Southern Africa Q&A: PE has demonstrated its resilience

What have been the stand-out sectors for PE investment in Southern Africa?

During the past 12 months, the sectors that have stood out include infrastructure, energy and telecommunications, with a focus on green energy, given the increase in innovations and incentives in the green economy. As an example, the 488 million rand ($30 million; €25 million) Green Outcomes Fund was launched in April to increase investment in green small, medium and micro-sized enterprises. The fund is a collaboration between National Treasury’s Jobs Fund and GreenCape, with knowledge partner UCT GSB Bertha Centre for Social Innovation.

What are the key trends in the region?

The key trends over the past few months have been fuelled in response to covid-19. We have seen an increase in digital innovation – for example, health tech businesses are automating aspects of medical care. We anticipate digital innovation to continue to be a growing trend as companies try to mitigate the risks involved with providing products and services during strict lockdown measures, while still trying to optimise their business operations.

We also anticipate the launch of new funds and initiatives to support the economic recovery needed after the adverse effects left by the health and economic crisis caused by covid-19. The private equity industry has demonstrated its resilience and adaptability, as we saw with the launch of the Sanlam job-preservation initiative, as well as the Ninety One SA Recovery Fund in association with Ethos Private Equity. These are two examples of Southern African private equity taking the initiative in response to covid-19, to preserve and create jobs to re-ignite economic growth.

What are the future prospects for Southern African private equity?

Covid-19 and the subsequent economic crisis have illuminated various vulnerabilities in economies, such as the need for greater collaboration between the public and private sectors and the disruption in supply chains.

With these challenges come renewed opportunities, such as the Agreement Establishing the African Continental Free Trade Area, which aims to increase Africa’s presence in the global economy by improving intra-African trade flows and attracting foreign investment. With the disruptions experienced in supply chains and the execution of AfCFTA, we anticipate more investment into new and existing businesses locally to secure supply chains, which may contribute to local job creation and to boosting the economy.