Nigeria records $200m equity investments in three years

Nigeria saw not less than $200 million worth of private equity investment in the last three years, according to a report by Stears, an Africa-focused financial data and software company.

In its November 2024 Macro Outlook for South Africa, Egypt, Nigeria, Ghana & Kenya, the firm stated that the African market is witnessing a surge in private equity funds spawned by the International Finance Corporation (IFC).

“As a leading DFI, the IFC has invested in private equity funds, making tangible investments in African businesses,” the report stated.

“In the last three years, Nigeria has seen over $200 million in private equity investments in critical sectors like health (e.g., i-Fitness) and financial services (e.g., Moniepoint) that have contributed positively to economic growth and sustainability,” it added.

According to Stears, the Central Bank of Nigeria (CBN) and the IFC are partnering to support naira-based investments, reducing currency risks in Nigeria’s volatile investment climate, especially for long-term investors facing challenges in capital recovery and exits.

It however noted that while the partnership is poised to mitigate currency risks, inflation remains a challenge as itt could impact consumer purchasing power and raise business costs, affecting profitability.

“Despite this, naira-based investments could strengthen portfolio company growth and sustainability,” the market intelligence firm said.

Stears said in its private capital report for the third quarter that Nigeria struggled to attract a meagre 23 percent of investments as private capital found its way to South Africa and Kenya.

The report revealed that while Nigeria led the West African region, accounting for 71 percent of market transactions, it was lower than Egypt’s 93 percent, Kenya’s 80 percent and South Africa’s 73 percent.

“South Africa and Kenya were standout performers, each accounting for a third of all private market deals in Q3,” the report stated.