Diverse insights into Africa

Where pensions systems exist across most of Africa, they do so against a backdrop of elevated levels of informality in labour markets. The result is that the pension contributions outside of the public sector are intermittent and relatively low.

The standard narrative across the continent is of a small percentage of the population in formal employment for whom social security is possible.

Africa can leverage its high mobile telephony penetration and digital adoption to tackle a foundational challenge to improved provision of social protection: enrollment.

According to the Organisation for Economic Co-operation and Development (OECD), assets in pension funds continued to grow throughout 2020, growing by 11% from the end of 2019 to a reported USD56 trillion as of the end of 2020.

Pension savings on the continent are growing, but this growth can be accelerated through paradigm shifts around pension policy, regulation, incentives and mediums to enable greater participation rates.

Apart from the Stock Exchange of Mauritius (MUSE) that experienced a 57% increase in daily turnover, all other exchanges saw a decline in their daily turnovers for 2019 when compared to 2018.

This Bright Africa Private Equity report focuses on the PE ecosystem in 2021 – including fundraising, dry powder, investments and pricing – and considers some interesting trends

Before the remarkable market contraction in 2020 and 2021, private equity (PE) fundraising activity across Africa showed strong growth between 2016 and 2019.

We have estimated the dry powder of the African Private Equity Industry, using fundraising data and the average deployment period RisCura observed.

The extent to which supply of investable opportunities exists cannot be observed directly. However, the level of deal activity at which investors make such investments can be measured.

The volume of exits and the quality of exit routes available in Africa have been key concerns for investors looking to access African PE. However, data shows that exits are taking place in Africa.

The perception of risk and returns, compared to other investment opportunities, influences the PE market. We explore the theoretical cost of equity, which reflects the perceived risk of the different markets.

Many of the drivers of price changes are unobservable, so it is often difficult to interpret changes over time. We assess the data available.

When looking at the prices for private equity assets in South Africa and Africa and the landscape that influences it, we can see market fundamentals reflected.

The total value of the debt outstanding is concentrated in five countries, making up 81% of the total bonds outstanding

The analysis covers the two countries with the largest sovereign debt balances. In both countries, local investors exceed foreign investors.

Africa will have to overcome challenges to gain more private sector investment to meet its infrastructure development funding deficit.

Alternative structures and avenues are opening, allowing investors to access this asset class more readily.

Several road infrastructure development projects are in progress in West Africa and East Africa that could set a precedent for other projects on the continent.

Southern Africa still has the continent’s largest rail network, but East Africa and West Africa have substantial rail expansion projects on the go that could see rail connectivity increase, linking several countries.

Although conventional thermal power makes up the bulk of capacity in South and North Africa, there is good potential for growth in the use of renewable energy on the continent.

Despite the majority of all African trade being through imports and exports at its largest regional ports, the continent’s ports handle only 6% of global water borne traffic and only 3% of global container traffic (Source: World Atlas).

The property market has long received attention from Africa’s institutional investors, especially in countries with relatively small and under-developed capital markets.

New developments in the retail sector over the past ten years have increased the supply of A-grade shopping centres and contributed to increased rental rates in local currency over this time.