The evolution of private equity and capital markets in Africa

Abstract

When thinking about Africa, many investors still view the continent as devastated by war, famine and poverty. Still, some countries are facing huge problems and some intense challenges but during the last decade Africa was among the fastest growing continents in the world. This growth could not have been possible without the implementation of sound macroeconomic policies, the liberalization of the economy, the improvement of the legal environment and the support to the private sector. All those reforms and changes have helped attract foreign investments but also accelerated the development of African financial markets and the private equity activity. Looking only at those factors would not give us the whole picture neither would help us assess the true drivers behind on the one hand the recent expansion of the African financial markets and on the other hand the increase of the capital allocated to African private equity funds. Indeed, looking at the world economy but more specifically to Western countries, we could easily understand that poor economic growth and uncertain expectations have forced investors to look for higher returns in other economies; African countries due to some features were among those. The following report aims at studying (a) the recent expansion of African financial markets and the development of the private equity industry (b) how investors could take advantage of some African booming economies (c) the risks, returns and sustainability of any investment strategy in Africa.