection in 2020, the pandemic revealed gaps in the continent’s healthcare systems. This year, we expect to see more investments in the health ecosystem to improve access to medical equipment and healthcare facilities. 54gene and mPharma, for example, are a testament to the tremendous potential that we see emerging from the vast pool of home-grown talent.

5. Industry collaboration to boost operational capacity

Shared prosperity and inclusive growth are more important than ever. It’s great to see several development finance institutions (DFIs) working with PE firms to provide portfolio companies with operational support and access to short-term liquidity as they bounce back from the economic fallout of the past year. As the largest investor group in the African PE industry, DFIs are expected to continue playing a leading role going forward.

A quote by Abi Mustapha-Maduakor

As 12 African countries hold presidential and parliamentary elections this year, the continent’s economic resurgence will be driven by forward-thinking policies that seek to improve the ease of doing business and the regulatory environment, thereby attracting more private capital into key sectors.

We look forward to supporting our members and industry stakeholders to channel further investment into Africa in 2021 and over the next few years.

 

About the author

Abi is the Chief Executive Officer of the African Private Equity and Venture Capital Association (AVCA). Prior to this role, she was Head of Business Operations and Finance at MedAccess (a subsidiary of CDC Group), which focuses on providing innovative finance to facilitate access to medicines across Africa and Asia. She has held leadership roles in AVCA as Chief Operating Officer and as the Special Adviser to the Minister of Industry, Trade and Investment in Nigeria, where she focused on programs and policies to spur private sector investment and SME growth.

Abi is currently completing the Oxford Executive MBA at Saïd Business School.

« Back to Afri-Spective Blog

Isabelle Bébéar is the Director of International & European Affairs at @Bpifrance. We caught up with her to discuss… https://t.co/nkVqrB8zX1

RT @forbesafrica: Of all the sectors, the world of private equity gets the most rap for its exclusive male-dominated culture. @Abi_Mustapha…

Are you fundraising or thinking of fundraising this year? Sign up for the Fund Manager Pitch Clinic at #AVCA2021 an… https://t.co/JFjcfut7bg

RT @AMIC_PE_morocco: Join the @AVCA_Africa for a virtual experience on best practices for fundraising and fund structuring, investors succe…

Together with our colleagues at EAVCA, SAVCA and PEVCA, we are delighted to join forces with FSD Africa to support… https://t.co/ThQq4Ns6RP

;