AVCA sees private capital slowdown in Africa

Despite the challenging macroeconomic environment, Africa's private capital industry is showing resilience and is poised for growth, according to Abi Mustapha-Maduakor, Chief Executive Officer of the Africa Venture Capital Association (AVCA). In a recent interview with CNBC Africa, Mustapha-Maduakor shared her optimistic outlook for private equity (PE) and venture capital (VC) in Africa. She highlighted that while public markets are clouded with uncertainties such as geopolitical issues, elections, inflation, and interest rate outlook, sentiments in the private sector are also impacted. Fundraising and deal investment activity experienced a significant drop, almost a third, reflecting global cautiousness in capital allocation. However, Mustapha-Maduakor emphasized that despite the decline, the number of deals in the past decade was the second largest, indicating the industry's overall resilience. Mustapha-Maduakor discussed various factors influencing the private capital landscape, including the role of catalytic capital from development finance institutions (DFIs), the need for local pension funds to support the industry, and the cyclical nature of global capital allocation, which could eventually turn back to Africa as a diversification opportunity. She pointed out that trends in infrastructure and venture capital remain attractive for investors, with a growing focus on climate-related investments and the integration of artificial intelligence (AI) in tech startups. While global markets witness a resurgence in initial public offerings (IPOs), African markets are still developing in this area, with strategic buyers and secondary sales being more common exit routes. Mustapha-Maduakor highlighted the importance of enhancing stock exchanges to make IPOs a more appealing exit strategy on the continent.