THE BOTTOM LINE
Private sector rocks in to the party to the tune of R31bn
Investment activity in southern Africa’s private equity industry hit a record last year: now we need more
It is unlikely that President Cyril Ramaphosa – last seen hobnobbing with the developing world’s most powerful leaders at the Brics Summit – has had the chance to cast his eye over the latest numbers out of the private equity industry.
But, gunning as he is for $100-billion in new investment into South Africa in the next five years, he will be pleased when he does.While investment activity in southern Africa’s private equity industry, which hit a record R31.1-billion last year, may seem small change alongside $15-billion investment injections from China, it does signal the private sector’s growing commitment to the region. And also its realisation that it needs to help government solve social problems.
In this regard, increased investment into infrastructure and education is encouraging. On the other hand, the decline in private money going towards agriculture, energy and healthcare is not.
But the overall trajectory is positive, with 30% of investments going towards startups, many of them with a developmental focus.
Of course, much more is needed. Millions of Africans still do not have access to clean water, electricity and education. This presents a powerful imperative and opportunity for private equity funds.
As Elias Masilela, executive chairman of DNA Economics and a former CEO of the Public Investment Corporation, said at the launch event for the private equity industry survey, “If inequality goes unchecked, [investment] returns are not sustainable.”