Africa trails China, India in race for funds by emerging markets

Sub-Saharan Africa only managed to get a few crumbs of the cake of private equity funds that was baked for emerging markets during the first quarter of this year.

Only 1.5 per cent of the $10 billion total funds that were raised for emerging markets during the first three months of the year were destined for the region, according to latest figures from the Emerging Markets Private Equity Association (EMPEA).

Although sub-Saharan Africa managed a very small portion of the funds that were raised in the emerging markets, it still turned out to be the region with the third highest amount among its peers, behind Asia, which took the bulk of the funds at $9.7 billion, and Latin America and the Caribbean, which raised $397 million.

This is a pointer towards a need for sub-Saharan Africa to either make itself more attractive to the private equity funds from across the world, or to tap into domestic sources of capital, if it cannot face up to the competition.

On the emerging markets space, individual countries were better magnets of private equity funds during the quarter than all the countries of sub-Saharan Africa combined.

China, for instance, which has, among other factors, a huge population working for it, raised a whopping 36 times more, to net $5.7 billion.

Also putting up an impressive attraction for funds in the first three months of the year were India and Brazil, raising $858 million and $150 million respectively.

Regional powerhouse

Within sub-Saharan Africa, its biggest economy, South Africa, as has been the tradition, hogged most of the funds dedicated to the region.

According to EMPEA statistics, close to half, $74 million, out of the region’s crumbs of raised private equity funds were destined southwards.

Last year, out of the $1.5 billion raised in the region, South Africa scooped $423 million.

Among the regions that sub-Saharan Africa outperformed when it comes to fundraising in private equity, is the Middle East and North Africa, which has lately been marked by uprisings that have been forecast to affect its performance.

While sub-Saharan Africa raised $156 million, the Middle East and North Africa raised $60 million.

Overall, the statistics from EMPEA indicate that the emerging markets could be up to a more successful year, if the trend over the past two years is anything to go by.

The funds raised so far are about half of the totals raised annually over the past two years.