The financial sector has emerged as the most attractive for investors seeking new ventures, according to new findings by pan African market insights firm Stears.
Between July and September 2024, financial services emerged as the most active, accounting for one-third (Sh97.99 billion) of total private capital deals recorded on the continent, with Kenya and South Africa leading the charge.
In the period, Stears recorded 73 private market deals, including 39 deals with a combined disclosed value of $2.27 billion (Sh293.96 billion).
Financial services led activity, accounting for 33 percent of all deals, followed by consumer goods at 19 per cent and energy at 18 per cent.
Kenya and South Africa accounted for 33 per cent of the deals recorded by Stears during Q3 2024, majorly dominated by private equity and private debt transactions, along with late-stage venture capital investments and significant mergers and acquisitions (M&A).
A strong investment appeal of financial services operators was reported, with payments subsector contributing 29 percent of deals and MSME lending, 20 per cent of the activity within the sector.
“Financial services emerged as the most active sector in Q3 2024, accounting for one-third of all recorded private capital deals on the continent—nearly double the share of the next largest sector, consumer goods,” reads the survey.
In the consumer goods and services sector, e-commerce projects accounted for 27 per cent of deals, mainly driven by the rapid growth of digital marketplaces.
E-commerce penetration in Africa is expected to reach 40% by 2025, according to the International Trade Administration.
The agriculture sector, despite employing more than half of the working population in Sub-Saharan Africa, made up only 15 per cent of private capital deals in the three-month period.
“In the sector, the momentum in production (accounting for 45 per cent of agriculture deals) is reflecting the deployment of private capital to catalyse growth in the farm economy that can deliver high-impact development returns,” the survey read.
The survey shows that equity investments dominated private capital transactions across Africa in the three months, with 75 percent of recorded deals including an equity component and 71 percent being purely equity-based.
Debt financing accounted for 19 per cent of transactions, rising to 24 per cent when hybrid structures are included.
Debt financing was heavily concentrated in agriculture and energy, accounting for 79 percent of recorded debt deals—more than double their contribution to all private capital transactions ( 33 per cent).
“South Africa dominated Southern Africa’s activity, featuring in 73 per cent of the region’s deals, while Kenya was central to East Africa, contributing to 80 per cent of the region’s transactions,” reads the report in part.
South Africa and Kenya each contributed 33 percent of all deals, dominating activity in their respective regions.
Across the continent, Southern Africa led with 45 per cent of deals, followed closely by East Africa ( 41 percent) and West Africa ( 33 per cent).
South Africa, Kenya, Nigeria, Ghana, and Egypt together participated in 85 per cent of all deals, underscoring their investor appeal.
All technology deals in Q3 involved companies from the Big 5
economies, demonstrating their
strong enabling environments for
innovation.
