A Transformative Year For Private Capital In Southern Africa

Despite these macro headwinds, the Southern African private capital market demonstrated resilience, buoyed by record levels of fundraising by PE firms in 2023, sizeable investments across sectors, and opportunities in high-growth sectors such as energy and fintech.

Impact investing has gained significant prominence this past year, as investors increasingly seek to balance social and environmental impact with achieving financial returns. General partners have demonstrated their commitment in this regard by embedding ESG into their firms and portfolio companies.

Exits remained a challenge, despite reaching their highest levels in five years during 2023 R21.3-billion. South Africa's muted economic growth, compounded by systemic issues such as load shedding, transport constraints and the lingering effects of state capture, has placed significant pressure on the growth of businesses. These challenges have contributed to subdued PE performance, with pooled internal rates of return IRR yet to recover to pre-2016 levels.

To unlock the potential of private capital in Southern Africa, sustained political stability and effective policy implementation are critical. The momentum introduced by the recent government of national unity GNU offers a valuable opportunity to build investor confidence, but execution will be key to maintaining this optimism.

An enabling regulatory environment for start-ups is equally important. High-growth businesses hold the potential to drive economic recovery, but they require supportive policies to attract capital and achieve scale.