Highlights of African Private Capital Activity Report, released in March 2024 by African Private Capital Association:
In 2023, persistent economic uncertainty continued to cast a dark cloud over private capital activity in Africa. Having weathered the economic headwinds in 2022 with a few scraps, Africa’s private capital landscape stepped into yet another challenging year that affected dealmaking on the continent. Inflation in Africa pushed the upper boundaries in 2023, rising to an average of 17.8%, the highest in over a decade. The rise in global food and energy prices, compounded by domestic factors including fiscal extravagance, disruptions in agricultural supply chains, and national currency depreciations against the US dollar fuelled inflationary pressures in Africa in 2023. As a result, inflation continued to swell across all regions except Southern Africa, where it fell to 8.5% in 2023. North Africa was the worst hit region, experiencing a 2x year-over-year surge in inflation, reaching 16.6% in 2023.
2023 experienced a sharp decrease in deal count, which plummeted by 28%, marking Africa’s steepest year-over-year decline in volume in 12 years, as well as a 22% drop in deal values. The downturn in Africa was driven by a slump in venture capital investments. Despite remaining the preferred investment asset class in Africa attracting 68% of deal volumes and 38% of deal values, after years of frenzied dealmaking, venture capital investing contracted in 2023.
Southern Africa remained resilient. For the second half of 2023, interest rates in South Africa remained unchanged at 8.5%, ushering in a period of relative economic stability. The region accounted for the greatest share (26%) of overall deal volume (alongside West Africa) and 44% of overall deal value.
Read the full report: https://bit.ly/3TXjV50
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