Investments into African economies have been on the rise. Data collected by Asoko Insights shows that between 2015 and 2018, 861 investment deals where sealed. 44 percent of the deals were collectively valued at over $44 billion (KSh4.4 trillion), a noteworthy input into African economies.
Private equity transactions are credited with the steady growth in Africa’s private sector. According to the African report, “… equity stakes rose from just over half of deals in 2015 to two-thirds in 2018.” The move will benefit the local economies by driving economic growth and enhancing corporate governance in the region.
Traditionally, investments into Africa mainly went to the developed economies – South Africa and Mauritius. In the four years between 2015 and 2018, Asoko insights estimate that nearly 25 percent of the deals went to South Africa. However, the African Report notes that attention is shifting to other evolving economies, particularly in the East Africa region. In the period under review, South Africa, Kenya and Nigeria were the leading investment destinations.
Foreign investors are drawn to the fastest growing sectors such as financial services, power and utilities, food and beverages, and agriculture. Investments into the manufacturing segment have been on the decline.
Notably, the size of investments has been on a downward trend according to data by Asoko Insights. It shows that investors are focused on mid-sized investments. For instance, two East-African private equity firms; Ascent Capital Africa and Catalyst Principal Partners have committed part of their funds to mid-sized companies.
Although Africa has been reliant on external investments, research shows that inter-Africa investments are on an upward trend. South Africa is the leading nation in outbound investments within the continent. Other countries that have shown interest in intra-Africa investment include Morocco.
The growing interest in African economies presents an opportunity for continued growth in the continent.
