Investor Updates: Private capital flows to Africa more than doubled in 2021

Private capital flows to Africa more than doubled in 2021

Highlights

• Investors bet record amounts of private equity and venture capital on Africa last year, according to a new report by the African Private Equity and Venture Capital Association (AVCA.)
• The ‘African Private Capital Activity Report’, released on 19 Mar., found that the total value of private capital deals in Africa reached a record high of $7.4 billion in 2021, representing a 118% increase compared to the $3.4 billion registered in 2020.
• The record amount was almost double the $4 billion that was invested on an annual average basis in Africa between 2016 and 2020.

Source: African Private Capital Activity Report

Our Takeaway

In spite of Covid-19’s impact on the global investment landscape, Africa continues to attract foreign investors in search of yields. Per the AVCA report, Africa recorded 429 private capital deals across diverse sectors and geographies. By sector, financials accounted for 30% of the total deal volume, followed by consumer discretionary (16%), information technology (14%), and industrials (13%). In terms of regions, West Africa accounted for the largest share of deals, followed by southern Africa, North Africa, and East Africa.

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UAE fintech Zenda eyes Africa expansion after $9.5m seed round

Highlights

• Zenda, a UAE-based fintech that offers pay-now and pay-later options for parents to pay school fees, has raised a $9.5 million seed round from venture capital firms.
• The startup offers parents an option to pay school fees directly through its app and will use its acquired funds to accelerate expansion into India while eyeing markets in North Africa like Egypt.
• Founded in 2021, Zenda has seen its users grow by 20 times. Last year, it had over $100 million in annual contracted payment volumes.

Source: TechCrunch

Our Takeaway

In most emerging markets, school fee payments are mostly cash-based. In a few cases where they’re digital, the systems are often expensive to run and cumbersome. In addition, most households earn monthly whereas tuition payments are made termly or bi-annual, causing cash flow stress for parents and collection delays for schools. Approximately $37 billion is processed annually in fee payments to private educational institutions in the Gulf region, $34 billion in the rest of the Middle East and Africa, and $70 billion annually in India. This means Zenda has on its hands a sizable but largely untapped market.

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Inseco raises $5.3m, South Africa’s largest seed funding

• Insect protein producer, Inseco, has raised $5.3m in what is South Africa’s largest-ever startup seed funding round.
• The round was led by Futuregrowth Asset Management, with participation from E4E Africa, Oak Drive Ventures, and a raft of private investors.
• Inseco currently produces more than 100 metric tons of defatted insect meal and oil per month, branded as EntoMeal and EntoOil, at its state-of-the-art 10,000m² production facility in Cape Town.

Source: Bloomberg

Our Takeaway

With the huge strides made by startups like Inseco in South Africa, Africa is fast becoming a global leader in the agritech space. Between 2016 and 2019, the industry grew by 44% year-on-year, and the continent has registered the highest number of agritech services in the developing world reaching more than 30 million smallholder farmers as of 2021. The global agritech sector is expected to reach nearly $200 billion by 2025. How much value Africa can tap from the vast and dynamic market remains to be seen.