Written by Korede Sotubo
Africa’s private equity (PE) landscape has evolved from a niche frontier market to a sophisticated engine of industrial and digital transformation. As of late 2025, the sector is characterized by a ‘flight to quality’, with investors prioritizing companies with solid unit economics over pure user growth.
Data from the African Private Capital Association (AVCA) and the International Finance Corporation (IFC) shows that while global macro headwinds such as high interest rates and currency fluctuations have created a challenging environment, Africa’s PE ecosystem has shown remarkable resilience, particularly through the mobilization of specialized and local capital.
Regional hubs: rebalancing power
Historically, Nigeria has served as an anchor for private capital in West Africa. From 2020 to 2024, Nigeria accounted for approximately 66% of the region’s transaction volume, with transaction value exceeding $3 billion.
However, the geographic balance will be rebalanced in 2024 and 2025. While Nigeria remains the undisputed leader in fintech, Southern Africa will emerge as a leading destination in 2024, with a mature financial services and industrial sector attracting $2 billion (36% of the continent’s total value) of private capital.
Meanwhile, Ghana continues to solidify its position as a top 10 recipient country, having previously collected about $291 million in a single year. Its appeal lies in its diversified approach to agritech and energy, serving as a stable “gateway” for investors wary of currency fluctuations seen in neighboring countries.
Meanwhile, Kenya is far ahead in East Africa, with a focus on health tech and renewable energy, bolstered by significant institutional support from the African Development Bank (AfDB) and British International Investment (BII).
2024-2025 Performance: Resurrection Cycle
Despite the downturn in 2023, the industry achieved a significant turnaround in 2024. According to the 2024 AVCA Africa Private Capital Activities Report, funding more than doubled to $4 billion, the third highest amount in a decade. This resurgence was particularly “counter-cyclical” as global PE funding fell by 19% over the same period.
A key change in this cycle is the “shrinking” of deal sizes. Investors are moving away from “mega-sized trades” ($250 million or more) in favor of more frequent mid-sized trades. In 2024, the average deal size decreased to $15.2 million. This reflects a strategic focus on small and medium-sized enterprises (SMEs) and ‘scaling up’ providing a clearer path to profitability.
Key indicators (2024-2025) Performance trends Key drivers Total funding $4 billion (+100% increase) DFI commitments and infrastructure funds Exit activity 63 (+47% YoY) Trade sales and secondary buyouts Sector focus Financial and cleantech Digital banking and energy transition Dry powder ~$10.3 billion Capital reserved for 2026 deployment
Changing sectors: From fintech to “greentech”
Financial services remains the most active sector, accounting for around 23% of trading volume, but the narrative is shifting towards sustainability. Cleantech is rapidly catching up with fintech, with investment 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, which have received multilateral support from the IFC and EBRD, demonstrate that “meaningful growth” is now synonymous with energy transition.
Exit frontier and maturity challenges
The most important indicator of market maturity is a surge in exit activity. In 2024, the number of exits in Africa increased by 47% year-on-year, reaching a total of 63. This is an important development for the “African PE story.” Historically, the inability to exit has been a major deterrent for international limited partners (LPs).
Current data shows that trade sales remain the main exit route (41%), followed by secondary sales to other PE firms (32%). While the initial public offering (IPO) market remains shallow on most African exchanges, recent listings on the Nairobi Stock Exchange and the opening of the Ethiopian Stock Exchange in 2025 offer new hope for public market liquidity, albeit in its infancy.
Strategic outlook and structural reforms
Nigeria has clarified regulations on this front through the landmark Investment and Securities Act (ISA) of 2025, which modernizes its capital markets framework and criminalizes fraudulent schemes, making it the first in the region to legally recognize digital assets, coupled with a 47% spike in exit activity across the continent, which has signaled high-profile Nigerian exits such as TPG’s sale of Mavin Global and Cardinal Stone’s exit from i-Fitness. A shift to trade sales and secondary buyouts that prioritize operational quality over direct growth.
Similarly, Ghana is strengthening its investment attractiveness through the Securities Industry (Financial Resources) Guidelines 2025, which introduced stricter capital and liquidity requirements to promote market resilience.
Despite widespread macroeconomic headwinds, Ghana’s private equity sector remains resilient in agritech and renewable energy, highlighted by Adeniya’s exit from Cresta Paints and Gpay’s $18 million debt expansion, with both countries increasingly relying on local pension funds and transparent exit routes to stabilize earnings and attract long-term global capital.
Into 2026, the main challenge remains macroeconomic instability, especially the “multiple exit” compression caused by local currency devaluation. To alleviate 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, structural changes are occurring in the investor base. Development finance institutions (DFIs) still provide 42% of financing, but local participation from African pension funds and insurance companies is increasing. This “homegrown” capital is essential to building a sustainable ecosystem that is less susceptible to the vagaries of global interest rate cycles.
Author profile
Korede Sotubo is a licensed lawyer in Nigeria and New York specializing in international business advisory and private equity M&A. With his expertise in Africa’s regulatory landscape, he has been instrumental in enabling foreign direct investment (FDI) and advised federal government agencies on business regulatory reform in Nigeria.
Korede currently works for a leading global law firm in New York, where he supports middle market private equity acquisitions. As a Salzburg Cutler Fellow, her research focuses on optimizing cross-border transactions and improving the ease of doing business across international terrains. She is a graduate of the University of Ibadan and Duke University School of Law, where she received her Master of Laws degree. and obtain a qualification in business law.
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