Regional breakdown: West Africa

The region still attracts private equity interest as countries improve their ratings in the Ease of Doing Business index.

West Africa, and in particular Nigeria, have consistently been marked out as appealing prospects for private equity investment and this year is no exception. More than two-thirds of GPs and LPs in the African Private Equity and Venture Capital Association’s 2021 survey view West Africa as an attractive location for investment over the next three years, and more than 40 percent say the same of Nigeria.

The country attracted the largest share of deal volume and value in West Africa in 2015-20, and accounted for 60 percent of deal volume last year, per AVCA data. Although Nigeria’s economy contracted 1.8 percent in 2020, the International Monetary Fund projects growth of 2.5 percent this year. There have also been efforts to further catalyse the country’s PE industry, such as a May 2021 partnership between AVCA and the Pension Fund Operators Association of Nigeria to empower local pension funds to invest in the asset class.

In a statement about the partnership, PenOp CEO Oguche Agudah said: “Pension funds realise that they need to diversify into alternative investments and private equity presents one of such opportunities.”

A number of West African countries have been implementing reforms to enhance the regulatory and business environment. Nigeria, for example, was named among the 10 most-improved economies in the World Bank’s Doing Business 2020 report, as was Togo. Nigeria rose 15 places in the annual Ease of Doing Business ranking, Togo moved up 40, Côte d’Ivoire 12 and Niger 11.

Alexia Alexandropoulou, research manager at AVCA, says: “These ascensions in the Ease of Doing Business rankings across West Africa are evidence of a strong regional motivation for reform and a concerted effort by national governments to reconfigure their strategies to attract more FDI and boost private markets investment.”

Alexandropoulou points to Côte d’Ivoire and Senegal as countries with strong growth potential. Côte d’Ivoire’s share of West African deal volume increased to 12 percent in 2018-20 from 6 percent in 2015-17, and Senegal’s share of deal volume grew to 7 percent from 3 percent over the same period.