Africa’s private equity market, excluding South Africa, experienced its lowest performance in five years during the first half of 2025. This significant decline is attributed to a combination of global headwinds and regional risks that have diminished investor appetite. According to new data from Finance in Africa, deal values plummeted sharply as rising global interest rates, a robust US dollar, and ongoing geopolitical tensions redirected capital towards more secure, higher-yielding markets.

From January to June 2025, the continent recorded transactions totaling US$4.67 billion. This represents a 15.4% decrease from the US$5.52 billion recorded in the same period of 2024, and a more substantial drop of over 53% compared to the US$10 billion posted in the first half of 2019. Deal volumes also saw a contraction, falling by 21% year-on-year to 174 deals, significantly lower than the 217 deals reported in 2019.

Energy sector activities notably dominated the market, with just two transactions alone accounting for US$2.16 billion, which is nearly half of the total deal value. Beyond these exceptional deals, a general sense of caution was evident across most other sectors. Finance in Africa highlighted that the analysis of private equity investment over the past four years reflects a steady decline, a trend influenced by global macroeconomic pressures, regional uncertainties, and shifts in investor strategies.

The study underscored Africa’s persistent reliance on offshore capital, which has recently been redirected towards the US and Europe. These regions offer higher interest rates and lower risk profiles, making fundraising more challenging for African private equity funds that depend heavily on external investment. This shift has resulted in weaker fundraising efforts and a more selective deployment of capital across the continent.

Analysts at Stears pointed out that the five largest African economies have witnessed an average currency depreciation of 51% over the past five years. This depreciation significantly erodes returns when converted into US dollars, thereby increasing the risk profile and negatively impacting key performance metrics for investors. Nigeria, despite leading the continent with deal values of US$956.7 million in H1 2025, experienced a substantial 66.9% year-on-year fall, reflecting investor unease concerning currency volatility, energy insecurity, and political uncertainty.

Other top performers, albeit with narrowing capital inflows, included Mauritius (US$367 million), Rwanda (US$274.5 million), Angola (US$233.8 million), and Côte d’Ivoire (US$213.7 million). A particularly sharp reversal was observed in the technology and fintech sectors, which had previously dominated African private equity during the boom years of 2020–2022. The post-pandemic surge had driven valuations higher as global investors backed startups in payments, e-commerce, and logistics. However, tighter global liquidity and rising interest rates have since corrected these valuations, negatively impacting deal momentum.

Investor focus is now pivoting towards more defensive sectors, such as healthcare, agriculture, food value chains, and logistics, which are perceived as more resilient to macroeconomic shocks. Despite this shift, these sectors have not yet managed to offset the broader market slowdown. Finance in Africa noted that the change in global sentiment and the redirection of attention to defensive opportunities have cooled valuations and deal appetite, contributing to lower deal volumes.

Despite the current weaknesses, analysts remain optimistic about Africa’s long-term fundamentals. The continent's youthful population, rapid urbanization, and pressing needs in infrastructure, healthcare, and energy transition are expected to attract capital back once global economic conditions stabilize. The consensus remains that the long-term growth story for Africa is intact, and the market cycle will eventually turn.