Regional guide: West Africa

More than two-thirds (68 percent) of West African PE deal value over 2014-19 occurred in Nigeria, Africa’s largest economy. The country accounted for 44 percent of deal volume in 2019, according to the African Private Equity and Venture Capital Association, followed by Côte d’Ivoire with 21 percent and Ghana with 16 percent.

“In West Africa, Nigeria still remains the prominent destination for private equity investments in the region. Specifically, the increased allocation limit for pension funds investing in private equity funds (from 5 percent to 10 percent) by the National Pension Commission was a great incentive for PE investments in the country,” says Alexia Alexandropoulou, research manager at AVCA.

In the association’s latest industry survey, 42 percent of LPs and 54 percent of GPs identify Nigeria as an attractive country for investments over the coming three years.

Yet after three consecutive years of economic growth, the African Development Bank expects Nigeria’s real GDP to shrink by between 4.4 percent and 7.2 percent in 2020 depending on the severity and duration of the covid-19 pandemic.

Although Nigeria is likely the effects of the pandemic will be felt across West Africa. Despite this, Alexandropoulou says that “investors will continue to remain attracted by investment opportunities that are emerging in the region”.

Moving on up

Bright spots include Senegal, which saw its share of West African PE deals increase from 1 percent in 2014-16 to 6 percent in 2017-19. The country passed a Startup Act at the end of last year to promote innovation and provide a framework that better facilitates entrepreneurship in the country.

Côte d’Ivoire’s share of West African PE deals has also been on an upward trajectory, rising from 9 percent in 2014-16 to 12 percent in 2017-19.

“The country has burgeoned into one of the key players in West Africa, particularly within Francophone West Africa,” says Alexandropoulou.