Africa’s Private Equity Deals Hit Five-Year Low in H1 2025

Africa’s private equity market, excluding South Africa, fell to its lowest level in five years during the first half of 2025, as global headwinds and regional risks dampened investor appetite.

According to new figures from Finance in Africa, deal values dropped sharply as rising global interest rates, a strong US dollar, and geopolitical tensions steered capital towards safer, higher-yielding markets.

The continent recorded transactions worth US$4.67 billion between January and June, a 15.4% decline from US$5.52 billion in the same period of 2024, and more than 53% below the US$10 billion posted in the first half of 2019.

Deal volumes also contracted, down 21% year-on-year to 174, compared with 2024’s tally, and nearly 20% lower than the 217 deals reported in 2019.

Energy dominated activity, with just two transactions accounting for US$2.16 billion, almost half of total value.

Beyond these outliers, caution was evident across most sectors.

“Analysis of private equity investment in the continent over the past four years mirrors this steady decline, amid challenges brought about by a mix of global macro pressures, regional risks, and shifts in investor strategy,”

Finance in Africa reported.

The study highlighted Africa’s continued reliance on offshore capital, with flows redirected to the US and Europe, where higher interest rates and lower risk profiles have made fundraising more difficult.

“For Africa, where private equity funds remain heavily reliant on offshore capital, this has translated into weaker fundraising and a more selective deployment of capital,”

the report said.

Analysts at Stears noted that the five largest African economies have seen their currencies depreciate by an average of 51% over the past five years, eroding returns once converted into US dollars.

“This depreciation has created significant challenges for fundraising, as it increases the risk profile and affects key performance metrics such as distributed value to paid-in and total value to paid-in,”

Stears said in a briefing on Tuesday (September 9).

Nigeria led the continent with deal values of US$956.7 million in H1 2025, though this represented a 66.9% year-on-year fall, reflecting investor unease over currency volatility, energy insecurity, and political uncertainty. Mauritius (US$367 million), Rwanda (US$274.5 million), Angola (US$233.8 million), and Côte d’Ivoire (US$213.7 million) rounded out the top five, underscoring a narrowing funnel of capital inflows.

One of the sharpest reversals has been in technology and fintech, which dominated African private equity during the boom years of 2020–2022.

The post-pandemic surge drove valuations higher as global investors backed startups in payments, e-commerce, and logistics.

But tighter global liquidity and rising rates have since corrected those valuations, weighing on deal momentum.

Investor focus is now shifting to defensive sectors such as healthcare, agriculture, food value chains, and logistics, industries considered more resilient to macroeconomic shocks.

However, these have not yet offset the broader slowdown.

“The shift in global sentiment and a redirecting of attention to more defensive opportunities has cooled valuations and deal appetite, reflected in the lower deal volume,”

Finance in Africa said.

Despite current weakness, analysts maintain that Africa’s long-term fundamentals remain compelling.

The continent’s youthful population, rapid urbanisation, and urgent needs in infrastructure, healthcare, and energy transition are expected to draw capital back once global conditions stabilise.