(Nairobi) – Kenya and South Africa have emerged as the leading destinations for private capital deals in Africa, with the two countries accounting for one-third of transactions recorded in the third quarter of 2024, amounting to $2.27 billion (KES 293.96 billion).
A recent survey by Stears, a pan-African market insights firm, highlights the financial services sector as the most attractive for investors during this period, representing 33% of all private market deals. The study recorded 73 private market transactions, with 39 deals disclosing a combined value of $2.27 billion (KES 293.96 billion).
Top Sectors for Private Capital Deals
| Sector | Share of Deals (%) |
|---|---|
| Financial Services | 33 |
| Consumer Goods | 19 |
| Energy | 18 |
| Agriculture | 15 |
The survey attributes Kenya and South Africa’s dominance to their leadership in private equity, private debt transactions, late-stage venture capital investments, and mergers and acquisitions (M&A). Financial services accounted for the largest share, with payments and MSME lending driving activity.
Payments made up 29% of financial services deals, while MSME lending represented 20%. These trends underscore the sector’s strong appeal, with the financial services market capturing nearly double the share of the next largest sector, consumer goods.
E-commerce initiatives led investments in the consumer goods sector, accounting for 27% of transactions. The rapid rise of digital marketplaces in Africa has driven this growth, with e-commerce penetration expected to reach 40% by 2025, according to the International Trade Administration.
Despite its critical role in employment across Sub-Saharan Africa, the agriculture sector contributed only 15% of private capital deals in the quarter. However, within this sector, private capital is increasingly supporting production initiatives, which comprised 45% of agriculture-related transactions.
Equity investments dominated private capital activity, representing 75% of transactions. Among these, 71% were purely equity-based. Debt financing played a smaller but significant role, making up 19% of transactions, or 24% when hybrid structures were included.
Breakdown of Financing Models
| Financing Type | Share of Deals (%) |
|---|---|
| Pure Equity | 71 |
| Debt Financing | 19 |
| Hybrid Structures | 24 |
Debt financing was particularly concentrated in the agriculture and energy sectors, which together accounted for 79% of recorded debt deals. These sectors also attracted investments aimed at catalyzing high-impact development.
Geographically, Southern Africa led the continent in private capital deals, contributing 45% of the total. East Africa followed closely with 41%, while West Africa accounted for 33%. Kenya was central to East African activity, contributing to 80% of the region’s transactions.
South Africa dominated Southern Africa, participating in 73% of the region’s deals. Together, Kenya and South Africa accounted for 33% of all transactions recorded during the quarter.
Across Africa, the “Big 5” economies—South Africa, Kenya, Nigeria, Ghana, and Egypt—were involved in 85% of all deals. These nations also played a pivotal role in the technology sector, where all recorded deals in Q3 2024 involved companies based in these countries.