Private Equity in Africa: Momentum, markets and meaningful growth

By Korede Sotubo

The landscape of private equity (PE) in Africa has evolved from a niche frontier market into a sophisticated engine of industrial and digital transformation. As of late 2025, the sector is characterized by a “flight to quality,” where investors prioritize firms with robust unit economics over pure user growth.

Data from the African Private Capital Association (AVCA) and the International Finance Corporation (IFC) suggests that while global macro headwinds such as high interest rates and currency volatility have created a challenging environment, Africa’s PE ecosystem is demonstrating remarkable resilience, particularly through specialised funds and local capital mobilisation.

Regional Strongholds: The Rebalancing of Power

Historically, Nigeria has served as the anchor for West African private capital. Between 2020 and 2024, Nigeria commanded approximately 66% of the region’s deal volume, representing over $3 billion in transactions.

However, 2024 and 2025 have seen a geographic rebalancing. While Nigeria remains the undisputed leader in fintech, Southern Africa emerged as a dominant destination in 2024, attracting $2 billion in private capital (36% of the continent’s total value), driven by mature financial services and industrial sectors.

Ghana on the other hand continues to solidify its position as a top-ten recipient, previously attracting nearly $291 million in a single year. Its appeal lies in a diversified approach to agritech and energy, serving as a stable “gateway” for investors wary of the currency fluctuations seen in larger neighboring economies.

Meanwhile, in East Africa, Kenya is taking a major lead and has pivoted toward healthtech and renewable energy, enhanced by significant institutional support from the African Development Bank (AfDB) and British International Investment (BII).

The 2024-2025 Performance: A Resurgent Cycle

Despite a subdued 2023, the industry achieved a significant turnaround in 2024. According to the 2024 AVCA African Private Capital Activity Report, fundraising more than doubled to $4.0 billion, the third-highest value in a decade. This resurgence was notably “counter-cyclical,” as global PE fundraising fell by 19% in the same period.

A critical shift in this cycle is the “shrinking” of deal sizes. Investors are moving away from “mega-deals” (over $250 million) in favor of more frequent, mid-sized commitments. In 2024, the average deal size dipped to $15.2 million, reflecting a strategic focus on Small and Medium Enterprises (SMEs) and “scale-ups” that offer clearer paths to profitability.

 

Key Metric (2024-2025)	Performance Trend	Primary Driver
Total Fundraising	$4.0 Billion (100% Increase)	DFI commitments & Infrastructure funds
Exit Activity	63 Exits (47% YoY Increase)	Trade sales & secondary buyouts
Sector Focus	Financials & Cleantech	Digital banking & Energy transition
Dry Powder	~$10.3 Billion	Capital reserved for 2026 deployment

 

Sectoral Shifts: From Fintech to “Green-tech”

While Financial Services remains the most active sector, accounting for roughly 23% of deal volume, the narrative is shifting toward sustainability. Cleantech has rapidly caught up to fintech, with investments in renewable energy and climate-smart agriculture reaching nearly $1 billion by late 2025. Large-scale infrastructure projects, such as Egypt’s integrated solar and battery storage plants, are drawing multi-lateral support from the IFC and EBRD, signaling that “meaningful growth” is now synonymous with the energy transition.

The Exit Frontier and Maturity Challenges

The most significant indicator of a maturing market is the surge in exit activity. In 2024, Africa recorded a 47% year-over-year increase in exits, reaching a total of 63. This is a vital development for the “African PE narrative,” as the inability to exit has historically been the primary deterrent for international Limited Partners (LPs).

Current data shows that Trade Sales remain the dominant exit route (41%), followed by Secondary Sales to other PE firms (32%). While the Initial Public Offering (IPO) market remains shallow across most African exchanges, recent listings on the Nairobi Securities Exchange and the launch of the Ethiopian Securities Exchange in 2025 offer new, albeit nascent, hope for public market liquidity.

Strategic Outlook and Structural Reform

Nigeria’s regulatory clarity on this front, through its landmark Investments and Securities Act (ISA) 2025, which modernised the capital market framework, criminalised fraudulent schemes, thus becoming the first in the region to provide statutory recognition for digital assets, combined with a 47% surge in continent-wide exit activity, has seen high-profile Nigerian exits like TPG’s sale of Mavin Global and CardinalStone’s exit from i-Fitness, signaling a shift toward trade sales and secondary buyouts that favor operational quality over raw growth.

Similarly, Ghana is strengthening its investment appeal through the Securities Industry (Financial Resources) Guidelines 2025, which introduced stricter capital and liquidity requirements to encourage market resilience.

Despite broader macroeconomic headwinds, Ghana’s private equity sector remains resilient in agritech and renewable energy, highlighted by Adenia’s exit from Cresta Paints and Zeepay’s $18 million debt expansion, as both nations increasingly lean on local pension funds and transparent exit pathways to stabilize returns and attract long-term global capital.

Moving into 2026, the primary challenge remains macroeconomic volatility, specifically the “exit-multiple” compression caused by devalued local currencies. To mitigate this, fund managers are increasingly turning to Private Debt and “hybrid capital” to provide flexible financing without the immediate valuation pressures of pure equity.

Furthermore, a structural shift is occurring in the investor base. While Development Finance Institutions (DFIs) still provide 42% of fundraising, local participation from African pension funds and insurance companies is growing. This “homegrown” capital is essential for creating a sustainable ecosystem that is less sensitive to the whims of global interest rate cycles.

Author’s Profile

Korede Sotubo is a Nigeria and New York-qualified attorney specialising in International Business Advisory and Private Equity M&A. With expertise in the African regulatory landscape, she has been instrumental in enabling Foreign Direct Investment (FDI) and advising federal agencies on the reform of business regulations in Nigeria.

Korede currently practices at a leading global law firm in New York, where she supports middle-market private equity acquisitions. As a Salzburg Cutler Fellow, she focuses her research on optimising cross-border transactions and enhancing the ease of doing business across international terrains. She is an alumna of the University of Ibadan and Duke University School of Law, where she earned her LL.M. and a certification in Business Law.

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