How can Africa’s private equity firms weather the COVID-19 storm?

Private equity firms in Africa are facing significant challenges due to the impact of the COVID-19 pandemic. The restrictions on travel and movement have hampered the pace of investing, making it difficult for firms to carry out due diligence and engage with entrepreneurs across different regions. This has not only affected the speed of investments but also made it challenging for potential investors to assess opportunities in the African market. However, despite these hurdles, David Owino, Managing Partner at Ascent Capital, remains optimistic about the future of private equity in the region. He highlights that there is still a strong interest from financial institutions in Europe and America to allocate capital into Africa. This indicates a continued appetite for private equity investments in the region. Owino emphasizes that certain sectors will remain attractive for private equity investments post-COVID-19, including consumer goods, technology, renewable energy, and healthcare. These sectors are expected to demonstrate resilience and growth potential in the wake of the pandemic. However, he also notes that industries such as retail and financial services may face challenges in the current environment. When it comes to the outlook for private equity investments in Africa, Owino anticipates a slowdown in activity in the short term. The lack of travel and the uncertainties surrounding the pandemic may lead to a delay in new deals and fundraising activities. While there was a positive trend in private equity investments in South Africa in recent years, the current situation may result in a revision of growth projections. Owino suggests that the focus is likely to shift towards the beginning of 2021 for new investment opportunities and fundraising initiatives. Despite the challenges posed by the pandemic, Owino points out that certain sectors such as urban services, education, and healthcare are expected to rebound quickly once the situation stabilizes. The growing urban population in Africa presents opportunities for investments in sectors that cater to the needs of urban residents. Additionally, advancements in healthcare services and local manufacturing capacity are areas that are poised for growth in the post-COVID era. Overall, while the road ahead may be challenging for private equity firms in Africa, there are pockets of resilience and opportunity that investors can explore in the long term.