Published by Wanda Rich
Posted on May 22, 2023
4 min readLast updated: February 1, 2026
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Bryan Turner
By Bryan Turner, Partner, Spear Capital
Let’s not try and gloss over reality. The global economy has had a tough few years. A global pandemic was followed by supply chain disruptions (exacerbated by Russia’s war in Ukraine), which was then followed by rampant inflation, rises in energy costs, and increasingly high-interest rates that have suddenly made everyone’s debt a lot more expensive. Few regions, however, have felt the impact of those economic ructions to the degree that countries in sub-Saharan Africa have.
In fact, the pandemic drove reductions in gross domestic product (GDP) across the region as well as depressed formal and informal economic activity and increased unemployment and increases in extreme poverty. And in 2022, inflation for the region hit 14.47%, a rate it last came close to in 2001. Economic growth, meanwhile, fell to 3.6% in 2022, down from 4.1% in 2021.
It’s a far cry from the heady days of The Economist’s iconic “Africa Rising” cover of December 2011. But it’s also true that governments and businesses across the region are looking beyond the current crisis and towards an eventual resurgence. As they do so, it’s vital that they consider the role private equity could play in that resurgence.
With the current global economic crisis piling on top of domestic economic issues, many countries are seeing a growing number of businesses that are either in distress or on the verge of closure. Many others have already been forced to close. In South Africa, for example, company liquidations in December 2022 were up 30.3% year-on-year.
Those companies that were forced into liquidation weren’t necessarily bad companies either. Far from it. In all likelihood, they lacked a combination of capital and the expertise needed to get through a period of economic volatility. The same is true of companies on the verge of closure.
That’s where private equity firms come into play. The right private equity firm can help a promising company in even the most difficult of economies survive and then thrive. That’s not just something I believe either. It’s something we’ve managed to achieve a number of times with our own portfolio companies. There are also others out there that are committed to helping African companies reach their full potential.
As sub-Saharan Africa prepares for an economic resurgence, private equity firms could prove crucial in ensuring that businesses are in the best possible position to bounce back and even fuel further growth.
The key, however, is to attract and find the right private equity firms. You don’t have to be an industry insider to know that some firms have a reputation for buying out a distressed company, stripping it of its assets, and selling them off for a tidy profit.
Those aren’t the kinds of private equity firms you want in the region right now (or ever, really). You want firms that see the potential in portfolio companies and take a ‘boots-on-the-ground’ approach to investing. More than that, you want firms that use African expertise to help their portfolio companies achieve their full potential.
That’s because it’s those firms that recognise that all the factors which made Africa so attractive in 2011 (a young, increasingly well-educated population, growing levels of connectivity, and rapid urbanisation) are still in place. Once the current global economic crisis reaches its endpoint, those factors will really come into play again.
It’s also worth noting that those kinds of private equity firms are also less likely to be spooked by rising interest rates and will continue investing in the region, regardless.
But if private equity investors are to play that role to full effect, then players from across the economic value chain must come together and work with unity of purpose. In addition to the investors themselves, governments need to create conditions that incentivise the right kinds of investments and educate businesses on what types of investments are available. Regional business bodies, meanwhile, need to promote the businesses in their region to investors. And the businesses themselves need to be receptive to the suggestions of their investors.
I have no doubt that sub-Saharan Africa can, and will, experience an economic resurgence. But in order for that resurgence to be something that can be built on and that benefits people across the region, a lot of players are going to have to come together and work in the same direction. Private equity can’t create that resurgence on its own but it will be crucial to it.
Private equity refers to investment funds that buy and restructure companies not listed on public exchanges, aiming to improve their financial performance and eventually sell them for a profit.
Inflation is the rate at which the general level of prices for goods and services rises, eroding purchasing power, and is often measured by the Consumer Price Index (CPI).
Economic growth is an increase in the production of goods and services in an economy over a period, typically measured as the percentage increase in real GDP.
A financial crisis is a situation where the value of financial institutions or assets drops rapidly, often leading to widespread economic instability and loss of consumer confidence.
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