Private capital is a significant engine for economic development across Africa, with the potential to transform industries and create new opportunities. However, this capital flow is not evenly distributed across the continent. According to a recent report by Stears, in Q3 2024, five countries—South Africa, Kenya, Nigeria, Ghana, and Egypt—accounted for a staggering 85% of all private capital deals in Africa. These nations, dubbed the ‘Big 5’, have become central to the region’s investment landscape.
The prominence of these economies is no coincidence. They offer favorable business environments, more stable economies, and policies that attract investment. For example, Nigeria’s progressive fintech regulations and Kenya’s thriving mobile money sector have been key drivers of international venture capital flows.
Technology continues to be a major focus for private capital, with the Big 5 leading the charge. One notable example from Q3 2024 is Terrapay, which secured $95 million in debt financing to expand its remittance services across Africa. This highlights the growing interest in tech investments in these countries, which are home to well-established innovation ecosystems.
Across the continent, there were 73 private market deals in Q3 2024, with 39 deals disclosing a total value of $2.27 billion. The bulk of these deals were concentrated in Southern, East, and West Africa, with Southern Africa accounting for 45%, followed by East Africa with 41%. West Africa saw 33% of the deals, while Central Africa made up just 8%.
In terms of sectors, financial services dominated, representing 33% of all private capital investments. Consumer goods came second with 19%, while e-commerce, as part of the consumer goods category, captured 27% of deals, reflecting the growth of trade and commerce across Africa. The technology sector, although growing, ranked fifth, behind agriculture and energy. Notably, 90% of tech deals involved equity financing, underscoring investor confidence in the region’s tech future.
While the Big 5 economies continue to capture the lion’s share of private capital, smaller countries are also experiencing growth, despite facing different challenges. In these nations, debt financing plays a more prominent role, accounting for 28% of all deals, compared to 18% in the Big 5. Agriculture remains highly localized, with 91% of deals confined to a single country. On the other hand, the energy sector has seen notable activity in non-Big 5 countries, particularly in renewable energy projects, driven by the need to address energy shortages and support economic development.
As smaller economies strengthen their policy frameworks, enhance financial ecosystems, and address infrastructure gaps, they are becoming increasingly attractive to private capital. The future of Africa’s investment landscape will be shaped by both the continued dominance of the Big 5 and the growing opportunities in smaller, emerging markets across the continent.
