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The Potential of Private Equity Remains Largely Untapped in Southern Africa

Three hundred and sixty-four deals worth $4.4bn were recorded in the region between 2015 and 2020, according to the African Private Equity and Venture Capital Association’s 2020 Annual African Private Equity Data Tracker, released in March, but 69% of the deals and 64% of the deal value were registered in South Africa alone. The Covid-19 pandemic has not helped matters. Private equity final closes across Africa as a whole dropped to $1.2bn in 2020 from $3.8bn in 2019 as the pandemic hit. The region’s economies have been ravaged – Zimbabwe’s GDP shrank by 8% last year, South Africa shrank by 7% and Botswana by 8.3%.  Still, there have been green shoots. The number of deals recorded across the continent rose to a high of 255 from 230 in 2019, with a value of $3.3bn and with early stage investments representing 49% of the total volume. About 55% of the deals reported in 2020 were in technology-enabled companies, as digital innovation continues to gain traction across Africa. Southern Africa’s economies are expected to partially bounce back this year as vaccinations are gradually introduced, with Zimbabwe expecting growth of 3.3%, Botswana 7.5% and South Africa 3.1%.