AVCA: Africa’s private capital deals reach $7.4bn in 2021

A report released by the African Private Equity and Venture Capital Association (AVCA) has revealed that private capital deals in Africa reached a record high of $7.4 billion in 2021, marking a substantial 118 percent increase compared to the previous year. The report also highlighted that West Africa attracted the largest share of deals at 33 percent. Nadia Coulibaly, the Head of Research at AVCA, discussed the key findings of the report in an interview with CNBC Africa. In the wake of the challenging times brought about by the COVID-19 pandemic, the resilience and recovery of private capital investments in Africa have been remarkable. Despite the initial uncertainties and lockdowns in 2020, 2021 saw a resurgence in fundraising and deal activities, reflecting investors' confidence in the continent. Private capital activity reached a new high of $7.4 billion in 2021, surpassing the annual average deal value between 2016 and 2020. The report indicates a 12% growth rate in private investments in Africa, signifying the maturation of the private investment landscape. The total volume of private capital deals reported in Africa saw a 118% increase from 2020, demonstrating the continent's transition from resilience to recovery. The venture capital sector in Africa also witnessed significant growth, with 650 deals reported in 2021. Fintech emerged as the most active sector, attracting 30% of the deal volume and nearly 40% of the deal value. The rise of fintech can be attributed to the shift towards digital banking and mobile money solutions during the pandemic, highlighting the sector's importance in meeting financial needs. Consumer discretionary, digital, and IT sectors also saw notable activity in terms of volume. The tech and tech-enabled companies were particularly prominent in the venture capital space, with 81% of deals involving technology solutions. Additionally, 15 African tech companies raised over $100 million in 2021, indicating a positive trajectory for the industry's development. Looking ahead, the forecast for 2022 remains optimistic, with expectations of sustained investment momentum. The momentum in technology and infrastructure sectors is likely to drive investment activity, with fintech and infrastructure projects set to attract significant funding. The infrastructure sector, in particular, has seen a significant increase in investment, reaching a high of $1.8 billion in 2021. One of the most intriguing aspects of the report for Nadia Coulibaly was the shift in regional dominance, with West Africa emerging as a leader in the investment landscape. The substantial fundraising and investment activity in the infrastructure sector also underscored the attractiveness of such assets for investors. In conclusion, the record-breaking private capital deals in Africa in 2021 reflect the continent's resilience and growth potential. With a favorable outlook for the future, the private investment landscape is poised for continued expansion and development, paving the way for economic growth and innovation across various sectors.